General and Special Accounting Journals

The sales journal is used to record sales on account (meaning sales on credit or credit sale). Selling on credit always requires a debit to Accounts Receivable and a credit to Sales. Because every credit sales transaction is recorded in the same way, recording all of those transactions in one place simplifies the accounting process. Note there is a single column for both the debit to Accounts Receivable and the credit to Sales, although we need to post to both Accounts Receivable and Sales at the end of each month. There is also a single column for the debit to Cost of Goods Sold and the credit to Merchandise Inventory, though again, we need to post to both of those. However, most firms enter those transactions in the general journal, along with other transactions that do not fit the description of the specific types of transactions contained in the four special journals.

The DR (debit) Other column would be handled a little differently as you need to look to the account column to find out where these individual amounts should be posted. In this case, we would post a $200 debit to merchandise inventory and a $300 debit to utility expense. Under the periodic inventory method, the July 6 shipping costs would go to a Transportation In account and the July 25 discount would go to Purchases Discounts.

  1. Each special journal is handled by a particular person, who will become familiar with the work assigned to them.
  2. By only recording credit purchases in this journal, accountants and bookkeepers can use this as a record of all the credit purchases during a period.
  3. Likewise, external users want this data (balance sheet, income statement, and statement of cash flows) to make decisions such as whether or not to extend credit to Gearhead.
  4. At Finance Strategists, we partner with financial experts to ensure the accuracy of our financial content.
  5. Entering transactions in the general journal and posting them to the correct general ledger accounts is time consuming.
  6. Altogether, the three individual accounts owe the company $2,775, which is the amount shown in the Accounts Receivable control account.

To manage purchase requests across multiple branches, you can use HashMicro’s purchasing software. A purchase journal is a record that makes it easier for accountants to record all types of purchases, such as purchases of goods or non-goods on credit. In this case, the types of purchase transactions include the trade goods purchase, equipment purchase, and other assets on credit.

In each special journal, all transactions are totaled at the end of the month, and these totals are posted to the general ledger. In addition, instead of one person entering all of the transactions in all of the journals, companies often assign a given special journal’s entries to one person. The relationship between the special journals, the general journal, and the general ledger can be seen in (Figure). The relationship between the special journals, the general journal, and the general ledger can be seen in Figure 7.8.

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Definition of a Special Journal

One benefit of using special journals is that one person can work with this journal while someone else works with a different special journal. Accountants using QuickBooks and other accounting systems may not have to perform this step, because in these systems the subsidiary ledger updates the general ledger automatically. However, a dishonest person might manipulate accounting records by recording a smaller amount of cash receipts in the control account than is recorded on the subsidiary ledger cards. The ethical accountant must be vigilant to ensure that the ledgers remain balanced and that proper internal controls are in place to ensure the soundness of the accounting system.

In the preceding example, if Baker Co. paid the $1,450 owed, there would be a debit to Cash for $1,450 and a credit to Accounts Receivable. A notation would be made in the reference column to indicate the payment had been posted to Baker Co.’s accounts receivable subsidiary ledger. After Baker Co.’s payment, the cash receipts journal would appear as in Figure 7.21. After Baker Co.’s payment, the cash receipts journal would appear as in (Figure).

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Purchase Journal

The name and page of the journal from which the ledger entry came is recorded in the folio number column. (Figure)Match the special journal you would use to record the following transactions. (Figure)Sandren & Co. purchased inventory on credit from Acto Supply Co. for $4,000. What other questions can be answered through the analysis of information gathered by the accounting information system? Is there nonfinancial information to extract from the accounting system?

General accounting journals

Incidental findings, regionally significant work such as research on an endemic disease, and reports on unusual clinical cases may be especially well suited to specialized journals. Choosing the right journal for your research can accelerate the publication of special journals your manuscript. In particular, you need to review a journal’s scope and publication history to determine the best fit. We follow strict ethical journalism practices, which includes presenting unbiased information and citing reliable, attributed resources.

Find the balance in each account in the accounts payable subsidiary ledger that follows. Adopting means recording business transactions can be entrusted to several employees, similar to the division of labor that increases the efficiency of bookkeepers or accountants. Some computer systems, such as payroll systems, also generate transactions that are recorded in one or more journals, but without paper source documents. First, enter these transactions manually by creating the relevant journals and subsidiary ledgers. While an accrual-based business will have cash journals, a cash-based business won’t have a sales or purchases journal as a cash-based business only recognizes transactions when cash changes hands.

At the end of the accounting period, each column total is posted to the general ledger account listed at the top of the column, and the account number is placed in parentheses below the total. Entries in the Other column are posted individually to the general ledger accounts affected, and the account numbers are placed in the cash disbursements journal’s reference column. A capital Xis placed below the Other column to indicate that the column total cannot be posted to a general ledger account. Accounts receivable payments are posted daily to the individual subsidiary ledger accounts, and customer account numbers (or check marks if the customer accounts are not numbered) are placed in the cash receipts journal’s reference column.

Each general journal is made up of daily entries which are summarized at the end of the month to post them in special journals. The ledger accounts where these postings are recorded differ for various types of special journals. Transactions recorded in special journals are subject to pre-transaction authorization. Examples of special journals are the cash receipts journal, cash disbursements journal, payroll journal, purchases journal, and sales journal. Instead of having just one general journal, companies group transactions of the same kind together and record them in special journals rather than in the general journal. This makes it easier and more efficient to find a specific type of transaction and speeds up the process of posting these transactions.

Savings in Bookkeeping Expenses

When accountants used a paper system, they had to write the same number in multiple places and thus could make a mistake. Now that most businesses use digital technology, the step of posting to journals is performed by the accounting software. The transactions themselves end up on transaction files rather than in paper journals, but companies still print or make available on the screen something that closely resembles the journals. If a company had many transactions, that meant many journal entries to be recorded in the general journal.