Recording Transactions in a General JournalRecording Transactions in a General Journal

Making Accounting Relevant

Some people keep journals to keep

track of their daily activities.

Making Accounting Relevant

Some people keep journals to keep

track of their daily activities.

What do you think a business journal is used for? What would be contained in that journal?

What do you think a business journal is used for? What would be contained in that journal?

Section 1 The Accounting Cycle

Section 1 The Accounting Cycle

Students will be able to:

Explain the first three steps in the accounting cycle.

Explain why is it necessary to journalize transactions.

Name and describe several examples of source documents.

Apply information from the different kinds of source documents used in a business.

Students will be able to:

Explain the first three steps in the accounting cycle.

Explain why is it necessary to journalize transactions.

Name and describe several examples of source documents.

Apply information from the different kinds of source documents used in a business.

Section 1 The Accounting Cycle

Section 1 The Accounting Cycle

Students will be able to:

Define the accounting terms related to journalizing transactions in a journal.

Explain the difference between a calendar year and a fiscal year.

Describe the steps to make a general journal entry

Make general journal entries and correct errors in journal entries.

Students will be able to:

Define the accounting terms related to journalizing transactions in a journal.

Explain the difference between a calendar year and a fiscal year.

Describe the steps to make a general journal entry

Make general journal entries and correct errors in journal entries.

On October 1 Maria Sanchez took $25,000 from personal savings and deposited that amount to open a business checking account in the name of Roadrunner Delivery Service, Memorandum 1.

On October 1 Maria Sanchez took $25,000 from personal savings and deposited that amount to open a business checking account in the name of Roadrunner Delivery Service, Memorandum 1.

Chapter 3 The Accounting Equation:Assets = Liabilities + Owner’s Equity25,000 = 25,000Cash in Bank Maria Sanchez, Capital

Chapter 4 T-Accounts:Cash in Bank Maria Sanchez, Capital

25,000 25,000Debit Credit Debit Credit + - - +

Business Transaction 1 (con’t.)

JOURNAL ENTRY 7.

On October 1 Maria Sanchez took $25,000 from personal savings and deposited that amount to open a business checking account in the name of Roadrunner Delivery Service, Memorandum 1.

CHAPTER 5CHAPTER 5

Recording Transactions in the General Journal Recording Transactions in the General Journal

The Steps of the Accounting CycleThe Steps of the Accounting Cycle

Section 1 The Accounting Cycle (con’t.)Section 1 The Accounting Cycle (con’t.)

The First Step in the Accounting Cycle: Collecting and Verifying Source Documents

The First Step in the Accounting Cycle: Collecting and Verifying Source Documents

Section 1 The Accounting Cycle (con’t.)Section 1 The Accounting Cycle (con’t.)

The accounting cycle starts by

collecting and verifying the accuracy

of source documents.

Source document is a paper

prepared as evidence of that

transaction.

The accounting cycle starts by

collecting and verifying the accuracy

of source documents.

Source document is a paper

prepared as evidence of that

transaction.

The First Step in the Accounting Cycle: Collecting and Verifying Source Documents (con’t.)

The First Step in the Accounting Cycle: Collecting and Verifying Source Documents (con’t.)

Section 1 The Accounting Cycle (con’t.)Section 1 The Accounting Cycle (con’t.)

Invoice:Lists specificinformationabout abusinesstransactioninvolving thebuying or selling of an item. The invoice contains the date of the transaction, along with the quantity, description, and cost of each item.

The First Step in the Accounting Cycle: Collecting and Verifying Source Documents (con’t.)

The First Step in the Accounting Cycle: Collecting and Verifying Source Documents (con’t.)

Section 1 The Accounting Cycle (con’t.)Section 1 The Accounting Cycle (con’t.)

Receipt:A record ofcash receivedby a business.It indicates thedate the payment was received, thename of the person or business from whom the payment was received, and the amount of the payment.

The First Step in the Accounting Cycle: Collecting and Verifying Source Documents (con’t.)

The First Step in the Accounting Cycle: Collecting and Verifying Source Documents (con’t.)

Section 1 The Accounting Cycle (con’t.)Section 1 The Accounting Cycle (con’t.)

Memorandum:A brief writtenmessage thatdescribes atransactionthat takesplace within abusiness. Oftenused if no other source document exists for the business transaction.

The First Step in the Accounting Cycle: Collecting and Verifying Source Documents (con’t.)

