FAR Lesson 2 Accounting Systems Special Journal

177
Chapter 7
ACCOUNTING SYSTEMS:
Combination and Special Journals
Controlling Account and Subsidiary Ledgers
Chapter Learning Objectives
• Distinguish business organizations that employ the accounting system that uses
either combination or special journals.
• Illustrate the uses of special journals: for sales, purchases, cash receipts, cash
disbursement, and general journal.
• Identify the different transaction cycles and other transactions that will help
facilitate the recording using combination or special journals.
• Justify and appreciate the division of labor provided by the special journal.
Transactions are usually recorded in the general journals, posted to the ledgers,
summarized, to be the basis for preparing the financial statements. It is always a problem
for the preparer of financial statements to facilitate recording, and postings of
transactions to the ledger; hence, several ways have been devised to reduce the
recording and posting labor. Preparers of financial statement took advantage of the fact
that journal entries and routine transactions always result in debits and credits to the
same accounts. One of the simplest labor saving devices is a journal in which special
columns are provided for accounts frequently debited or credited.
COMBINATION JOURNAL
The combination journal saves labor in writing the journal entries. It has several
columns for accounts frequently used or for routine transactions. It is not necessary to
write the account titles each time the accounts are debited or credited. The transactions
of Bangladesh RTW for the month of September, the recording in the two-column journal
as compared with the entries in the combination journal illustrate the mechanics of using
the journal.
1. The owner invested cash of P500,000 and inventories worth P125,000 to start an
RTW business.
Date Particulars Debit Credit

1 Cash 500,000
Inventories 125,000
Cruz capital 625,000
Investment of the owner
2. Purchased land P300,000, and building worth P500,000. A 20% down payment
was paid and the balance by a 6% 360-day mortgage payable.
2 Land 300,000
Building 500,000
Cash 160,000
Mortgage payable 640,000
Purchase of land and buildings
178
3. The business purchased merchandise worth P150,000 from Malaysia Clothing,

P150,000, cash.
3 Purchases 150,000
Cash 150,000
Purchases – Malaysia Clothing
4. Purchased store equipment from Automatic Center, P15,000 on terms: 2/10;

n/30.
4 Store equipment 15,000
Accounts payable 15,000
Automatic Center, 2/10; n/30
5. Cash sales for the week, P25,000, and paid the freight to ABC Forwarders for the
merchandise sold, P1,500.
5 Cash 25,000
Sales 25,000
Cash Sales

5 Freight-out 1,500
Cash 1,500
Payment of freight
6. Sold good to Cambodia Fashion House worth P35,000 on terms: 20% down,
balance 2.10, n/30.

6 Cash 7,000
Accounts receivable 28,000
Sales 35,000
Sales, Cambodia, 2/10; n/30
7. The business paid in full the accounts payable to Automatic Center less the
discount of P300.
7 Accounts payable 15,000
Store equipment 300
Cash 14,700
Payment of accounts
8. Sold merchandise to English Fashion amounting to P75,000 on terms: 20%

down, balance on a 6%, 90-day promissory note.
8 Cash 15,000
Notes receivable 60,000
Sales 75,000
English Fashion, 6%, 90-day
179
9. Sold goods to Rose Fashions, P80,000 on terms: 2/15, 1/10, n/30.

9 Accounts receivable 80,000
Sales 80,000
Rose Fashion, 2/15, 1/10, n/30
The recoding of the transactions of Bangladesh RTW in the combination journal is

shown on the next page.
Analysis of the combination journal revealed that frequent transactions involved

cash, accounts receivable, and sales; thus, columns for these accounts were provided to
facilitate the recording of transactions involving the accounts mentioned. Sundry column
with debit and credit was also provided to allow recording of those transactions with
accounts whose columns are not provided. The cash for P500,000, inventories for
125,000 and Cruz capital for P625,000 were not written as debit and credit in the
combination journal. But instead, the amounts were directly entered into their respective
columns such that the P500,000 was written under debit column of cash account. Since
no columns were provided for inventories of P125,000 , it was entered into the debit
column of the sundry, and Cruz capital of P625,000 was entered into the credit column of
the sundry.
The acquisition of land and building called for the recording of P160,000 under
credit column of cash. Land for P300,000, building for P500,000, and mortgage payable
for P640,000 required recording in the sundry columns of the journal. Purchases from
Malaysia Trading was recorded by a credit to cash for P150,000, the account purchases
for P150,000 was recorded as debit in the sundry column. The acquisition of store
equipment and the accounts payable of P15,000 were recorded in the sundry column of
the journal. Cash sales for P25,000 were recorded by a debit to cash, and credit to
account sales. These columns were provided in the combination journal. In summary,
the combination journal provides columns for those accounts that are frequently used.
Those accounts whose columns are not provided should be recorded in the sundry
columns of the journal.
The combination journal of Bangladesh RTW also showed totals of debit of

