ACC1000 Chapter Notes - Chapter 5: Current Liability, Subledger, Current Asset

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taupewoodchuck955

6 Jun 2018

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Chapter 5

5.1 Special Journals

Special Journal:

an accounting record that summarizes similar transactions.

*Special journal are used before posting the totals to the general ledger accounts at the end of the month.

Types of special journals

Whereas ledger accounts record all transactions that affect a particular item, special journals record all

transactions of a particular type. 4 common type of special journals are:

The

main purpose of these special journals

is to 1.summarise similar transactions so that totals can be posted

to the General Ledger, in the process. 2.reducing the number of ledger entries required and improving the

efficiency of the recording system.

*Any transactions that are unable to be recorded in a special journal must be recorded in the General journal,

which is used to record all infrequent, non-cash transactions.

The journals – special and general – play an additional role of providing a direct link between the ledger

entries and the source documents, thus ensuring that the amount show in the reports are free from error

or bias, and is reliable to use.

5.2 The Purchases Journal

Purchases Journal:

an accounting record that summarizes all transactions involving the purchase of stock on

credit during a month

Recording in the Purchases Journal

Purchases Journal

Date

Creditor

Invoice number

Stock Control

GST

Creditors Control

Notes for recording in the Purchases Journal

Date

The transactions are recorded in the journal on the date they occur.

Creditor

The journal must show the name of each individual creditor. A separate record will be maintain

elsewhere for each individual creditor

Invoice Number

In order to ensure Reliability, the source document, which for this journal is a purchase invoice,

must be recorded. If a query arises as to the details of the transaction, it can be traced back easily to

the source document for clarification and verification. The invoices will not run in sequence in the

Purchases Journal.

Stock Control

Stock Control is the value (cost price) of the stock that has been purchased, excluding the GST

GST

This is the GST charged by suppliers on credit purchases. It reduces the GST liability owed to the

ATO, and increases the debt owed to creditors.

Creditors Control

This is the total amount owed to creditors, calculated by adding together the value of the stock

purchased and the GST.

Posting the Purchases Journal to the General Ledger

All transactions involving purchase of stock on credit have exactly the same entries:

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Document Summary

Special journal: an accounting record that summarizes similar transactions. *special journal are used before posting the totals to the general ledger accounts at the end of the month. Whereas ledger accounts record all transactions that affect a particular item, special journals record all transactions of a particular type. The main purpose of these special journals is to 1. summarise similar transactions so that totals can be posted to the general ledger, in the process. 2. reducing the number of ledger entries required and improving the efficiency of the recording system. *any transactions that are unable to be recorded in a special journal must be recorded in the general journal, which is used to record all infrequent, non-cash transactions. Purchases journal: an accounting record that summarizes all transactions involving the purchase of stock on credit during a month. The transactions are recorded in the journal on the date they occur. The journal must show the name of each individual creditor.

Related Questions

Now that you have reviewed information about Hi-Fi Way, you are ready to begin the first step in the accounting cycle, recording transactions. On this page of the practice set, you are asked to record transactions that occurred during the first week of June into the company's journals and post the appropriate entries to the ledger accounts. The following transactions occurred throughout the first week of June:

Week 1
Date	Transaction description
1	Issued Check No. 570 for $8,400 to pay Realty Bites for two month's worth of rent in advance.
1	Obtained a loan of $59,000 from ZNZ Bank at a simple interest rate of 6% per year. The first interest payment is due at the end of August 2017 and the principal of the loan is to be repaid on June 1, 2021.
3	Made payment of $764 to Integer Energy for 3 months of electricity up to and including May 31, Check No. 571.
4	Turbo Tech paid the full amount owing on their account.
4	Paid sales staff wages of $13,224 for the week up to and including yesterday, Check No. 572. Note that $6,637 of this payment relates to the wages expense incurred during the last week of May.
5	Paid the full amount owing to Big Telco, Check No. 573.
7	Issued Check No. 574 to Office Supplies Warehouse for the purchase of $301 worth of office supplies.

After completing this practice set page, you should know how to record basic transactions in the journals provided below and understand the posting process in the manual accounting system. Note that you will record the remaining June transactions in the following sections of this practice set.

Remember, one purpose of using special journals is to make the posting process more efficient by posting the total of most columns in the special journals after all of the transactions for the period have been recorded. However, some parts of a journal entry are still required to be posted on a daily basis. View the company's accounting policies and procedures for details of what is to be posted daily or monthly.

Instructions for week 1

1)Record all week 1 transactions in the relevant journals.

Note that special journals must be used where applicable. Any transaction that cannot be recorded in a special journal should be recorded in the general journal.

2)Post entries recorded in the journals to the appropriate ledger accounts according to the company's accounting policies and procedures.

Note that the relevant totals of the special journals will be posted to the general ledger accounts at the end of the month. You will enter this before you prepare the Bank Reconciliation Statement.

Remember to enter all answers to the nearest whole dollar. When calculating a discount, if a discount is not a whole number, round the discount to the nearest whole dollar. Then, to calculate the cash amount, subtract the discount from the original amount.

