39 Describe and Explain the function of unique Journals and also Their prominence to Stakeholders

The bigger the business, the higher the likelihood that that business will have actually a big volume that transactions that need to be recorded in and processed through the company’s accounting information system. Did you do it learned the each transaction is tape-recorded in the basic journal, i beg your pardon is a chronological listing of transactions. In various other words, transactions space recorded into the basic journal together they occur. When this is correct bookkeeping methodology, it likewise can develop a cumbersome general journal with which to work and also may do finding certain pieces that information an extremely challenging. Because that example, i think customer john Smith charged an object for $100 top top June 1. In the general journal, the firm would document the following.

You are watching: Which of the following is not a special journal?

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What must the total be in the account Payable regulate Total?

Here is the information from the accounts receivable subsidiary ledger.

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Most providers have four special journals, yet there can be more depending ~ above the company needs. The 4 main unique journals are the sales journal, to buy journal, cash disbursements journal, and cash receipts journal. These distinct journals were designed due to the fact that some journal entries take place repeatedly. For example, selling goods for cash is constantly a debit come Cash and a credit transaction to Sales tape-recorded in the cash receipts journal. Likewise, we would record a revenue of products on credit transaction in the sales journal, together a debit to accounts receivable and a credit transaction to sales. Service providers using a perpetual list system likewise record a 2nd entry because that a sale with a debit to cost of products sold and also a credit transaction to inventory. You deserve to see sample entries in (Figure).


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Paying receipt is videotaped in the cash disbursements newspaper ((Figure)) and is always a debit to account Payable (or an additional payable or expense) and also a credit transaction to Cash.


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(Figure) summarizes the common transactions in the distinct journals formerly illustrated.

Types and also Purposes of special JournalsJournal NameJournal PurposeAccount(s) DebitedAccount(s) Credited
Sales JournalSales top top creditAccounts Receivable, expense of goods SoldSales, Inventory
Purchases JournalPurchases ~ above creditInventoryAccounts Payable
Cash Disbursements JournalPaying cashCould be:Accounts Payable, or other accountsCash
Cash Receipts JournalReceiving cashCashCould be:Sales, accounts Receivable, or other accounts
General JournalAny transaction not extended previously; adjusting and closing entriesCould be:Depreciation ExpenseCould be:Accumulated Depreciation

How will certainly you remember every one of this? Remember, “Cash Is King,” for this reason we consider cash transactions first. If you obtain cash, nevertheless of the source of the transaction, and even if that is only a part of the transaction, the goes in the cash receipts journal. For example, if the agency made a sale for $1,000 and also the customer offered $300 in cash and also promised to pay the remaining balance in the future, the entire transaction would get in the cash receipts journal, because some cash was received, even if it was only component of a transaction. You might not split this journal entry in between two journals, due to the fact that each transaction’s debits have to equal the credits or else your newspaper totals will certainly not balance at the end of the month. Friend might consider splitting this transaction right into two separate transactions and considering it a cash sale because that $300 and a revenue on account for $700, yet that would likewise be inappropriate. Although the balances in the general ledger accounts would certainly technically be exactly if friend did that, this is not the ideal approach. Great internal regulate dictates the this is a solitary transaction, associated with one invoice number on a offered date, and should be taped in its totality in a solitary journal, i m sorry in this case is the cash receipts journal. If any kind of cash is received, even if it is only a part of the transaction, the whole transaction is gotten in in the cash receipts journal. Because that this example, the transaction gone into in the cash receipts journal would have actually a debit to cash for $300, a debit to account Receivable because that $700, and a credit transaction to Sales because that $1,000.

If you pay cash (usually by creating a check), for any kind of reason, even if it is only a component of the transaction, the entire transaction is videotaped in the cash disbursements journal. Because that example, if the company purchased a building for $500,000 and also gave a examine for $100,000 as a down payment, the entire transaction would certainly be tape-recorded in the cash disbursements journal as a credit transaction to cash because that $100,000, a credit to mortgage payable because that $400,000, and a debit to structures for $500,000.

If the transaction does not involve cash, it will be taped in among the various other special journals. If it is a credit sale (also known as a revenue on account), that is taped in the sales journal. If that is a credit acquisition (also known as a acquisition on account), the is videotaped in the purchase journal. If it is nobody of the above, that is videotaped in the basic journal.


Let’s take into consideration what Gearhead Outfitters’ audit information system could look like. What info will agency management uncover important? Likewise, what information could external customers of Gearhead’s gaue won reports need? carry out regulatory demands dictate what Gearhead demands to track in its audit system?

Gearhead will desire to recognize its gaue won position, outcomes of operations, and also cash flows. Together data will aid management make decisions around the company. Likewise, outside users desire this data (balance sheet, revenue statement, and also statement the cash flows) to do decisions such as whether or not to expand credit come Gearhead.