The First Step in the Accounting Cycle: Collecting and Verifying Source Documents (con’t.)

Section 1 The Accounting Cycle (con’t.)Section 1 The Accounting Cycle (con’t.)

Check Stub:The check stublists the sameinformation thatappears on acheck: the datewritten, the personor business towhom the check was written, and the amount of the check. The check stub also shows the balance in the checking account before and after each check is written.

The Second Step in the Accounting Cycle: Analyzing Business Transactions

The Second Step in the Accounting Cycle: Analyzing Business Transactions

Section 1 The Accounting Cycle (con’t.)Section 1 The Accounting Cycle (con’t.)

Analyzing information on the

source documents to determine

the debit and credit parts of each

transaction.

Analyzing information on the

source documents to determine

the debit and credit parts of each

transaction.

The Third Step in the Accounting Cycle: Recording Business Transactions in a Journal

The Third Step in the Accounting Cycle: Recording Business Transactions in a Journal

Section 1 The Accounting Cycle (con’t.)Section 1 The Accounting Cycle (con’t.)

Record the debit and credit parts of each business transaction in a journal.

A journal is a record of all of the transactions of a business.

The process of recording business transactions in a journal is called journalizing.

Record the debit and credit parts of each business transaction in a journal.

A journal is a record of all of the transactions of a business.

The process of recording business transactions in a journal is called journalizing.

Section 2 Recording Transactions in the General Journal

Section 2 Recording Transactions in the General Journal

Students will be able to:

Define the accounting terms related to journalizing transactions in a journal.

Explain why is it necessary to journalize transactions.

Describe the steps to make a general journal entry

Make general journal entries and correct errors in journal entries.

Students will be able to:

Define the accounting terms related to journalizing transactions in a journal.

Explain why is it necessary to journalize transactions.

Describe the steps to make a general journal entry

Make general journal entries and correct errors in journal entries.

Section 2 Recording Transactions in the General Journal

Section 2 Recording Transactions in the General Journal

Enduring Understanding:

The general journal is used to summarize and record all detail daily transactions of a business.

Essential Questions

How does a general journal organize and reflect the value of your business?

Enduring Understanding:

The general journal is used to summarize and record all detail daily transactions of a business.

Essential Questions

How does a general journal organize and reflect the value of your business?

Business Transaction (con’t.)

DEBIT-CREDIT RULE 4. Which account is debited? For what amount?

5. Which account is credited? For what amount?

Section 2 Recording Transactions in the General Journal (con’t.)

Section 2 Recording Transactions in the General Journal (con’t.)

Recording a General Journal Entry (con’t.)Recording a General Journal Entry (con’t.)

BUSINESS TRANSACTION ANALYSIS (con’t.)

Business Transaction (con’t.)

T ACCOUNTS 6. What is the complete entry in T-account form?

Section 2 Recording Transactions in the General Journal (con’t.)

Section 2 Recording Transactions in the General Journal (con’t.)

Recording a General Journal Entry (con’t.)Recording a General Journal Entry (con’t.)

BUSINESS TRANSACTION ANALYSIS (con’t.)

Business Transaction (con’t.)

JOURNAL ENTRY 7. What is the complete entry in general journal form?

Section 2 Recording Transactions in the General Journal (con’t.)

Section 2 Recording Transactions in the General Journal (con’t.)

Recording a General Journal Entry (con’t.)Recording a General Journal Entry (con’t.)

BUSINESS TRANSACTION ANALYSIS (con’t.)

Business Transaction 1

ANALYSIS Identify 1. The accounts Cash in Bank and Maria Sanchez, Capital are affected.

Classify 2. Cash in Bank is an asset account. Maria Sanchez, Capital is an owner’s capital account.

+ / – 3. Cash in Bank is increased by $25,000. Maria Sanchez, Capital is increased by $25,000.

On October 1 Maria Sancheztook $25,000 from personal savings and deposited that amount to open a businesschecking account in the nameof Roadrunner Delivery Service, Memorandum 1.

Section 2 Recording Transactions in the General Journal (con’t.)

Section 2 Recording Transactions in the General Journal (con’t.)

Business Transaction 1 (con’t.)

DEBIT-CREDIT RULE 4. Increases in asset accounts are recorded as debits. Debit Cash in Bank for $25,000.

5. Increases in owner’s capital account are recorded as credits. Credit Maria Sanchez, Capital for $25,000.

On October 1 Maria Sanchez took $25,000 from personal savings and deposited that amount to open a business checking account in the name of Roadrunner Delivery Service, Memorandum 1.

