1. Journals, Source Documents, & Recording Entries in a Journal
Chapter Three

2. Chapter Introduction
After taking chapter 2 test, list all new vocabulary words for chapter 3 and write out their definitions.
Journal
Journalizing
Special Amount Columns
General Amount Columns
Entry
Double-entry accounting
Source document
Check
Invoice
Sales invoice
Receipt
Memorandum
Proving Cash

3. Journals and Journalizing
Journal: form for recording transactions in chronological order.
Recording transaction in a journal is called journalizing.
Journal is permanent record
Fits the needs of the business
What determines the kind of journal used?
Nature of business
Number of transactions
Journalizing is done daily!

4. Five-Column Journal Five Amount Columns General Debit General Credit
Sales Credit
Cash Debit
Cash Credit
Special Amount Column: a journal amount column headed with an account title.
Used for frequently occurring transactions
Eliminates writing an account title in the Account Title column and saves time
Three Special Amount Columns:

5. Five Column Journal
General Amount Column: a journal amount column that is not headed with an account title.
General Debit
General Credit
Facts about the Journal
Information recorded includes debit and credit parts of each transaction in one location.
Data can be verified by comparing journal to transaction data.
Transactions are recorded in chronological order.

6. Journalizing
Entry: information for each transaction recorded in a journal.
Double-entry accounting: recording of debit and credit parts of a transaction.
Each transaction affects at least two accounts
A debit and a credit are recorded
Debits = Credits

7. Source Documents
Source Documents are business papers from which information is obtained for a journal entry.
Each transaction is described by a source document that proves it occurred.
Example: Check stub for each cash payment
Objective Evidence: applied when a source document is prepared for each transaction.

8. Five Source Documents Checks Sales Invoices Receipts Calculator Tapes
Memorandums

9. Source Documents
Checks- A business form ordering a bank to pay cash from a bank account (Source document for cash payments)
Sales Invoices (Source document for recording a sale on a account)
Invoice: form describing the goods or services sold, the quantity, and the price.

10. Source Documents cont.
Receipts – written acknowledgement for cash received (Source document for cash received from sources other than sales)
Example: Received Cash and an Investment
Calculator Tapes (Cash Sales)
Memorandums – a form for which a brief message is written describing a transaction. (Used when no other source document is prepared for a transaction or when an additional explanation is needed.

11. Journal Entries A Journal entry consists of four parts: Date Debit
Credit
Source Document
Use T accounts to help you!

12. Journal Entry Examples
Received Cash From Owner as an Investment, $5, Receipt No. 1
FYI – Dollar and cent signs,
decimals are not used when
writing on ruled paper

13. Journal Entry Example
August 3 -Paid Cash for Supplies, $ Check No. 1
Remember: Writing Cash frequently could be time consuming- Special amount columns are used for these frequently used accounts

14. Review In what order are transactions recorded in a journal?
Chronological
Why are source documents important?
Proves a transaction occurred
List the four parts of a journal entry.
Date
Debit
Credit
Source Document

15. Practice
Working Together
On Your Own
Application Problem 3-1

16. Review Look under your chairs – you may have a slip of paper
Read Your Question
Give the Answer
Prize
Go Over Application Problem 3-1

17. Quick Check (You can use your notes)
Name at least 3 of the 5 source documents we have discussed
Check, Sales Invoice, Receipt, Memo, Calculator Tape
What is the difference between a general amount column and a special amount column
A special amount column is headed with an account title. A general amount column is NOT
How are transactions recorded in a journal?
Chronological (by date)

18. Section 3-2: Journalizing (PAGE 63)
August 4th – Paid Cash for Insurance, $1200. Check No. 2

19. Bought Supplies on Account
August 7 - Bought Supplies on Account from Supply Depot, $500. Memorandum No. 1

20. Paid Cash on Account
August 11 – Paid Cash on Account to Supply Depot, $300. Check No. 3

21. Practice
Working Together
On Your Own

22. Journalizing Transaction that affect OE and Receiving Cash on Account
August 12 – Received Cash from Sales, $295. Tape No. 12

23. Sold Service on Account
August 12 – Sold services on account to Oakdale School, $350. Sales Invoice No. 1

24. Paid Cash for an Expense
August 12 – Paid Cash for Rent, $300. Check No. 4

25. Received Cash on Account
August 12 – Received cash on account from Oakdale School, $200. Receipt No. 2

26. Paid Cash to Owner for Personal Use
August 12 – Paid cash to owner for personal use, $125. Check No. 6

27. Practice and Reviewing
Section 3
Working Together
On Your Own
Section 2-3
Audit Your Understanding p. 66 & 72
Homework
Application Problems 3-2 and 3-3

28. Review Quiz In what order are transactions recorded in a journal?
What are the four parts of a journal entry?
Why are source documents important?
What are the three special account columns?
What columns are used to record Sold services on Account?

29. Section 3-4: Proving and Ruling a Journal
When all but the last line on a journal page is used, columns are proved and ruled….
Total are carried forward to the next page
Steps in Proving a Journal:
Add each amount column
Add Debit column totals, Add Credit Column totals
Verify that Total Debits=Total Credit
Journal page is PROVED
If errors- must correct first

30. Steps in Ruling a Journal Page
You Must Use a STRAIGHT EDGE!
Rule single line across all amount columns – indicated that columns are to be totaled
On the next line, write date
Write Carried Forward in the Account Title column – checkmark placed on post ref. column
Write in column totals
Rule double line below totals
Indicates amounts are totals and debit=credits

31. Starting a NEW JOURNAL Page
Write page number at top
Write date (year, month and day)
Write Brought Forward – check mark is placed in the post ref. column
Record column totals from previous page

32. Proving and Ruling at the End of the Month
Rule single line to indicate columns will be added
Write date
Write the word Totals in the account title column – check mark is NOT placed in the post ref.
Write each column total
Rule double line - debits=credits

33. Proving Cash
Determining that the amount of cash agrees with accounting records…
Add Cash at beginning and Cash Debit Column
Subtract Cash paid out- Cash Credit column
This equal cash balance at the end of the month
Compare to checkbook balance – next unused check stub.

34. Practice Section 3-4 Work on Application Problems 5 Working Together
On Your Own
Application 4
Work on Application Problems 5

35. Review
Quotes/ Brainteasers
Audit Test
Go over Homework

36. Standard Accounting Practice
Procedures for error corrections, abbreviated words, signs and rulings.
Popcorn reading
Write on the board
Students make a list

37. Practice & Application
Crossword Puzzle
Applications Problems 6-6
Homework 6-7

38. Review Catch Phrase Study Guide Review Game Audit Test
Chapter Three Test