Page 1 PRINCIPLES OF ACCOUNTS CHAPTER 5: JOURNALS Alan Goh Jiang Wee Name: _________________________________ Index No.: ________ Class: Sec 3___________ Recapitulation: A source document is a specially designed form, which provides details of a business transaction. It contains information like the date, the nature, & types of transactions, the value of the transactions & the names of the buyers & sellers involved. Examples of source document include invoice, credit & debit notes, receipt, cheque counterfoil, & bank statement. For accounting purposes, source documents are important: 1. as evidence of transactions 2. for recording transactions 3. for auditing purposes Source Documents Where is the information in the source documents recorded? Books of Prime Entry (Journals) – books (or diaries) used to record information from source documents is first recorded. General Journal: A business diary used to record all business transactions (other than those for cash or goods), which are not entered in the Special Journals Special Journal: 1. Sales Journal – for credit sales 2. Returns Inwards Journal – for return of goods by customers 3. Purchases Journal – for credit purchases 4. Returns Outwards Journal – for return of goods to suppliers 5. Cash Book – for receipts & payments of cash & cheques (will be covered in Term III)
Page 2 PRINCIPLES OF ACCOUNTS CHAPTER 5: JOURNALS Alan Goh Jiang Wee DIFFERENCE BETWEEN CASH DISCOUNT TRADE DISCOUNT Recording Transactions from Source Documents into Special Journals: (a) Sales Journal Sales Journal is written up from duplicate copies of sales invoices & debit notes sent to customers. ONLY credit sales are recorded in the Sales Journal. Cash sales are recorded in another book called the Cash Book. Example 1: Five Stars Computer Company sells 1000 pieces of mouse pad to ABC Trading Company at S$2.00 per piece. Due to a bulk purchase, Five Stars Computer Co. has decided to give a 10% trade discount. After preparing the Sales Invoice, the accountant of Five Stars Computer Company will record the business transaction in the Sales Journal. (Use the Sales Invoice for reference) Date Particulars Invoice No. Details of Invoice Total
Page 3 PRINCIPLES OF ACCOUNTS CHAPTER 5: JOURNALS Alan Goh Jiang Wee Invoice No.: FS-2002-0001 Date: 10 March 2002 No. Description Quantity Unit Price Total 01 Mouse Pad 1000 S$2.00 S$2,000.00 SUBTOTAL: LESS: TRADE DISCOUNT (10%) NETT S$2,000.00 -S$200.00 S$1,800.00 REMARKS: 1. Cheques should be crossed & made payable to “Five Stars Computer Company” 2. Credit Term is 30 days from the Invoice Date, unless otherwise specified.
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- invoice, Alan Goh Jiang Wee, Goh Jiang Wee, Alan Goh Jiang, Five Stars Computer Company