1. Journalizing Transactions
Chapter 3
Journalizing Transactions

2. Journals, Source Documents, and Recording Entries in a Journal
GAAP (Generally Accepted Accounting Practice) (principles) is to make a more permanent record by recording transactions in a journal
A form for recording transactions in chronological order is called a journal
Recording transactions in a journal is called journalizing

3. Journals
The type of journal that is used is determined by nature of business and number of transactions
Five amt col.: General Debit, General Credit, Sales Credit, Cash Debit, Cash Credit
Page 57 - Journal

4. Special Amount Columns
A journal amount column headed with an account title is called a special amount column. -- Used for frequently occurring transactions
Most transactions involve receipt or payment of Cash
A large number of transactions involve receiving cash from Sales
Special amount columns are used for Sales Credit, Cash Debit and Cash Credit
Eliminates writing an account title in the Account Title Column

5. General Amount Columns
A journal amount column that is not headed with an account title is called a general amount column.
General Debit and General Credit

6. Benefits of a Journal
Accuracy -- Debit and credit parts of each transaction are recorded in one place
Transactions are recorded in chronological order -- easy to locate
Information for each transaction recorded in a journal is called an entry
The recording of debit and credit parts of a transaction is called double-entry accounting
Affects at least two accounts -- assures that debits equal credits

7. Source Documents
A business paper from which information is obtained for a journal entry is called a source document.
Proves that the transaction did occur
Accounting concept: Objective Evidence – a source document is prepared for every transaction
RULES
Transactions should be journalized only if it occurred
Amounts must be accurate and true
verify by comparing entry with source document.

8. Examples of Source Documents
PAGES 58-59
Check stub – describes information about the cash payment transaction
Checks – a business form ordering a bank to pay cash from a bank account.
All cash payments are made by check
Invoice – a form describing the goods or services sold, the quantity, and the price. -- Prenumbered
Sales Invoice – an invoice used as a source document for recording a sale on account
Also called sales ticket or sales slip

9. Examples of Source Documents
Receipts – a business form giving written acknowledgement for cash received.
When cash is received from other sources other than sales, prepare a receipt -- Prenumbered
Memorandum – a form on which a brief message is written describing a transactions
Used when no other source document is prepared or when additional explanation is needed, Prenumbered
Calculator Tape – total amount of cash received from sales is printed on electronic calculator -- daily sales
T12 – tape for twelfth day of the month --- page 75

10. Recording Transactions in a Five-Column Journal
Entry consists of 4 parts:
Date Debit 3. Credit 4. Source document
DATE
1st entry on journal page – must contain year, month, and day
all other entries – must contain day only
DEBIT
Debits to cash – use special amount column
Write amount
CREDIT
Credits to cash – use special amount column
Credits to Sales – use special amount column
All other credits -- Write title of account to be credited
SOURCE DOCUMENT
Write number in Doc. No. column
Document number – a cross reference from the journal to the source document

11. Proving and Ruling a Journal
After next to last line of journal page is used, columns are proved and ruled before totals are carried forward to next page.
Also at end of each month – prove and rule a journal

12. Proving and Ruling a Journal – Lesson 3-4
PROVING A JOURNAL
Verify that total debits on the page equal total credits
3 steps
add each of the amount columns
add the debit column totals, and then add the credit column totals
verify that the total debits and total credits are equal

13. Ruling a Journal Page
Rule a single line across all amount columns directly below the last entry
On next line, write the date
Write the words Carried Forward in the Account Title column
-- check mark in Post Ref column to show that nothing on this line needs to be posted
4. Write each column total below the single line
5. Rule double lines below the column totals across all amount columns

14. Starting a New Journal Page
Column totals from previous page are carried forward to a new page
Write page number at the top of journal
Write the date – year, month and day
Write the words Brought Forward in the Acct Title Col. -- check mark in Post Ref
Record the column totals

15. Completing a Journal At the End of the Month
Prove last page
-- debits equal credits
Prove cash
Cash on hand at beginning of month
plus total cash received during month (debit) + 15,600.00
Equals total = 15,600.00
less total cash paid during month (credit) ,980.00
Equal cash balance at the end of the month = 8,620.00
(this should equal checkbook balance on the next
unused check stub) = 8,620.00
3. Rule journal

16. Standard Accounting Practices
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