Day 209

Special journals

We all know that general journal has been an important recording instrument in the accounting process. On the purpose of concise and accurate recording, transactions are required to be recorded in this journal before posted into ledgers. Hence all entries are traceable and details are explained in the reference notes. The general journal itself constructed the fundamental start for the whole recording progress. However, there are other special journals functions toward the same goal. These specialized journals have distinct purposes and therefore, are used to classify different entries. In fact, all the transactions should be allocated into these journals first according to their characteristics. Only the remaining ones will be recorded on general journals.

There are four major types of special journals. The first two are cash receipt and cash payment journal. As described by their names, the cash receipt journal is used to record cash inflow transactions. On the contrary, cash payment journal will only account for cash outflows. The columns outline the ledger accounts that have been involved. To illustrate, the cash receipt journal should include debit cash at bank, credit sales, debit sales discounts, credit accounts receivables, debit cost of sales, credit inventory, credit other accounts. Where those columns represent the cash receipt form cash sales, creditors’ payment or other source of cash inflows. The cash payments journal follows the similar pattern, but in the form of cash payments. Thus, payments to debtors,  cash purchases of inventory and other payments are needed to be mentioned in this journal. Since the journal performed as a summarization tool, we only need to post the total amount of each column toward specific general ledger at the end of the month. Except for the creditors, debtors and other accounts. The creditors and debtors are required to be posted immediately into corresponding subsidiary account, and the total amount is going to be recorded in control accounts. In addition, the other accounts column is comprised of diversified source of receipt/payment Consequently, each transaction has to be posted right afterwards to prevent further perplexity. The other two special journals are sales and purchase journal. Where concentrate on sales and purchase on credit. So the sales journal contains Dr sales, Cr creditors, Dr Cost of sales and Cr inventory.  The puchase journal is even more straight-forward, it focuses on the Dr. Inventory, Cr. Debtors plus the relative terms of this purchase on credit. 

The special journals and the general journal function together to establish the pre-posting step in accounting. We should remember the original aim of these journals is to ensure clear and precise accounting for transactions. Thereby we must maintain error-free and avoid complexity on our recording process.