P561,000, and total credit of P326,200 for cash account, a debit of P108,000 and credit
of P14,000 for accounts receivable column, and P215,000 for sales account column.
These totals shall be forwarded to the ledgers in the process of posting. However, those
recorded under the sundry columns shall be posted individually to its corresponding
ledgers.
Using the combination journal saves time in recording the entries. The debit and
credits and no longer written but instead only the amounts are recorded in appropriate
columns. Transactions are not posted individually but instead, the totals of each column
are forwarded to the ledgers in the process of posting. Those recorded under the sundry
columns are posted individually.
180
COMBINATION JOURNAL
Bangladesh RTW
Accounts
Cash Receivable Sales Sundry
Date Particulars Debit Credit Debit Credit Credit Other Accounts Debit Credit
1 Investment of the owner 500,000 Inventories 125,000
Cruz, capital 625,000
Acquisition of land and
2 building 160,000 Land 300,000
Building 500,000
Mortgage payable 640,000
3 Malaysia Clothing 150,000 Purchases 150,000
4 Automatic Center Store equipment 15,000
Accounts payable 15,000
5 Cash sales 25,000 25,000
ABC Forwarders 1,500 Freight-out 1,500
6 Cambodia Fashion 7,000 28,000 35,000
7 Automatic Center 14,700 Accounts payable 15,000
Store equipment 300
8 English Fashion 15,000 75,000 Notes receivable 60,000
9 Rose Fashion 80,000 80,000
10 Cambodia Fashion 14,000 14,000
Total 561,000 326,200 108,000 14,000 215,000

181
SPECIAL JOURNALS
While the combination journal saves labor, time, and expenses, it does not permit
division of labor since recording of all transactions is done by only one person who
handles the combination journal. Many businesses adopt a system that facilitate
recording, permits checks and balance, and most of all, permits division of labor. Division
of labor means that sales transactions are recorded separately in a sales journal,
purchases transactions are recorded separately in purchases journal, cash payments are
recorded in the cash disbursement journal, and all cash receipts are recorded separately
in the cash receipt journal. This type of accounting system permits not only division of
labor but also checks and balance enforcing that all recorded transactions are valid
transactions and all valid transactions are recorded. The five special journals typically
used by merchandising businesses are discussed below.
Sales Journal
All sales of merchandise are recorded in the sales journal. The sales journal has
debit columns for cash, accounts receivable, and maintains a credit column for the sales
account. Other sales journals were designed to maintain a debit column for the account
cash sales. This cash sales account serves as a controlling account for all cash receipts
from sales that should have been recorded in the cash receipts book. Some of the
transactions of Renovo Trading were used to illustrate the mechanics of the sales journal.
Renovo Trading
Sales Journal
For the month of October, 2009
Cash Accounts Sales

Sales Receivable invoice Sales
Debit √ Debit .No. Date Description Credit
32,000 502 15 Alabama Trading 32,000
24,500 503 17 Bahamas Sales 24,500
8,800 504 19 Various customers 8,800
25,000 505 22 Calcutta Merchandising 25,000
12,000 506 23 Dunhill Sales 12,000
33,000 507 24 England Enterprises 33,000
45,000 508 25 Family Trading 45,000
15,000 509 25 Various customers 15,000
67,800 127,500 This month’s total 195,300
The analysis for the sales journal showed that columns for cash sales, debit;
accounts receivable, debit, and column for credit sales were provided. The column for
sales invoice number was also provided to facilitate verification of sales invoice issued,
and in any circumstances, missing. Transaction amounts were entered directly into each
column; however, providing also the equality of debit and credit entry. The cash sales for
Alabama Trading for P32,000 as evidenced by sales invoice no. 502, was recorded by a
debit to cash sales and credit to sales. The cash sales accounts, as mentioned, served
as a controlling account for cash receipts received from sales of merchandise; thus, a
column for cash sales, credit is maintained in the cash receipts journal. The sales to
Bahamas Sales as per sales invoice no. 503 amounting to P24,500 on October 17 was
on account; thus, a debit to accounts receivable and credit to sales were recorded. The
entry debit cash sales and credit sales for P8,800 was recorded on October 19 for sales
for cash to various customers. Sales invoice no. 504 was issued for this transaction.
182
On October 22, sales on account of P25,000 was made to Calcutta

Merchandising. The entry debit accounts receivable and credit sales was recorded and
sales invoice no. 505 was issued for this transaction. The transaction with Dunhill Sales
on October 23, with sales invoice no. 506 was recorded by a debit to cash sales and
credit to sales. Sales invoice no. 507 was issued to England Enterprises for sales on
account on October 24. The sales to Family Trading on October 25 on account amounted
to P45,000, and was recorded by a debit to accounts receivable and credit to sales.
Sales invoice no. 508 was issued for the sale. Sales invoice no. 509 was issued on
October 25 for P15,000 representing the sales made to various customers and was
recorded by a debit to cash sales and a credit to sales.
The analysis of the journal and the entries showed that the account cash sales,
debit was used to control cash transactions from sales. Eventually this account is offset
by the entry debit cash, and credit cash sales in the cash receipts journal. The names of
the customers were written under description column to allow postings of the debit to
accounts receivable to customers’ accounts receivable subsidiary ledger. The column
with symbol √ permits the postings of accounts receivable to customers’ subsidiary
ledgers. The total of each columns P67,800 for cash sales debit, P127,500 for accounts
receivable debit, and P195,300 for credit sales shall be forwarded to the general ledgers.
In this respect, posting labor is saved.
General ledgers
Special journals reduce the posting labor, and facilitate the preparation of
periodic financial statements. The affected general ledgers of Renovo Trading, after
postings sales transactions are illustrated as follows. The general ledgers provided
columns for particulars, debit and credit column, and the running balance of each
account. Only the totals appearing in the sales journal were posted to the general
ledgers. Excluding the beginning balance, the accounts receivable ledger showed debit
posting of P127,500 taken from the total of accounts receivable from the sales journal;
hence, the word sales journal was written under the particulars column of the general
ledger. The amount of P153,500 was the running balance of the account as of October
31.
Accounts Receivable Account No. 1104

