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CHAPTER 6

CHAPTER 6. The Journal and Source Documents. The Journal . A journal is a book in which the accounting entries for all transactions are first recorded, before they are recorded in the ledger accounts. The Two-Column General Journal.

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CHAPTER 6

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  1. CHAPTER 6 The Journal and Source Documents

  2. The Journal A journal is a book in which the accounting entries for all transactions are first recorded, before they are recorded in the ledger accounts

  3. The Two-Column General Journal The simplest form of journal is the two-column general journal. One side is a debit amount and the other is a credit amount. There is also columns for date, particulars and posting reference. Example on page 158

  4. Features of a General Journal Page number Entry balance Blank line Compound entry Account Title Brief explanation

  5. Journalizing This is the process of recording accounting entries in the journal. The journal is known as the book of original entries because each balanced accounting entry is recorded there first. Transactions occur Transactions are recorded in a journal in order of date Transactions are recorded in a journal in order of date

  6. Journalizing in the Two-Columns General Journal Recording the Data The Year - Do not repeat it for each entry The Month - Do not repeat it for each entry. Enter a new month at the point where it occurs The Year – The date is repeated no matter how many transactions occur on any given day.

  7. Steps in Recording a Journal Entry Four Steps: Enter the day in the date column Enter the name of the accounts to be debited at the left hand side Enter the name of the accounts to be credited at the left hand side. They are indented Write a brief explanation for the entry beginning at the left side of the particular column on the line beneath the last credit item

  8. The Opening Entry This is the journal entry that starts the books off, or “opens” them. Page 160

  9. Source Documents A source document is a business paper that shows the nature of a transaction and provides all of the information needed to account for it properly.

  10. Cash Sales Slip A cash sales slip is a business form showing the details of a transaction in which goods or services are sold to a customer for cash. Journal Entry Dr. Cr. Bank $35.90 Sales $35.90

  11. Sales Invoice A sales invoice is a business form showing the details of a transaction in which goods or services are sold on account. Page 166

  12. Journal Entry for a Sales Invoice Dr Cr A/R – S. & s. Boatworks $835.70 Sales $835.70

  13. Point of Sale Summaries A point of sale (POS) terminal is a computerized sales register that allows a business and its customers to exchange funds electronically using debit or credit cards. At the end of the business day, the accounting clerk will use the POS terminal to print at least two source documents

  14. Transaction Log The other common POS summary is a report called a transaction log. Is document generated by a point of sale terminal that contains detailed information about each transaction. Customer’s name and card number.

  15. Journal Entry for POS Summaries It is important for you to realize that credit and debit card transactions are treated as cash receipt from the business’s point of view. Dr Cr Bank $734.18 Sales $734.18

  16. Purchase Invoice A purchase invoice is a business form representing a purchase of goods or service on account.

  17. Journal Entries for Purchases Invoices Dr Cr Equipment Repairs $241.50 A/P – General Engineering $241.50

  18. Cheque Copies A cheque copy is a document supporting the accounting entry for a payment by cheque

  19. Journal entry for a Cheque Copy Dr Cr A/P – Sterling Spars $1802.90 Bank $1802.90

  20. Cash Receipts Daily Summary This is a business paper that lists the money coming in from customers. Remittance advice This is a form accompanying the cheque explaining the payment

  21. Journal Entry for a Cash Receipts Daily Summary Dr Cr Bank $2142.24 A/R – A. Baldwin $375.00 A/R – F. Perri $965.52 A/R – Pier – Pier 10 Marina $801.72

  22. Bank Advices A bank debit advice is a bank document information the business if a decrease made in the business’s bank account

  23. Bank Credit Advice A bank credit advice is a bank document information the business of an increase is made in the business’s bank account

  24. Journal entry for a bank debit Advice Dr Cr Bank Charges and Interest $113.50 Bank $113.50

  25. Journal entry for a bank credit Advice Dr Cr Bank $110.50 Interest $110.50

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