Special Journals in Accounting: A Comprehensive Guide, Lecture notes of Accounting

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SPECIAL JOURNALS

LEARNING OUTCOMES

a. Explain what are special journals and why

these are needed.

b. Enumerate the special journals and their

features.

c. record the transactions in special journals

d. makes postings to the general ledger and the

subsidiary ledgers.

Learning Outcome B

Special journals may consist of two books:

cash receipts journal- receipt of customers/clients are recorded

cash payments journal- payments of expenses and liabilities are

recorded

A general journal, is not a special journal. It is always maintained to

record other transactions such as non cash, adjustments, and closing

entries,

To illustrate: Dr. Guy opened a medical clinic and for the month of May

the following are his activities:

1 Opened a clinic with an investment of P50,000 cash, medical

equipment of P500,000, furniture and fixtures of P350,000.

2. Purchased from Supplier X medical supplies on account worth

P100,000.

3. Received cash of P10,000 from Santos for medical services rendered

4. Cruz paid cash for a minor operation, P5,000 and promised to pay the

Cash Receipts Journal Date Augus t 3 4 Received From Mr. Romy Cruz Miss Ivy Santos Explanation Ref Consultation OR 1 Minor surgery OR 2 Cash Debit 10, 5, 15, Medical Fees Credit 10, 10, Accts Recble Credit 5, 5,

Cash Disbursements

JournalDate

August 5 6 Paid To Supplier X PLDT Explanation Paid partial utility bill Vouche r No 01 02 Cash Credit 50, 0 5, 55, Accts Payable Debit 50, 50, Sundry Acct Title Utility expense Debit 5, 5,

Debit total P15,000 = Credit Total P15,

Debit total P55,000 = Credit Total

This is a special journal were cash receipts and cash disbursements are

recorded. In this special journal there are two money columns for cash:

debit (for cash receipts) and credit for cash disbursements. This is the

principal money column. The other specific money columns depend on

accounts that are most used during the month- such as sales,

purchases, freight in or freight out, utility expenses , etc. Otherwise, if

the transaction or account is seldom occurring create a sundry (meaning

others) column with a debit and credit side where the other accounts are

placed. The rule is no entry in the cash journal unless there is a debit to

cash or a credit to cash.

So if the transaction is account sales then it should be in the general

journal.

CASH JOURNAL

Let’s answer Exercise 8 (Excel)

Only the totals of the accounts receivable debit P17,000 and sales credit P25,000 are posted to the general ledger. The cash sales debit will be offset against the cash sales credit in the cash receipts journal. The debit to cash of P8,000 is also recorded in the cash receipts journal and will be posted to the general ledger.

CASH RECEIPTS JOURNAL

This is a book of original entry where all cash receipt transactions are recorded such as

cash investment, loans, cash sales, collections of customers' accounts and cash refund.

Again, take note of the specific money columns provided. The rules are explained in

page 252. To illustrate, let us continue with the Pasco Hardware by assuming the

following additional transactions:Oct. 1 Dan Pasco made a cash investment of P50,000.

2 Borrowed from PNB P50,000 and issued a 90 day 18% note.

6 Cash sales summary for the week, P8,000.

8 Collected P5,000 from Lopez Trading.

10 Collected in full from Chavez Store.

CASH RECEIPTS JOURNAL

Posting to the general ledger for the sales will appear as follows:

Purchases debit of P16,500 and Accounts Payable credit of P14,000 will be posted to the general ledgers. Cash purchases credit is offsetting against the cash purchases debit in the cash disbursements journal. Refer to pages 258 and 259 of the textbook.