Date Particulars Debit Credit Balance
9.30 Beginning balance 26,000 26,000
10.31 Sales journal 127,500 153,500
Sales Account No. 5001

10.31 Sales journal 195,300 195,300
Cash sales Account No. 7001

10.31 Sales journal 67,800 67,800
183
Cash Receipts Journal

The cash receipts journal is used to records all cash receipts that include
collection of accounts, cash investments of the owner, and cash receipts from sales, and
other sources. It provides columns for cash, debit; the offsetting cash sales of the sales
journal, credit; accounts receivable, credit, and sales discount, debit. In order to maintain
the cash receipts journal as a complete record of all cash received, a column for cash
sales both in the sales and cash receipts journal must be maintained. A debit column for
cash sales should appear in the sales journal, and offset by the credit column for cash
sales in the cash receipts journal. Other cash receipts journal provides credit column for
sundry to accommodate accounts which columns were not provided in this journal.
Some of the transactions of Renovo Trading affecting the use of cash receipts
journal illustrate the procedures. The cash receipts journal showed columns for cash,
debit; cash sales, credit; sales discount, debit; accounts receivable, credit, and sundry
credit column. On October 15 cash sales were made to Alabama Trading for P32,000.
This transaction was recorded in the sales journal as debit to cash sales and credit sales;
however, the recording in the cash receipts journal required a debit to cash and the credit
to cash sales to offset the debit cash sales in the sales journal for the same amount. The
official receipt no. 405 was issued fro this cash transaction. The transaction with
Venezuela Sales on October 16 was a collection of account amounting to P13,000. This
was recorded in the cash receipts journal be a debit to cash of P12,740, debit to sales
discount of P260, and a credit to accounts receivable by P13,000. Official receipt no. 406
was issued for this transaction.
Renovo Trading
For the month of October 2009
Cash Sales
Cash Sales Disc. OR A/R Sundry
Debit Credit Debit Nos. Date Description Credit Credit
32,000 32,000 405 15 Alabama Trading
12,740 260 406 16 Venezuela Sales 13,000
24,240 407 17 Reyes, notes receivable 24,000
Interest income 240
8,800 8,800 408 19 Various customers
13,000 409 20 Carpooling Store 13,000
12,000 12,000 410 23 Dunhill Sales
15,000 15,000 411 25 Various customers
44,100 900 412 29 Family Trading 45,000
161,600 67,800 1,160 This months total 71,000
The collection of notes receivable on October 17 from Reyes Sales amounting to

P24,000 as per official receipt no. 407 was recorded by a debit to cash for P24,240;
credit to notes receivable for P24,000, and to the interest income account for P240. This
collection of accounts receivable was recorded in the sundry since no columns were
provided for notes receivable and interest income. The cash sales of P8,800 as per
official receipt no. 408 to various customers on October 19 was recorded by a debit to
cash and a credit to cash sales. The credit to cash sales offset the debit entry recorded
in the sales journal. The transaction of Carpooling Store on December 20 for P13,000
was a collection of accounts receivable, and was recorded by a debit to cash and credit
to accounts receivable. The official receipt no. 409 was issued for this cash receipt. The
184
cash sales to Dunhill Sales amounting to P13,000 as per official receipt no. 410 was
recorded by a debit to cash and credit to cash sales. Cash sales of P15,000 to various
customers amounting to P15,000 was recorded in the same manner signifying that this
transaction was cash sales. The official receipt no. 411 was issued for this transaction.
The collection of accounts receivable of P45,000 from Family Trading had debit cash of
P44,100, debit sales discounts of P900, and credit accounts receivable of P45,000 as per
official receipt no. 412.
The use of cash receipts journal saves time and posting labor. Furthermore, the
journal serves as a controlling account for all cash receipts from sales and other sources.
Usually, cash receipts journals have column for official receipt numbers recorded
chronologically; thus, any missing official receipt can be discovered from the journal. The
name of customers or the sources of cash were written under description column to allow
postings of credit in the accounts receivable in the accounts receivable subsidiary
ledgers. The total at the bottom P161,880 for debit cash; P67,800 for cash sales credit,
P1,160 for sales discounts, and P82,500 for accounts receivable credit shall be then
forwarded to the general ledgers for postings.
General ledgers
The affected general ledgers of Renovo Trading, after postings sales and cash
receipts transactions showed that the general ledger for cash had P161,800 debit entry
from cash receipts journal that included those cash transactions from sales journal
previously debited to cash sales account.
Cash Account No. 1101

