Preparing The General Journal

Learning Outcomes:

In this lesson, you will learn how to:

● Explain the importance of the seventh book of original
entry (general journal)
● Use source documents to prepare a general journal
● Prepare an entry in the general journal

www.caribbeanonlineacademy.com
The General Journal

The General Journal is a book of original entry used

to make the first record of transactions that it would
not be appropriate to record in the other books of
original entry. Here are some examples of these
transactions:
● The purchase and/or sale of a non-current asset on credit
● Cancelling entries and correcting errors in accounts
● Transferring information from one account to another
● Opening a new set of books of account

www.caribbeanonlineacademy.com
The General Journal

● Most transactions are recorded in any of the six

books of original entry covered earlier.
● These six books of original entry provides the first
record of all monetary and credit transactions
involving the purchase and sale of goods in which
a business trade.
● A seventh book of original entry, the general
journal, is required to make a first record of a
small group of transactions that cannot be
recorded in the other six subsidiary books.

www.caribbeanonlineacademy.com
Source Documents and
The General Journal
● Many different source documents are used for
making entries in the general journal
● For instance, a purchase invoice for a new non-
current asset (such as a motor vehicle).
● However, less formal source documents may also
be used that include instructions or financial details
that needs to be recorded in accounts.
● For instance, there could be letters and emails
received from other businesses, or emails and notes
written by owners and managers.
www.caribbeanonlineacademy.com
Preparing the General Journal

An entry in a general journal consists of the following

elements:
● The date
● The account to be debited and the amount
● The account to be credited and the amount
● A brief explanation of the nature of the transaction
(often called the narrative)
● Folio references, which are completed when the
journal entry is posted to the ledger
www.caribbeanonlineacademy.com
Preparing the General Journal
Each journal entry is ruled off to separate it from the
next entry. additionally:
● Each entry is set out so that debit entries are recorded first
and credit entries second (with a slight indent in the details
column).
● Usually there is only one account to debit and one account to
credit; just occasionally it is possible to have several accounts
debited/credited in one journal entry (as in example three of
the next few slides)–this is called combined entry.
● The folio column will be completed when the entries are
posted to the ledgers. Here are some typical journal entries

www.caribbeanonlineacademy.com
Preparing the Purchases Day Book
Opening a new set of books

GENERAL JOURNAL Page 3

Date Details Folio Dr Cr

$ $

Feb 1 Vehicles 18 000

Bank 4 000
Cash 500
Bank loan 8 000
Capital 14 500

Assets and liabilities on opening new books of

account

www.caribbeanonlineacademy.com
Preparing the Purchases Day Book

Recording the purchase on credit of a non-current

asset

GENERAL JOURNAL Page 3

Date Details Folio Dr Cr

$ $

Feb 11 Equipment 2 200

KKZ Office Equipment Ltd 2 200

Purchase of new printers for office, invoice

number 78328

www.caribbeanonlineacademy.com
Preparing the Purchases Day Book

Recording the correction of an error

GENERAL JOURNAL Page 4

Date Details Folio Dr Cr

$ $

Feb 11 Motor expenses 110

General expenses 110

Correction—motor expenses had been

recorded in the general expenses account

www.caribbeanonlineacademy.com
Summary Points
● Be sure to demonstrate and give examples of recording
entries from the three (3) categories of transactions in the
general journal.
● Note, explain and give examples of source documents
used when preparing journal entries.
● Explain and demonstrate the main elements to include
when preparing a journal entry.
● Entries in the general journal require a good
understanding of the rules of double entry bookkeeping.
● It is recommended that you study section 4 before fully
feeling accomplished at journalizing
www.caribbeanonlineacademy.com
www.caribbeanonlineacademy.com