So far you have learned to journalize transactions in
a two-column general journal and post these entries individually to
the general ledger. This procedure is satisfactory in only the very
smallest companies. To expedite journalizing and posting
transactions, most companies use special journals in addition to the
journal is used to group similar types of transactions, such
as all sales of merchandise on account, or all cash receipts. The
types of special journals an enterprise uses depend largely on the
types of transactions that occur frequently in its business. Most
merchandising enterprises use the following journals to record
Sales journal-- all sales of
merchandise on account.
Cash receipts journal-- all cash
received (including cash sales).
Purchases journal-- all purchases
of merchandise on account.
Cash payments journal-- all cash
paid (including cash purchases).
If the transaction cannot be recorded in a special
journal, it is recorded in the general journal. For example, if you
had special journals for only the four types of transactions listed,
purchase returns and allowances or sales returns and allowances
would be recorded in the general journal. Similarly, correcting,
adjusting, and closing entries are recorded in the general journal.
Other types of special journals may be used in some situations. For
example, where purchase returns and allowances or sales returns and
allowances are frequent, special journals may be employed to record
The journalization and posting process is illustrated
using the sales journal and the cash receipts journal. The same
procedures apply to all special journals with only the column and
account names being different.
The sales journal is used to record sales of
merchandise on account. Cash sales of merchandise are entered in the
cash receipts journal. Similarly, credit sales of assets other than
merchandise are entered in the general journal.
Journalizing Credit Sales
Each entry in the sales journal used here results in a
debit to Accounts Receivable and a credit to Sales. Since each sale
on account involves a debit to Accounts Receivable and a credit of
equal amount to Sales, only one line is used to record the
transaction. Postings from the sales journal are made daily to the individual accounts
receivable in the subsidiary ledger and monthly to the general ledger.
Posting the Sales
A check mark is inserted in the reference posting
column instead of an account number to indicate that the daily
posting to the customer's account has been made. A check mark is
used when subsidiary ledger accounts are not numbered. A typical
sales journal with related accounts is shown in Illustration 2.
At the end of the month, the column total of the sales
journal is posted to the general ledger-as a debit to Accounts
Receivable (account No. 4) and as a credit to Sales (account No.
60). The insertion of the respective account numbers below the
column total in the sales journal indicates that the postings have
been made. In both the general ledger and subsidiary ledger
accounts, the reference S1 indicates that the posting came from page
1 of the sales journal.
Journal. All receipts of cash are recorded in the cash receipts journal. The most
common types of cash receipts are cash sales of merchandise and
collections of accounts receivable. Many other possibilities exist,
however, such as receipt of money from bank loans and cash proceeds
from disposals of equipment, buildings, or land. As a result, a
one-column cash receipts journal is not sufficient to accommodate
all possible cash receipts transactions; therefore, a
multiple-column cash receipts journal is used. Generally, a cash
receipts journal includes debit columns for cash and sales discounts
and credit columns for accounts receivable, sales, and "other"
accounts. The other accounts category is used when the cash receipt
does not involve a cash sale or a collection of accounts receivable.
A five-column cash receipts journal is shown in Illustration 3. When
a special journal has more than one column it is often referred to
as a columnar journal.
Journalizing and Posting
Cash Receipts Journal
Additional credit columns may be used if they
significantly reduce postings to a specific account. For example,
the cash receipts of a loan company, such as Household Finance,
include thousands of collections from customers that are credited to
Loans Receivable and Interest Revenue. A significant saving in
posting would result from using separate credit columns for Loans
Receivable and Interest Revenue. In contrast, a retailer that has
only one interest collection a month would not reduce its postings
by using a separate column for interest revenue.
In a columnar journal, as in a single-column journal,
only one line is needed for each entry. However, in contrast to a
single-column journal, an
explanation is given for each entry, and there must be equal
debit and credit amounts for each line. When the collection from
Abbot Sisters on May 10 is journalized, for example, three amounts
are indicated. Note also that the Accounts Credited column is used
to identify both general ledger and subsidiary ledger account
titles. The former is illustrated in the May 1 entry for Karns'
investment; the latter is illustrated in the May 10 entry for the
collection in full from Abbot Sisters.
Posting the Cash Receipts Journal
Posting a columnar journal involves the following
totals except the total for the Other Accounts column are
posted once at the end of the month to the account title
specified in the column heading, such as Cash or Accounts
||The total of
the Other Accounts column is not posted. Instead, the
individual amounts comprising the total are posted separately
to the general ledger accounts specified in the Accounts
Credited column. See, for example, the credit posting to D. A.
Karns, Capital. The symbol (X) is inserted below the total of
this column to indicate that the amount is not
individual amounts in a column, posted in total to a control
account (Accounts Receivable, in this case), are posted daily
to the subsidiary ledger account specified in the Accounts
Credited column. See, for example, the credit posting of
$10,600 to Abbot Sisters.
Therefore, cash is posted to account No. 1, accounts
receivable to account No. 4, sales to account No. 60, and sales
discounts to account No. 61. The symbol CR is used in the ledgers to
identify postings from the cash receipts journal.
Format of Purchases Journal and Cash Payments
The column headings that might be used in a typical
single-column purchases journal and a multiple-column cash payments
journal are shown in Illustration 4.
Purchases Journal and Cash
||Other Accounts Dr.
||Accounts Payable Dr.
||Store Supplies Dr.
||Purchase Discounts Cr.