July 5 marketed $5,000 of merchandise inventory, terms 1/15, n 30, FOB destination with a price of products sold of $3,000 come Robby Red.July 6 paid shipping expense of $200 top top merchandise marketed on July 5.July 10 offered $1,500 of was inventory because that cash, FOB Shipping Point, through a price of goods sold that $1,000.July 12 to buy $10,000 of merchandise inventory, terms 2/15, n 45, FOB destination from Gus Grass.July 15 obtained payment indigenous Robby Red from July 5 sale much less the discount.July 16 changed $2,500 of merchandise damaged in shipment from July 12 purchase.July 20 payment the utility bill because that $300.July 25 Paid because that the July 15 purchase much less the return and discount.July 30 marketed $7,000 of was inventory, terms 1/15, n 30, FOB Shipping suggest with cost of goods sold $5,000 to Bobby Blue.

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You deserve to see how these journal entries (using the perpetual perform method) would be recorded in the basic ledger as by click fooz ball town to save space.

Note: The entries would be slightly various under the periodic inventory an approach as cost of products sold and merchandise inventory are not updated till the finish of the duration instead of v each sale or purchase.

The list of entries for these 9 transactions is long…can girlfriend imagine what it would certainly look like once a firm has thousands of transactions a day? It will be overwhelming so there requirements to it is in a much better way. Unique journals are a faster and an ext efficient means to enter transactions. Remember, we have actually 5 distinct journals:

a sales journal to document ALL credit transaction SALESa purchases journal to record ALL credit transaction PURCHASESa cash receipts journal to record ALL CASH RECEIPTSa cash disbursements journal to record ALL CASH PAYMENTS; anda general journal to record adjusting and closing entries and also any various other entries that execute not to the right in among the distinct journals.

Now we will certainly classify Fooz sphere Town’s transactions right into the proper special journals:

DateTransaction SummarySpecial Journal
July 5Sold come Robby Red ~ above credit.Sales Journal
July 6Paid shipping cost.Cash Disbursements Journal
July 10Sold inventory for cash.Cash Receipts Journal
July 12Purchased list on credit.Purchases Journal
July 15Received payment from Robby Red.Cash Receipts Journal
July 16Returned damaged merchandise to supplier .General Journal
July 20Paid energy bill.Cash Disbursements Journal
July 25Paid because that July 15 purchase.Cash Disbursements Journal
July 30Sold to Bobby Blue ~ above credit.Sales Journal

The July 10 sales is not taped in the sales journal — why not? It to be a cash sale and not top top credit. The discussion continues by looking at each special journal in detail.

Sales Journal

The sales newspaper is supplied to record all sales on credit. This means the customer has actually not paid yet we will receive payment in the future. The video shows an example of a sales newspaper under the periodic inventory method:

Under the perpetual perform system, the Sales Journal would have an additional column to present Debit to expense of goods Sold and a credit transaction to Inventory. Because that Fooz sphere Town, we established the following transactions for the sales journal:

July 5 sold $5,000 of goods inventory, state 1/15, n 30, FOB location with a cost of products sold of $3,000 to Robby Red.July 30 sold $7,000 of was inventory, state 1/15, n 30, FOB Shipping allude with price of products sold $5,000 to Bobby Blue.

These entries would certainly be recorded in the sales newspaper (instead of basic journal entries) as:

Sales Journal
Date Customer DR accounts Receivable DR price of items sold 
CR SalesCR Inventory
July 5Robby Red$5,000$3,000
July 30Bobby Blue7,0005,000
TOTALS $12,000$8,000

The subsidiary (customer) ledgers would be update daily yet at the finish of the period, the TOTALS just would be taped in posted straight into the accounts provided with no newspaper entry necessary.

Cash Receipts Journal

The cash receipts newspaper is supplied to document all receipts that cash for any reason. Anytime money comes right into the company, the cash receipts journal need to be used.

The cash receipts journal, under the perpetual perform would, would additionally contain a tower to Debit expense of products sold and Credit inventory offered for any cash sales. Because that Fooz round Town, we identified two transactions for the cash receipts journal:

July 10 offered $1,500 of was inventory because that cash, FOB Shipping Point, through a expense of goods sold that $1,000.July 15 received payment indigenous Robby Red from $5,000 sale less the 1% discount.

The cash receipts newspaper for this transactions would certainly be:

Cash Receipts newspaper
Date Account DR Cash DR Sales CR account CR Sales DR expense of goods Sold
 Discounts ReceivableCR Inventory
July 10Checking1,5001,5001,000
July 15Checking4,950505,000
TOTALS 6,450505,0001,5001,000

At the end of the period, the TOTALS just would be recorded in posted directly into the accounts detailed with no newspaper entry necessary.

Purchase Journal

The purchases journal is used to document all purchases on credit. This method purchases we have actually not paid for however will pay for in the future. There to be one transaction established for the acquisition journal because that Fooz round Town:

July 12 purchased $10,000 of merchandise inventory, terms 2/15, n 45, FOB location from Gus Grass.

This would certainly be document in a purchases journal (under the perpetual inventory system as):

Purchases Journal 
DateVendorDR goods Inventory
CR account Payable
July 12Gus Grass10,000
TOTALS 10,000

The acquisition from Gus Grass would certainly be videotaped in the account payable subsidiary ledger and also the full would be videotaped at the end on the period by posting directly to merchandise inventory and accounts payable.

This video demonstrates the acquisition journal and also cash disbursement journal:

Cash Disbursement Journal

The cash disbursement newspaper is offered to document all payment of cash regardless of the reason. Whenever cash pipeline the company, it need to be recorded in the cash disbursement journal. We established these transaction native Fooz round Town because that the cash disbursement journal:

July 6 payment shipping expense of $200 ~ above merchandise marketed on July 5.July 20 payment the utility bill for $300.July 25 Paid because that the July 15 acquisition from Gus Grass that $10,000 much less the 2% discount and also $2,500 return.

These entries would certainly be recorded right into a cash disbursement newspaper (under the perpetual perform method) as:

Cash Disbursement Journal
DateCheck #AccountDR Accts PayableDR OtherCR Mdse InventoryCR Cash
July 6Merchandise Inventory200200
July 20Utilities Expense$300$300
July 25 Gus Grass7,5001507,350
TOTALS  $7,500$300$150$7,650

At the end of the period, us would article the totals that $7,650 credit transaction to cash, the $7,500 debit to account payable, and also the $150 credit to was inventory. The DR (debit) Other column would be taken on a little differently as you should look come the account column to discover out wherein these individual quantities should it is in posted. In this case, we would short article a $200 debit come merchandise inventory and a $300 debit to energy expense. Under the regular inventory method, the July 6 shipping costs would go to a transportation In account and the July 25 discount would certainly go to Purchases Discounts.

General Journal

When using distinct journals, the basic journal is supplied to document all adjusting entries, close up door entries and anything else that doesn’t fit right into the various other special journals. An example of this would certainly be any kind of returns or allowances comes from either the sales or purchase side. Because that Fooz ball Town, over there is one transaction because that the basic journal:

July 16 went back $2,500 of goods damaged in delivery from July 12 purchase.

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This journal entry is recorded, under the perpetual inventory technique as:

July 16Accounts Payable2,500
was Inventory2,500

This entry would then be post to the accounts payable and also merchandise inventory account both because that $2,500. Under the periodic inventory method, the credit would be to purchase Returns and also Allowances.