Lecture 5 - Journal Entries PDF

17/10/2014
UGBS 205: Fundamentals of

Accounting Methods
RECORDING TRANSACTIONS IN JOURNALS
Financial
statements
Components
Elements
Users
Chapters 11, 13, 14, 15, 16, 17, 18, and 20 of Wood & Sangster
2
Prepared by A. Essel-Anderson
Sep 2014
17/10/2014
Learning objectives
Distinguish between special journals and general journal
Record transactions in relevant special journals sales
journal, purchases journal, sales returns, purchases returns
journal, cash receipt journal, and cash disbursement
journal.
Use the general journal to pass posting entries.
Sep 2014
Overview of Journals
General journal
Types of special journals
Sep 2014
17/10/2014
Journals keep complete chronological record

of transactions processed by the entity
Journals provide means for posting
transactions to ledger accounts
Special journals
Overview of
Journals
Importance of
journals
Classes of journals
Recurring, high-volume
transactions
General journal
Nonrecurring, infrequent,
dissimilar transactions
5
Inventory bought
on account
Purchases journal
Inventory bought
for cash
Cash
disbursement
journal (or
cashbook)
Return of
inventory
previously bought
on account
Purchases returns
journal
Refund for return

of inventory
previous bought
for cash
Cash receipt
journal (or
cashbook)
Sep 2014
Special Journals
for purchase of
goods
Purchases journal
Purchases returns
journal
Sep 2014
17/10/2014
Inventory sold on
account
Sales journal
Inventory sold for

cash
Cash receipts
journal (or
cashbook)
Return of
inventory
previously sold on
account
Sales returns
journal
Refund for return

of inventory
previous sold for
cash
Cash
disbursement
journal (or
cashbook)
Special
Journals for
sale of goods
Sales journal
Sales returns journal
Sep 2014
Special Journals
for cash
transactions
The firm may keep a
cashbook to record
both cash receipts and
payments
Or
Keep a separate cash
receipt journal to
record cash receipts
and cash
disbursement journal
to record cash
payments
Sep 2014
17/10/2014
The General Journal
Any transaction that cannot

be recorded in any of the
special journals is recorded
in General Journal
Sep 2014
Journal for petty cash disbursement

To keep the main cashbook free from small disbursements, a
petty cashbook may be kept to record petty disbursements.
Petty cash disbursements

Postage
Cleaning agents
Travelling
Food
Souvenirs for guests
10
Petty cashbook
Sep 2014
17/10/2014
Illustration 5.1: Kofis Retail

Business
Required:
11
Date
Record transactions for the month of

January 2014 in the relevant journals
Description of Transaction
Jan 01
Kofi started business with GH500,000 paid

