1. Chapter 7 – Special Transactions: General Journal Entries
Learning Outcome
This chapter shows how to prepare General Journal entries for special transactions from source documents and other information supplied.
Copyright  2006 McGraw-Hill Australia Pty Ltd PPTs t/a Introductory Accounting 2r, by David Willis
By Kaye Watson

2. KEY TERMS Adjusting journal entry Bad debt Bad debt recovered
Bills of exchange
Bills payable
Bills receivable
Dishonoured cheques
Copyright  2006 McGraw-Hill Australia Pty Ltd PPTs t/a Introductory Accounting 2r, by David Willis
By Kaye Watson

3. KEY TERMS cont… General journal Interest charged Interest received
Narration
Opening General journal entry
Special transactions
Copyright  2006 McGraw-Hill Australia Pty Ltd PPTs t/a Introductory Accounting 2r, by David Willis
By Kaye Watson

4. GENERAL JOURNALS
Used to record entries that cannot be recorded in the other four journals
Must be supported by a narration
Copyright  2006 McGraw-Hill Australia Pty Ltd PPTs t/a Introductory Accounting 2r, by David Willis
By Kaye Watson

5. GENERAL JOURNALS cont…
Records transactions that are NOT:
cash sales
credit sales
cash payments
credit purchases
returns of goods sold
returns of goods purchased
discounts allowed
discounts received
Copyright  2006 McGraw-Hill Australia Pty Ltd PPTs t/a Introductory Accounting 2r, by David Willis
By Kaye Watson

6. FORMAT OF GENERAL JOURNAL
Date
Details
Folio
Debit
Credit 1 2 3 4 5
Shows transaction date
Shows details of accounts to be debited and credited
Folio column for cross references
Debit amount
Credit amount
Copyright  2006 McGraw-Hill Australia Pty Ltd PPTs t/a Introductory Accounting 2r, by David Willis
By Kaye Watson

7. GENERAL JOURNAL TRANSACTIONS
Opening entry for commencement of business
Record Equity in terms of assets and liabilities at commencement of business
Copyright  2006 McGraw-Hill Australia Pty Ltd PPTs t/a Introductory Accounting 2r, by David Willis
By Kaye Watson

8. GENERAL JOURNAL TRANSACTIONS cont…
Show debit entries before credit entries
Must have narration
Indent credit entries
Debits must equal credits
Copyright  2006 McGraw-Hill Australia Pty Ltd PPTs t/a Introductory Accounting 2r, by David Willis
By Kaye Watson

9. WRITE OFF BAD DEBTS Debtor is bankrupt Unable to collect debt
Copyright  2006 McGraw-Hill Australia Pty Ltd PPTs t/a Introductory Accounting 2r, by David Willis
By Kaye Watson

10. INTEREST EXPENSE AND INTEREST RECEIVED
Copyright  2006 McGraw-Hill Australia Pty Ltd PPTs t/a Introductory Accounting 2r, by David Willis
By Kaye Watson

11. ADJUSTMENTS TO CORRECT ENTRY IN WRONG ACCOUNT
Purchase of computer incorrectly posted to office furniture:
Copyright  2006 McGraw-Hill Australia Pty Ltd PPTs t/a Introductory Accounting 2r, by David Willis
By Kaye Watson

12. DRAWINGS If owner takes stock for personal use, use Purchases account.
Drawings account is an Equity account.
Debit drawings decreases Equity.
Copyright  2006 McGraw-Hill Australia Pty Ltd PPTs t/a Introductory Accounting 2r, by David Willis
By Kaye Watson

13. BILLS OF EXCHANGE A means of payment for debtors
Used for overseas transactions
Used for some activities within Australia
Accounts called bills receivable and bills payable used to record transactions
Copyright  2006 McGraw-Hill Australia Pty Ltd PPTs t/a Introductory Accounting 2r, by David Willis
By Kaye Watson

14. ADVANTAGES OF BILLS OF EXCHANGE
Formal recognition of debt owing
Written evidence of debt
Date set for payment
Negotiable instruments—can be transferred to another person
Copyright  2006 McGraw-Hill Australia Pty Ltd PPTs t/a Introductory Accounting 2r, by David Willis
By Kaye Watson