SOURCE DOCUMENTS AND SPECIAL JOURNALS AND LEDGERS

Training Objectives:
At the end of the training, you should be able to do the following:
 Classify source documents
 Journalize transactions using the special journals and general journal.
 Post transactions (including post-closing trial balance from previous period) in the special ledger and general
ledger.
 Prepare trial balance
 Prepare adjusting entries
 Prepare Worksheet
 Prepare trial balance
 Prepare financial statements
 Prepare closing entries
 Prepare post-closing trial balance
 Interpret financial statements
Source Documents
All business transactions that are taken up in the accounting records should be supported by appropriate source
documents. It is necessary that the reported information can be easily traced back to the supporting evidences. Therefore, it
is important that all source documents are properly prepared, compiled and controlled.
All documents must contain the following information before the transaction can be recorded:
 Date
 Document and number
 Name and address of the business firm
 Name of the other party involved in the transaction (maybe the payee- payment of an account, payor- collection of
an account, customer/client, supplier, creditor.
 Amounts in words – P824, 5000.50 – Eight Hundred Twenty Four Thousand Five Hundred & 50/100.
 Amounts in figures- must be written in peso sign ₱ and two zeroes (00) or a dash (-) should be indicated as
centavos if the amount is a centavo less.
 Signature of the person who prepared and/or approved the business transactions- must be the authorized person
like general manager, department supervisor, or the owner.
 Signature of the other party involved in the transaction, if necessary.
Examples:
1. Official Receipt
This is a document which gives evidence to a transaction involving the receipt of cash. The documents gives
information on the amount of cash received, the person or party from whom cash was received, the date of receipt
and the reason of such receipt.

2. Cash Voucher
This is a document which gives evidence to a transaction involving the receipt of cash. This document gives
information as to the name and address of the payee, the date of payment, the amount paid, and explanation to
such payment.

3. Petty Cash Voucher

This is used to evidence payment made out of the petty cash fund. The petty cash fund is a sum of money set up to
settle expenses involving small amount such as jeepney or taxi fares for messengers, gasoline and oil for company
delivery vans, supplies and others. The fund is usually in the custody of a trusted employee or cashier of the
company.

4. Checks
This is a written order to bank (drawee) by a depositor (drawer) to pay the amount specified from the checking
account to the person named in the check (payee). This is prepared whenever payment is to be made from cash in
bank.
 5. Statement of Account
A bill presented to a client or a customer by a creditor requesting payment of service rendered or goods sold on
account. It may also represent a bill sent by utility, telecommunications, and credit card companies to inform
customers of the amount due to them for services.

6. Promissory note
Is a written promise made by a maker (debtor) promising to pay the payee (creditor) or a certain sum in money at a
fixed or determinable future time.

7. Sales Invoice/ Purchase Invoice

After a sale has taken place, the seller issues a business form called the invoice. The invoice shows information
about the seller and the buyer, terms of sale, list of articles sold, their unit price and the total amount due including
the Value-Added-Tax (VAT) if applicable. The invoice serves as the evidence of the sale transactions that has taken
place. From the standpoint of then seller, the invoice is a sales invoice. The same document from the point of view
of the buyer is called the purchase invoice.

8. Bank deposit slip

When money is deposited with the bank, the bank deposit slip is filled up showing the date, account number, name
of the depositor, nature of the deposit (cash or check) and amount.
The following are selected business transactions of a servicing firm with the source documents used.
Transactions Source Documents
The owner invested cash in the business. Official Receipt by the business to the owner.
Borrowed money from a bank payable in 2 years. Executed Promissory note, official receipt issued by the business
a promissory note in favor of the bank.
Purchased tables and chairs for cash Supplier’s sales invoice, cash voucher and official receipt
issued by the seller
Paid rent for office Cash voucher and official receipt issued by the lessor.
Purchased additional tables and chairs on account from Supplier’s sales invoice
Balingit Furniture.
Paid business licenses and taxes Registration papers, cash vouchers, and official receipt
issued by the government
Received cash from services offered Official receipt issued by the business to the customer
Paid employees’ salaries Cash Voucher, Time Record, Payroll Sheet
Sent check to Balingit Furniture to apply on account Cash Voucher, and official receipt issued by the supplier
Paid water and electricity bill Bill from the utility companies and official receipts issued by
the utility companies.
Purchased office and school supplies- 50% down, balance Supplier’s sales invoice, cash voucher and official receipt
on account from Trader Inc. issued by the seller for the down payment.
Rendered tutorial services to customers on account Statement of account
Withdrew cash for personal use Cash voucher
Collected from customers to apply on account Official receipt by the business to the customers
Paid Trader Inc. Cash voucher and official receipt by creditor
70% of supplies purchased has been used. Inventory count sheet