10.31 Cash receipts journal 161,880 161,880
These cash sales transactions were from Alabama Trading for P32,000 as
evidence by the sales invoice no. 502 and official receipt no. 405 dated October 15;
P8,800 from various customers as per sales invoice no. 504 and official receipt no. 408
dated October 19; P12,000 from Dunhill Sales as per sales invoice no. 506 and official
receipt no. 410 dated October 23, and P15,000 cash sales from various customers as per
sales invoice no. 509 and official receipt no. 411 dated October 25. The cash account
also included the collection of accounts receivable from Venezuela Sales amounting to
P12,740 a per official receipt no. 406 dated October 16; collection of notes receivable
and interest thereof amounting to P24,240 as per official receipt no. 407 dated October
17, and the collection of accounts receivable from Family Trading as per official receipt
no. 412 dated October 29 amounting to P44,100.

9.30 Beginning balance, October 26,000 26,000
10.31 Sales journal 127,500 153,500
The general ledger for accounts receivable showed three postings. One posting
was dated September 30 indicating that this was the beginning balance of the account for
the month of October. The posting of P127,500 were the debit entries from the sales
185
journal, and the P71,000 were the credit entries from the cash receipt journal. The
accounts receivable ledger had an ending balance of P82,500.
Sales discount Account No. 5011

The sales discount amounted to P1,160 and this entry was from the cash receipt journal.
Cash sales Account No. 7001

10.31 Sales journal 67,800 67,800
10.31 Cash receipts journal 67,800 0
The account cash sales have two postings as of October 31 one from the sales
journal and one from the cash receipts journal; both postings have the same amount. The
transactions from sales journal and cash receipts journal offset each other; thus, the
general ledger for cash sales always had zero balance at end of the accounting period.
This system provides the checks and balance for the cash receipts from sales and cash
receipts as recorded in the cash receipts journal. The particular column for the general
ledgers was the point of reference that signifies the origin of the entry; thus, for cash
sales, sales journal and cash receipts journal were written under the particular column.
Notes receivable Account No. 1103

8.17 Sales journal 24,000 24,000
10.17 Cash receipts journal 24,000 0
Interest income Account No. 8001

10.17 Cash receipts journal 240 240
The general ledger for notes receivable showed two postings as of October 31,
one transaction was upon the receipt of the note on August 17 recorded as debit, and the
other one was for the collection on October 17. It was noticeable that the dates of
transaction, August 17, and October 17, were written on the date column of the notes
receivable general ledger. August 17 was the date of transaction coinciding with the date
of the note, and October 17 was the date of collection. The interest at 6% for 60 days
attached to the note was posted separately to the interest income general ledger on
October 17.
186
Accounts Receivable Subsidiary Ledgers

The accounts receivable general ledger is a controlling account for all accounts
receivable transactions. It shows the total of accounts receivable debited and credited
during the accounting period, and provides summary of all claims from customers. The
information provided by Renovo Trading is used to illustrate the mechanics of subsidiary
ledgers.
General Legers
9.30 Beginning balance 26,000 26,000
10.31 Sales journal 127,500 153,500
The accounts receivable general ledger, which serves as a controlling account

for all credit sales showed three entries, the beginning balance of P26,000 dated
September 30, and two current transactions coming from sales journal amounting to
P127,500 and from cash receipts journal for P71,000. The accounts receivable ledger
showed ending balance of P82,500. The details of P82,500 can be verified from the
subsidiary ledgers as shown below.

Bahamas Sales Account No. 201
Date Particulars Ref Debit Credit Balance
10.17 2/10; n/30; invoice no. 503 24,500 24,500
Calcutta Merchandising Account No. 204

10.22 2/10; n/30, invoice no. 505 SJ 25,000 25,000
England Enterprises Account No. 205

10.24 2/10; n/30, invoice no. 507 SJ 33,000 33,000
Family Trading Account No. 207

10.25 2/10; n/30, invoice no. 508 SJ 45,000 45,000
10.29 Full payment, OR no. 412 CRJ 45,000 0
The accounts receivable subsidiary ledgers showed the details of the controlling
account accounts receivable general ledger. It showed debit column for increases, credit
column for decreases in the accounts and the accounts’ ending balances. It also showed
187
the terms of sale, sales invoice number, and official receipt number as for example,
Family Trading with credit terms of 2/10; n/30 for sales on October 25 sales invoice no.
508. The full payment taken from the cash receipts journal was evidence by the official
receipt no. 412. It also showed the point of reference SJ for sales journal, and CRJ for
cash receipts journal. The full collection of account was made on October 29, and was
recorded in the subsidiary ledger as a credit entry for P45,000. Although sales discount
was considered for having collected the accounts within the discount period of 10 days,
sales discount was not reflected in the accounts receivable subsidiary ledger but instead
recorded separately in the general ledger for sales discount.
Purchases Journal
The purchase journal is used exclusively to record all purchases of merchandise.
The purchase journal provides columns for cash credit; cash purchases, credit, and
accounts payable, credit. It is usual for purchase journal to have separate column for
purchase invoice number to facilitate the sources of transaction entry. These purchase
invoices received from suppliers served as control for authorized purchases recorded.
The purchases journal of Renovo Trading for the month of October 2006 is illustrated
below.
Renovo Trading
Purchases Journal
For the month of October 2009
Cash
Purchase A/P PI Purchases
Credit Credit No. Date Description Debit
12,000 2456 11 12,000
33,000 5621 13 33,000
10,000 5981 15 10,000
12,000 2566 16 12,000
25,000 2561 17 25,000
9,000 2653 22 9,000
10,000 2555 23 10,000
10,000 1434 25 10,000
Credits are posted to the individual vendors’ account in the accounts payable
ledger directly from the purchase invoice.
Cash Payments (Disbursements) Journal

