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Resources 9 Journals For Cash Transactions

This chapter covers the purpose and functions of journals in accounting, specifically focusing on Cash Receipts and Cash Payments Journals. It explains how journals serve as the original record of transactions, summarizing similar entries to minimize ledger details while providing easy reference to source documents. The chapter also outlines the types of journals and includes practical examples for preparing Cash Receipts and Payments Journals.

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0% found this document useful (0 votes)
11 views10 pages

Resources 9 Journals For Cash Transactions

This chapter covers the purpose and functions of journals in accounting, specifically focusing on Cash Receipts and Cash Payments Journals. It explains how journals serve as the original record of transactions, summarizing similar entries to minimize ledger details while providing easy reference to source documents. The chapter also outlines the types of journals and includes practical examples for preparing Cash Receipts and Payments Journals.

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Resource Booklet Introductory Accounting Unit 4 3.12204 9 Bandara, P. (2014). Introductory Accounting for Papua New: Guinea (5” ed.): Journals for Cash Transactions. (Ch. 6; pp. 129 — 136). Sri Lanka, Sara Publications. 10s 129 CHAP T Sie Journals for Cash Transactions Learninc Outcomes: On completion of this chapter, you should be able to: explain the purpose of various journals explain the functions of journals O_record entries in the Cash Receipts and Cash Payments Journals using source documents as well as given information Q ascertain totals of Cash Payments and Receipts Journals. 6.1 INTRODUCTION A journal is the record of original entry, which collates and summarises information from similar source documents. The journals are aiso known as books of first entry because transactions are recorded and summarised first in journals before making an entry in the ledger accounts. Inputs for journals ere extracted from source documents, Journals are then totalled on a regular basis and posting is made to the relevant ledger accounts. ——) ‘Spuree documents Journals I Ledger Fig 6.1: Accounting Process up to Ledger 130 Introductory Accounting for PNG Journals provice a summary of similar transactions, e.g. Credit Sales, Credit Purchases. Therefore, number of records that should be included in ledger accounts could be minimised, For instance, 50 credit sales transactions may occur in a business during a particular month. All these transactions are recorded in sales journal and total is posted to the sales account as one single entry. [f journal i$ not used, then these 50 transactions should be recorded in the sales account making the ledger account quite lengthy. On the other hand, journals provide more details as compared to ledger accounts, Details of those transactions could be obtained by referring to source documents on a future date, 6.2 FUNCTIONS OF JOURNALS 1. Journals act as an aid for posting to ledger by analysing the transactions into debit and credit elements . Journals provide a record of transactions in chronological order 3, They enable easy reference forward to the ledger and back to source documents They cut down unnecessary details in the ledger. 6.3 TYPES OF JOURNALS ‘There are two types of journals: 1. Special journals, and 2. General journal 6.4 SPECIAL JOURNALS Special Journals are those which maintain special type of transactions and events. They are: 1. Cash Receipts Journal 2. Cash Payments Journal 3. Sales Journal 4, Purchases Journal 5. Sales Returns and Allowances Journal 6. Purchases Returns and Altowances Journal. CASH RECEIPTS JOURNAL (SIMPLE FORMAT) Cash Receipts Journal is used to record all cash receipts by an entity. ‘The Cash Receipts and Cash Register Slip (CRS) are used to make entries in the Cash Receipts Journal on a daily basis. Cash Receipts Journal Folle”, |, Receipt | Diséount |. Bank No] “Allowed Fig. 6.2: Sample format of Cash Receipts Journal Chapter 6. Journals for Cash Transactions 131 Column Deseript Date Date of transaction Particulars ‘Title of corresponding account Folio Account number of corresponding ledger account. Further details will be discussed in Chapter 10 Receipt No. Receipt number or CRS. | Discount allowed Cash discount allowed to debtors Bank Amount received after discount if any Tes | cui ee |e Lf] | Cheque (ai Journals, es | eA Fig. 6.3: Accounting for Cash Receipts Mlustration 6.1 Using the following documents, prepare tle Cash Receipts Journal, Receipt Ressipt Receipt No, 108 No, 108 No, 110 30 Jen, 2008 30 Jan, 2008 31 Jan, 2008 31 Jon, 2008 | 200 1 | Received trom Smtth Received from Received from | 300 | | Por payment of Thomes tin 150} | account For peoment of For payment of ol) account secount 1950 | | x 1980 piseou K20 | | K1850.Discou— | | x 300 Disconn K 0 | Answer | Cash Recel rat I Das Parca ae as aa 