To sum up Journals
Special Journals- these are journals of original entry other than general journal that are designed for recording specific types
of transactions of a similar nature. Most entities use the following special journals:
Journal Specific Transactions Recorded Posting Abbreviation
Sales Journal Sales of merchandise on accounts SJ
Cash Receipts Journal Receipts of cash CRJ
Purchase journal Credit purchase of merchandise and PJ
other items
Cash Disbursements Journal Payments of cash CD
General Journal Entries that do not fit in the other GJ
journals
Sample:
Sales Journals
Date Invoice Number Account Debited Post Ref Accounts Receivable Debit/ Sales Credit
2015 June 1 001 Abc Company P20, 000.00
5 002 Def Company 10, 000.00
12 003 Ghi Company 100, 000.00
22 004 Jkl Company 40, 000.00
29 005 Mno Company 30, 000.00
30 006 Pqr Company 50, 000.00
250, 000.00

120/410 (This is the acct. number)

Accounts Receivable Subsidiary Ledger

Accounts Receivable – Abc Company
Balance
Date Particulars PR Debit Credit
Debit Credit
06/01/2015 Credit Sales SJ 20, 000.00 20, 000.00

Accounts Receivable – Def Company

Balance
Date Particulars PR Debit Credit
Debit Credit
06/05/2015 Credit Sales SJ 10, 000.00 10, 000.00

Accounts Receivable – Ghi Company

Balance
Date Particulars PR Debit Credit
Debit Credit
06/12/2015 Credit Sales SJ 1 100, 000.00 100, 000.00

Accounts Receivable – Jkl Company

Balance
Date Particulars PR Debit Credit
Debit Credit
06/22/2015 Credit Sales SJ 1 40, 000.00 40, 000.00

Accounts Receivable – Mno Company

Balance
Date Particulars PR Debit Credit
Debit Credit
06/29/2015 Credit Sales SJ 1 30, 000.00 30, 000.00

Accounts Receivable – Pqr Company

Balance
Date Particulars PR Debit Credit
Debit Credit
06/05/2015 Credit Sales SJ 1 50, 000.00 50, 000.00

General Ledger
Accounts Receivable Account No. 120
Balance
Date Particulars PR Debit Credit
Debit Credit
06/30/2015 Credit Sales SJ 1 250, 000.00 250, 000.00

Sales Account No. 410

Balance
Date Particulars PR Debit Credit
Debit Credit
06/30/2015 Credit Sales SJ 1 250, 000.00 250, 000.00
Purchase Journal
Merchandising business frequently purchase merchandise and supplies. Such purchases are usually made on account. The
purchase journal is designed to account for purchases of merchandise, supplies and other assets on account. In contrast,
cash purchases are recorded in the cash disbursements/payments journal.
Sample:
Credits Debits
Invoice Acct. P Other Accounts
Date Accounts Office Store
No. Credited R Purchases Acct.
Payable Supplies Supplies PR Amount
Title
2015
June 2 001 A Sup. / P70, 000.00 P70, 000.00
9 002 B Sup. / 190, 000.00 190, 000.00
Office 120,
14 003 C Sup. / 120, 000.00 190
Eqpt. 000.00
18 004 D Sup. / 140, 000.00 140, 000.00
25 005 E Sup. / 40, 000.00 40, 000.00
30 006 F Sup. / 30, 000.00 10, 000.00 20, 000.00
P400, P20, P120,
P590, 000.00 P50, 000.00
000.00 000.00 000.00
210 510 160 170

Accounts Payable Subsidiary Ledgers

Accounts Payable- A Supplier
Balance
Date Particulars PR Debit Credit
Debit Credit
06/02/2015 Purchases PJ 1 70, 000.00 P70, 000.00

