Subdivision of Journals

Journal Proper and Journal Special

Reason


In a big business, recording of all transactions in one journal is not only inconvenient but also cause delay in collecting information required. Therefore the journal is subdivided into many subsidiary books.

Advantages:

  

Convenience Division of labour Classified information

Subdivision of Journal
Journal

General Journal

Special Journal

Cash Journal

Goods Journal

Bills Journal

Cash receipt Journal

Cash Payment Journal

Bills Receivable Journal

Bills Payable Journal

Purchase Journal

Sales Journal

Purchases Returns Journal

Sales Returns Journal

General Journals
     

Opening entries Closing entries Adjustment entries Transfer entries Rectification entries Purchases of fixed assets

Cash Journal
Reason:
 

Large number of cash transactions Properly maintained cash book is required for control as well as avoiding the chances of fraud For timely payment to creditors as well as reminder for receival from the debtors

Types of Cash book

      

Simple cash book Two columnar cash book Three columnar cash book Multi columnar cash book Cash receipt book Cash payment book Petty Cash book

Simple cash book

Dr Cr

Date Particulars

LF Amount Date

Particular

LF

Amt

EX: Record the following transaction in the cash book and post them in the ledger.  Jan.1 Opening cash balance Rs 5000  Jan.4 Rent paid 2000  Jan.6 Interest received Rs 3000  Jan.15 Cash purchases Rs 4000  Jan. 25 Cash sales Rs 8000  Jan.31 Salaries paid Rs 2000

Dr Date

Particulars

LF

Amt 5000 3000 8000 16000 8000

Date Jan4 Jan15 Jan31 Jan31

Particular By Rent By Purchases A/c By Salaries A/c By Balance C/d

Cr LF Amt 2000 4000 2000 8000 16000

Jan1 To Balance b/d Jan2 To Interest Jan25 To Sales

To Balance b/d Dr Dr Dr To Cash A/c Dr To Cash A/c

Interest account By Cash a/c Sales account By Cash A/c Rent A/c 2000 Purchases A/c 4000

Cr 3000 Cr 8000 Cr Cr

Two Columnar Cash Book

Dr
Date Particulars Discout Cash Date Particulars Discount

Cr
Cash

Trade Discount and Cash Discount: TD is the deduction granted by the supplier from the list price of the goods due to large quantity of sale where as CD is allowed by the creditors to debtors for either buying in cash or for making payment before the stipulated period. TD is allowed on sale of goods while CD is allowed on payment of money TD is not recorded in the books of accounts, they are recorded on the net price. CD is shown in the books of accounts TD may vary with the quantity of goods purchased, while CD may vary with time period.

Three Columnar Cash Book

Dr.
Date Particulars
Discount

Cr.
Cash Bank Date Particulars
Discount

Cash

Bank

Illustration: Jan.1 Opening Balance: Cash Rs 3000, Bank Rs 4000 Jan.4 Rent paid by cheque Rs 2000 Jan.6 Received on account of cash sales Rs 3000 Jan.8 Paid to Mohan Bros. by cheque Rs 2000 and earned Rs 200 as cash discount Jan.10 Received from Suresh by cheque Rs 2000 and allowed him Rs 100 as cash discount Jan.12 Cash sales 20000 Jan.20 Cash purchases Rs 15000 Jan.31 Salaries paid Rs 5000

Dr.
Date Jan1 Particulars
Disct

Cash book
Cash Bank Date Particulars
Disct

Cr.
Cash Bank

J6 J 10 J 12

To Balance b/d To Sales A/c To Suresh To Sales A/c

3000 3000 100 20000

4000 2000

J6 J8 J 20 J 31 J 31

By Rent A/c By Mehta Bros. By Purch. A/c By Salrs A/c By Balance c/d

2000 200 15000 5000 6000 200 26000 2000

2000 6000

100 To Balance b/d Dr. Date

26000 6000

6000 200

Particulars

SALES ACCOUNT Amnt. Date Particulars Jan.1 By Cash A/c Jan.10 By Cash A/c Discount Account

