Let’s have a look at an example of an entry in the general journal for a sale on credit (sales that will only be paid for in 30 or 60 days etc.):-
Journal Example a Sale on Credit in the general journal
Note - Accounts Receivable is the ‘control account’ ledger
used for recording sales that have not yet been paid for. If the sale
was paid for right away the debit account would be ‘bank'.
There is a problem with this type of entry...
... many sales on credit require the entry of repetitive bookkeeping journals
which would be tedious. It is better to only have one journal to enter
- a summary of all sales on credit - at the end of the month.
Therefore, it makes sense to maintain a separate journal designed to handle customer transactions... The Sales Journal.
The sales are listed under each other using only one column for the amounts.
This takes away the need to do debit and credit entries and a
description line for each and every sale, which greatly reduces time
spent on this task.
At the end of the month, the list is totalled and the debit and credit journal entry indicated on the bottom line.
The reference is the first letter of the client’s name (or
surname for an individual), or it could be assigned a number, eg. if the
Accounts Receivable ledger is given the account number ‘003, then
customers could be given the number 003.1, 003.2 etc.
Example of a Journal for a list of different sales on credit
These work much the same as sales journals and are used to record
the purchase of items that will only be paid for in 30, 60 etc. days.
Example of a general journal entry for a purchase on credit
Note - Accounts payable is the ‘control account’ ledger used
for recording purchases that have not yet been paid for.
purchase was paid for right away the credit account would be ‘bank’.
Unlike sales, there are usually many different types of purchases so the Purchases Journal has multi columns to show the detail.
Some types of purchases are made on a frequent basis so these
have their own columns.
See the illustration below.
The frequent ones
are Purchases, Store Supplies and Office Supplies.
The other purchases
that don’t happen so regularly are detailed under the generic ‘Other
Notice how the account numbers are shown in brackets at the bottom of the columns for the frequent purchases.
Whew! ...and that’s only three of the bookkeeping journals! Your
head is probably spinning now with all this information.