8/3/20203.5 Use Journal Entries to Record Transactions and Post to T-Accounts - Principles of Accounting, Volume 1: Financial Accounting | Open…1/26When we introduced debits and credits, you learned about the usefulness of T-accounts as a graphicrepresentation of any account in the general ledger. But before transactions are posted to the T-accounts,they are first recorded using special forms known asjournals.JournalsAccountants use special forms calledjournalsto keep track of their business transactions. A journal is thefirst place information is entered into the accounting system. A journal is often referred to as thebook oforiginal entrybecause it is the place the information originally enters into the system. A journal keeps ahistorical account of all recordable transactions with which the company has engaged. In other words, ajournal is similar to a diary for a business. When you enter information into a journal, we say you arejournalizingthe entry. Journaling the entry is the second step in the accounting cycle. Here is a picture of ajournal.You can see that a journal has columns labeled debit and credit. The debit is on the left side, and the creditis on the right. Let’s look at how we use a journal.When filling in a journal, there are some rules you need to follow to improve journal entry organization.Formatting When Recording Journal EntriesInclude a date of when the transaction occurred.The debit account title(s) always come first and on the left.The credit account title(s) always come after all debit titles are entered, and on the right.The titles of the credit accounts will be indented below the debit accounts.You will have at least one debit (possibly more).You will always have at least one credit (possibly more).The dollar value of the debits must equal the dollar value of the credits or else the equation will go outof balance.You will write a short description after each journal entry.Skip a space after the description before starting the next journal entry.An example journal entry format is as follows. It is not taken from previous examples but is intended tostand alone.Note that this example has only one debit account and one credit account, which is considered asimpleentry. Acompound entryis when there is more than one account listed under the debit and/or creditcolumn of a journal entry (as seen in the following).
8/3/20203.5 Use Journal Entries to Record Transactions and Post to T-Accounts - Principles of Accounting, Volume 1: Financial Accounting | Open…2/26Notice that for this entry, the rules for recording journal entries have been followed. There is a date of April1, 2018, the debit account titles are listed first with Cash and Supplies, the credit account title of Common