Journals, Source Documents,

1
Journals, Source Documents, Recording Entries
in a Journal

• Chapter Three

2
Chapter Introduction

• After taking chapter 2 test, list all new
  vocabulary words for chapter 3 and write out
  their definitions.
• Journal
• Journalizing
• Special Amount Columns
• General Amount Columns
• Entry
• Double-entry accounting

• Source document
• Check
• Invoice
• Sales invoice
• Receipt
• Memorandum
• Proving Cash

3
Journals and Journalizing

• Journal form for recording transactions in
  chronological order.
• Recording transaction in a journal is called
  journalizing.
• Journal is permanent record
• Fits the needs of the business
• What determines the kind of journal used?
• Nature of business
• Number of transactions
• Journalizing is done daily!

4
Five-Column Journal

• Five Amount Columns
• General Debit
• General Credit
• Sales Credit
• Cash Debit
• Cash Credit
• Special Amount Column a journal amount column
  headed with an account title.
• Used for frequently occurring transactions
• Eliminates writing an account title in the
  Account Title column and saves time
• Three Special Amount Columns
• Sales Credit
• Cash Debit
• Cash Credit

5
Five Column Journal

• General Amount Column a journal amount column
  that is not headed with an account title.
• General Debit
• General Credit
• Facts about the Journal
• Information recorded includes debit and credit
  parts of each transaction in one location.
• Data can be verified by comparing journal to
  transaction data.
• Transactions are recorded in chronological order.

6
Journalizing

• Entry information for each transaction recorded
  in a journal.
• Double-entry accounting recording of debit and
  credit parts of a transaction.
• Each transaction affects at least two accounts
• A debit and a credit are recorded
• Debits Credits

7
Source Documents

• Source Documents are business papers from which
  information is obtained for a journal entry.
• Each transaction is described by a source
  document that proves it occurred.
• Example Check stub for each cash payment
• Objective Evidence applied when a source
  document is prepared for each transaction.

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Five Source Documents

• Checks
• Sales Invoices
• Receipts
• Calculator Tapes
• Memorandums

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Source Documents

• Checks- A business form ordering a bank to pay
  cash from a bank account (Source document for
  cash payments)
• Sales Invoices (Source document for recording a
  sale on a account)
• Invoice form describing the goods or services
  sold, the quantity, and the price.

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Source Documents cont.

• Receipts written acknowledgement for cash
  received (Source document for cash received from
  sources other than sales)
• Example Received Cash and an Investment
• Calculator Tapes (Cash Sales)
• Memorandums a form for which a brief message is
  written describing a transaction. (Used when no
  other source document is prepared for a
  transaction or when an additional explanation is
  needed.

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Journal Entries

• A Journal entry consists of four parts
• Date
• Debit
• Credit
• Source Document
• Use T accounts to help you!

12
Journal Entry Examples

• Received Cash From Owner as an Investment,
  5,000.00. Receipt No. 1
• FYI Dollar and cent signs,
• decimals are not used when
• writing on ruled paper

13
Journal Entry Example

• August 3 -Paid Cash for Supplies, 275.00. Check
  No. 1
• Remember Writing Cash frequently could be time
  consuming- Special amount columns are used for
  these frequently used accounts

14
Review

1. In what order are transactions recorded in a
   journal?
2. Chronological
3. Why are source documents important?
4. Proves a transaction occurred
5. List the four parts of a journal entry.
6. Date
7. Debit
8. Credit
9. Source Document

15
Practice

• Working Together
• On Your Own
• Application Problem 3-1

16
Review

• Look under your chairs you may have a slip of
  paper
• Read Your Question
• Give the Answer
• Prize
• Go Over Application Problem 3-1

17
Quick Check (You can use your notes)

• Name at least 3 of the 5 source documents we have
  discussed
• Check, Sales Invoice, Receipt, Memo, Calculator
  Tape
• What is the difference between a general amount
  column and a special amount column
• A special amount column is headed with an account
  title. A general amount column is NOT
• How are transactions recorded in a journal?
• Chronological (by date)

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Section 3-2 Journalizing (PAGE 63)

• August 4th Paid Cash for Insurance, 1200.
  Check No. 2

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Bought Supplies on Account

• August 7 - Bought Supplies on Account from Supply
  Depot, 500. Memorandum No. 1

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Paid Cash on Account

• August 11 Paid Cash on Account to Supply Depot,
  300. Check No. 3

21
Practice

• Working Together
• On Your Own

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Journalizing Transaction that affect OE and
Receiving Cash on Account

• August 12 Received Cash from Sales, 295. Tape
  No. 12

23
Sold Service on Account

• August 12 Sold services on account to Oakdale
  School, 350. Sales Invoice No. 1

24
Paid Cash for an Expense

• August 12 Paid Cash for Rent, 300. Check No. 4

25
Received Cash on Account

• August 12 Received cash on account from Oakdale
  School, 200. Receipt No. 2

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Paid Cash to Owner for Personal Use

• August 12 Paid cash to owner for personal use,
  125. Check No. 6

27
Practice and Reviewing

• Section 3
• Working Together
• On Your Own
• Section 2-3
• Audit Your Understanding p. 66 72
• Homework
• Application Problems 3-2 and 3-3

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Review Quiz

1. In what order are transactions recorded in a
   journal?
2. What are the four parts of a journal entry?
3. Why are source documents important?
4. What are the three special account columns?
5. What columns are used to record Sold services on
   Account?

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Section 3-4 Proving and Ruling a Journal

• When all but the last line on a journal page is
  used, columns are proved and ruled.
• Total are carried forward to the next page
• Steps in Proving a Journal
• Add each amount column
• Add Debit column totals, Add Credit Column
  totals
• Verify that Total DebitsTotal Credit
• Journal page is PROVED
• If errors- must correct first

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Steps in Ruling a Journal Page

• You Must Use a STRAIGHT EDGE!
• Rule single line across all amount columns
  indicated that columns are to be totaled
• On the next line, write date
• Write Carried Forward in the Account Title
  column checkmark placed on post ref. column
• Write in column totals
• Rule double line below totals
• Indicates amounts are totals and
  debitcredits

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Starting a NEW JOURNAL Page

• Write page number at top
• Write date (year, month and day)
• Write Brought Forward check mark is placed in
  the post ref. column
• Record column totals from previous page

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Proving and Ruling at the End of the Month

• Rule single line to indicate columns will be
  added
• Write date
• Write the word Totals in the account title column
  check mark is NOT placed in the post ref.
• Write each column total
• Rule double line - debitscredits

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Proving Cash

• Determining that the amount of cash agrees with
  accounting records
• Add Cash at beginning and Cash Debit Column
• Subtract Cash paid out- Cash Credit column
• This equal cash balance at the end of the month
• Compare to checkbook balance next unused check
  stub.

34
Practice

• Section 3-4
• Working Together
• On Your Own
• Application 4
• Work on Application Problems 5

35
Review

• Quotes/ Brainteasers
• Audit Test
• Go over Homework

36
Standard Accounting Practice

• Procedures for error corrections, abbreviated
  words, signs and rulings.
• Popcorn reading
• Write on the board
• Students make a list

37
Practice Application

• Crossword Puzzle
• Applications Problems 6-6
• Homework 6-7

38
Review

• Catch Phrase
• Study Guide
• Review Game
• Audit Test
• Chapter Three Test