BIT 163
INTRODUCTION TO ACCOUNTING
CHAPTER THREE
Books of original entry and ledgers
Books of original entry: Are use to record all the
transaction for the first timea. Journalb. Cash Book
Books of original entry and ledgers JOURNAL There are two type of Journal a. General Journal b. Special Journali. Purchase Journal-use to record purchase of
goods on creditii. Sales Journal-use to record sale of goods on
creditiii. Return Outwards Journal-use to record goods
returned to the creditorsiv. Return Inwards Journal-use to record goods
returned by the debtors
JOURNALGeneral Journal-use to record the transactions that cannot recorded in special
journal.-some of the main uses of journal are listed below:The purchase and sale of fixed assets on creditThe correction of errorsWriting off bad debtsOpening entriesTransactions such as drawings, additional capital by ownerAdjustment of balance day
Format of General Journal
General Journal
Date Details Folio Debit (Dr) Credit (Cr)
ExplanationDate: to record the date of the transactionDetails: to record the name of account (s) to be debited
and the name of the account (s) to be credited.Folio: to record the reference number of ledger.Debit: amount (s) to be debitedCredit: amount (s) to be credited
Special Journal
Purchase Journal-use to record purchases goods on
credit.-the purchaser will receive purchases
invoices when goods bought on credit.
-the purchaser enters the details from the invoice in his purchases journal.
Example of Purchase Journal
Purchase Journal
Date Details Invoice No Folio Amounts
Purchase Journal Date: use to record date of the
transactions. Details: use to record name of the
creditors. Invoice no: use to record the
reference number of the invoice. Amounts: use to record the final
amount of invoice.
Sales Journal
To record sales good on credit The seller will send sales invoice to
debtors when goods sold on credit. The sellers enters details from the
invoice in his sales journal.
Example of Sales Journal
Sales Journal
Date Details Invoice No Folio Amounts
Explanation of Sales Journal
Date: use to record date of the transactions
Details: use to record name of the debtorsInvoice no: use to record the reference
number of the invoice.Folio: use to record the number of ledgerAmounts: use to record the final amount
of invoice.
Return Outwards Journal
Use to record amount of goods returned to the creditors.
The purchaser will receive debit note when goods returned to creditors.
The purchaser enter details from thedebit notes in his return outwards
journal.
Format of Return Outwards Journal
Return Outwards Journal
Date Details Debit Notes No Folio Amounts
Explanation of Return Outwards JournalDate: use to record date of the transactions.Details: use to record name of creditors.Debit notes: use to record the reference number of the
debit note.Folio: use to record the reference number ledger.Amounts: use to record the final amounts of debit notes.
Return Inwards Journal
Use to record amounts of goods returned by the debtors.
The seller will send debit note to the debtors when goods returned by them.
The seller enters details from debit notes in his return inwards journal
Format of Return of Inwards Journal
Return Inwards Journal
Date Details Debit Notes No Folio Amounts
Explanation of Return Inwards Journal
Date: use to record the date of transactions.Details: use to record the name of debtors.Debit Notes: use to record the reference
number of Debit NotesFolio: use to record the reference number
of ledgerAmounts: use to record the final amounts
of debit notes.
CASH BOOK
Use to record cash and bank transactions.Receiving money either by cash or
cheque will be recorded in debit side=increase the cash and bank balance.
Paying money either by cash or cheque will be record in credit side =decreases the cash and bank balance
Two types of Cash Book as per below:
Two column Cash Book
Date Details F Cash Bank Date Details F Cash Bank
Three column Cash Book
Date Details F Dis Cash Bank Date Details F Dis Cash Bank
Three column Cash Book
Discounts allowed-cash discounts allowed by a company to its debtors when they pay before maturity or on time.
Discounts received-cash discounts received by a company from its suppliers when its pay their account before maturity or on time.
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