Journals, Source Documents, & Recording Entries in a

Journal

Chapter Three

Chapter IntroductionAfter 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

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!

Five-Column JournalFive 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

Five Column JournalGeneral 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.

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

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.

Five Source Documents

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

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.

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.

Journal Entries

A Journal entry consists of four parts:

• Date• Debit• Credit• Source Document

Use T accounts to help you!

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

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

Review

1. In what order are transactions recorded in a journal?1. Chronological

2. Why are source documents important?1. Proves a transaction occurred

3. List the four parts of a journal entry.1. Date2. Debit3. Credit4. Source Document

Practice

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

Review

Look under your chairs – you may have a slip of paper

1. Read Your Question2. Give the Answer3. Prize

Go Over Application Problem 3-1

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)

Section 3-2: Journalizing (PAGE 63)August 4th – Paid Cash for

Insurance, $1200. Check No. 2

Bought Supplies on Account

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

Paid Cash on Account

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

Practice

Working TogetherOn Your Own

Journalizing Transaction that affect OE and Receiving Cash on AccountAugust 12 – Received Cash from

Sales, $295. Tape No. 12

Sold Service on Account

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

Paid Cash for an Expense

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

Received Cash on Account

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

Paid Cash to Owner for Personal Use

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

Practice and Reviewing

Section 3 • Working Together• On Your OwnSection 2-3• Audit Your Understanding p.

66 & 72

HomeworkApplication Problems 3-2 and 3-

3

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?

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:1. Add each amount column2. Add Debit column totals, Add Credit

Column totals3. Verify that Total Debits=Total Credit

• Journal page is PROVED• If errors- must correct first

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 debit=credits

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

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 -

debits=credits

Proving CashDetermining that the amount of cash

agrees with accounting records…1. Add Cash at beginning and Cash

Debit Column2. Subtract Cash paid out- Cash Credit

column3. This equal cash balance at the end

of the month4. Compare to checkbook balance –

next unused check stub.

Practice

• Section 3-4– Working Together– On Your Own– Application 4

• Work on Application Problems 5

Review

• Quotes/ Brainteasers• Audit Test• Go over Homework

Standard Accounting Practice

Procedures for error corrections, abbreviated words, signs and rulings.

• Popcorn reading• Write on the board• Students make a list

Practice & Application

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

Review

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