To keep accurate records, agency operations need to be considered. For example, perform is purchased, sales are made, customers space billed, cash is collected, employee work and also need to it is in paid, and other costs are incurred. Every one of these work involve various recording processes. Perform will call for a purchase journal. Sales will call for a sales journal, cash receipts journal, and accounts receivable subsidiary ledger (discussed later) journal. Payroll and also other disbursements will require their very own journals come accurately monitor transactions.

Such journals allow a company to record accountancy information and also generate gaue won statements. The data also provides administration with the information needed to do sound business decisions. For example, subsidiary ledgers, such as the accounts receivable ledger, carry out data around the aging and also collectability the receivables. Thus, the appropriate design, implementation, and also maintenance the the accounting information mechanism are critical to a this firm sustainability.

What various other questions can be answered v the evaluation of information gathered by the bookkeeping information system? Think in terms of the timing of inventory orders and also cash flow needs. Is there nonfinancial information to extract indigenous the accounting system? An bookkeeping information device should administer the information needed because that a company to meet its goals.


Subsidiary Ledgers

In addition to the four special journals, there space two distinct ledgers, the account receivable subsidiary ledger and the account payable subsidiary ledger. The account receivable subsidiary ledger offers details around each person who fan the company money, as shown in (Figure). Every colored block to represent an individual’s account and shows just the lot that human owes the company. Notice that the subsidiary ledger gives the date of the transaction and a reference pillar to connect the transaction come the same information posted in among the distinct journals (or general journal if one-of-a-kind journals are not used)—this referral is usually a password that referrals the distinct journal such as SJ because that the sales distinct journal, as well as the amounts owed in the debit column and also the payment made in the credit transaction column. The quantities owed by all of the individuals, as indicated in the subsidiary ledger, are added together to kind the accounts receivable control total, and also this should equal the account Receivable balance report in the basic ledger as shown in (Figure). Vital points around the account receivable subsidiary ledger are:

Accounts receivable in the general ledger is the complete of every one of the individual account totals the are noted in the account receivable subsidiary ledger.All of the quantities owed to the firm in the account receivable subsidiary ledger should equal the quantities in the accounts receivable basic ledger account.
Subsidiary ledgers have to balance and also agree with the basic ledger. Accountants using QuickBooks and other bookkeeping systems might not have to perform this step, due to the fact that in these equipment the subsidiary ledger updates the basic ledger automatically. However, a dishonest person can manipulate audit records by recording a smaller amount the cash receipts in the control account 보다 is videotaped on the subsidiary ledger cards. The moral accountant must be vigilant come ensure that the ledgers stay balanced and also that ideal internal controls space in location to ensure the soundness of the accounting system.

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The account payable subsidiary ledger stop the details about all of the amounts a company owes to world and/or companies. In the account payable subsidiary ledger, each vendor (the person or agency from who you purchased inventory or other items) has an account that reflects the details of all transactions. Comparable to the account receivable subsidiary ledger, the purchase subsidiary journal shows the date on i beg your pardon a transaction take it place; a reference pillar used in the very same manner as previously defined for accounts receivable subsidiary ledgers; and also finally, the subsidiary ledger reflects the amount charged or the amount paid. Adhering to are the transactions for abc Inc. And also XYZ Inc. The last balance suggested on each subsidiary purchases journal mirrors the amount the company owes ABC and XYZ.

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Solution

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(Figure)On June 30, Isner Inc.’s bookkeeper is preparing to near the publications for the month. The accounts receivable control complete shows a balance of $550, but the accounts receivable subsidiary ledger shows full account balances that $850. The account receivable subsidiary ledger is presented here. Deserve to you assist find the mistake?

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(Figure)Why need to the accounts Receivable account in the general ledger complement the totals of all the subsidiary account Receivable accounts?


(Figure)If a customer fan your company $100 ~ above the first day that the month, climate purchased $200 of items on credit on the fifth and paid friend $50 on fifteenth, the customer’s ending balance because that the month would display a (debit or credit) of exactly how much?


Glossary

accounts payable subsidiary ledgerspecial ledger that includes information about all vendors and the amounts we owe them; the full of every accounts in the account payable subsidiary ledger must same the complete of account payable control account in the basic ledgeraccounts union controlaccounts union account in the general ledgeraccounts receivable subsidiary ledgerspecial ledger that includes information about all customers and also the amounts they owe; the full of all accounts in the accounts receivable subsidiary ledger must same the full of accounts receivable regulate account in the basic ledgercash disbursements journalspecial newspaper that is offered to record outflows that cash; every time cash leaves the business, usually when we worry a check, we record in this journalcash receipts journalspecial journal that is offered to document inflows that cash; every time we obtain checks and also currency native customers and also others, we record these cash receipts in this journalpurchases journalspecial journal that is provided to record purchases of merchandise list on credit; it always debits the merchandise inventory account (if utilizing the perpetual perform method) or the purchases account (if using the regular method)sales journalspecial journal that is offered to record all sales top top credit; it constantly debits account receivable and credits sales, and if the firm uses the perpetual inventory method it also debits price of products sold and credits was inventoryspecial journalbook of original entry that is used to record transactions the a similar form in addition to the basic journal