Recording transactions H

AVING LOOKED at the nature of business transactions and how they are analysed and classified, it is safe to say that the main emphasis was on the ‘why’ and not the ‘how’ of the accounting operations. Now that we understand the reason for making the entries, and the effects of transactions by making entries in the ‘T’ accounts, it is now easy to understand that these entries do not provide the data for particular transactions. The information missing may be had by using an accounting form known as the journal.

WHAT IS THE JOURNAL?

The journal, also known as the day book, is the book of original entry used to record data which is later transferred to the ledger, known as the secondary book. The transactions are made from: I Sales invoice I Purchases invoice I Cheque stubs

The transactions are entered in chronological order in the journal. The process of entering the transactions is called journalising. There are several different journals; however, for your syllabus, we will turn our focus on the: I Sales journal I Purchases journal I General journal I Return inward journal I Return outward journal

CONCEPTS TO KNOW:

Sales journal – This is known as a book of original entry. It: i. Lists all credit sales for a given period. ii. Is used for posting credit sales to the sales ledger. The sales journal total for the period is posted to the credit of the sales account.

SALES INVOICES

This document is prepared by the business selling the goods on credit. It is given to the debtor to inform of the: a. Cost of the goods. b. Total money owed.

CASH SALES

i. Cash sale is when goods are paid for immediately. ii. Cash sales are not entered in the sales journal.

CREDIT SALES

a. This is where goods are given to debtors/customers on credit.

b. The debtor will pay at a later date.

SALES DISCOUNT

i. Sales discount is a reduction in the cost of goods. ii. It is given to a customer when calculating the selling price.

SALES LEDGER

This is the ledger that records ONLY customers’ personal account.

PERSONAL ACCOUNTS

Personal accounts are account for: a. Creditors b. Debtors

WORKED EXAMPLE 1:

James Bradford 390 Top Roads Village Plain

He is selling the following items listed below; the recommended retail prices are also listed: I White tape at $10 per roll. I Green baize at $4 per metre. I Blue cotton at $6 per sheet. I Black silk at $20 per dress length. He makes the following sales: You are required to: 1. Draw up a sales invoice for EACH of the above sales. 2. Enter them up on page 163 in the sales journal, post to the personal accounts.

3. Transfer the total to the sales account on page 66 in the general ledger.

4. Show all folio numbers.

This is where we will end for this week. Join us next week as we continue to complete the syllabus. Grasp the concepts and retain them. You will need them as you progress to excellence. See you next week.