The cash payments journal is illustrated below. This cash payment journal
accounts for all checks that are issued in payment of vouchers that has been properly
approved. Sundry debit and credit column may be added in this journal to accommodate
other accounts which columns are not provided in this journal, like the payments of notes
payable, salaries, and others.
Accounts Purchase
Check Voucher Payable Discount Cash
No. Description No. Debit Credit Credit
4207 Phil. Nat. Bank 5155 8,800 8,800

4208 Santos Trading 5156 12,500 500 12,000
Total 21,300 500 20,800

188
General Journal
This journal is used for all transactions that cannot be conveniently recorded in
the four mentioned journal. Thus if the transaction is about the sales returns and
allowances, which column is not provided in the sales journal or in the cash receipts
journal, this type of journal is used.
Subsidiary Ledgers
The general ledgers show the total amount of receivables or payables as recorded in
the special journals. The details of these receivables and payables, on the other hand,
are shown in the subsidiary ledgers. Hence, the general ledgers balance of receivable
and payables must equal to the balance of the subsidiary ledgers. Subsidiary ledgers can
be maintained for accounts receivables and accounts payables.

The accounts receivable subsidiary ledgers show the detail of the accounts
receivable general ledger balance. Postings to the accounts receivable subsidiary
ledgers are done directly from the sales invoice only for sales made on account or on
credit.
Accounts Payable Subsidiary Ledgers

The accounts payable subsidiary ledgers show the detail of the accounts payable
general ledger balance. Postings to the accounts payable subsidiary ledger are done
from the purchase invoices received from suppliers only for purchases made on account
or on credit.
EXERCISES
Exercise 7.1 Identify the appropriate journal or journals to which the following given
transactions must be recorded. Sundry columns for debits and credit are made available
only for cash receipts and cash payments journals. Write the letter of the choices
corresponding to the journals given below on the provided answer sheet.
A. Only the first journal is correct

B. Only the second journal is correct
C. The Second and Third journals are correct
D. Answer not given
The given transactions should be

Transactions recorded in the:
1 Sale of merchandise to customers with • Sales Journal
down payment and the balance on • Cash Receipts Journal
account. • Both Sales and Cash Receipts
Journal
2 Sale of merchandise to customers with • Sales Journal
no down payment but with a promissory • Cash Receipts Journal
note. • Both Sales and Cash Receipts
Journal
3 Sale of merchandise to customers who • Sales Journal
paid cash at the time of sale. • Cash Receipts Journal
• Both Sales and Cash Receipts
Journal
4 Sale of merchandise to customer who • Sales Journal
paid a 6%, 90-day promissory note • Cash Receipts Journal
189

Journal
5 Sale of merchandise to customer who • Sales Journal
made an oral promise to pay • Cash Receipts Journal
Journal
6 Purchases of merchandise for cash • Purchases Journal
• Cash Payments Journal
• Both Purchases and Cash Payment
Journals
7 Purchases of merchandise with down • Purchases Journal
payment and the balance on account. • Cash Payments Journal
Journals
8 Purchases of merchandise and paid a • Purchases Journal
6%, 90-day promissory note. • Cash Payments Journal
Journals
9 Purchases of merchandise paying cash • Purchases Journal
and the balance on a promissory note. • Cash Payments Journal
Journals
10 Purchases of office equipment paying • Purchases Journal
cash and the balance on account. • Cash Payments Journal
Journals
11 Purchases of office supplies on terms: • Purchases Journal
2/10; n/30. • Cash Payments Journal
Journals
12 Payment of salaries and wages to • Purchases Journal
employees • Cash Payments Journal
Journals
13 Payment of salaries which were not • Purchases Journal
paid the previous week. • Cash Payments Journal
Journals
14 Payments of accounts payable for the • Purchases Journal
purchase of merchandise. • Cash Payments Journal
Journals
15 Collection of accounts receivable for the • Sales Journal
sale of merchandise. • Cash Receipts Journal
Journal
190
Exercise 7.2. Several transactions were given below from which you are required to
determine the special journal to be used in recording these transactions. Assume that
sundry columns were provided in the cash payments and cash receipts journals. Encircle
the letter of your answers.
1. The owner, Mr. Denver, invested cash of P200,000 and office furniture which has a
fair market value of P25,000 to start his business.
A. Only cash receipts journal
B. Only general journal
C. Both cash receipts and general journal
D. Both sales and cash receipts journals
2. On July 2, the business purchased merchandise from Japan Enterprises amounting

to P25,000 paying cash of P5,000 and the balance on account.
A. Only cash payments journal
B. Only purchases journal
C. Both the cash payments and purchases journal
D. Both the cash payment and general journal
3. Purchased merchandise from Aftermath Store amounting to P35,000 paying a 120-

day, 6% promissory note.
C. Only general journal
4. Purchased merchandise from Before Trading amounting to P30,000 on terms: 2/10;

n/30. The business received purchase invoice dated July 5.
5. Sold merchandise to Come Store amounting to P25,000 receiving cash, and issuing
an official receipt dated July 5.
B. Only sales journal
6. Sold merchandise to Done Enterprises amounting to P35,000, receiving cash of

