Subdivision of Journals Journal Proper and Journal Special
Nov 27, 2014
Subdivision of Journals
Journal Proper and Journal Special
Reason
In a big business, recording of all transactions in one journal is not only inconvenient but also cause delay in collecting information required.
Therefore the journal is subdivided into many subsidiary books.
Advantages:
Convenience Division of labour Classified information
Subdivision of Journal
General Journal Special Journal
Journal
Cash Journal Goods Journal Bills Journal
Cash receipt Journal
CashPayment Journal
PurchaseJournal
Sales Journal
Purchases Returns Journal
Sales Returns Journal
Bills Receivable Journal
Bills Payable Journal
General Journals
Opening entries Closing entries Adjustment entries Transfer entries Rectification entries Purchases of fixed assets
Cash Journal
Reason:
Large number of cash transactions Properly maintained cash book is required for
control as well as avoiding the chances of fraud For timely payment to creditors as well as
reminder for receival from the debtors
Types of Cash book
Simple cash book Two columnar cash book Three columnar cash book Multi columnar cash book Cash receipt book Cash payment book Petty Cash book
Simple cash bookDr Cr
EX: Record the following transaction in the cash book and post them in the ledger.
Jan.1 Opening cash balance Rs 5000 Jan.4 Rent paid 2000 Jan.6 Interest received Rs 3000 Jan.15 Cash purchases Rs 4000 Jan. 25 Cash sales Rs 8000 Jan.31 Salaries paid Rs 2000
Date Particulars LF Amount Date Particular LF Amt
Dr Cr
Dr Interest account Cr
Dr Sales account Cr
Dr Rent A/c Cr
Dr Purchases A/c Cr
Date Particulars LF Amt Date Particular LF Amt
Jan1
Jan2
Jan25
To Balance b/d
To Interest
To Sales
To Balance b/d
5000
3000
8000
16000
8000
Jan4
Jan15
Jan31
Jan31
By Rent
By Purchases A/c
By Salaries A/c
By Balance C/d
2000
4000
2000
8000
16000
By Cash a/c 3000
By Cash A/c 8000
To Cash A/c 2000
To Cash A/c 4000
Two Columnar Cash Book
Date Particulars Discout Cash Date Particulars Discount Cash
Dr Cr
Trade Discount and Cash Discount:
•TD is the deduction granted by the supplier from the list price of the goods due to large quantity of sale where as CD is allowed by the creditors to debtors for either buying in cash or for making payment before the stipulated period.
•TD is allowed on sale of goods while CD is allowed on payment of money
•TD is not recorded in the books of accounts, they are recorded on the net price. CD is shown in the books of accounts
•TD may vary with the quantity of goods purchased, while CD may vary with time period.
Three Columnar Cash Book
Dr. Cr.
Illustration: Jan.1 Opening Balance: Cash Rs 3000, Bank Rs 4000
Jan.4 Rent paid by cheque Rs 2000
Jan.6 Received on account of cash sales Rs 3000
Jan.8 Paid to Mohan Bros. by cheque Rs 2000 and earned Rs 200 as cash discount
Jan.10 Received from Suresh by cheque Rs 2000 and allowed him Rs 100 as cash discount
Jan.12 Cash sales 20000
Jan.20 Cash purchases Rs 15000
Jan.31 Salaries paid Rs 5000
Date Particulars Discount Cash Bank Date Particulars Discount Cash Bank
Dr. Cash book Cr.
Dr. SALES ACCOUNT Cr.
Discount Account
Date Particulars Disct Cash Bank Date Particulars Disct Cash Bank
Jan1J 6J 10J 12
To Balance b/dTo Sales A/cTo SureshTo Sales A/c
To Balance b/d
100
100
3000 3000
20000
26000
6000
4000
2000
6000
200
J 6J 8
J 20J 31J 31
By Rent A/cBy Mehta Bros.By Purch. A/cBy Salrs A/cBy Balance c/d
200
200
15000 5000 6000
26000
2000
2000
2000
6000
Date Particulars Amnt. Date Particulars Amnt.