Cr. Amnt. 3000 20000

Date Jan10

Particulars To Sundries A/c

Amnt. 100

Date Jan 8

Particulars By Sundries A/c

Amnt. 200

Contra entry


There are certain transactions where both Cash as well as Bank accounts are involved. In such cases the transaction is recorded on both sides of the cash book. Such an accounting entry which is recorded on both the debit and credit sides of the cash book is known as a contra entry. In order to give a hint to the ledger-keeper, that no posting is required for such an entry, the word C is put in the ledger folio column on both the sides of the cash book.

Cash Receipt and Payment Journal



Cash Receipt Journal: It is meant for recording all cash

receipts. The posting is done daily from the Cash Receipt Book to the Ledger. The concerned accounts are all credited with amount mentioned in the Cash Receipts Journal. The total cash received (as shown by the Cash Receipt Journal) is debited to the cash account at the end of the period.

Cash Payment Journal: It is meant for recording all cash

payments. The posting is done daily from the Cash Receipt Book to the ledger. The concerned accounts are all debited with amount mentioned in the Cash Payments Journal. The total cash paid (as shown by the Cash Payment Journal) is credited to the cash account at the end of the period.

Petty Cash Book



It is maintained to record petty cash expenses of the business, such as postage, cartage, stationary, cleaning charges etc. A petty cashier is appointed under the supervision of the chief cashier, who advances money in the beginning of every month/ quarter, to make payments for all such petty expenses. At the end of the month/ quarter, the petty cashier submits a statement of account of the expenses incurred by him during the month/ quarter and gets a fresh advance. As the chief cashier gives him the fresh advance equivalent to the amount spent by him, in the beginning of each period, the petty cashier has a fixed balance. This advanced money is termed as Imprest or Float.

Purchases Journal


Also known as Purchases or Bought Day Book, it is meant for recording only credit purchases of goods. Posting is done in the credit side of the Personal accounts daily from the Purchase Book. At the end of the period (week/month), the total of Purchase book is debited to the purchase account in the ledger. EX: Record the following transaction and post them in the ledger. Jan.1 Purchased from Ram & Co. on credit: 38 Immersion Heaters @ Rs 10 and 20 Philips Tube lights @ Rs 20 Jan.4 Purchased from Shyam & Co. on credit: 40 Immersion Heaters @Rs 10 and 20 ECE Tube lights @ Rs 15 Jan.8 Purchased from Bajaj & Co. on credit: 20 Electric Irons @ Rs 40 and 3 Electric Mixer @ Rs 100 Jan.24 Purchased from K.C. & Co. on credit: 30 Electric Kettles @ Rs 20 and 40 Table Fans @ Rs 200

Purchases Journal
Date
Jan. 1 Invoice

Particulars
Ram & Co.: 30 Immersion Heaters @ Rs 10 20 Philips Tube lights @ Rs 20 Shyam & Co.: 40 Immersion Heaters @Rs 10 20 ECE Tube lights @ Rs 15 Bajaj & Co. : 20 Electric Irons @ Rs 40 3 Electric Mixer @ Rs 100 K.C. & Co.: 30 Electric Kettles @ Rs 20 40 Table Fans @ Rs 200 Purchase Account Dr.