into business bank account.
Jan 04
Hired a shop from Naa Adjeley for GH400

monthly rent; and paid five years rent in
advance by cheque.
Withdrew GH10,000 cash from bank for
future cash disbursements.
Furnished the shop with shelves, counter,
desk and chairs, and ceiling fun for a total of
GH2,000. Payments were made by cash on
the spot.
GH500 in signage expense incurred and
paid in cash.
Bought motor vehicle for business use,
GH50,000 by cheque.
Kofi withdrew GH2,000 cash from business
bank account for personal use.
Jan 06
Jan 06
Jan 07
Jan 07
Jan 07
12
Sep 2014
Illustration 5.1:
Kofis Retail
Business
Transactions for the
first month of
operations: January
2014
Which of the
transactions should be
recorded through a
special journal?
Which of the
recorded through the
general journal?
Sep 2014
17/10/2014
Date
Jan 08 Bought on account goods worth
GH30,000 less 2% trade discount from
DML Ltd.
Jan 09 Bought on account goods worth
GHS28,000 from BenAns Trading.
Jan 10 Paid vehicle registration and roadworthy
certification fees, GH550, by cash.
Jan 11 Paid cash GH150 to SIC Insurance as
premium for 1-year insurance cover on the
vehicle.
Jan 13 Employed a shop attendant on monthly
gross salary of GH600.
Jan 14 Issued cheque for cash purchases from Jon
Mark, GHS35,000.
Jan 16 Kofi withdrew goods worth GH1,000
personal use.
Jan 17 Returned to DML Ltd one-third of the
goods bought on Jan 08.
13
Date
Jan 18
Jan 20
Jan 21
Jan 22
Jan 25
Jan 27
Jan 28
Jan 29
Jan 30
14
Sold goods worth GH25,000 to Obaa Yaa
on account. 3% VAT was charged.
Returned goods worth GHS1,000 to Jon
Mark and cash refund was received.
Cash sales, GH29,000.
Sold goods worth GH17,000 to Nana Addo
on account. 3% VAT was charged.
Obaa Yaa returned goods worth GH2,000.
Issued cheque to DML Ltd in settlement of
amount on account less 2% cash discount.
Paid half of the amount payable to BenAns
Trading by cheque.
Paid the shop attendant net salary for
January by cheque. Employee income tax,
5.5% employee social security fund (SSF),
and 13% employer SSF contribution apply.
Received utility bills totalling GH800.
Illustrative Case:
Kofis Trading
Business
first month of
operations: January
2014
Which of the
recorded through a
special journal?
Which of the
general journal?
Sep 2014
Illustrative Case:
Kofis Trading
Business
first month of
operations: January
2014
Which of the
recorded through a
special journal?
Which of the
general journal?
Sep 2014
17/10/2014
Recording Kofis purchase transactions
All Credit purchase of

inventory are recorded
in Purchases Journal
All cash purchases of
in Cash Disbursement
Journal
15
Any credit purchase of

property, plant, and
equipment would go to
the General Journal
Any cash purchase of
property, plant and
equipment would go to
the Cash Disbursement
Journal
Sep 2014
Kofis Purchases Journal

Purchases Journal
Currency: GH
Date
Supplier
2014
Invoice
Number
Terms
Sheet 1
Debit
Credit
Purchases /Inventory Trade Payables
8-Jan DML Ltd

9-Jan BenAns Trading
31-Jan
Total credit purchases is

posted at the end of the
month to the Purchases A/c in
the General Ledger
29,400
28,000
29,400
28,000
57,400
57,400
Each credit purchase is

posted immediately to
individual Supplier's A/c in
the Purchases Sub-ledger
See Cash Disbursement Journal for the cash inventory purchases

16
Sep 2014
17/10/2014
Recording Kofis inventory returns to

suppliers
Inventory bought may be

returned to the supplier for
several reasons, including:
Inventory not meeting quality

specifications
Units supplied in excess of
units ordered
Credit note (credit memo)

from the supplier serves as
source document
17
Returns of inventory
previously bought on credit
go to the Purchases Returns
(Return Outwards) Journal
previous bought for cash:
Cash Receipt Journal if refund
is received immediately
General Journal if refund is
not received immediately
No entry in journals when

returned products are
exchanged for same/similar
products of the same value
Sep 2014
Kofis Purchases Returns Journal
See Cash Receipt Journal for return of inventory for immediate refund
18
Sep 2014
17/10/2014
Recording Kofis sales transactions
All credit sales of

in Sales Journal
All cash sales of
in Cash Receipt Journal
19
Any disposal of
property, plant, or
equipment on credit
would go to the General
Journal
Any disposal of
property, plant, or
equipment for
immediate cash
settlement would go the
Cash Receipt Journal
Sep 2014
Kofis Sales Journal

Sales Journal
Currency: GH
Date
Customer
2014
Invoice
Number
Terms
Debit
Trade Receivable
Sheet 1
Credit
VAT Payable
Credit
Sales
18-Jan Obaa Yaa