Jan.1Jan.10
By Cash A/cBy Cash A/c
300020000
Date Particulars Amnt. Date Particulars Amnt.
Jan10 To Sundries A/c 100 Jan 8 By Sundries A/c 200
Contra entry
There are certain transactions where both Cash as well as Bank accounts are involved. In such cases the transaction is recorded on both sides of the cash book.
Such an accounting entry which is recorded on both the debit and credit sides of the cash book is known as a contra entry.
In order to give a hint to the ledger-keeper, that no posting is required for such an entry, the word ‘C’ is put in the ledger folio column on both the sides of the cash book.
Cash Receipt and Payment Journal
Cash Receipt Journal: It is meant for recording all cash receipts. The posting is done daily from the Cash Receipt Book to the Ledger. The concerned accounts are all credited with amount mentioned in the Cash Receipts Journal. The total cash received (as shown by the Cash Receipt Journal) is debited to the cash account at the end of the period.
Cash Payment Journal: It is meant for recording all cash payments. The posting is done daily from the Cash Receipt Book to the ledger. The concerned accounts are all debited with amount mentioned in the Cash Payments Journal. The total cash paid (as shown by the Cash Payment Journal) is credited to the cash account at the end of the period.
Petty Cash Book
It is maintained to record petty cash expenses of the business, such as postage, cartage, stationary, cleaning charges etc.
A petty cashier is appointed under the supervision of the chief cashier, who advances money in the beginning of every month/ quarter, to make payments for all such petty expenses.
At the end of the month/ quarter, the petty cashier submits a statement of account of the expenses incurred by him during the month/ quarter and gets a fresh advance.
As the chief cashier gives him the fresh advance equivalent to the amount spent by him, in the beginning of each period, the petty cashier has a fixed balance. This advanced money is termed as ‘Imprest’ or ‘Float’.
Purchases Journal
Also known as Purchases or Bought Day Book, it is meant for recording only credit purchases of goods.
Posting is done in the credit side of the Personal accounts daily from the Purchase Book. At the end of the period (week/month), the total of Purchase book is debited to the purchase account in the ledger.
EX: Record the following transaction and post them in the ledger.
Jan.1 Purchased from Ram & Co. on credit:
38 Immersion Heaters @ Rs 10 and 20 Philips Tube lights @ Rs 20
Jan.4 Purchased from Shyam & Co. on credit:
40 Immersion Heaters @Rs 10 and 20 ECE Tube lights @ Rs 15
Jan.8 Purchased from Bajaj & Co. on credit:
20 Electric Irons @ Rs 40 and 3 Electric Mixer @ Rs 100
Jan.24 Purchased from K.C. & Co. on credit:
30 Electric Kettles @ Rs 20 and 40 Table Fans @ Rs 200
Purchases Journal
Purchase Account
Date Invoice Particulars LF Amount Amount
Jan. 1
Jan. 4
Jan. 8
Jan. 24
Jan. 31
Ram & Co.:30 Immersion Heaters @ Rs 1020 Philips Tube lights @ Rs 20Shyam & Co.:40 Immersion Heaters @Rs 1020 ECE Tube lights @ Rs 15Bajaj & Co. :20 Electric Irons @ Rs 403 Electric Mixer @ Rs 100K.C. & Co.:30 Electric Kettles @ Rs 2040 Table Fans @ Rs 200
Purchase Account Dr.
300400
400300
800300
6008000
700
700
1100
8600
11,100
Date Particulars Amnt. Date Particulars Amnt.
Jan.31 To Sundries 11,100
Sales Journal Also known as Sales or Sold Day Book, it is meant for recording only
credit sales of goods. The posting is done in the debit side of the Personal accounts daily from
the Sales Book. At the end of the period (week/month), the total of Sales book is credited to the Sales account in the ledger.
