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General Journal NEW_copy

The document outlines the concept of books of original entry, which are used to record transactions before they are posted to the ledger, including various types such as purchase and sales day books, cash books, and the general journal. It details the process of recording transactions in the general journal, emphasizing the importance of analyzing accounts affected and applying debit and credit rules. Examples of transactions, including capital introduction, purchasing fixed assets on credit, and recording revenue, illustrate the application of double-entry accounting principles.

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Rochelle Jordan
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2 views

General Journal NEW_copy

The document outlines the concept of books of original entry, which are used to record transactions before they are posted to the ledger, including various types such as purchase and sales day books, cash books, and the general journal. It details the process of recording transactions in the general journal, emphasizing the importance of analyzing accounts affected and applying debit and credit rules. Examples of transactions, including capital introduction, purchasing fixed assets on credit, and recording revenue, illustrate the application of double-entry accounting principles.

Uploaded by

Rochelle Jordan
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
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Books of Original Entry

General Journal
Books of Original Entry

The subsidiary books are used in addition to the ledger. Transactions are first
entered in these books before being posted to the ledger. Different types of
transactions are entered in different books and, as a result the job of recording
transactions can be distributed and entries in the ledger reduced.
• The books of original entry are:
1. Purchase day book
2. Sales day book
3. Purchase returns/ Returns outward book
4. Sales returns/ Returns inwards book
5. Cash book
6. Petty cash book
7. General journal
General Journal

When business’s do not use the other subsidiary books the


general journal is used to record ALL transactions of the business.
The information is then posted to the General Ledger.
Recording Transaction in the General Journal

To record a transaction in the General Journal, the bookkeeper will go through the following steps,
analysing each transaction to determine which account is to be debited and which account is to be
credited.

1. Determine which items were affected by the transaction.

2. Assign an account name to each item

3. Determine whether the items affected are asset, liability, income, capital or expense items.

4. For each item, determine whether it was increased or decreased in value.

5. Apply the debit and credit rules to record transactions as follows.


General Journal
Date Details Debit Credit

Year
mm dd The name of the account to be debited xxx
The name of the account to be credited xxx
The narrative

• When preparing a journal entry, it is important to ensure that all accounts to be debited are
recorded before the names of accounts to be credited.

• The name of all credit accounts are indented. This assists in distinguishing between debit and
credit entries.

• The narrative is a brief description of the transaction which was recorded.


Double – Entry Rules
Debit Credit
Assets

Liabilities

Capital

Expenses

Revenues
Recording the Start of the Business
2020
Jan 1 Owner started business with $20,000 cash and $5,000 in the
bank
Accounts affected:
Capital
Cash
Asset Capital Bank

Increased Increased
Double – Entry Rules

Debit Credit
Assets

Liabilities

Capital
Date Details Debit Credit
Jan 1 Cash 20,000
Bank 5,000
Capital 25,000
To record the introduction of capital by
the owner
Recording the Purchasing of a Fixed Asset on
Credit
2021
Jan 3 Bought furniture on credit from Courts Ltd $3,000.

Asset Liability

Increased Increased
Double – Entry Rules
Debit Credit
Assets

Liabilities

Capital

Expenses

Revenues
Recording the Purchasing of a Fixed Asset on
Credit
2021
Jan 3 Bought furniture on credit from Courts Ltd $3,000.

Date Details Debit Credit


2021
Jan 3 Furniture 3,000
Courts Ltd 3,000
To record the purchase of furniture on credit
Recording the Sale of a Fixed Asset on Credit
2021
Jan 6 Sold equipment on credit to J. Searles $1,200.

Asset Asset – Accounts Receivable


Person who owes the
business

Decreased Increased
Double – Entry Rules
Debit Credit
Assets

Liabilities

Capital

Expenses

Revenues
Recording the Purchasing of a Fixed Asset on
Credit
2021
Jan6 Sold equipment on credit to J. Searles $1,200.

Date Details Debit Credit


2021
Jan 6 J. Searles 1,200
Equipment 1,200
To record the sale of equipment on credit
Recording the Payment of an Expense by
Cheque
Accounts affected:
Jan 14Paid insurance $400 by cheque Insurance expense
Bank

Expense Asset

Increased Decreased
Double – Entry Rules
Debit Credit
Assets

Liabilities

Capital

Expenses
Date Details Debit Credit
Jan 14 Insurance 400
Bank 400
To record the payment of insurance by cheque
Recording the Receipt of Revenue by Cheque
Jan 16 Rent received for premises sublet, by cheque $1,500
Accounts affected:
Rent received
Bank

Revenue Asset

Increased Increased
Double – Entry Rules
Debit Credit
Assets

Liabilities

Capital

Expenses

Revenues
Date Details Debit Credit
Jan 16 Bank 1,500
Rent received 1,500
To record rent received by cheque

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