Presentation on theme: "Journals, Source Documents, & Recording Entries in a Journal"— Presentation transcript:
1 Journals, Source Documents, & Recording Entries in a Journal Chapter Three
2 Chapter IntroductionAfter taking chapter 2 test, list all new vocabulary words for chapter 3 and write out their definitions.JournalJournalizingSpecial Amount ColumnsGeneral Amount ColumnsEntryDouble-entry accountingSource documentCheckInvoiceSales invoiceReceiptMemorandumProving Cash
3 Journals and Journalizing Journal: form for recording transactions in chronological order.Recording transaction in a journal is called journalizing.Journal is permanent recordFits the needs of the businessWhat determines the kind of journal used?Nature of businessNumber of transactionsJournalizing is done daily!
4 Five-Column Journal Five Amount Columns General Debit General Credit Sales CreditCash DebitCash CreditSpecial Amount Column: a journal amount column headed with an account title.Used for frequently occurring transactionsEliminates writing an account title in the Account Title column and saves timeThree Special Amount Columns:
5 Five Column JournalGeneral Amount Column: a journal amount column that is not headed with an account title.General DebitGeneral CreditFacts about the JournalInformation 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 JournalizingEntry: 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 accountsA debit and a credit are recordedDebits = Credits
7 Source DocumentsSource 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 paymentObjective Evidence: applied when a source document is prepared for each transaction.
9 Source DocumentsChecks- 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 InvestmentCalculator 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 CreditSource DocumentUse T accounts to help you!
12 Journal Entry Examples Received Cash From Owner as an Investment, $5, Receipt No. 1FYI – Dollar and cent signs,decimals are not used whenwriting on ruled paper
13 Journal Entry ExampleAugust 3 -Paid Cash for Supplies, $ Check No. 1Remember: 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? ChronologicalWhy are source documents important?Proves a transaction occurredList the four parts of a journal entry.DateDebitCreditSource Document
15 PracticeWorking TogetherOn Your OwnApplication Problem 3-1
16 Review Look under your chairs – you may have a slip of paper Read Your QuestionGive the AnswerPrizeGo Over Application Problem 3-1
17 Quick Check (You can use your notes) Name at least 3 of the 5 source documents we have discussedCheck, Sales Invoice, Receipt, Memo, Calculator TapeWhat is the difference between a general amount column and a special amount columnA special amount column is headed with an account title. A general amount column is NOTHow 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 AccountAugust 11 – Paid Cash on Account to Supply Depot, $300. Check No. 3
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 3Working TogetherOn Your OwnSection 2-3Audit Your Understanding p. 66 & 72HomeworkApplication 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 pageSteps in Proving a Journal:Add each amount columnAdd Debit column totals, Add Credit Column totalsVerify that Total Debits=Total CreditJournal page is PROVEDIf 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 totaledOn the next line, write dateWrite Carried Forward in the Account Title column – checkmark placed on post ref. columnWrite in column totalsRule double line below totalsIndicates amounts are totals and debit=credits
31 Starting a NEW JOURNAL Page Write page number at topWrite date (year, month and day)Write Brought Forward – check mark is placed in the post ref. columnRecord column totals from previous page
32 Proving and Ruling at the End of the Month Rule single line to indicate columns will be addedWrite dateWrite the word Totals in the account title column – check mark is NOT placed in the post ref.Write each column totalRule double line - debits=credits
33 Proving CashDetermining that the amount of cash agrees with accounting records…Add Cash at beginning and Cash Debit ColumnSubtract Cash paid out- Cash Credit columnThis equal cash balance at the end of the monthCompare to checkbook balance – next unused check stub.
34 Practice Section 3-4 Work on Application Problems 5 Working Together On Your OwnApplication 4Work on Application Problems 5
35 ReviewQuotes/ BrainteasersAudit TestGo over Homework
36 Standard Accounting Practice Procedures for error corrections, abbreviated words, signs and rulings.Popcorn readingWrite on the boardStudents make a list
37 Practice & Application Crossword PuzzleApplications Problems 6-6Homework 6-7
38 Review Catch Phrase Study Guide Review Game Audit Test Chapter Three Test