The journal is the book of first entry.
It used to be an actual book that the bookkeeper would use to make accounting entries.
These days bookkeepers enter transactions on the computer using an accounting program.
Our recording in the journal is also called a journal or a journal entry.
The journal entries look like this:
Does this look at all familiar? It should – we have been doing these basic accounting journal entries throughout the previous section on double-entry accounting.
Journals are simply debits and credits in chronological (date) order.
The purpose of journals is to keep a day-to-day record of a business and its transactions.
Each transaction also requires a brief explanation of the transaction (below the debit and credit). This explanation should accurately describe what took place, so that anyone who glanced at it for the first time could easily identify what occurred.
Each journal can also be matched to the relevant supporting document (such as a check stub or a receipt) by use of a cross-referencing code or folio number. This code or folio number simply cross-references between one document and another. If the first transaction above of $15,000 capital was made by issuing check number 38, then one could write ‘Ch-38’ (for example) under the folio number.
Using the folio number to match a journal entry to a source document would enable a person to easily trace the recorded transaction back to the source document and verify that the transaction actually took place (as evidenced by the source document).
Journals may also often include a cross-referencing code or folio number to cross-reference between the journal entries and the T-accounts (the next step in the accounting cycle). Each specific item, such as bank, would have its own folio number, and this would be used to cross-reference from the journal entry involving ‘bank’ to the banks’ T-account in the ledger (this will be covered in the next section). The folio numbers make it simple to trace information through the steps in the accounting cycle.
These cross-referencing numbers or codes would work like this:
‘Sal-1’ is the individual code for the ‘salaries’ account. ‘J-1’ is the code for ‘journal page 1’. One could thus follow information from the journal entry to an account in the ledger, or from an account in the ledger back to the journal entries.
There are actually various different types of journals, and in our next lesson we're going to see what they look like and how they work.
Click below to see questions and exercises on this same topic from other visitors to this page... (if there is no published solution to the question/exercise, then try and solve it yourself)
Name the Accounts Question
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Journal Entry Question:
Purchase with Personal Funds
Q: On 25th March 2011 Mr. A purchased goods to the value of rs. 25000 (rs = Rupees = Indian, Pakistani and Sri Lankan currency). Due to a shortage of …
Journal Entry Question: Complex Capital Investment
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Journal Entry - Purchasing Goods
Q: What is the journal entry for the following? Purchase goods from KJ Mehta for cash 5,000 Rupees A: The journal entry would be: Debit …
Journal Entries and Ledger Exercise
Q: Mr Robert commenced business on 1st January, 2011 with a capital of $100,000 in cash. On the same date he opened the bank account in ADCB and deposited …
Journal Entry for Bad Debts?
Q: What is the journal entry for bad debts? A: The journal entry for bad debts (also called "doubtful debts") is as follows: Debit Bad debts …
Journal Entries Question:
Perpetual Inventory System & Credit Card Transaction
Q: Prepare journal entries for the following credit card sales transactions using the perpetual inventory system: Sold $10,000 of merchandise, that …
Transactions Exercise (Malaysia)
Question: What accounts are affected by the following transactions (RM = Malaysian Ringgit = Malaysian currency): July 1 Purchased goods from …
Journal Entries and T Accounts Exercise
Create journal entries and draw up the T-accounts for the following transactions (Rs. = Rupees = Indian currency): 1. Harish started business with …
Entry for Returned Cheque
Q: Dear Sir, Can you please explain what will be the journal entry when a cheque we issued is returned by the bank and when they reproduce it? A: …
Issuing Shares for Assets
Q: How would you write this in a journal entry: a company issued 2,660 shares of its common stock after $31,360 in cash and computer equipment with …
Journal Entry Question
Q: What's the entries for the following: 1 - Business started with cash 8,000 and plant & machinery 3,000. 2 - Stock purchase for sale (cash purchase)= …
Recording Retained Earnings
in the Journal
Q: How do you record retained earnings in the journal? A: Earnings means profits and retained earnings is all the net profits one accumulated. …
Journal Entry for Shares Issued
Q: Make a journal entry for the following (assume that this occurred in the second half of 2009): a) issued additional shares for 1,200 in cash. …
Gift, Sale, Discount & Carriage Paid By Another
Q: What are the journal entries for the following: 1) Received gift of Rs 51,000 from father-in-law by check, which is deposited into business bank …
Journal Entries Accrual Items Question
Q: I want to know how do you make the following journal entries (rs = Rupees = Indian currency): 1. Outstanding expense - rs 3,000 2. Accrued interest …
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