2008 "ade dibior = Smt zi ise 3 980 517” Tae debior= Thomas i65 eo inde dcbior~ Bain iid) 5 366 a cael ECE ed ets : mo 132 Introductory Accounting for PNG Define journal 2, State three functions of journals 3*. Prepare the Cash Receipts Journal, using the documents given below. Cash Register Receipt Receipt Receipt Summary: No, 40 No. 4 No, 42 aCe Pere 2 March 2008 3 March 2008 4 March 2008 250 | | Received from Hla For || Received from PNG | | Received trom Seibt 350 || payment of account Bank For payment of 200 For payment of eccount } 250 1) i980 Discount K 20 Iaterest 270 Discount & 30 ose, K 200 | | 4*. Record the following receipts in the Cash Receipts Journal and total the journal at the cha of the month. Date Transaction Document Reference 2008 March 1 Cash received from trade debtor, Rapau K 1 800 | Discount allowed K. 100 0 5 Cash sales K 2 500 RR) 7 Cash received from Sapak K 1 400 | Discount allowed K 150 6 10 Cash received from Gabina K 1 200 64 12 Cash sales K 3 000 RR) 14 Interest received from Bank of Goroka K 200 65 | 25 ‘Additional capital from Kim — Owner K 5 000 6 | 31 Cash sales K 2.000 crr| 5. Prepare the Cash Receipts Journal using the documents given below. Receipt Receipt Receint Cash Register No. 143 No. 14d Summary 15 May 2008 16 May 2008 17 May 2008 Received from Received from Kay For |) Received from PNG 45 Supo For Payment — || payment of account ‘roders 33 of account For Commission 40 K 1270 Discount K 1980 Discount K 120 Ki 200 28 K 130 Ts Chapter 6. Journals for Cash Transactions 133 6.6 CASH PAYMENTS JOURNAL (SIMPLE FORMAT) Cash Payments Journal records all payments made by a business. As a cash control procedure, most of the businesses make all the payments by cheques. Therefore, the source document yet to record entries in the Cash Payments Journal is the Cheque Butt | Cash Payments Journal | Date | Particulars”, .-], Folio [Cheque |. - Discount © Bank) end No.’ | Received Fig, 6,4: Sample Cash Payments Journal Column Description Date Date of transaction Particulars Title of ledger account to be credited Ledger folio Account number of the ledger account. Further details will be discussed in Chapter 10, Discount received Discount deducted from gross amount j Bank Total value of each cheque is recorded in this column. { Paynes |_[cwave |S LJ cee oy Goes out ame tetas Fig. 6.5: Accounting for Cash Payments 134 Introductory Accounting for|PNG Mlustration 6.2 Using the source documents, prepare the Cash Payments Journal Cheque Butt 00756 00787 00788 fl Date: 11,2008 Date: 3.1.2008 Date: 3.1.2008 i To. Gabi ‘To. Konkong Security Service To. Pacific Traders i For: Payment of Account For: Sovity hares for can pctses | Discount K 20 i Balance Faq Tatanee 7330 Daan TTA] fh Deposit 7000 Deposit = [Deposit sao Sanco} 00 Balance | 7 Tanase | TH | ‘This chogue 680 his cheque | 200 Ti chenwe [COOH Danes 7320 JN [ater 70 Bane To20| |} "rarer NS “SEE TTTAEE ‘000760 Depowt 7 Depots = Tolance Tia Dakanes oH Tis cheque [0 This eau | PTO atance ie Balance 6 900 000759 Tatanee 706 Datines EQ ff kK Cosh Payments Journal | Date Folio Cheque eet Bank] . yay | Ae cived ~ tf 2008 Janet | Gabi OY Sestiy expenses "| Birchases Chapter 6. Journals for Cash Transactions 135 1*, Enter following details of Cheques Butts in the Cash Payments Journal for Kaukau Traders and total the journal, 018s ‘00186 000187 " 13,2008 Date:2.3.2008 Date: 33.2008 i ash “To, Pacific Real Estate Ltd “To, PNG Traders For: Woget er: Rent fr Math 2008 for: Payment of accom | ff Discount K 10 Balanes 7000 Balance 400 Balas 300) Deposit 7000 Deposit = Deposit 200 Balance 000 Balance 8400 Balance: 8 500) i This cheque 600 This cheque 100 This cheque uso | Balance 5400 Balance F300 Balance $350 | prec = ‘00188 Date: 43.2008 ‘To, Highlands Wholesale Stores For: Payment of account Diseount K.25 a EL Deposit 130 Balance 3300 This cheque 300 Balance #000 2, Record the following payment details in the simple Cash Payments Journal and total the ofa Date 2008 June 1 2 3 4 Transa Rent paid K 300 Purchases K 3 500 Pacific Traders ~ for payment of account K 780 Discount received K 20 Paid wages K 300 Goroka Traders ~ for payment of account K 660 Discount received K 40 Kaukau Traders ~ for payment of account K 230 Discount K 20 Cheque No. 000687 00988 00689 000670 000671 00472 136 Introductory Accounting for PNG 3. Enter the following details of Chéque Butts in the Cash Payments Journal for Umi Traders and total the journal 0088s 000886 000887 Date: 1.9.2008 Date: 2.9.2008, Date: 3.9.2008, To, Real State Lid. ‘To. Gordon Distributors To. National Traders For: Rent For: Payment of acount For: Payment of account Discount K 40 Discount K 30 Balance Balance 7700 Balance 7 000 Deposit Deposit = Deposit 3000) Balance Balance 7700 Balance 10 000 This cheque This cheque 700 This cheque 1000 Balance, Balance 7000 Balance 9-000 000888 Date: 3.9,2008, To. Cash For: Payment of wages Balance 9.000 Deposit 300 Balance 9300 This cheque | 1 500 Balance 7800

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