SPECIAL JOURNALS

References:
Abeleda, N. (2012) Simplified Accounting for Sole Proprietorship, Vol. 1
Valix, C. (2017) Theory of Accounts

The use of Special journals – used for expediency and convenience in the
special journals recording of business transactions; usually for businesses with
transactions that occur frequently (voluminous transactions).

• Purchases Journal
• Sales Journal
• Cash Receipts Journal
• Cash Disbursements Journal
• Subsidiary Ledger

Entries in the general journal will be limited to those which cannot

be recorded in the special journals.

Purchases Purchases Journal – used to record all purchases of

journal merchandise, regardless of whether in cash or on account.

With columns for:

DR – Purchases and VAT Input
CR – Cash Purchases and Accounts Payable

Excludes purchase of other assets; recorded in the general journal.

Sales journal Sales Journal – used to record all sales of merchandise,

regardless of whether in cash or on account.

With columns for:

DR – Accounts Receivable or Cash Sales
CR – Sales and VAT Output

Excludes purchase of other assets; recorded in the general journal.

Cash receipts Cash receipts journal – used to record all receipts of cash,
journal either from the sale of merchandise, collection of receivables or
any other type of transaction involving receipt of cash.

Contains columns for:

DR – Cash and Sales Discount
CR – Accounts Receivable, Cash Sales, VAT Output
 Sundry – for any other account affected by the receipt of cash

Note: Cash Sales is not an account but a notation to monitor how

much of the Sales are in cash.
Cash payments Cash payments journal (Cash disbursements journal) – used to
journal record all cash payments, either from the purchase of
merchandise, payment of suppliers, or any other type of
transaction involving cash disbursement.

Contains columns for:

DR – Accounts Payable, Cash Purchases, VAT Input
CR – Cash in bank, Purchase discount
Sundry – for any other account affected by the disbursement of
cash

Note: Cash Purchases is not an account but a notation to monitor

how much of the Purchases are in cash.
Subsidiary Subsidiary ledger – ledger for individual customers (accounts
ledger receivable) and suppliers (accounts payable); shows the running
balance of each customer and supplier for monitoring purposes

A business which has many customers and suppliers need to

monitor individual balances. As such, subsidiary ledgers are
created for each of them.

For suppliers, they have to ensure payment within the due date to
protect their credit rating.

For customers, they need the information to follow-up on unpaid

accounts, and adjust customer terms based on credit rating as
needed.

Controlling Control account – general ledger for accounts receivable and

account accounts payable which have subsidiary ledgers

The control account shows all the transactions affecting it,

regardless of the individuals involved.

As part of internal control, the balance of the control account

should equal the total of the subsidiary ledgers. Imbalance may be
a result of recording errors, which should be corrected.
Internal controls Internal controls – procedures implemented by a business to
safeguard its assets from possible theft, embezzlement or fraud, as
well as honest mistakes and errors.

Examples of internal controls:

• Cashier must not have access to the accounting records.
• Number of persons handling cash must be limited.
• Employees handling cash must be bonded (insured).
• Use of cash register and safe vault, if possible.

Imprest Cash System – one of the most widely-used controls for

cash. Cash is generally placed in the bank, and not maintained at
the place of business. Most businesses use a checking account.

Features of the imprest cash system:

• A checking account (current account) is opened with a
bank.
• All collections are deposited at the end of the day, or early
the following day.
• Official receipts must be issued for all collections, regardless
of the source.
• All payments are made through issuance of checks, except
for small payments which are paid through the Petty Cash
Fund. Issuance of check is supported by a Check Voucher.
Other supporting documents are attached to the voucher;
this may include a billing statement, or an invoice, or an
official receipt.
• Petty Cash Fund is established for small expenditures;
replenished every month or when the fund is used up. A
petty cash voucher is prepared for the requested payment
of expenses. Replenishment is recorded in the general
ledger.

Checking Checking account – a bank account in which the funds of a

account business are kept.

Businesses issue checks for the payment of suppliers, creditors,

etc.

Check voucher Check voucher – document used when releasing payment for
usual operation expenses. Payment to suppliers, settlement of
obligations, acquisition of property, withdrawal of capital, etc.
Petty cash Petty cash voucher - document used when releasing payment
voucher for small expenses such as fare, specific supplies, representation,
miscellaneous, etc.

Recording the See excel file Basic Accounting_01

transactions in
the special
journals