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General Journal

A general journal records each transaction separately from the others in its own very format which has the first column for date, and the second column for mostly two or sometimes more accounts with the debit entry of the account listed first followed by the credit entry a line below it. This credit entry is indented. The next two columns are the debit and credit columns respectively. The debit amount which is mostly the same as the credit amount is entered on the same line as the debit entry and likewise, the credit amount on the credit line. A narrative of the transaction is entered below the credit entry.

There are occasional entries to be made for certain transactions, and none of the main day books is suitable. They are instead recorded in the book called the journal. The entries in the journal show which accounts are to be debited and which are to be credited and these are followed when they are posted in the double entry accounts. Thus, the journal is not a book of accounts, but a source of entries to be made in the accounts. Other items found in the journal are date, a reference number of the source document of the transaction, and importantly a narrative that explains the purpose of this journal entry.

Making entries in a journal

  1. Enter the date which is always in the first column.
  2. Write up the first line to point out the account to be debited.
  3. Write the second line, which is below the first line and indent it a few spaces, to indicate the account for the credit entry to be made.
  4. Enter the folio numbers in the folio column for cross reference of the accounts referred to in the first and second lines.
  5. Write the amounts for the debit and credit entries as mentioned above.
  6. State the reason for making the journal entry.
  7. Sales/Purchases returns not yet paid for.

Once the entries are made in the journal, postings to the double entry accounts are then done accordingly.

Some of the items that require journal entries include:

  1. Opening entries to commence a new set of books of accounts, or of a new business.
  2. Writing off bad debts
  3. The correction of errors
  4. The purchase or sale of fixed assets on credit
  5. Depreciation of fixed assets such as plant and machinery, and vehicles
  6. Cash or goods taken for personal use


1. Opening entries to commence a new set of books of accounts

A new set of books needs writing up at the beginning of a new accounting period. The journal is used to list the opening debit and credit balances in the double entry accounts. The following shows the journal entries.

Date Particulars Folio Dr Cr
20XX



Jan 1 Machinery GL01 490

Motor Van GL02 350

Stock GL03 240

Debtors:



M Moony SL13 110

S Sunny SL19 160

Cash CB01 180

Bank CB02 220

Accruals:



Rental PL18
120

Telephone PL20
150

Creditors:



C Cloudy PL03
280

S Starry PL19
240

Capital GL03
960








1,750 1,750






2. Writing off bad debts

Date Particulars Dr Cr
20XX


Apr 30 Bad debts 60

B Badman
60

(Being bad debts written off - Badman



declared bankrupt)







60 60





3. The correction of errors

Date Particulars Dr Cr
20XX


May 31 D Crockett 9

Sales

9

(Correction of errors - sales to Crockett



entered in Crockett's and sales accounts


as $256 instead of $265)







9 9





4. Purchase of asset on credit

Date Particulars Dr Cr
20XX
$
$
Jun 1 Machinery tools 360


Toothy Tools Suppliers

360

(Purchase of tools on credit as per 



purchase invoice no. A321)








360
360





5. Depreciation of fixed assets

Date Particulars Dr Cr
20XX
$
$
Dec 31 Profit and loss account
400


Provision for depreciation account

400

(Depreciation provided for Machinery



for the year 20XX)







400
400





6. Money taken out as drawings

Date Particulars Dr Cr
20XX
$
$
Aug 20
Drawings
200


Cash

200

(Cash taken out of business for own use)







200
200





7. Purchases returns not yet paid for

Date Particulars Dr Cr
20XX
$
$
Sep 29
Accounts Payable
40


Returns Outwards

40

(Wrong type of goods now returned



to supplier)







40
40





Last Updated (Thursday, 28 October 2010 18:16)