Chapter 10

Special Journals

SPECIAL JOURNALS
Entering transactions in the general journal and posting them to the correct general ledger
accounts is time consuming. To expedite journalizing and posting transactions, most companies
use special journals in addition to the general journal.

Special journal is used to repetitive transactions that affect same set of accounts and have a
consistent description. The types of special journals used depend largely on the types of
transactions that occur frequently in a business enterprise. Most merchandising companies use
special journals for purchases, cash payments/disbursements, sales, and cash receipts.

Purchases Cash Sales Cash General

Journal Payments Journal Receipts Journal
Journal Journal
Used for all Used for all Used for
purchases of Used for all sales of Used for all transactions
merchandise cash merchandise cash that cannot
on account payments on account receipts be entered
(including (including in a special
cash cash sales) journal
purchases)

Special Journals

Figure 1 Types of Special Journals

 Purchases Journal
The purchases journal lists all credit purchases of merchandise. Each entry in this journal
results in a debit to Purchases and a credit to Accounts Payable. When a one-column
purchases journal is used, other types of purchases on account and cash purchases
cannot be journalized in it. Some companies include column to identify the credit terms,
thereby making the purchases journal a tool that helps the companies takes advantage of
discounts just before they expire.

Purchases Journal P1
Purchases (Dr)
Date Account Credited Terms Ref. Accounts
payable (Cr)
Year
Jan. 2 Hipolito Paper Supply n/30 10,000
10 Rapal Global Co. 2/10, n/30 9,000
18 JM International 1/15, n/30 2,000
28 Opulencia Incorporated n/30 EOM 4,000
31 Bucar Enterprise n/30 1,800
26,800

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 Expanding the Purchases Journal

Companies that frequently make credit purchases of items other than merchandise
use a multi-column purchases journal. For example, the purchases journal below
includes columns for supplies and equipment. Of course, every purchase in the
journal below must credit accounts payable; equipment purchased with a note
payable or supplies purchased with cash would not be recorded in this journal.

Purchases Journal P1
Accounts
Date Account Credited Ref. Purchases Supplies Equipment Payable
(Dr) (Dr) (Dr) (Cr)
Year
Jan. 2 Hipolito Paper Supply 10,000 10,000
7 Pandayan Bookstore 500 500
10 Rapal Global Co. 9,000 9,000
18 JM International 2,000 2,000
23 MJD Company 6,200 6,200
28 Opulencia Incorporated 4,000 4,000
31 Bucar Enterprise 1,800 1,800
26,800 500 6,200 33,500

 Cash Payments Journal

Transactions that decrease cash are recorded in the cash disbursements journal. Entries in
this journal are made from pre-numbered cash/check vouchers. Because cash payments
may be made for a variety of purposes, the cash payments journal has a multiple columns.

Cash Payments Journal CP1

Other Accounts Purchase
Date Check Account Debited Ref. Accounts Payable Discounts Cash
No. (Dr) (Dr) (Cr) (Cr)
Year
Jan. 1 5021 Rent Expense 15,000 15,000
10 5022 Light and Water 4,000 4,000
15 5023 Supplies 5,200 5,200
20 5024 Rapal Global Co. 9,000 180 8,820
31 5025 Hipolito Paper Supply 10,000 10,000
24,200 19,000 180 43,020

 Sales Journal
The sales journal lists all credit sales made to customers. Sales returns and cash sales are
not recorded in this journal. Entries in the sales journal typically include the date, invoice
number, customer name, and amount. Invoices are the source documents that provide this
information. In its most basic form, a sales journal has only one column for recording
transaction amounts. Each entry increases (debits) accounts receivable and increases
(credits) sales.

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Sales Journal S1
Accounts
Date Invoice Account Debited Ref. Receivable (Dr)
No. Sales (Cr)
Year
Jan. 1 4030 Celeste Company 8,000
5 4031 Labsan Inc. 10,000
15 4032 Saddi Corporation 5,000
22 4033 Polintan Enterprise 9,000
31 4034 Castro Incorporated 6,000
38,000

 Cash Receipts Journal

Transactions that increase cash are recorded in a multi-column cash receipts journal. If
sales discounts are offered to customers, the journal includes a separate debit column for
sales discounts. Credit columns for accounts receivable and for sales are normally present,
but companies that frequently receive cash from other, specific sources use additional
columns to record those types of cash receipts. In addition, the cash receipts journal
includes a column named Other Accounts, which is used to record various types of cash
receipts that occur infrequently and therefore do not warrant a separate column.

