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1 Books of Original Entry ( 原始分錄簿 ) and Ledgers ( 分類帳 ) References : Chapter 11-14, 19 3.

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Presentation on theme: "1 Books of Original Entry ( 原始分錄簿 ) and Ledgers ( 分類帳 ) References : Chapter 11-14, 19 3."— Presentation transcript:

1 1 Books of Original Entry ( 原始分錄簿 ) and Ledgers ( 分類帳 ) References : Chapter 11-14, 19 3

2 2 AIntroduction Books to record all the T accounts. The expansion of the business, transactions increase , the numbers of T accounts are numerous. Thus the T accounts are classified into 3 Ledgers and 7 Books (Books of Original Entry).

3 3 BBooks of Original Entry 1Sales Journal ( Day Book) 2Purchases Journal (Day Book) 3 Returns Inwards Journal (Day Book) 4 Returns Outwards Journal (Day Book) 5 Cash Book 【 Explain later 】 6 Petty Cash Book 【 Explain later 】 7 Journal 【 Explain later 】

4 4 Transactions Classifying the transactions Credit Sales Credit Purchases Returns Inwards Returns Outwards Cash and cheque receipts and payment Others Returns Inwards Journal Sales Journal Returns Outwards Journal Purchases Journal Cash Book/ Petty Cash Book Journal p. 116 Posting to the double entry accounts in the ledgers : Sales ledger Purchases ledger General ledger

5 5 CLedgers 3 kinds of ledgers : Sales ledger - records each debtor ’ s T A/C Purchases ledger - records each creditor ’ s T A/C General ledger - records the rest of the accounts, such as expenses, Fixed assets, capital, etc.

6 6 D Sales Journal and Sales Ledger D1Sales Journal Record all credit sales There is no debit items in “ Sales A/C ”, so the “ Sales A/C ” transforms to a statement( 表 ), i.e, Sales Journal.

7 7 Examples of Sales Journal : The credit sales transactions in January, 2008 of Green Co. are as follow : Jan 5, sold $500 goods on credit to Rabbit Co. and offered 1% trade discounts* to Rabbit Co. Jan 15, sold $100 goods on credit to Pepper Co. If Pepper Co. pays the debt within 1 month, Pepper can enjoy 2% cash discounts** 。 Jan 28, sold $500 goods to Pump Co. and offered 1% trade discounts. If Pump Co. pays the debt within 1 weeks, Pump can enjoy 2% Cash discounts. You are required to prepare : The Sales Journal to record the above transaction.

8 8 *Trade discount: offered to customers to attract large- quantity transactions. Directly deducted from the list price, no double entry is required. **Cash discounts: Encourage the early repayment of debts The entry is recorded at the time of repayment of debts.

9 9 Sales Journal 2008ParticularInv. No.$ Jan 5Rabbit Co495 15Pepper Co100 28Pump Co Transferred to sales A/C 1090 (in General Ledger)

10 10 D2Sales Ledger After recording each transaction in the Sales Journal, the transaction is posted to the Debtors A/C in the Sales Ledger. At the end of month or year, the total of the Sales Journal is posted to the “ Sales A/C ” in the General Ledger.

11 11 Sales Journal ( Record each credit sales ) Sales A/C Cr. $ Debtors: Rabbit Co. Dr. $ General LedgerSales Ledger Posting each sales transactions Posting the total to the Sales A/C

12 12 EPurchases Journal and Purchases Ledger E1 Purchases Journal Record all credit purchases There is no credit items in “ Purchases A/C ”, so the “ Purchases A/C ” transforms to a statement( 表 ), i.e, Purchases Journal.

13 13 Examples of Purchases Journal : The credit purchases transactions of Cucumber Co. in February 2008 are as follows : Feb 6, bought goods $200 on credit from Celery Co., and received 1% trade discounts. Feb 17, bought $100 goods on credit from Carrot Co. If the debt is repaid within 1 week, 2% cash discounts is offered. Feb 27, bought $200 goods on credit from Spinach Co, and received 1% trade discounts. If the debt is repaid within 1 week, 2% cash discounts is offered. You are required to prepare : The Purchases Journal to record the above transaction.

14 14 Purchases Journal 2006ParticularInv. No. $ Feb 6Celery Co Carrot Co Spinach Co Transferred to Purchases A/C 496 (in General Ledger)

15 15 E2Purchases Ledger After recording each transaction in the Purchases Journal, the transaction is posted to the Creditors A/C in the Purchases Ledger. At the end of month or year, the total of the Purchases Journal is posted to the “ Purchases A/C ” in the General Ledger.

16 16 Purchases Journal ( Record the credit purchases ) Creditors: Celery Co Cr. $ Purchases Dr. $ Purchases LedgerGeneral Ledger Posting each purchases transaction Posting the total to the Purchases A/C

17 17 FReturns Inwards Journal ( 銷貨退回簿 ) Customers (Debtors) demand to return goods to our company. When we accept the goods returned, we issue a 【 Credit note 】 to the customers. Examples : Goods returned to Cucumber Co in March, 2006 are as follows : March 1, Rabbit Co. returned $50 goods to us (After deducted 1% trade discounts). March 10, Pepper Co. returned $10. You are required to prepare : The Returns Inwards Journal to record the above transaction.

18 18 Returns Inwards Journal 2006Particular Credit Note No. $ Mar 1Rabbit Co Pepper Co Transferred to returns inwards A/C 60 (in General Ledger)

19 19 Returns Inwards Journal (Record each items in Credit Notes) Debtors: Carrot Co. Cr. $ Returns Inwards A/C Dr. $ Sales LedgerGeneral Ledger Posting each returns transaction Posting the total to the returns inwards A/c

20 20 GReturns Outwards Journal Our company demands to returns the goods to suppliers (Creditors). We issue a 【 Debit note 】 with the goods returns to the suppliers. Examples : Cucumber Co returned goods in March, 2006 are as follows : March 1, returned $20 goods to Celery Co. (After deducted 1% trade discounts). March 5, returned $10 goods to Carrot Co. You are required to prepare : The Returns Outwards Journal to record the above transaction.

21 21 Returns Outwards Journal 2006 Particular Debit Note No. $ Mar 1 Celery Co Carrot Co Transferred to returns Outwards A/C 30 (in General Ledger)

22 22 Returns Outwards Journal (Recording each items in Debit Notes) Returns Inwards A/C Cr. $ Creditors: Celery Co. Dr. $ General Ledger Purchases Ledger Posting each transaction in debit notes Posting the total to the Returns Outwards A/C

23 23 HClassification of T Accounts T 字帳的分類 Accounts Nominal Accounts 虛帳戶 Real Accounts 實帳戶 Creditors (Purchases Ledger) Debtors (Sales Ledger) Records assets and Liabilities in General Ledger Records expenses, incomes, and Capital in General Ledger 人名帳戶 Personal Accounts 非人名帳戶 Impersonal Accounts


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