Cash Receipts Journal Cash Payments Journal Sales Journal Purchases Journal General Journal	Journal Tutorial In the last two chapters we analyzed business tranasctions into their debit and credit parts. After you decide which account to debit and which one to credit, it is time to record these transactions into a journal. This process is called journalizing. All business transctions should first be recorded in a journal. The journal provides a chronological record of these transactions. The recording of the debit and credit parts of each transaction is called double-entry accounting. The source documents, such as invoices, checks, receipts are used to decide the debit and credit parts that are recorded in a journal. Instead of recording all business transactions in one journal, specialized journals are used. They save time because more than one person can journalize at the same time. The number of journals depends on the type and nature of the business. Each journal is used for a separate kind of transaction. For example, 1. Purchases journal is used to record purchase of merchandise on account. 2. The cash receipts journal is for recording all receipts of cash from cash sales and received on account. 3. Cash payments journal is used to record all checks and withdrawls. 4. The sales journal is for charge sales only. 5. The general journal is used for all other types of entries that do not fit into the other four. At first this might seem a little confusing, but as we go thru the transactions, it will be easier to understand. There are five scroll boxes, each represent transactions that are recorded in a particular journal. Examine the transactions, then click on the links above for that journal to see how these transactions were journalized using Excel spreadsheets. The transactions are for Bromley's Formal Wear. The business transactions and journals represent transactions for the month of November. When deciding on which account is debited and which one is credited, we must use our chart of accounts. Do not just make up account titles. Look at the chart of accounts for Bromley's Formal Wear prior to completing these exercises. Now it is time to journalize your own company's business transactions. Decide on which month, November or December. Journalize all of your business transactions using the appropriate journal. You can clear the data from the worksheet, by selecting the cells that contain the data that your want of delete, then press DElete Key. All of the headings and formulas should remain intact. You may modify the spreadsheet jorunals before entering in your own company's information or your may choose to prepare manual journals. The Virtual Enterprise web site has good examples of these forms. Look under the "Accounting Manual". Save the files if using the spreadsheet versions and print out a copy of each journal for your instructor. If preparing manual journals, turn these in to your instructor.
Cash Receipts Transactions The Cash Receipts journal is a record of all cash received by a business. This includes cash received from sales and sales tax collected. The journal also records money received from charge sale customers. The general debit column is used to record for example, the sale of old office equipment, or other cash collected tht is not directly related to the product or services sold by the company. 1. Virtual Enterprise contract $132,246.61 2. Grand Opening guest checks totaled $125,000 plus sales tax $9,687.50 3. Received on account from Rob Jones $703.34 4. Received on account from David James $377.13 After all entries are made, the journal needs to be proved. That means that all debit totals should equal all credit totals. Total Sales, Total Sales Tax Payable and Accounts Receivable Credit and General Credit totals should equal Cash Debit total. If all debits do not equal credits, you should go back through your work to find your error. The journal has a couple of formulas that verify that the journal is in balance.	Cash Payments Transactions The cash payment journal is to record cash disbursements. It has 4 money columns: General Debit, Accounts Payable Debit Purchases Discount Credit and Cash Credit. The other columns are used to record the date, document number, account title and posting reference. If we look at our checkbook lesson, we will see that all this information has been compiled. Some of the transactions in the checkbook are checks written. Other withdrawls are paid electronically and are deducted from our account. The chart of accounts is necessary when using the format of this cash payments journal. In accounting, we work with the same number many times. if we enter the same number, again and again, there is a great probability that we will enter it incorrectly. The journal you will be looking at has you enter the cash credit amount, then key the the account number you want to debit. That debited amount is then extended into the proper column and totaled for you, thus reducing the chance of error. The last two entries involving the payroll are different. An account number is not entered. Each amount is entered manually. As in all journals, it must be in balance. That means that all debits must equal all credits. Two formulas have been entered at the bottom of the journal, that show if the journal is in balance. If you are not in balance, you cannot continue with posting these amounts to the general ledger. 