Cash Receipts Journal CR1

Sales Accounts Other
Date Account Credited Ref. Cash Discounts Receivable Sales Accounts
(Dr) (Dr) (Cr) (Cr) (Cr)
Year
Jan. 2 Dioquino, Capital 100,000 100,000
7 20,000 20,000
11 Celeste Company 6,860 140 7,000
14 18,000 18,000
21 12,000 12,000
25 Saddi Corporation 4,900 100 5,000
28 25,000 25,000
31 Labsan Inc. 10,000 10,000
31 Interest Income 1,300 1,300
198,060 240 22,000 75,000 101,300

 General Journal
The general journal is used for adjusting entries, closing entries, correcting entries, and all
transactions that do not belong in one of the special journals.

General Journal G1

Date Account Titles and Explanation Ref. Debit Credit

Year
Jan. 5 Sales Returns and Allowances 1,000
Accounts Receivable – Celeste Company 1,000
~ Credit Memo #80 ~

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SUBSIDIARY LEDGERS
A subsidiary ledger is a group of similar accounts whose combined balances equal the balance
in a specific general ledger account. The general ledger account that summarizes a subsidiary
ledger's account balances is called a control account or master account. For example, an
accounts receivable subsidiary ledger (customers' subsidiary ledger) includes a separate
account for each customer who makes credit purchases. The combined balance of every
account in this subsidiary ledger equals the balance of accounts receivable in the general
ledger. Posting a debit or credit to a subsidiary ledger account and also to a general ledger
control account does not violate the rule that total debit and credit entries must balance because
subsidiary ledger accounts are not part of the general ledger; they are supplemental accounts
that provide the detail to support the balance in a control account.

Accounts Receivable – Subsidiary Ledger Control Account

Celeste Company Accounts Receivable
Date Ref. Debit Credit Balance Date Ref. Debit Credit Balance
Year Year
Jan. 1 SJ 8,000 8,000 Jan. 31 SJ 38,000 38,000
5 GJ 1,000 7,000 GJ 1,000 37,000
11 CRJ 7,000 -0- 22,000 15,000

Labsan Inc.
Date Ref. Debit Credit Balance
Year
Jan. 5 SJ 10,000 10,000
31 CRJ 10,000 -0- -0-
-0-
Saddi Corporation -0-
Date Ref. Debit Credit Balance 9,000
Year + 6,000
Jan. 15 SJ 5,000 5,000 15,000
25 CRJ 5,000 -0-

Polintan Enterprise
Date Ref. Debit Credit Balance
Year
Jan. 22 SJ 9,000 9,000

Castro Incorporated
Date Ref. Debit Credit Balance
Year
Jan. 31 SJ 6,000 6,000

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The accounts receivable subsidiary ledger is essential to most businesses. Companies

may have hundreds or even thousands of customers who purchase items on credit, who
make one or more payments for those items, and who sometimes return items or
purchase additional items before they finish paying for prior purchases. Recording all
credit purchases, returns, and subsequent payments in a single account would make an
individual customer's balance virtually impossible to calculate because the customer's
transactions would be interspersed among thousands of other transactions. But the
accounts receivable subsidiary ledger provides quick access to each customer's balance
and account activity.

Companies create subsidiary ledgers whenever they need to monitor the individual
components of a controlling general ledger account. In addition to the accounts
receivable subsidiary ledger, companies often use an accounts payable subsidiary ledger
(creditors' subsidiary ledger), which has separate accounts for each creditor, an inventory
subsidiary ledger, which has separate accounts for each product, and a property, plant,
and equipment subsidiary ledger, which has separate accounts for each long-lived asset.

Selected General Ledger Accounts

Accounts Property, Plant Accounts

Receivable Inventory & Equipment Payable
15,000 11,500 590,000 7,800

Celeste Co. Bond paper Land Hipolito Paper

-0- 3,000 180,000 -0-
Labsan Inc. Pencil Computer Rapal Global
-0- 1,000 15,000 -0-
Saddi Corp. Ball pen Truck JM Corp.
-0- 2,000 370,000 2,000
Polintan Ent. Folder Table Opulencia Inc.
9,000 1,500 5,000 4,000
Castro Inc. Staple wire Filing cabinet Bucar Ent.
6,000 4,000 20,000 1,800