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Cash and Credit Journals: Learning Outcome
Cash and Credit Journals: Learning Outcome
Cash and Credit Journals: Learning Outcome
credit journals
Learning outcome
Be able to prepare four special journals from
source documents and information supplied
PPTs to accompany Accounting and Bookkeeping: Principles & Practice by AAT and David Willis
© 2011 McGraw-Hill Australia Pty Ltd 3-1
KEY TERMS
• Cash journals
• Cash payments journal (CPJ)
• Cash receipts journal (CRJ)
• Credit journals
• Purchases journals (PJ)
• Sales journals (SJ)
• Trial balance
PPTs to accompany Accounting and Bookkeeping: Principles & Practice by AAT and David Willis
© 2011 McGraw-Hill Australia Pty Ltd 3-2
SOURCE DOCUMENTS
Source documents that generate accounting entries:
– Sales invoices
– Receipts/Cash register tapes
– Purchase invoices
– Cheques
– Adjustment notes
– Memoranda
– Electronic transfers
PPTs to accompany Accounting and Bookkeeping: Principles & Practice by AAT and David Willis
© 2011 McGraw-Hill Australia Pty Ltd 3-3
PROCESS TO TRIAL BALANCE
Transactions from source documents
Sales invoices/Purchase invoices/Receipts or cash register tapes/
Cheques and electronic payments/Adjustment notes/Memoranda
The four cash and credit journals and the general journal
Which are:
To:
PPTs to accompany Accounting and Bookkeeping: Principles & Practice by AAT and David Willis
© 2011 McGraw-Hill Australia Pty Ltd 3-4
INVENTORIES—STOCK OR
GOODS
• Balance of inventories on hand is an asset
• Purchase of inventories sold is an expense:
• Cash purchases—CPJ
• Credit purchases—PJ
• Sale of inventories is revenue:
• Cash sales—CRJ
• Credit sales—SJ
PPTs to accompany Accounting and Bookkeeping: Principles & Practice by AAT and David Willis
© 2011 McGraw-Hill Australia Pty Ltd 3-5
PERIODIC INVENTORY SYSTEM
• Inventory balance determined by stocktake
• Profit determined by deducting inventory balance from cost
of goods sold at end of period
• For purchase:
DR: Cost of goods sold (purchases)
DR: GST input tax credits CR: Accounts payable/Cash
PPTs to accompany Accounting and Bookkeeping: Principles & Practice by AAT and David Willis
© 2011 McGraw-Hill Australia Pty Ltd 3-6
PERPETUAL INVENTORY
SYSTEM
• Separate inventory cards for each item
• Show continual stock movement
• Physical stocktakes allow comparison with stock records
• Distinguishes between cost and selling price
• For purchase:
DR: Inventories DR: GST input tax credits
CR: Accounts payable/Cash
PPTs to accompany Accounting and Bookkeeping: Principles & Practice by AAT and David Willis
© 2011 McGraw-Hill Australia Pty Ltd 3-7
FOUR CASH AND CREDIT
JOURNALS
• Sales journal, including sales returns journal
– Records credit sales
– Records goods returned by debtors
• Purchases journal, including purchases returns
journal
– Records credit purchases
– Records stock returned to creditors
PPTs to accompany Accounting and Bookkeeping: Principles & Practice by AAT and David Willis
© 2011 McGraw-Hill Australia Pty Ltd 3-8
FOUR CASH AND CREDIT
JOURNALS cont.
• Cash receipts journal
– Details cash received
• Cash payments
– Details cash paid out
PPTs to accompany Accounting and Bookkeeping: Principles & Practice by AAT and David Willis
© 2011 McGraw-Hill Australia Pty Ltd 3-9
JOURNALISING
TRANSACTIONS
PPTs to accompany Accounting and Bookkeeping: Principles & Practice by AAT and David Willis
© 2011 McGraw-Hill Australia Pty Ltd 3-10
CREDIT JOURNALS
• Sales journal
– Records credit sales
– Records inventory returns
– Records sales of non-current assets
– Source documents
Sales invoice
Credit or adjustment note
PPTs to accompany Accounting and Bookkeeping: Principles & Practice by AAT and David Willis
© 2011 McGraw-Hill Australia Pty Ltd 3-13
CASH RECEIPTS JOURNAL
Records all cash received and paid into bank
accounts from:
• trade debtors
• other debtors
• cash sales
• receipts from other sources of revenue (e.g.
interest and dividends received)
PPTs to accompany Accounting and Bookkeeping: Principles & Practice by AAT and David Willis
© 2011 McGraw-Hill Australia Pty Ltd 3-14
ADVANTAGES OF USING
SPECIALISED JOURNALS
• Record only one type of transaction
• Totals posted to ledgers rather than individual
transactions
• Different staff use the journals, providing an
internal control to reduce error and fraud
PPTs to accompany Accounting and Bookkeeping: Principles & Practice by AAT and David Willis
© 2011 McGraw-Hill Australia Pty Ltd 3-15