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

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

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!

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:

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.

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

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.

Five Source Documents Checks Sales Invoices Receipts Calculator Tapes Memorandums

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.

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.

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

Journal Entry Examples Received Cash From Owner as an Investment, $5,000.00. Receipt No. 1 FYI – Dollar and cent signs, decimals are not used when writing on ruled paper

Journal Entry Example August 3 -Paid Cash for Supplies, $275.00. Check No. 1 Remember: Writing Cash frequently could be time consuming- Special amount columns are used for these frequently used accounts

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

Practice Working Together On Your Own Application Problem 3-1

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

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)

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

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

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

Practice Working Together On Your Own

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

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

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

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

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

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

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?

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

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

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

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

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.

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

Review Quotes/ Brainteasers Audit Test Go over Homework

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

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

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