Additional instructions

Displaying selected accounting records:

To save space, not all accounting records (e.g. journals and ledgers) will be displayed on every page. However, on each page you can access all accounting records necessary to answer the questions on that page.

There are several tabs representing different views of the accounting records. The active tab by default is Show All, but you may also select to view just one particular accounting record by selecting the appropriate tab.

If you fill in any accounting records and change the view on the page by selecting a different tab, the information that you have entered will remain in that accounting record and be displayed whenever you can see that accounting record.

Before submitting your answers, we recommend that you click the Show All tab and check that all relevant accounting records have been completed. You are required to complete all relevant accounting records before pressing the Submit answers button. Once submitted, you will not be able to return to the page to re-enter or alter your answers.

Journals:

Each transaction recorded in a special journal must be entered in one line. In order to receive full points, you must not split up the relevant transaction into more than one line in the special journal.

For certain transactions in special journals, some accounting textbooks do not always require an account to be chosen under the column labeled Account. In this practice set you arerequired to select an account for each transaction in the special journals. Specifically, in all special journals, under the column labeled Account, you must select the correct account name for each transaction in order to receive full points. Note that for some transactions, this will mean that the account name selected will correspond to the heading of one of the columns in that special journal.

For each journal, in the Post Ref. column you will need to correctly type the account number of the account you are posting to. In particular, in special journals, some accounting textbooks do not always require a reference to be recorded in the Post Ref. column. In this practice set, in order to receive full points, every transaction entered in a special journal requires an entry in the Post Ref. column. Note that in the special journals, if the account name selected for a transaction corresponds to the heading of one of the columns in that special journal, the post ref is to be recorded as an X. This is because these transactions are not posted on a daily basis. In order to receive full points, you must record only the letter Xin the Post Ref. column for these transactions.

Note that in special journals, the Other Accounts column should not be used to record movements of inventory.

There may be entries in the general journal that require posting to both a control account and a subsidiary ledger. In these cases, after you have posted to both ledgers, you should enter the reference for both the general ledger account and the subsidiary ledger account in the Post Ref. column to indicate that you have posted to both accounts. For example, if the reference number for the control account is 110 and the reference number for the subsidiary ledger account is 110-1, you should type '110/110-1' into the Post Ref. column.

General journal entries do NOT require a description of the journal entries.

Ledgers:

When posting a transaction to a ledger account, under the Description column, please type the description of the transaction directly into the field. The exact wording does not matterfor grading purposes. For example, it does not matter in an electricity transaction if you type 'Paid for electricity' or 'Paid electricity bill'.

For each ledger, under the Ref. column, you need to select the correct journal from a list in the drop-down box provided in order to receive full points.

If the balance of a ledger account is zero you do not need to select a debit or credit from the drop-down box.

Each transaction posted to the subsidiary ledgers must be entered in one line. In order to receive full points, you must not split up the relevant transaction into more than one line in the subsidiary ledger.

Both journals and ledgers:

Most journals and ledgers will have blank rows left at the end of the page.

Some journals and ledgers may not require any entries.

When purchases and sales are recorded in special journals, changes in inventory must not be posted to the Merchandise Inventory account in the general ledger on a daily basis.

chocolateporpoise367

Week 5
29	Received 13 Bungee Kits for $420each, which were ordered on the 24^th, agreed terms withJ. J. Spud are 2/10, n/30.
29	Great Sports paid the full amountowing on their account.
29	Made cash sale of 30 Melon WattSkateboards for $280 each plus 5% sales tax.
30	Purchased 27 Specialist Body Boardswith cash for a list price of $100 each. A trade discount of 20%applies, Check No. 780.
30	Paid monthly salary of $5,400 to Orlando Chadwick, Check No.781. 1)Record all week 1 transactions in therelevant journals. Note that special journals must be used where applicable. Anytransaction that cannot be recorded in a special journal should berecorded in the general journal. 2)Post entries recorded in the journals to theappropriate ledger accounts according to the company's accountingpolicies and procedures.

sapphiregoose614

Week 2 11 Balls 'n All paid the full amount owing on theiraccount. 11 Made cash sale of 24 Melon Watt Skateboards for $280each plus 5% sales tax. 12 Made payment of $1,376 to State Powerfor 3 months of electricity up to and including May 31, Check No.772. 12 Paid sales staff wages of $1,730 for the week up to andincluding yesterday, Check No. 773. 13 Paid the full amount owingto Sport Borders, Check No. 774. 13 Sold 29 Specialist Body Boardsto Croquet and Cricket for $260 each, plus 5% sales tax, InvoiceNo. 410. 1)Record all week 1 transactions in the relevant journals.Note that special journals must be used where applicable. Anytransaction that cannot be recorded in a special journal should berecorded in the general journal. 2)Post entries recorded in thejournals to the appropriate ledger accounts according to thecompany's accounting policies and procedures.

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ACC1000 Chapter Notes - Chapter 5: Current Liability, Subledger, Current Asset

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