Professional Documents
Culture Documents
Cash
Credit Credit Returns Returns Other
Receipt
Sales Purchases Inwards Outwards Types
and
Payments
R.LALL
R. LALL POA LESSONS
Having identified the uses and analysis of several books of original entry (Journals) we now turn
our attention to the final book – The General Journal.
The Journal
Date Details Folio DR CR
$ $
The name of the account to be debited
The name of the account to be credited
Description/narrative
N.B. The credit entry (details) is slightly indented and not shown directly under the name
of the account to be debited.
R.LALL
R. LALL POA LESSONS
Transactions:
1. A machine is bought on credit from Toolmakers for $550 on 1 July 2017.
2. Sale of stationery no longer required, for $300 on credit to K. King on 2 July 2017.
3. A debt of $78 owing to us from H. Marshall is written off as a bad debt on 31 August 2017.
4. S. Blake, a debtor, owed $2,000 on 1 July 2017. He was unable to pay his account in cash, but
offers a motor car in full settlement of the debt. The offer is accepted on 5 July 2017.
5. G. Grant is a creditor. On 10 July 2017, his business is taken over by A. Lee, to whom a debt of
$150 is to be paid.
6. An office photocopier, previously bought on credit from RS Ltd, for $1,310, is found to be
faulty and returned to the supplier on 12 July 2017. The supplier, RS Ltd, agreed to make an
allowance for the full amount outstanding, $1,310, which the business accepted.
Bad Debts
➢ A bad debt expense is recognized when a receivable (debtor) is no longer collectible
because a customer is unable to fulfill their obligation to pay an outstanding debt due to
bankruptcy or other financial problems.
➢ A bad debt is an expense (DR entry).
➢ Bad debts would need to be recorded in the Income Statement under the expenses
sections.
R.LALL
R. LALL POA LESSONS
The Journal
Date Details Folio DR CR
2017 $ $
1-Jul Machine 550
Toolmaker 550
Purchase of machinery on credit from Toolmaker
R.LALL
R. LALL POA LESSONS
SALES LEDGER
DR H. Marshall CR
Date Details Folio $ Date Details Folio $
2017 2017
1-Aug Balance b/d 78 31-Aug Bad Debts 78
GENERAL LEDGER
DR Bad Debts CR
Date Details Folio $ Date Details Folio $
2017
31-Aug H. Marshall 78
DR Office Photocopier CR
Date Details Folio $ Date Details Folio $
2017 2017
12-Jul Balance b/d 1,310 12-Jul RS Ltd 1,310
PURCHASES LEDGER
DR G. Grant CR
Date Details Folio $ Date Details Folio $
2017 2017
10-Jul A. Lee 150 10-Jul Balance b/d 150
DR A. Lee CR
Date Details Folio $ Date Details Folio $
2017
10-Jul G. Grant 150
DR RS Ltd CR
Date Details Folio $ Date Details Folio $
2017 2017
12-Jul Office photocopier 1,310 12-Jul Balance b/d 1,310
R.LALL
R. LALL POA LESSONS
Opening Entries
J. Brown, after being in business for some years without keeping proper records, now decides
to keep a double entry set of books. On 1 July 2017, he establishes that his assets and liabilities
are as follows:
• When doing opening entries all amounts in each account would be considered as the
balance b/d figure. For instance if you are drawing up the Motor Van Ledger account,
this account will have a debit balance b/d of 4,840.
• As such, all accounts and their balances are just listed in the General Journal.
• Opening entries follows the principle of the Accounting Equation (Capital = Assets –
Liabilities) and as such, Capital must be calculated for all opening entries in the General
Journal.
The Journal
Date Details Folio DR CR
2017 $ $
1-Jul Motor Van 4840
Fixtures 700
Inventory 390
B. Nunez - Accounts receivable 95
D. Blake - Accounts receivable 45
Bank 5080
Cash 20
L. Lee - Accounts payable 129
C. Shaw- Accounts payable 41
Capital 11,000
Opening Entries 11170 11170
R.LALL
R. LALL POA LESSONS
QUESTION
(a) Prepare journal entries to record each of the following:
(i) The opening entries of T. Lee who commenced his business on 1 April 2017.
(ii) The purchase of a new computer system on credit from Computex Data Services for $20,000
on 23 November 2017.
(iii) K. Bond owed the company $780 but unfortunately was unable to pay the debt so you
decide to write it off as bad on 30 November 2017.
(iv) The sale of some office equipment no longer required for $3,000 to Ms Chandler who pays
by cheque on 30 November 2017.
R.LALL