1. The Journal and Source Documents
Unit 3 : Chapter 6
The Journal and Source Documents
Watch tutorial below before proceeding

2. The General Journal
Just as people write diaries to record their experiences, thoughts, feelings, facts and details, accountants also use diary called, “General Journal” to record facts and details of a business transactions.
Accountants write down on General Journal all the things that they should remember for a long time.
So far, we used T accounts whenever we recorded transactions.

3. The General Journal
It is easy to use T accounts when the transactions are simple such as one debit entry and one credit entry.
In reality, many transactions consist of many accounts, so we have to record the transactions first in the General Journal. (or Journal or Journal Entry)
General Journal is a notebook in which accounting entries are first recorded

4. The General Journal
Each transaction is recorded separately in chronological order.
Usually there is a blank line between two transactions.
GJ is also referred to as the book of original entry
Each transaction is recorded
separately
in the order that they occur
It provides a continuous record of all transactions

5. The First 6 Steps in the Accounting Cycle
1 Transactions occur.
2 Transactions are recorded in the journal in order by date.
3 The accounting entries are transferred to the ledger accounts. (or T accounts)
4 Trial Balance
5 Adjusting Entry
6 Balance Sheet and Income Statement

6. The Two-Column Journal
Year recorded at the top of column.
Month recorded once with days noting business transactions.
Account titles are always capitalized.
Explanations are brief but tell ‘the story’.
Debits are always recorded first.
Credit particulars are always indented.
The completed journal entry must balance.
Leave a blank line before next entry.
P.R.: Posting Reference – this will be covered in more detail later; just leave it blank for now
Year entered once in small figures on the first line of each page. (for this demonstration, I gave it a full line just to make it visible)
Month is entered on the first line of each page, but do not repeat for each entry. Enter a new month at the point it occurs.
Day is entered on the first line of each journal entry and is repeated no matter how many transactions occur on a given day.
Note the compound entry in the second example

7. The Steps in Recording a Journal Entry
Step 1: Date: Enter the day in the date column (second column)
Step 2: Debit Accounts: Enter the name of the accounts, which is to be debited. Enter the amount in debit column.
Step 3: Credit Accounts: Enter the names of the accounts which is to be credited. They are indented about 1.5 cm. Enter the amount in credit column.
Step 4: Explanation: Write a brief explanation for the entry beginning at the left side of the “Particular” column on the line beneath the last credit item.

8. Example of a Journal Entry
Let’s say that on Feb 1, you sold your accounting service to your existing client for $180. Customer did not pay on the same date, but she paid on Feb 15 instead.
What are the journal entries?
Date Particulars PR Debit Credit
Feb 1 AR Service fee(Rev)
Sold tax return service to Mr. Smith
15 Bank AR
Received money from Mr. Smith Invoice 123

9. Notes about recording a Journal Entry
Year recorded at the top of column.
Month recorded only once with days noting business transactions.
Account titles are always capitalized.
Explanations are brief but tell ‘the story’. (What happened?)
Debit accounts are always recorded first.
Credit accounts are always indented.

10. Notes about recording a Journal Entry
7. The completed journal entry must balance.
(=> total debit amounts = total credit amounts)
8. Leave a blank line before next entry.