Ch 5 Credit Journals

8/2/2019 Ch 5 Credit Journals

1/22

Click to edit Master subtitle style

4/26/12

SPECIAL JOURNALS CREDIT JOURNALS

CHAPTER 5 & 6


2/22

4/26/12

Special Journal

An accounting record thatsummarises similartransactions to allow totals to

be posted to the ledgeraccounts at the end of thereporting period

They are used to avoidrepetition in the ledger

accounts


3/22

4/26/12

Benefits of specialjournalsSummarise similar transactions

and reduce the number ofledger entries required

Journals provide a direct linkbetween the ledger entries andthe source documents


4/22

4/26/12

Special Journals

Ledger accounts record alltransactions that affect aparticular item

But special journals record alltransactions of a particular type


5/22

4/26/12

Types of Special Journals

Purchases Journal for creditpurchases of stock

Sales Journal for credit sales

of stock

Cash Receipts Journal for allcash received

Cash Payments Journal for allcash paid


6/22

4/26/12

Special Journals

EVERYtransaction must berecorded in a journal before it isposted to the ledger accounts


7/22

4/26/12

Purchases Journal

An accounting record thatsummarises all transactionsinvolving the purchase of stock

on credit during a reportingperiod


8/22

4/26/12

Purchases Journal

All transactions involving thepurchase of goods on credithave the same debit and credit

entries:DR Stock Control

DR GST Clearing

CR Creditors Control

These transactions can besummarised in the Purchases

Journal, so only the total credit


9/22

4/26/12

Purchases Journal

Date Creditor InvoiceNumber

Stock GST TotalCreditor

s

TOTAL $Example:

On 1st March, the businesspurchased stock on credit from ABCCo. for $100 plus $10 GST (Inv. 57)

Mar1

ABC Co. 57 100 10 110


10/22

4/26/12

Creditors SubsidiaryLedgerIn the General Ledger, we use

an account called CreditorsControl

A Control account is used tosummarise the transactionsrecorded in the subsidiary

ledger accountsA Subsidiary Ledger is an

additional set of ledger

accounts kept outside the


11/22

4/26/12

Creditors SubsidiaryLedgerThe Creditors Controlaccount in the General Ledgershows a summary of all

transactions affecting creditorsThe Creditors SubsidiaryLedger contains a separate

account for each individualcreditor, showing eachindividual transaction affectingthat creditors balance


12/22

4/26/12

Creditors Schedule

The Creditors Schedule liststhe name and balance of eachindividual account in the

Creditors Subsidiary LedgerThe total amount on the

Creditors Schedule must equal

the balance in the CreditorsControl account


13/22

4/26/12

Sales Journal

An accounting recordsummarising all transactionsinvolving the sale of stock on

credit during a reporting period


14/22

4/26/12

Sales Journal

All transactions involving thesale of goods on credit have thesame debit and credit entries:

DR Debtors Control

CR Sales Revenue

CR GST Clearing

DR Cost of Sales

CR Stock Control


15/22

4/26/12

Sales Journal

These transactions can besummarised in the Sales Journal,so only the total credit sales of

stock is posted to the ledgeraccounts at the end of theperiod


16/22

4/26/12

Sales Journal

Date Debtor InvoiceNumbe

r

Cost ofsales

Sales GST TotalDebtor

s

TOTAL $Example:

On 3rd March, the business soldstock on credit to J. Smith for $200plus $20 GST (Inv. 77). The costprice of the stock was $100.

Mar3

J Smith77

100 200 20 220


17/22

4/26/12

Debtors Subsidiary Ledger

The Debtors Control accountin the General Ledger shows asummary of all transactions

affecting debtorsThe Debtors SubsidiaryLedger contains a separate

account for each individualdebtor showing each individualtransaction affecting thatdebtors balance


18/22

4/26/12

Debtors Schedule

The Debtors Schedule lists thename and balance of eachindividual account in the

Debtors Subsidiary LedgerThe total amount on the

Debtors Schedule must equal

the balance in the DebtorsControl account


19/22

4/26/12

GST Clearing Account

At the end of the reportingperiod, the GST Clearingaccount must be balanced, and

reported as either a currentasset or current liability,depending on whether it has adebit or credit balance

Bene ts o s ng Contro


20/22

4/26/12

Bene ts o us ng ControAccounts and Subsidiary

LedgersDetection of errorsAllocation of responsibility

Ease of reporting

RELEVANCE AND RELIABILITY!!!


21/22

4/26/12

Questions

1. What is a control account?

2. What is a subsidiary ledgeraccount?

3. Why do we need to have both aCreditors Control acct and aCreditors Subsidiary Ledger?

4. Which qualitative characteristicdoes this assist with?


22/22

4/26/12

Questions1. Show the DR & CR entries for

recording:a. Credit purchase of stock

b. Credit sale of stock

c. Payment to creditor

d. Receipt from debtor

e. GST settlement

2. Why do we need to have both aCreditors Control acct and a CreditorsSubsidiary Ledger?

3. State three differences between the

Documents

Ch 5 Credit Journals