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Unit 5 The General Journal Journalizing the recording process!

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Presentation on theme: "Unit 5 The General Journal Journalizing the recording process!"— Presentation transcript:

1 Unit 5 The General Journal Journalizing the recording process!

2 THE RECORDING PROCESS 1. Analyse each transaction.
JOURNAL LEDGER JOURNAL 1. Analyse each transaction. 2. Enter transaction in a journal. 3. Transfer journal information to ledger accounts.

3 THE JOURNAL Transactions are initially recorded in chronological order in a journal before being transferred to the accounts. Every company has a general journal which contains 1. spaces for dates, 2. account titles and explanations, 3. references, and 4. two money columns.

4 WHY THE JOURNAL The journal makes several significant contributions to the recording process: It discloses, in one place, the complete effect of a transaction. It provides a chronological record of transactions. It helps to prevent or locate errors because the debit and credit amounts for each entry can be readily compared.

5 JOURNALIZING Entering transaction data in the journal is known as journalizing. Separate journal entries are made for each transaction. A complete entry consists of 1. the date of the transaction, 2. the accounts and amounts to be debited & credited, and 3. a brief explanation of the transaction.

6 JOURNAL FORM Page: _____

7 TECHNIQUE OF JOURNALIZING
The date of the transaction is entered in the date column. GENERAL JOURNAL J1 Date Account Titles and Explanation Ref. Debit Credit 2002 Sept. 1 Cash 15,000 M. Doucet, Capital Invested cash in business. 1 Equipment 7,000 Purchased equipment for cash.

8 TECHNIQUE OF JOURNALIZING
The debit account title is entered at the extreme left margin of the Account Titles and Explanation column. The credit account title is indented on the next line. GENERAL JOURNAL J1 Date Account Titles and Explanation Ref. Debit Credit 2002 Sept. 1 Cash 15,000 M. Doucet, Capital Invested cash in business. 1 Equipment 7,000 Purchased equipment for cash.

9 TECHNIQUE OF JOURNALIZING
The amounts for the debits are recorded in the Debit column and the amounts for the credits are recorded in the Credit column. GENERAL JOURNAL J1 Date Account Titles and Explanation Ref. Debit Credit 2002 Sept. 1 Cash 15,000 M. Doucet, Capital Invested cash in business. 1 Equipment 7,000 Purchased equipment for cash.

10 TECHNIQUE OF JOURNALIZING
A brief explanation of the transaction is given. GENERAL JOURNAL J1 Date Account Titles and Explanation Ref. Debit Credit 2002 Sept. 1 Cash 15,000 M. Doucet, Capital Invested cash in business. 1 Equipment 7,000 Purchased equipment for cash.

11 TECHNIQUE OF JOURNALIZING
A space is left between journal entries. The blank space separates individual journal entries and makes the journal easier to read. GENERAL JOURNAL J1 Date Account Titles and Explanation Ref. Debit Credit 2002 Sept. 1 Cash 15,000 M. Doucet, Capital Invested cash in business. 1 Equipment 7,000 Purchased equipment for cash.

12 TECHNIQUE OF JOURNALIZING
The column entitled Ref. is left blank at the time the journal entry is made and is used later when the journal entries are transferred to the ledger accounts. GENERAL JOURNAL J1 Date Account Titles and Explanation Ref. Debit Credit 2002 Sept. 1 Cash 15,000 M. Doucet, Capital Invested cash in business. 1 Equipment 7,000 Purchased equipment for cash.

13 SIMPLE AND COMPOUND JOURNAL ENTRIES
If an entry involves only two accounts, one debit and one credit, it is considered a simple entry. GENERAL JOURNAL J1 Date Account Titles and Explanation Ref. Debit Credit 2002 Oct. 2 Delivery Equipment 14,000 Cash Purchased truck for cash.

