What is a 'Journal' with practice question 1

*Journal

*. In accounting, a first recording of financial transactions as they occur in time, so that they can then be used for future reconciling and transfer to other official accounting records such as the general ledger.

* A journal will state the date of the transaction, which account(s) were affected and the amounts, usually in a double-entry bookkeeping method.

*. For an individual, investor or professional manager, a detailed record of traders occurring in the investor's own accounts, used for tax, evaluation and auditing purposes. 

The journal is a book of prime entry which records transactions which are not routine (and not recorded in any other book of prime entry), for example:

• year end adjustments
  
  • depreciation charge for the year
  • irrecoverable debt write-off
  • record the movement in the allowance for receivables
  • accruals and prepayments
  • closing inventory
  • acquisitions and disposals of non-current assets
• opening balances for statement of financial position items
• correction of errors

The journal is a clear and comprehensible way of setting out a bookkeeping double entry that is to be made.

1.When goods are purchased on Credit 

Debit	purchase (increase expense)
Credit	payable account (increase liability

2.When customer return goods to supplier,the customer record the following entry

Debit	payable account (decrease liability)
Credit	purchase return (decrease expense)

3.When goods are purchase on Credit & pay later to supplier

Debit	Payable (decrease liability)
Credit	Cash (decrease current asset)

4.Purchase of machine by cash

Debit	Machine (Increase in Asset)
Credit	Cash (Decrease in Asset)

5.Payment of utility bills

Debit	Utility Expense (Increase in expense)
Credit	Cash (Decrease in Asset)

6.Interest received on bank deposit account

Debit	Cash (Increase in asset)
Credit	Finance Income (Increase in Income)

7.Receipt of bank loan principal

Debit	Cash (Increase in Asset)
Credit	Bank Loan (Increase in liability)

8.Issue of ordinary shares for cash

Debit	Cash (Increase in Asset)
Credit	Share Capital (Increase in equity)

9.Purchase of machine by credit

Debit	Machine (Increase in asset)
Credit	payable (Increase liability)

10.When supplier make sales on Cash

Debit	Cash (Increase in asset)
Credit	Sales/Revenue (Increase income)