22-Jan Nana Addo
25,750
17,510
25,000
17,000
750
510
31-Jan
43,260
42,000
1,260
Each credit sale is posted

immidiately to the
indivual customer's a/c in
the Sales Subledger
Total credit sales is posted

at the end of the month to
the Sales a/c in the
General Ledger
Total VAT charged is posted

at the end of the month to
the VAT Payable a/c in the
General Ledger
See Cash Receipt Journal for the cash inventory sales

20
Sep 2014
10
17/10/2014
Recording customers inventory returns to

Kofi
Customers may return

inventory to the entity for
some reasons:
Inventory not meeting quality

specifications
Units supplied in excess of
units ordered
Credit note (credit memo)

sent to the customer serves
as source document
21
previously sold on credit go
to the Sales Returns (Return
Inwards) Journal
previous sold for cash:
Cash Disbursement Journal if
refund is paid immediately
General Journal if refund is
not paid immediately
No entry in journals when

returned products are
exchanged for same/similar
products of the same value
Sep 2014
Kofis Sales Returns Journal
22
Sep 2014
11
17/10/2014
Recording payroll related transactions
A large firm would

typically have a large
volume of payroll related
transactions, which may
clog the General Journal.
Therefore, large firms
usually maintain a Payroll
Journal to record
payroll transactions.
23
For a smaller firm,

payroll journal entries
may be made in the
General Journal as
volume of payroll
transactions is not too
large to clog the General
Journal.
Judging that Kofis Retail
Business is a small entity,
lets use the General
Journal to pass the payroll
journal entries.
Sep 2014
Computations relating to shop attendants

salary
24
Sep 2014
12
17/10/2014
Entries for shop attendants salary in the

General Journal
Entries for Employers
Basic Salary
Entries for Employers

contribution to SSF
Debit Salaries Expense a/c

and Credit SSF Payable a/c
with employees mandatory
5.5% contribution to SSF
and Credit PAYE Payable
a/c with employees income
tax withheld
and Credit Salaries Payable
a/c with net salary
25
Debit Employer SSF

Expense and Credit SSF
Payable a/c with
employers mandatory
13% contribution to SSF
Sep 2014
Entries for shop attendants salary in the

General Journal cont.
26
Sep 2014
13
17/10/2014
Recording Kofis cash transactions
All transactions involving

receipt of cash go to the
Cash Receipt Journal
27
All transactions involving

payment of cash go the
cash Disbursement
(Payment) Journal
Sep 2014
Kofis Cash Receipt Journal
28
Sep 2014
14
17/10/2014
Kofis Cash Disbursement Journal
29
Sep 2014
When a cashbook is kept
Kofi could have kept a Cashbook in place of the separate

Cash Receipt and Cash Disbursement Journals.
The cashbook keeps record of both transactions that
resulted in cash receipts and those that resulted in cash
payments.
If Kofi kept a cashbook, his cashbook would be as
presented on the next slide.
30
Sep 2014
15
17/10/2014
31
Sep 2014
Kofis General
Journal
Kofis General Journal
could be used for the
nonrecurring or
dissimilar transactions
that are not
individually too large
in volume:
Drawings of goods
Payroll for shop
attendant
Accrued expenses
Think about
others
32
Sep 2014
16
17/10/2014
Using the General Journal for

Posting Entries
Posting from the purchases journal
Posting from the sales journal
Posting from the purchases returns journal
Posting from sales returns journal
Posting from the cash receipt and disbursement journals
33
Immediate
Postings
relating to
Purchase of
Inventory
34
Sep 2014
Credit
purchases
Purchases
returns
Payments
Discount
received
Cash refunds
Sep 2014
17
17/10/2014
Posting from Purchases Journal to