14 COMPOUND JOURNAL ENTRY
When three or more accounts are required in one journal entry, the entry is referred to as a compound entry. GENERAL JOURNAL J1 Date Account Titles and Explanation Ref. Debit Credit 2002 Oct. 2 Delivery Equipment 34,000 Cash 8,000 Note Payable 26,000 Purchased truck for cash and note payable. 1 2 3

15 COMPOUND JOURNAL ENTRY
This is the wrong format; all debits must be listed before the credits are listed. GENERAL JOURNAL J1 Date Account Titles and Explanation Ref. Debit Credit 2002 Oct. 2 Cash 8,000 Delivery Equipment 34,000 Note Payable 26,000 Purchased truck for cash and note payable.

16 The Two-Column General Journal

17 SUMMARY OF JOURNAL RECORDING
Step 1 : Record the Date The year and month are shown on each journal page. Step 2: Record the Debit The debit is shown first Step 3: Record the Credit The credit is indented Step 4: Record the Explanation The explanation includes on invoice or cheque number A journal presents a chronological history of all the company's transactions.

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19 The Opening Entry Every accounting entry is recorded first in the journal. This is done even for the first accounting entry, the one that sets up the financial position from a balance sheet. The journal entry that starts the books off, or "opens" them, is known as the OPENING ENTRY.

20 RECEIVED CASH FROM OWNER AS AN INVESTMENT
August 1. Received cash from owner as an investment, $5, Receipt No. 1. 2 1 3 1. Write the date in the Date column. 2. Write the title of the account debited. Write the debit amount. 3. Write the title of the account credited. Write the credit amount.

21 PAID CASH FOR SUPPLIES August 3. Paid cash for supplies, $ Check No. 1. 2 1 3 1. Write the date in the Date column. 2. Write the title of the account debited. Write the debit amount. 3. Write the title of the account credited. Write the credit amount.

22 PAID CASH FOR INSURANCE
August 4. Paid cash for insurance, $1, Check No. 2. 1 2 3 1. Write the date in the Date column. 2. Write the title of the account debited. Write the debit amount. 3. Write the title of the account credited. Write the credit amount.

23 BOUGHT SUPPLIES ON ACCOUNT
August 7. Bought supplies on account from Supply Depot, $ Memorandum No. 1. 2 1 3 1. Write the date in the Date column. 2. Write the title of the account debited. Write the debit amount. 3. Write the title of the account credited. Write the credit amount.

24 PAID CASH ON ACCOUNT August 11. Paid cash on account to Supply Depot, $ Check No. 3. 2 1 3 1. Write the date in the Date column. 2. Write the title of the account debited. Write the debit amount. 3. Write the title of the account credited. Write the credit amount.

25 RECEIVED CASH FROM SALES
August 12. Received cash from sales, $ Tape No. 12. 2 1 3 1. Write the date in the Date column. 2. Write the title of the account debited. Write the debit amount. 3. Write the title of the account credited. Write the credit amount.

26 SOLD SERVICES ON ACCOUNT
August 12. Sold services on account to Oakdale School, $ Sales Invoice No. 1. 2 1 3 1. Write the date in the Date column. 2. Write the title of the account debited. Write the debit amount. 3. Write the title of the account credited. Write the credit amount.

27 PAID CASH FOR AN EXPENSE
August 12. Paid cash for rent, $ Check No. 4. 2 1 3 1. Write the date in the Date column. 2. Write the title of the account debited. Write the debit amount. 3. Write the title of the account credited. Write the credit amount.

28 RECEIVED CASH ON ACCOUNT
August 18. Received cash on account from Oakdale School, $ Receipt No. 2. 2 1 3 1. Write the date in the Date column. 2. Write the title of the account debited. Write the debit amount. 3. Write the title of the account credited. Write the credit amount.

29 PAID CASH TO OWNER FOR PERSONAL USE
August 18. Paid cash to owner for personal use, $ Check No. 6. 2 1 3 1. Write the date in the Date column. 2. Write the title of the account debited. Write the debit amount. 3. Write the title of the account credited. Write the credit amount.


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