P5,000, and the balance on 2/15; n/30. The business issued sales invoice dated July
6 for the sale
7. Return defective merchandise to Before Trading amounting to P3,000. The

business received an acknowledgment memo for the returned merchandise from
supplier.
191
8. Paid Before Trading the balance of the account within the discount period of 10 days.
Issued cash voucher for this payment.
9. Sold merchandise to Jets Airplane Supply amounting to P25,000 receiving cash, and
issuing an official receipt for the cash.
10. Collected the accounts from Done Enterprise for merchandise sold on July 6, and
issued an official receipt for the receipt of cash.
11. Received defective merchandise from Jets Airplane Supply amounting to P4,000.
The business acknowledged the receipt and credited the account of the customer.
12. Purchased office machinery from Nepal Machines amounting to P35,000. The
business paid cash of P12,000 and the balance on account.
13. The business collected the account of jets Airplane Supplies, beyond the discount
period, and issued an official receipt for the cash.
14. On this date, the business paid the salaries of employees amounting to P25,000.
15. Paid the bills due: light, P4,000; water, P5,000, and telephone, P1,500.
192
Exercise 7.3. Record the following completed transactions of Burma Enterprises during
the month of August, in a special journal given on the pages that follow. Purchases and
Sales invoices include the 10% Value Added Tax.
Sales Transactions
1. Sold merchandise to Afghanistan Trading on for cash P12,000. Issued official
receipt no. 1001 and invoice no. 2001.
2. Sold merchandise to Bangladesh Office and School supplies, P20,000 on terms:

2/10, n/30. Issued invoice no. 2002.
3. Sold merchandise to Cambodia Company, P35,000 on terms: 15% down, and

the balance on a 6%-120-day promissory note. Issued official receipt 1002 and
sales invoice no. 2003.
4. Sold merchandise to Finland Supplies, P22,0000 on terms: P2,000 down

payment, P10,000 on account and the balance on a promissory note. Official
receipt no. 1003 was issued.
5. Sold used equipment which book value was P6,000 and an accumulated
depreciation of P9,000. The business received a cash of P8,000.
Cash Receipts Transactions

6. The owner, Mr. Victor made an additional investments of the following: cash of
P35,000, inventory at a fair market value of P25,000 and office equipment with
fair value of P50,000. Issued the corresponding official receipt no. 1004.
7. Collected the accounts receivable from Bangladesh Office and School Supplies
within the discount period, issued official receipt no. 1005.
8. Received cash from Zimbabwe Rentals amounting to P30,000 representing two-

years rent for the space occupied by them. Official receipt no. 1006 was issued.
9. Collected the notes receivable from Cambodia including the interest for 30 days.
Official receipt no. 1007 was issued.
10. Collected the promissory note due from Finland Supplies.
Purchases Transactions
11. Purchased merchandise from Denmark Trading, P30,000 paying cash, received
invoice no. 12568.
12. Purchased merchandise from England Department Store P25,000 paying a down
payment of P10,000 and the balance on account. Invoice no. 45890 was
received from supplier.
13. Purchased merchandise from Fake Trading P30,000 paying a down payment of
P2,000, and the balance on a 6%, 90-day promissory note. The invoice no.
3456789.
14. Purchased merchandise from Greek Trading, P12,000 paying a down payment of
P3,500, P5,000 on account, and the balance on terms 2/10; n/30.
15. Purchased office supplies from National Book Store, P12,000. The business
received invoice no. 346780, and paid cash.
193
16. Purchase office equipment from Equipment Limited amounting to P35,000. The
business paid a promissory note, receiving an invoice no. 347890.
Cash Disbursements Transactions

17. Paid salaries and wages for the month, P35,000.
18. Paid the accounts due Greek Trading amounting to P3,000.
19. Made the partial payment of P5,000 to England Department Store.
20. Paid the purchased of office equipment amounting to P12,000 from Office
Equipment Limited, paid cash.
Other Transactions
21. The business returned some defective merchandise amounting to P2,000. The
Greek Trading acknowledged the return.
Burma Enterprises
Burma enterprises
Sales Journal
For the month of August
Cash Vat
Inv. A/R Sales Sales Output
Date Sold to No. Terms Debit Debit Credit Credit
194
Burma Enterprises
Burma enterprises
Purchases Journal
For the month of August
Cash Vat
Inv. A/P Purchase Purchases Input
Date Purchased From No. Terms Credit Credit Debit Debit
195
Burma Enterprises
Cash Disbursements Journal
For the Month of August
Cash Accounts Purchase
CV Purchases Payable Cash Discounts
Date Paid to No. Debit Debit Credit Credit Particulars Debit Credit
196
Burma Enterprises
For the Month of August
Cash Accounts Sales
CV Sales Receivable Cash Discounts
Date Paid to No. Credit Credit Debit Debit Particulars Debit Credit
197
Exercise 7.4 The completed transactions of Consolation Sales are given below. Using
the format of special journals as given on the previous exercises:
1. Purchased merchandise on credit from Laos Enterprises, P22,500, invoice no.