Purchases Sub-ledger during the month
35
During the
month,
purchases are
posted to the
respective
suppliers a/c
in the
Purchases
sub-ledger
The check
mark
indicates that
the purchase
transactions
have been
posted to the
suppliers
account
Sep 2014
Purchases Subledger
Suppliers
accounts with
purchases posted
Supplies account
with purchases and
purchases returns
posted
Completed suppliers
account, including
payments posted
from Cash
Disbursement
Journal
36
Sep 2014
18
17/10/2014
Posting from Purchases Returns Journal to

37
During the
month,
purchases
returns are
posted to the
respective
suppliers a/c in
the Purchases
sub-ledger
The check
mark indicates
that the return
has been
posted to
DMLs account
Sep 2014
Purchases Subledger
Suppliers accounts
with purchases
posted
Supplies
account, updated
with purchases
returns
Completed
suppliers account
38
Sep 2014
19
17/10/2014
Posting from Cash Disbursement Journal to

39
During the
month,
payments to
suppliers are
posted to the
suppliers a/c in
the Purchases
sub-ledger
The check
mark indicates
that the
transactions
have been
posted to the
suppliers a/c in
the Purchases
sub-ledger
Sep 2014
Purchases Subledger
Suppliers
accounts with
purchases posted
Supplies
account,
updated with
purchases
returns
Completed
suppliers
account
40
Sep 2014
20
17/10/2014
End-of-month
Postings
relating to
Purchase of
Inventory
Total credit
purchases
Total purchases
returns
Total payments
Total discount
received
Total cash refunds
Preparation of controlling account in the General Ledger

for all suppliers a/c in the Purchases Sub-ledger
41
Sep 2014
Posting of purchases transactions to the

General Ledger at the end of the month
Post total credit purchases from the Purchases Journal to

the Purchases a/c in the General Ledger
Post total cash purchases from the Cash Disbursement
Journal to the Purchases a/c in the General Ledger
Post total credit purchases returns from the Purchases
Returns Journal to the Purchases Returns (or Return
Outwards) a/c in the General Ledger
Post total cash returns from the Cash Receipt Journal to
the Purchases Returns a/c in the General Ledger
Post total payments to suppliers from the Cash
Disbursement Journal to Bank a/c in the General Ledger
42
Sep 2014
21
17/10/2014
Final Postings
for Purchases
Credit purchases
Purchases returns
Cash payments
Discount received
43
Sep 2014
General Ledger
(Extract)
Purchases a/c
Purchases
Returns a/c
44
Sep 2014
22
17/10/2014
General
Ledger
(Extract)
Discount
Received a/c
45
Sep 2014
The Trade Payables (or Creditors) Control

a/c
At the end of the month, a controlling account is opened in

the General Ledger to reconcile entries made in suppliers
accounts in the Purchases Sub-ledger with the journal entries
The following are debited to the Trade Payables Control a/c
(note they are the items usually debited to the individual
suppliers a/c in the Purchases Sub-ledger):
Payments to suppliers
Discount received
Purchases returns
The following are credited to the Trade Payables Control a/c:
46
Balance brought forward from the end of previous month

Credit purchases
Sep 2014
23
17/10/2014
Kofis Trade Payables (or Creditors) Control

a/c
47
Immediate
Postings
relating to
Sale of
Inventory
48
Sep 2014
Credit sales
Sales returns
Collections
Discount
allowed
Cash refunds
Sep 2014
24
17/10/2014
Posting from Sales Journal to the Sales

Subsidiary Ledger during the month
49
During
the month,
sales are
posted to
the
respective
customers
a/c in the
Sales subledger
Sep 2014
Sales
Sub-ledger
Individual
customers
account with
credit sales, VAT,
and sales returns
posted.
50
Sep 2014
25
17/10/2014
End-of-month
Postings
relating to
Sale of
Inventory
Total credit sales

Total sales
returns
Total collections
Total discount
allowed
Total cash
refunds
Preparation of controlling account in the General Ledger

for all customers a/c in the Sales Sub-ledger
51
Sep 2014
Posting of purchases transactions to the