Accounts Payable- B Supplier

Balance
Date Particulars PR Debit Credit
Debit Credit
06/09/2015 Purchases PJ 1 190, 000.00 P190, 000.00

Accounts Payable- C Supplier

Balance
Date Particulars PR Debit Credit
Debit Credit
06/14/2015 Office Equipment PJ 1 120, 000.00 P120, 000.00

Accounts Payable- D Supplier

Balance
Date Particulars PR Debit Credit
Debit Credit
06/18/2015 Purchases PJ 1 140, 000.00 P140, 000.00

Accounts Payable- E Supplier

Balance
Date Particulars PR Debit Credit
Debit Credit
06/25/2015 Office Supplies PJ 1 P40, 000.00 P40, 000.00

Accounts Payable- F Supplier

Balance
Date Particulars PR Debit Credit
Debit Credit
06/30/2015 Supplies PJ 1 30, 000.00 P30, 000.00
General Ledgers
Accounts Payable Account Number: 210
Balance
Date Particulars PR Debit Credit
Debit Credit
06/30/2015 Payables PJ 1 590, 000.00 P590, 000.00

Purchases Account Number: 510

Balance
Date Particulars PR Debit Credit
Debit Credit
06/30/2015 Credit purchases PJ 1 400, 000.00 P400, 000.00

Office Supplies Account Number: 160

Balance
Date Particulars PR Debit Credit
Debit Credit
06/30/2015 On account PJ 1 50, 000.00 50, 000.00

Store Supplies Account Number: 170

Balance
Date Particulars PR Debit Credit
Debit Credit
06/30/2015 On account PJ 1 20, 000.00 20, 000.00

Office Equipment Account Number: 190

Balance
Date Particulars PR Debit Credit
Debit Credit
06/14/2015 On account PJ 1 120, 000.00 120, 000.00

Recording Other Related Purchases Transactions

1) Purchase Returns and Allowances
Purchase returns and allowances granted by suppliers are properly recorded in the General Journal as debit to
Accounts Payable and Credit to purchase returns and allowances. Cash refund from suppliers for returns of
merchandise for cash are recorded in the cash receipts journal.

2) Purchases on Account with a down payment

If a purchase transaction involves a down payment with the balance payable at a later date, the entire purchase
transaction will be recorded in the purchase journal as a purchase. The down payment is recorded in the cash
payments journal as debit to accounts payable. If a “cash purchases” column is used in both purchase and cash
payments journal, then the amount of down payment is indicated in such column.

3) Purchases on account with a note

If a purchase transaction involves the issuance of a promissory note to a supplier, the entire purchase transaction is
recorded in the purchase journal as a credit to purchase, i.e. Notes Payable account is credited and Purchases is
debited. A column for notes payable may be added in the Purchase journal if such is frequently issued to suppliers.
But if promissory notes are not frequently issued, then the credit purchase is still recorded in the purchase journal
as credit to Accounts Payable. Simultaneously, an entry is made in the General Journal by debiting accounts
payable and crediting notes payable account.
Cash Receipts Journal
As the name implies, cash receipts journal is a book where all cash inflows, irrespective of the source or nature, are
recorded. Some examples of transactions that are entered in this book are:
 Cash investments of the proprietor
 Cash from cash customers
 Collections from customers to apply on open accounts
 Proceeds from borrowings from bans, financial institutions, or other third parties.
 Collections of income from non-operating sources
 Proceeds from the sale of investments and other assets
  Collections of loans from customers, employees, or other third parties
Examples of Cash Receipts Transactions
May 1 H. Mina invested P20, 000.00 in a mini-grocery business.
5 Sold various grocery items for P1, 200.00 cash
8 Collected P500 from G. Javier, less 2% discount.
13 Sold various grocery items for P1, 400.00 cash.
16 Collected P750.00 from P. Castro.
19 Sold various grocery items for P1, 000.00 cash
20 sold some equipment not used in business for P500 cash. The book value of the equipment was P500.00
24 Signed a note at the bank for loan of P5, 000.00
26 sold various grocery items for P1, 600.00 cash
28 Collected P600.00 from P. Castro

The cash receipts journal has two debit columns: Cash and Sales Discounts- and three credit columns- Sundry, Accounts
Receivable and Sales. The Debit columns are:
a) Cash
Each entry must have an amount in this column because each transaction must be a receipt of cash.