1-Nov ck1101 $45,000.00 bought display cases and clothing racks 1-Nov ck1102 $5,300.00 - office equipment (Staples) 1-Nov $500.00 - office supplies (Staples) 1-Nov ck1103 $100,000.00 inventory 1-Nov inv1234 $4,000.00 Virtu Rent (Utility) 1-Nov inv442 $456.99 Virtu Gas (Utility) 1-Nov inv345 $2,121.00 VirtuElectric (Utility) 1-Nov inv6676 $255.00 VirtuPhone (Utility) 1-Nov inv9800 $1,200.00 VirtuInsurance (Prepaid Ins) 3-Nov $655.54 VE Loan Payment (Note Payable) $1508.00 VE Loan (Interest Expense) 3-Nov ck1104 $135.00 Office Supplies 3-Nov ck1105 $131.75 (Alterations ) 5-Nov inv8878 $250.00 VirtuPhone (Utility) 6-Nov chk1106 $25.00 Federal Express (Delivery) 6-Nov ck1107 $350.00 Joe's Plumbing (Repair) 7- Nov Ck 1108 $47.95 (Sales Returns) 9-Nov ck1109 $6,000.00 (Advertising) 10-Nov ck1110 $200.00 (Misc) 14-Nov ck1111 $327.50 (Alterations) 16-Nov ck1112 $5,000.00 (Advertising) 30-Nov ck1113 $55,702.99 (Salaries) 30-Nov ck1114 $18,769.52 (Franchise Tax board) 30-Nov ck1115 $29,427.72 (IRS) 30-Nov ck1115 $48,915.41 On November 2 there are two amounts that need to be explained. This transaction involves paying on the Note, the money you borowed from VE. The first amount, $655.54 is payment on the principal. The other amount, $1,508.00 is interest expense. Together the two add up $2,163.54 the amount listed in the checkbook The amount of $29,427.32 is to VirtuIRS was calculated as follows Federal Income Tax Withheld 16,011.41 FICA Employee's share 5,166.33 FICA Employer's share 5,166.33 Medicare Employee's share 1,208.30 Medicate Employer's share 1,208.30 FUTA 666.65 When preparing the entry in the cash payments journal, a code number were not used to extend the amounts. Each amount was keyed in under the appropriate heading. The tranasction for $18,799.52 to VirtuFranchiseTax was calculated as follows. State Income Tax Withheld $4,825.31 State Employment Training $83.33 Sales Tax Collected $10,640.96 SUTA $2,833.26 SDI $416.66
Charge Sales Transactions The Sales Journal is reserved for recording of charge sales. Cash sales and credit card sales are journalized in the Cash Receipts Journal. The charge sales that our company has so far are from orders placed on our web page. During a trade fair almost all of our sales will be charge sales. There is a lot more paperwork relating to charge sales verses cash sales. We need to keep track of the name of the customer, the amount of the sale, the sales tax, invoice number and the date. The charge sales we have so far are: 11-1 sales slip #1101 Jerome Stevens $1,616.25 accounts receivable debit. Sales amount $1,500. Sales tax $116.25 11-2 sales slip #1102 Kenny Sanchez $2,370.50 accounts receivable debit. Sales amount $2,200.00. Sales tax $170.50 11-3 sales slip #1103 Maryanne Thompson $4,310.00 accounts receivable debit. Sales amount $4,000.00. Sales tax $310.00 11-6 sales slip #1104 Rob Jones $703.34 accounts receivable debit. Sales amount $652.75. Sales tax $50.59 11-11 sales slip #1105 David James $377.13 accounts receivable debit. Sales amount $350.00. Sales tax $27.13 11-15 sales slip #1106 Charles Jameson $646.50 accounts receivable debit. Sales total $600.00. Sales tax $46.50 11-20 sales slip #1107 Janet Coy $8,620.00 accounts receivable debit. Sales total $8,000.00. Sales tax $620.00 Verify that the sales journal is in balance. The total of the sales and sales tax must equal the accounts receivable debit total. The formulas to calculate these totals appear in the cells just below row 76	Purchases on Account Transactions Remember that account name Purchases has a special meaning. We buy items from manufacturers, mark them up and then sell these items to our cusomers. If we purchase this merchandise for resale and pay cash, the transaction would go in the Cash Payments Journal. The Purchases Journal can also be used to buy other things on account. We need to keep track of the date that this merchandise was ordered, the vendor's name, the amount of the purchases debit and the accounts payable credit We ha one purchase on account for 60,000 to Oscar de la Renta. If you cliock on the Purchases Journal link you can see this transaction. Here ia an example of buying office equipment on account Date 11-1 Inv # 1102 Account Debited Staples Post Ref AP Credit $8,975.95 General Debit $8,975.95 The Post Ref columns will be explained in the next lesson
General Journal The general journal is the simplest of all journals. It has only two money columns, date, description and post reference columns. This journal is used to record transactions that are not normally journalized in one of the other four. Payroll entries, adjusting and closing entries, which will be explained later are journalized here. Other entries like the note payable, investments by owners, etc. are other types of transactions that are recorded in this journal. 1. Record Business loan $150,800. Debit Cash and Credit Notes Payable 2. Record the $85,000 worth of common stock purchased by managers. Debit Cash and Credit Common Stock 3. Payroll entry 1 The information for this entry comes from your payroll register. The first entry is for the salary expense for all employees. The credit to cash represent the net pay for all employees. The debit to salaries represents the gross pay. The other credits are the deductions from employee paychecks. 4. Payroll entry 2 This entry is to record the employer's tax liablity. Make sure that this journal is in balance. Scroll down to below row 75 to see the debit and credit totals.	Chart of Accounts Bromley's Formal Wear Chart of Accounts ASSETS (1) 111 Cash 112 Accounts Receivable 113 Furniture and Fixtures 114 Accumulated Depreciations Furniture 115 Office Supplies 116 Other Assets 117 Office Equipment 118 Accumulated Depreciation Office Equipment 119 Prepaid Insurance 120 Merchandise Inventory LIABILITIES (2) 211 Notes Payable 212 Accounts Payable 213 Workers' Comp Payable 214 Federal Income Tax Payable 215 FICA Tax Payable 216 Medicare 217 Federal Unemployment Tax Payable 218 State Unemployment Tax Payable 219 Sales Tax Payable 220 SDI Tax Payable 221 State Income Tax Payable 222 State Employment Training STOCKHOLDERS' EQUITY (3) 311 Common Stock 312 Retained Earnings REVENUE (4) 411 Sales 412 Sales Returns and Allowances 413 Other Income COST OF MERCHANDISE (5) 511 Purchases 512 Purchase Returns and Allowances EXPENSES (6) 611 Salary Expense 612 Rent Expense 613 Repairs Expense 614 Advertising Expense 615 Supplies Expense 616 Depreciation Expense 617 Insurance Expense 618 Miscellaneous Expense 619 Payroll Taxes Expense 620 Legal and Accounting Expense 621 Utilities Expense 622 Bad Debts Expense 623 Interest Expense 624 Delivery Expense
1. Recording the debit and credit part of a business transaction is called? Posting Double Entry Accounting Proving the ledger	2. All business transactions should first be recorded in? Journal Ledger Chart of Accounts
3. The kind of journals described in this lesson are? Combination Journals Specialized Journals Progressive Journals	4. A purchases journal is used to? record all cash payments record all cash receipts record purchases of merchandise on account