General Ledger at the end of the month
Post total credit sales from the Sales Journal to the Sales a/c in
the General Ledger
Post total cash sales from the Cash Receipt Journal to the
Sales a/c in the General Ledger
Post total credit sales returns from the Sales Returns Journal
to the Sales Returns (or Return Inwards) a/c in the General
Ledger
Post total cash refunds (in respect of cash sales returns) from
the Cash Disbursement Journal to the Sales Returns a/c in the
General Ledger
Post total collections from customers from the Cash Receipt
Journal to Bank/Cash a/c in the General Ledger
Post total VAT from the journals to the VAT Payable a/c in the
General Ledger
52
Sep 2014
26
17/10/2014
Posting from Sales Journal to General

Ledger at the end of the month
53
Total
credit
sales is
posted to
Sales a/c
while total
sales
returns is
posted to
Sales
Returns
a/c in
General
ledger
Sep 2014
General Ledger
(Extract)
Sales a/c
Sales Returns a/c
54
Sep 2014
27
17/10/2014
General Ledger
(Extract)
VAT Payable a/c
55
Sep 2014
The Trade Receivables (or Debtors) Control

a/c
At the end of the month, a controlling account is opened in

the General Ledger to reconcile all entries made in all
customers accounts in the Purchases Sub-ledger with the
journal entries
The following are debited to the Trade Receivables Control
a/c:
Balance b/f
Credit sales
The following are credited to the Trade Receivables Control

a/c:
56
Sales returns
Collections from customers
Discount allowed
Sep 2014
28
17/10/2014
Kofis Trade Receivables (or Debtors) Control

a/c
57
Sep 2014
29

Lecture 5 - Journal Entries PDF

Загружено:

Сведения о документе

Исходное описание:

Оригинальное название

Авторское право

Доступные форматы

Поделиться этим документом

Поделиться или встроить документ

Параметры публикации

Этот документ был вам полезен?

Это неприемлемый материал?

Авторское право:

Доступные форматы

Lecture 5 - Journal Entries PDF

Загружено:

Авторское право:

Доступные форматы

17/10/2014

UGBS 205: Fundamentals of

RECORDING TRANSACTIONS IN JOURNALS

Journals keep complete chronological record

Refund for return

Inventory sold for

Refund for return

The General Journal

Any transaction that cannot

Journal for petty cash disbursement

Petty cash disbursements

Illustration 5.1: Kofis Retail

Record transactions for the month of

Kofi started business with GH500,000 paid

Hired a shop from Naa Adjeley for GH400

Recording Kofis purchase transactions

All Credit purchase of

Any credit purchase of

Kofis Purchases Journal

8-Jan DML Ltd

Total credit purchases is

Each credit purchase is

See Cash Disbursement Journal for the cash inventory purchases

Recording Kofis inventory returns to

Inventory bought may be

Inventory not meeting quality

Credit note (credit memo)

No entry in journals when

Kofis Purchases Returns Journal

Recording Kofis sales transactions

All credit sales of

Kofis Sales Journal

18-Jan Obaa Yaa

Each credit sale is posted

Total credit sales is posted

Total VAT charged is posted

See Cash Receipt Journal for the cash inventory sales

Recording customers inventory returns to

Customers may return

Inventory not meeting quality

Credit note (credit memo)

No entry in journals when

Kofis Sales Returns Journal

Recording payroll related transactions

A large firm would

For a smaller firm,

Computations relating to shop attendants

Entries for shop attendants salary in the

Entries for Employers

Debit Salaries Expense a/c

Debit Employer SSF

Entries for shop attendants salary in the

Recording Kofis cash transactions

All transactions involving

All transactions involving

Kofis Cash Receipt Journal

Kofis Cash Disbursement Journal

When a cashbook is kept

Kofi could have kept a Cashbook in place of the separate

Using the General Journal for

Posting from Purchases Journal to

Posting from Purchases Returns Journal to