11345 dated December 31. Terms: 2/15, n/30.
2. Paid the January and February rent, P50,000, and issued check no. 7831, and
the corresponding cash voucher no. 7001.
3. Sold merchandise on credit to Alabama Waters, invoice no. 302 P12,000. Terms:
2/10, n/30.
4. Received P1,500 allowance from Laos Enterprises for defective merchandise

purchased, cash.
5. Sold merchandise for cash, P45,000. Issued official receipt no. 1001 and the
corresponding sales invoice no. 303.
6. Purchased store equipment on account from ABC Equipment, P24,000, invoice

no. 3345.
7. Purchased P9,000 worth of merchandise for cash. Issued check no. 7832. and
the corresponding cash voucher no. 7002.
8. Received payment from Alabama Waters, less discounts. Issued official receipt
no. 1002 for the cash received.
9. Sold merchandise on account to Lexington Company, P18,000, invoice no. 304.

Terms: 2/15; n/30.
10. Paid the account due to Laos Enterprises less discounts. Issued check no. 7833
and cash voucher no. 7003.
11. Purchased merchandise on credit from South Company, invoice no. 4457,
P36,000. Terms: 2/10; n/30.
12. Purchased land by paying P60,000 cash and signing a P240,000 promissory
note. The corresponding check and voucher were issued.
13. Sold merchandise fro cash P90,000. Issued invoice no. 305 and its
corresponding official receipt for the cash received.
14. Received P80,000 from Philippine national Bank representing cash proceeds of
the loan.
15. Paid the balance due on merchandise purchased from South Company, less
discounts, check no. 7835 and the corresponding cash voucher were issued.
198
Exercise 7.5. Record the following transactions of Major Office and School Supplies in
the special journals.
1. Sold merchandise to Alaska Trading as per sales invoice no. 827, on account,
P78,000.
2. Cash sales for the day as per sales invoice no. 828 and official receipt no. 931,
P7,800.
3. Issued credit memorandum to Alaska Trading for merchandise returned, P7,800.
4. Collection of accounts from Alaska as partial payment, issued official receipt no.
932, P25,000.
5. Received telephone bill for the month, P3,500.
6. Issued check no. 10386 to Bermuda Supplies for merchandise purchased on

cash, P35,000. Cash voucher no. 1001 was also issued.
7. Received proceeds of bank loan, P75,000, and issued a 120-day 8 percent note.
8. Paid the telephone bill with check no. 10387 and the approved cash voucher no.
1002.
9. Purchased furniture and fixtures from Prime Furniture House, P35,000. Terms:
10 % down payment with check no. 10388, 2/10; n/30. The check was
accompanied by the approved voucher no. 1003.
10. Purchased merchandise from General Merchandiser, P60,000. Terms: 20%

down payment with check no. 10389 and an approved voucher no. 1004.
11. Paid salaries of office staff, P36,000 and store staff, P48,000. Issued the
corresponding check no. 10390 and the approved voucher no. 1005.
12. Purchased merchandise from Everlasting Company, P75,000. Terms. COD.

Issued check no. 10391 and voucher no. 1006.
13. Purchased merchandise from Dale Manufacturing, P75,000. Terms: 1/15; n/30.
14. Paid P15,000 the supplier General Merchandiser. Check no. 10392 and voucher
no. 1007 were issued.
15. Cash sales for the week, P36,000. Issued official receipt no. 933 and sales
invoice no. 829.
199
Major Office and School Supplies

Sales Journal
For the month of January
Cash Vat
200

Purchases Journal
Cash Vat
201

For the Month of January
202

For the Month of January
Cash Accounts Sales
203

General Journal
204
Exercise 7.6 Subsidiary Ledgers. Record the following transactions of Cranberries

Trading in the appropriate journals and post the transactions to the appropriate subsidiary
ledgers.
Sales Transactions
1. Sold merchandise to Aragon Trading worth P35,000 on terms 2./10; n30.
2. Sold merchandise to Botswana Supplies worth P45,000 on terms: on account.
3. Sold merchandise to Cambodia Trading worth P25,000 on terms : 5%, 2./10;

n30.
4. Sold merchandise to Denmark Trading and Office Supplies worth P15,000 on

terms: P2,000 down the balance on account.
5. Sold merchandise to Emery Merchandising worth P55,000 on terms 2./10; n30.
6. Sold merchandise to Family Book Store worth P25,000 on terms : 3%, 1%,
2./10; n30.
7. Sold merchandise to Grate computer Supplies worth P45,000 on terms 2./10;