Section 2 Recording Transactions in the General Journal (con’t.)

Section 2 Recording Transactions in the General Journal (con’t.)

Recording a General Journal Entry (con’t.)Recording a General Journal Entry (con’t.)

Business Transaction 1 (con’t.)

T ACCOUNTS 6.

On October 1 Maria Sanchez took $25,000 from personal savings and deposited that amount to open a business checking account in the name of Roadrunner Delivery Service, Memorandum 1.

Maria Sanchez,Cash in Bank Capital

Debit

+

25,000

Credit

+

25,000

Credit

–

Debit

–

Section 2 Recording Transactions in the General Journal (con’t.)

Section 2 Recording Transactions in the General Journal (con’t.)

Recording a General Journal Entry (con’t.)Recording a General Journal Entry (con’t.)

Business Transaction 1 (con’t.)

JOURNAL ENTRY 7.

On October 1 Maria Sanchez took $25,000 from personal savings and deposited that amount to open a business checking account in the name of Roadrunner Delivery Service, Memorandum 1.

Section 2 Recording Transactions in the General Journal (con’t.)

Section 2 Recording Transactions in the General Journal (con’t.)

Recording a General Journal Entry (con’t.)Recording a General Journal Entry (con’t.)

Business Transaction 4

ANALYSIS Identify 1. The accounts Delivery Equipment and Accounts Payable—North Shore Auto are affected.Classify 2. Delivery Equipment is an asset account. Accounts Payable— North Shore Auto is a liability account. + / – 3. Delivery Equipment is increased by $12,000. Accounts Payable— North Shore Auto is increased by $12,000.

On October 9 Roadrunnerbought a used truck on account from North ShoreAuto for $12,000, Invoice 200.

Section 2 Recording Transactions in the General Journal (con’t.)

Section 2 Recording Transactions in the General Journal (con’t.)

Business Transaction 4 (con’t.)

DEBIT-CREDIT RULE 4. Increases in asset accounts are recorded as debits. Debit Delivery Equipment for $12,000.

5. Increases in liability accounts are recorded as credits. Credit Accounts Payable—North Shore Auto for $12,000.

On October 9 Roadrunner bought a used truck on account from North Shore Auto for $12,000, Invoice 200.

Section 2 Recording Transactions in the General Journal (con’t.)

Section 2 Recording Transactions in the General Journal (con’t.)

Recording a General Journal Entry (con’t.)Recording a General Journal Entry (con’t.)

Business Transaction 4 (con’t.)

T ACCOUNTS 6.

On October 9 Roadrunner bought a used truck on account from North Shore Auto for $12,000, Invoice 200.

Delivery Accounts Payable—Equipment North Shore Auto

Debit

+

12,000

Credit

+

12,000

Credit

–

Debit

–

Section 2 Recording Transactions in the General Journal (con’t.)

Section 2 Recording Transactions in the General Journal (con’t.)

Recording a General Journal Entry (con’t.)Recording a General Journal Entry (con’t.)

Business Transaction 1 (con’t.)

JOURNAL ENTRY 7.

On October 9 Roadrunner bought a used truck on account from North Shore Auto for $12,000, Invoice 200.

Section 2 Recording Transactions in the General Journal (con’t.)

Section 2 Recording Transactions in the General Journal (con’t.)

Recording a General Journal Entry (con’t.)Recording a General Journal Entry (con’t.)

Correcting Errors in General Journal EntriesCorrecting Errors in General Journal Entries An error should never be erased. Use a pen and a ruler to draw a

horizontal line through the entire incorrect item and write the correct information above the crossed-out error.

An error should never be erased. Use a pen and a ruler to draw a

horizontal line through the entire incorrect item and write the correct information above the crossed-out error.

Section 2 Recording Transactions in the General Journal (con’t.)

Section 2 Recording Transactions in the General Journal (con’t.)

Check Your UnderstandingCheck Your Understanding

1. What accounts would you use to

record the purchase of a

newspaper ad for cash?

2. What accounts would you use to

record the sale of business

services on account?

1. What accounts would you use to

record the purchase of a

newspaper ad for cash?

2. What accounts would you use to

record the sale of business

services on account?

Section 2 Recording Transactions in the General Journal (con’t.)

Section 2 Recording Transactions in the General Journal (con’t.)