EX: Record the following transactions in the Sales Day Book and post them into the ledger.
Jan. 1 Sold to Mukesh & Co.:
10 Electric Heaters @ Rs 20 and 10 Table Lamps 2 Rs 30
Jan. 10 Sold to Suresh & Bros.:
10 Table Fans @ Rs 250 and 20 Philips Tube lights @ Rs 30
Jan. 25 Sold to Ramesh & Co.:
10 Electric Kettles @ Rs 50 and 20 ECE Tube lights @ Rs 30
Sales Journal
Mukesh & Co. Account
Sales A/c
Date Invoice Particulars LF Amount Amount
Jan. 1
Jan. 10
Jan. 25
Jan. 31
Mukesh & Co.:10 Electrical Heaters @ Rs 2010 Table lamps @ Rs 30Suresh & Bros.:40 Table Fans @Rs 25020 Philips Tube lights @ Rs 30Ramesh & Co. :10 Electric Kettles @ Rs 5020 ECE Tube lights @ Rs 30
Sales Account Cr.
200300
2500600
500600
500
3100
1100
4,700
Date Particulars Amnt. Date Particulars Amnt.
Jan.1 To Sales 500
Date Particulars Amnt. Date Particulars Amnt.
Jan.31 By Sundries 4700
Sales Returns Journal
The journal is meant for recording return of goods sold on credit. The posting from the Sales Return Journals is done daily in credit side
of the personal accounts. The total of the Sales Return Journal is posted to the debit of Sales Return Account at the end of the period (week/month).
The goods which are sold for cash, if returned, are either exchanged for new goods or parties are paid in respect of them or otherwise are recorded in the memorandum book only.
Ex: In case Ram & Co. returns the following goods on Jan. 10th :
5 Electric Heaters @ Rs 20 and 3 Philips Tube light @ Rs 30
Sales Return JournalsDate Cr. Note No Particulars LF Amnt. Amnt.
Jan.1 Ram & Co.:5 Electric Heaters @ Rs 203 Philips Tube light @ Rs 30
Sales Returns A/c Dr.
10090 190
190
Purchase Returns Journal
The journal is meant for recording return of goods purchased on credit. The posting from the Purchase Return Journals is done daily in debit
side of the personal accounts. The total of the Purchase Return Journal is posted to the credit of Purchase Return Account at the end of the period (week/month).
EX: In case Shyam & Co. is returned 3 Electric Irons @ Rs 40 on Jan. 12th and on Jan.21 3 Electric Mixer @ Rs 300 is returned to Bajaj & Co.
Purchases Returns Journal
Date Dr Note No. Particulars LF Amnt Amnt.
Jan.12
Jan.21
Jan.31
Shyam & Co. :3 Electric Irons @ Rs 40 Bajaj & Co.3 Electric Mixer @ Rs 300
Purchase Returns A/c Cr.
120
900
1020
Bills of Exchange:
It is a documentary evidence in writing, containing an unconditional order signed by the maker, directing a certain person to pay a certain sum of money only to, or to the order of, a certain person, or to the bearer of the instrument.
A bills of exchange becomes legally valid only after its acceptance.
A bills of exchange accepted by a customer is called Bills Receivable and a bills of exchange drawn by the supplier on the business entity is called Bills Payable.
Bills Receivable and Bills Payable books record bills, accepted by customer and drawn by supplier, date-wise to help the business unit to easily find out which bill has become matured on a particular date.
Bills Receivable and Bills Payable Books:
It records bills raised on, and accepted by, customers.Bills Receivable Book
It records bills raised by suppliersBills Payable Books
Date of Receipt
Voucher No.
Party from whom received
Date of Bill Due Date
Place of Payment
Amount LF
Date of acceptance
Voucher No.
Party by whom Drawn
Date of Bill Due Date
Place of payment
Amount
LF