b) Sales Discounts
This is in the event that collections from anything previously offered are discounted.
The credit columns are the following:
a. Sundry
This column is used for the credit portion of any entry that is neither cash collection from accounts receivable nor a
cash sale. The name of the account to be credited is indicated in the Account Credited Column. For example,
transactions May 1, 20 and 24 involved credits to accounts other that Accounts Receivables or Sales. These
individual posting should be done daily (or weekly if there are few of them). If a company finds that it is consistently
crediting account in the Sundry Accounts column, it may be appropriate to add another credit column to the cash
receipts journal.

b. Accounts Receivable
This column is used to record collections from account customers. The customer’s name is written in the space
entitled Accounts Credited so that the payment can be entered in his or her account in the accounts receivable
subsidiary ledger. The postings to the individual accounts receivable accounts are usually done daily so that the
customer’s account balance will be known in case of an injury.

c. Sales
This column is used to record all cash sales during the month. Retail firms that normally use cash registers would
make an entry at the end of each day for the total sales from each cash register for that day. The debit, of course, is
in the cash debit column.
Recording other Related Cash Receipts Transactions
 Collection of accounts within the discount period with VAT
If the amount due from a credit customer is collected in full and a discount was deducted from the gross invoice
amount, then the recording of the sales discount results in an adjustment in the amount of the output tax. For
example, assume that the sale to G. Javier on May 5 is with VAT. This account was collected in full in May 8, which
falls within the discount period. The entries in the sales journal and cash receipts journal are as follows:
Sales Journal
Date Invoice No. Sold To Terms PR Accounts Receivable (DR) Sales (CR) Output Tax
2/ 10,
May 5 722 G. Javier / P500.00 P446.43 53.57
n/30

Cash Receipts Journal

Account Credit Debit
Date O.R No. PR
Credited Sundry Accounts Receivable Sales Output Tax Sales Discounts Cash
May 722 G. Javier / P500.00 P1.20 P10.00 P488.50
 5
 Collection of a promissory note with interest
Two accounts are entered in the Accounts Credited Column: the first line for Notes Receivable, and the second line
for interest income. There will also be two entries in the Sundry column: the first line for the principal amount of the
note, and the second line for the amount of interest earned. The total principal and interest is extended under the
Cash debit column, second line. For example, a P10, 000.00 60-day, 12% note was collected on maturity date, then
the entry on the cash receipt journal will be:
Cash Receipts Journal
Credit Debit
Account P
Date O.R No. Accounts Sales Sales
Credited R Sundry Output Tax Cash
Receivable Discounts
Notes
May Receivable P10, 000.00
151 / P500.00
31 Interest
Income 200.00 P10, 200.00

Cash Payments Journal

The cash payments journal (CPJ) is a book where all cash outflows, irrespective of the nature or purpose, are recorded.
This is also called, cash disbursements journal. Some examples of transactions that are entered in this book are:
 Payments of expenses
 Payments to suppliers and other trade creditors
 Cash withdrawals of the owner
 Payments of matured loans and other obligations
 Payments for acquired investments (long terms assets) and other assets (short term assets)
 Loans granted to customers, employees, and other parties.
The source documents of the entries in this journal are the cash vouchers (or check voucher if checks are used as
payment), supplier’s invoice and bills, and checks issued. The debit column of the journal are anything that business paid.
The credit column are cash and purchase discounts.
Sample of Cash Payment Journal
Debit Credit
Date C.V.
Account Debited PR Accounts Purchases Purchase
(May) No. Sundry Cash
Payable Discounts
2 101 Cash Purchase P400.00 P400.00
6 102 Advertising 612 P200.00 200.00
8 103 Rent 631 250.00 250.00
11 104 J. Celso / P2,500.00 P50.00 2,450.00
16 105 Salaries 611 600.00 600.00
17 106 M. Ferrer / 300.00 6.00 294.00
Prepaid 480.00
24 107 119 480.00
Insurance
27 108 D. Sison / 3,200.00 64.00 3,316.00
Office 400.00
30 109 144 400.00
Equipment
Store 500.00
146 500.00
Equipment
31 110 Land 141 5,000.00 5,000.00
TOTALS P7,430.00 P6,000.00 P400.00 P120.00 P13,710.00
(/) (212) (511) (512) (111)