Journals, Source Documents, and Recording Entries in a Journal LESSON 3-1 4/15/2017 CHAPTER 3 Journals, Source Documents, and Recording Entries in a Journal

3-1 JOURNALS, SOURCE DOCUMENTS, AND RECORDING ENTRIES IN A JOURNAL A form for recording transactions in chronological order is called a journal. -Each business uses a journal that best meets the needs of that business. -Special Amount Column are headed with an account title. Ex: Sales credit, Cash Credit, Cash Debit -General Amount Column are not headed with an acct title. Ex: General Debit, General Credit Five Column Journal

Debits = Credits (ALWAYS) The recording of debit + credit parts of a transaction is called double entry accounting. -Each transaction affects at least two parts. Ex: Cash paid for advertising. Cash decreases & Expenses increase Source Document - A business paper with information that proves that the transaction did occur. (Concept: Objective Evidence) -Transaction should be journalized only if it actually occurs. -Amounts recorded must be accurate & true. -To verify accuracy of a specific journal entry, compare the entry with the source document. Source Documents:Checks, Invoices, Receipts, Memos, Calculator Tapes

SOURCE DOCUMENTS receipt calculator tape memorandum check page 58 check receipt calculator tape sales invoice memorandum

4 PARTS OF AN ENTRY 1 - Date 2 - Debit - always get written first When you journalize an entry remember there are four parts: 1 - Date 2 - Debit - always get written first 3 - Credit 4 - Source Document Before transaction is recorded it needs to be analyzed into its debit & credit parts.

RECEIVED CASH FROM OWNER AS AN INVESTMENT page 60 August 1. Received cash from owner as an investment, $5,000.00. Receipt No. 1. 1 3 2 4 1. Write the date in the Date column. 2. Write the debit amount in the Cash Debit column. 3. Record the credit amount in the General Credit column. Write the title of the account in the Account Title column. 4. Write the source document number in the Doc. No. column.

PAID CASH FOR SUPPLIES page 61 August 3. Paid cash for supplies, $275.00. Check No. 1. 1 2 3 4 1. Write the date in the Date column. 2. Record the debit amount in the General Debit column. Write the title of the account in the Account Title column. 3. Write the credit amount in the Cash Credit column. 4. Write the source document number in the Doc. No. column.

LESSON 3-2 JOURNALIZING BUYING INSURANCE, BUYING ON ACCOUNT, AND PAYING ON ACCOUNT page 63 August 4. Paid cash for insurance, $1,200.00. Check No. 2. 1 2 3 4 1. Write the date in the Date column. 2. Record the debit amount in the General Debit column. Write the title of the account in the Account Title column. 3. Write the credit amount in the Cash Credit column. 4. Write the source document number in the Doc. No. column.

BOUGHT SUPPLIES ON ACCOUNT page 64 August 7. Bought supplies on account from Supply Depot, $500.00. Memorandum No. 1. 2 4 1 3 1. Write the date in the Date column. 2. Record the debit amount in the General Debit column. Write the title of the account in the Account Title column. 3. Record the credit amount on the next line in the General Credit column. Write the title of the account in the Account Title column. 4. Write the source document number in the Doc. No. column on the first line of the entry.

PAID CASH ON ACCOUNT page 65 August 11. Paid cash on account to Supply Depot, $300.00. Check No. 3. 2 1 3 4 1. Write the date in the Date column. 2. Record the debit amount in the General Debit column. Write the title of the account in the Account Title column. 3. Write the credit amount in the Cash Credit column. 4. Write the source document number in the Doc. No. column.

LESSON 3-3 JOURNALIZING TRANSACTIONS THAT AFFECT OWNER’S EQUITY AND RECEIVING CASH ON ACCOUNT page 67 August 12. Received cash from sales, $295.00. Tape No. 12. 1 3 4 2 1. Write the date in the Date column. 2. Write the debit amount in the Cash Debit column. 3. Write the credit amount in the Sales Credit column. Place a check mark in the Account Title column. A check mark is also placed in the Post. Ref. column. 4. Write the source document number in the Doc. No. column.

SOLD SERVICES ON ACCOUNT page 68 August 12. Sold services on account to Oakdale School, $350.00. Sales Invoice No. 1. 2 1 4 3 1. Write the date in the Date column. 2. Record the debit amount in the General Debit column. Write the title of the account in the Account Title column. 3. Write the credit amount in the Sales Credit column. 4. Write the source document number in the Doc. No. column.

PAID CASH FOR AN EXPENSE page 69 August 12. Paid cash for rent, $300.00. Check No. 4. 1 2 4 3 1. Write the date in the Date column. 2. Write the debit amount in the General Debit column. Write the title of the account in the Account Title column. 3. Write the credit amount in the Cash Credit column. 4. Write the source document number in the Doc. No. column.

RECEIVED CASH ON ACCOUNT page 70 August 18. Received cash on account from Oakdale School, $200.00. Receipt No. 2. 3 1 2 4 1. Write the date in the Date column. 2. Write the debit amount in the Cash Debit column. 3. Record the credit amount in the General Credit column. Write the title of the account in the Account Title column. 4. Write the source document number in the Doc. No. column.

PAID CASH TO OWNER FOR PERSONAL USE page 71 August 18. Paid cash to owner for personal use, $125.00. Check No. 6. 1 2 4 3 1. Write the date in the Date column. 2. Write the debit amount in the General Debit column. Write the title of the account in the Account Title column. 3. Write the credit amount in the Cash Credit column. 4. Write the source document number in the Doc. No. column.

3-4 PROVING AND RULING A JOURNAL page 73 When you have used all but the last line of a journal page, columns are proved and ruled before totals are carried forward to the next page. 1 2 3 1. Add each of the amount columns. 2. Add the debit column totals, and then add the credit column totals. 3. Verify that the total debits and total credits are equal.

RULING A JOURNAL PAGE 1 2 3 5 4 Double lines mean DEBITS = CREDITS 1. Rule a single line. 2. Write the date. 3. Write Carried Forward. 4. Write each column total. Double lines mean DEBITS = CREDITS 5. Rule double lines.

STARTING A NEW JOURNAL PAGE 1 2 3 4 1. Write the page number. 2. Write the date. 3. Write Brought Forward in the Account Title column. A check mark is also placed in the Post. Ref. column. 4. Record the column totals brought forward from the previous page.

PROVING AND RULING A JOURNAL AT THE END OF A MONTH page 75 1 2 3 5 4 1. Rule a single line. 2. On the next line, write the date. 3. Write the word Totals. 4. Write each column total. A journal is ruled at the end of the month regardless of how full it is. 5. Rule double lines.