LF

Amount
300 400 400 300 800 300 600 8000

Amount

700

Jan. 4

700

Jan. 8

1100

Jan. 24

8600 11,100

Jan. 31

Purchase Account
Date Particulars Amnt. 11,100 Date Particulars Amnt. Jan.31 To Sundries

Sales Journal
 

Also known as Sales or Sold Day Book, it is meant for recording only credit sales of goods. The posting is done in the debit side of the Personal accounts daily from the Sales Book. At the end of the period (week/month), the total of Sales book is credited to the Sales account in the ledger. EX: Record the following transactions in the Sales Day Book and post them into the ledger. Jan. 1 Sold to Mukesh & Co.: 10 Electric Heaters @ Rs 20 and 10 Table Lamps 2 Rs 30 Jan. 10 Sold to Suresh & Bros.: 10 Table Fans @ Rs 250 and 20 Philips Tube lights @ Rs 30 Jan. 25 Sold to Ramesh & Co.: 10 Electric Kettles @ Rs 50 and 20 ECE Tube lights @ Rs 30

Sales Journal
Date
Jan. 1 Invoice

Particulars
Mukesh & Co.: 10 Electrical Heaters 10 Table lamps Suresh & Bros.: 40 Table Fans 20 Philips Tube lights Ramesh & Co. : 10 Electric Kettles 20 ECE Tube lights Sales Account @ Rs 20 @ Rs 30 @Rs 250 @ Rs 30 @ Rs 50 @ Rs 30 Cr.

LF

Amount
200 300 2500 600 500 600

Amount

500

Jan. 10

3100

Jan. 25

1100 4,700

Jan. 31

Mukesh & Co. Account Date Jan.1 Particulars To Sales Amnt. 500 Sales A/c Date Particulars Amnt. Date Jan.31 Particulars By Sundries Amnt. 4700 Date Particulars Amnt.

Sales Returns Journal

 

The journal is meant for recording return of goods sold on credit. The posting from the Sales Return Journals is done daily in credit side of the personal accounts. The total of the Sales Return Journal is posted to the debit of Sales Return Account at the end of the period (week/month). The goods which are sold for cash, if returned, are either exchanged for new goods or parties are paid in respect of them or otherwise are recorded in the memorandum book only. Ex: In case Ram & Co. returns the following goods on Jan. 10th : 5 Electric Heaters @ Rs 20 and 3 Philips Tube light @ Rs 30 Sales Return Journals
Date Cr. Note No Particulars
Jan.1 Ram & Co.: 5 Electric Heaters @ Rs 20 3 Philips Tube light @ Rs 30 Sales Returns A/c Dr.

LF

Amnt.
100 90

Amnt.

190 190

Purchase Returns Journal

 

The journal is meant for recording return of goods purchased on credit. The posting from the Purchase Return Journals is done daily in debit side of the personal accounts. The total of the Purchase Return Journal is posted to the credit of Purchase Return Account at the end of the period (week/month). EX: In case Shyam & Co. is returned 3 Electric Irons @ Rs 40 on Jan. 12th and on Jan.21 3 Electric Mixer @ Rs 300 is returned to Bajaj & Co. Purchases Returns Journal

Date Jan.12 Jan.21

Dr Note No.

Particulars Shyam & Co. : 3 Electric Irons @ Rs 40 Bajaj & Co. 3 Electric Mixer @ Rs 300 Purchase Returns A/c Cr.

LF

Amnt

Amnt. 120 900 1020

Jan.31

Bills of Exchange:


It is a documentary evidence in writing, containing an unconditional order signed by the maker, directing a certain person to pay a certain sum of money only to, or to the order of, a certain person, or to the bearer of the instrument. A bills of exchange becomes legally valid only after its acceptance. A bills of exchange accepted by a customer is called Bills Receivable and a bills of exchange drawn by the supplier on the business entity is called Bills Payable. Bills Receivable and Bills Payable books record bills, accepted by customer and drawn by supplier, date-wise to help the business unit to easily find out which bill has become matured on a particular date.

Bills Receivable and Bills Payable Books:



It records bills raised on, and accepted by, customers.

Bills Receivable Book
Party from whom received Date of Bill Due Date Place of Payment Amount L F

Date of Voucher Receipt No.

It records bills raised by suppliers

Bills Payable Books
Date of Bill Due Date Place of payment Amou nt L F

Date of Voucher Party by whom acceptance No. Drawn