n30.
8. Sold merchandise to Palo Enterprises P10,000 on terms: 2/10; n/30.
Cash Receipts Transactions
9. Received the payment from Aragon Trading within the discount period.
10. Received the payment from Cambodia Trading within the discount period.
11. Family book Store made a down payment of P5,000 on its purchase made
recently.
12. Collected P10,000 from Emery Merchandise as partial payment for the
merchandise sold.
Purchases Transactions
13. Purchased merchandise from Honduras Ink Supplies worth P12,000 on terms:
2/10; n/30.
14. Purchased merchandise from Ireland Supplies worth P22,000 on terms: 3%, on
account.
15. Purchased merchandise from Japan Paper and Ink Supplies worth P18,000 on
terms: P5,000 down, 2/10; n/30.
16. Purchased merchandise from King Kong Paper Supplies worth P42,000 on
terms: P10,000 6%, 90-day note and the balance on 2/10; n/30.
17. Purchased merchandise from Laos Trading worth P12,000 on terms: 2/10; n/30.
205
Cash Payment Transactions
18. Issued check as full payment for merchandise purchased from Ireland Supplies.
19. Made a partial payment on the purchase made from King Kong Paper Supplies,
P5,000.
20. Paid within the discount period, Laos Trading the full amount of liability for the
purchase of merchandise.
Cranberries Trading
Sales Journal
For the month of May
Cash Vat
Cranberries Trading
Purchase Journal
For the month of May
Cash Vat
206
Cranberries Trading
For the Month of May
Cranberries Trading
For the Month of May
Cash Accounts Sales
207
Cranberries Trading: Subsidiary Ledgers
Particulars Debit Credit Balance

208

209

210

FAR Lesson 2 Accounting Systems Special Journal

Uploaded by

Document Information

Original Description:

Original Title

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

FAR Lesson 2 Accounting Systems Special Journal

Uploaded by

Copyright:

Available Formats

177

Chapter Learning Objectives

Date Particulars Debit Credit

3. The business purchased merchandise worth P150,000 from Malaysia Clothing,

4. Purchased store equipment from Automatic Center, P15,000 on terms: 2/10;

Date Particulars Debit Credit

Date Particulars Debit Credit

8. Sold merchandise to English Fashion amounting to P75,000 on terms: 20%

9. Sold goods to Rose Fashions, P80,000 on terms: 2/15, 1/10, n/30.

The recoding of the transactions of Bangladesh RTW in the combination journal is

Analysis of the combination journal revealed that frequent transactions involved

The combination journal of Bangladesh RTW also showed totals of debit of

Total 561,000 326,200 108,000 14,000 215,000

Cash Accounts Sales

67,800 127,500 This month’s total 195,300

On October 22, sales on account of P25,000 was made to Calcutta

Accounts Receivable Account No. 1104

Sales Account No. 5001

Cash sales Account No. 7001

Cash Receipts Journal

The collection of notes receivable on October 17 from Reyes Sales amounting to

Cash Account No. 1101

Accounts Receivable Account No. 1104

Sales discount Account No. 5011

Cash sales Account No. 7001

Notes receivable Account No. 1103

Interest income Account No. 8001

Accounts Receivable Subsidiary Ledgers

The accounts receivable general ledger, which serves as a controlling account

Accounts Receivable Subsidiary Ledgers

Calcutta Merchandising Account No. 204

England Enterprises Account No. 205

Family Trading Account No. 207

Cash Payments (Disbursements) Journal

4207 Phil. Nat. Bank 5155 8,800 8,800

Total 21,300 500 20,800

Accounts Receivable Subsidiary Ledgers

Accounts Payable Subsidiary Ledgers

A. Only the first journal is correct

The given transactions should be

• Both Sales and Cash Receipts

2. On July 2, the business purchased merchandise from Japan Enterprises amounting

3. Purchased merchandise from Aftermath Store amounting to P35,000 paying a 120-

4. Purchased merchandise from Before Trading amounting to P30,000 on terms: 2/10;

6. Sold merchandise to Done Enterprises amounting to P35,000, receiving cash of

7. Return defective merchandise to Before Trading amounting to P3,000. The

2. Sold merchandise to Bangladesh Office and School supplies, P20,000 on terms:

3. Sold merchandise to Cambodia Company, P35,000 on terms: 15% down, and

4. Sold merchandise to Finland Supplies, P22,0000 on terms: P2,000 down

Cash Receipts Transactions

8. Received cash from Zimbabwe Rentals amounting to P30,000 representing two-

10. Collected the promissory note due from Finland Supplies.

Cash Disbursements Transactions

18. Paid the accounts due Greek Trading amounting to P3,000.

19. Made the partial payment of P5,000 to England Department Store.

1. Purchased merchandise on credit from Laos Enterprises, P22,500, invoice no.

4. Received P1,500 allowance from Laos Enterprises for defective merchandise

6. Purchased store equipment on account from ABC Equipment, P24,000, invoice

9. Sold merchandise on account to Lexington Company, P18,000, invoice no. 304.

3. Issued credit memorandum to Alaska Trading for merchandise returned, P7,800.

5. Received telephone bill for the month, P3,500.

6. Issued check no. 10386 to Bermuda Supplies for merchandise purchased on