JOURNALS

MEANING OF JOURNALS

A journal is the first book in which we record business transactions. Each record in the journal is called an entry. A journal is like a diary of  transactions. It is the first book where accounting records are made before they are posted to the ledger.  This means that the first entries of business transactions from the source documents are made in the journals.  Journals are called books of prime or original entries because entries are first made in them before they are passed on to the ledger.

 

TYPES OF JOURNALS

The journals are:-

1. Purchases journal or Purchases day book or Purchase Book
2. Sales journal or Sales day book or Sales Book
3. Purchases journal or Purchases Returns Book or Purchases returns day book or returns outwards journal
4. Sales returns journal or returns inwards journal or Sales returns book or sales returns day book or
5. General Journal, Principal Journal or Journal proper

 

USES OF THE JOURNALS

1. Purchases book-to record goods bought on credit only.
2. Sales book-to record goods sold on credit only.
3. Purchases returns book-to record goods returned by us to the seller e.g. damaged or bad quality goods
4. Sales returns book-to record goods returned by our customers to us.
5. General journal: This is used for various purposes such as
   1. All transactions on day-by-day basis so that no transaction is omitted, or forgotten.
   2. To record transactions that do not take place often. to correct mistakes in accounts records, 5etc.

 

EVALUATION

1. What is a journal?
2. How many types of journal you learnt?

 

PURCHASES DAY BOOK

A Purchases Day Book is a record of credit purchases made by a business organization.  This means that all cash purchases must not be recorded in the purchases journal because it is concerned only with credit purchases. It is important also to remember always that the purchases journal is used to record goods bought for resale by a business.  It cannot be used to record properties or assets of a business bought on credit such as delivery van, office typewriter, etc.

 

The  preparation of a purchases journal can be illustrated with the following example-

ONYEKACHUKWU LTD made the following purchases from UAC  Nigeria Plc on credit in the month of November:

Nov. 10                                                   Office stationeries                 N300

Nov 15                                                    Jacket files                             N200

Nov. 20                                                   Window envelopes                N500

You are required to record the above transaction in the purchases journal of Onyekachukwu Ltd

 

SOLUTION

ONYEKACHUKWU   LTD

Purchases Journal

Date	Particulars	Fol	Amount
Nov. 10	UAC Nigeria PLC		#
Nov. 10	Office Stationeries	PL	300
Nov. 15	Jacket files	PL	200
Nov. 20	Window envelopes	PL	500
	Transferred to GL purchases Account		1,000

 

RETURNS OUTWARD JOURNAL

This is also known as purchases returns book or purchases return day book.  It is used to record goods returned by a business to its suppliers. If we assumed that Onyekachukwu Ltd returned the purchases on 20/11/ and the amount of the return is N200, then it will be  recorded in the returns outwards journal as follows:-

 

ONYEKACHUKWU LTD LTD

                                           Purchases Returns Journal

Date	Particulars (Name of supplier	Fol	Amount
Nov 20	UAC Nigeria PLC Window envelopes	ROL	# 200
	Transferred to GL’ Returns Out A/c		200

 

EVALUATION

1. What is the purchases Journal used for?
2. In what subsidiary book do we records goods returned to suppliers?

 

SALES DAY BOOK 

This is a book of original entry which is used to record goods sold on credit to customers by an organisation. It is also known as sales journal.

SALES RETURNS BOOKS

This is also known as returns inwards day book or sales returns journal. It is used to record goods which have been sold to customers previously but are now returned to the organization. Goods  are returned for reasons such as damages, incorrect order, low quality product etc.                                 The seller( i.e organisation) records the returned goods in the returns inwards journal and then issues a credit note to the buyer,

 

PREPARATION OF SALES DAY BOOK AND SALES RETURNS BOOKS

The sales day book or sales journal can be prepared using the following example:-

Example:

Write up the sales Journal of Mr. ABUKA from the information given below:-

Dec. 5 2004                          Sold goods on credit, 20 cartons of keysoap at N10 per cartons to Mr. Jibunor

Dec. 19 2004         Sold to Ngozi Adebayo on credit, 30 pairs of slippers at #4 per pair

 

SOLUTION

1. ABUKA

Sales Journal (or Sales Day Book)

Date	Particulars (Name of Debtor)	Fol	Amount N
Dec. 5 2005	MR. JIBUNOR 20 cartons of soap at #10 each	SL	200
Dec. 19 2005	NGOZI ADEBAYO 30 pairs of slippers at #4 per pair	SL	120
	Transfer to GL Sales Account		#320

 

Sales Returns Journal or Returns Inwards Journal

In order to illustrate  Returns Inwards Journal we will work with the following example

Example:

Enter the following transactions in the Inwards Book of Mr. Abuba.

7/12/04:                 Mr. Jibunor returned

5 cartons of soap as interior

22/12/04                Ngozi Adebayo returned

10 pairs of slippers as bad

 

SOLUTION

Sales Returns Journal

Date	Particulars	Fol	Amount #
7/1/04	MR. JIBUNOR 5 cartons of soap at #10 each		50
22/12/04	NGOZI ADEBAYO 10 pairs of slipper at #4 each Transfer to GL Returns Inward A/c		40 90

 

EVALUATION

1. What is a sales journal and what is it used for?
2. Why do you think sales made can be returned? And when returned where should it be recorded?

 

GENERAL EVALUATION

1. Define Office
2. State the types of office by size and explain them
3. State the types of office by administrative structure and describe them.
4. Mention five functions of office.
5. List five different business organizations.

 

WEEKEND ASSIGNMENT

1. Which of the following is not a book of prime entry? A. general journal B. invoice                   C. sales book D. returns outwards journal
2. The other names for sales returns journal are _______ and _________ A. returns Inward and Returns outwards journals B. Returns outwards and purchases returns journals C. Returns Inwards Journal and sales Returns book D. None of the above.
3. Goods sold on credit are recorded in ________ book  A. sales B. returns inwards

1. returns outwards D. purchases

1. Purchases returns is also called A. return inwards B. return outwards C. credit returns                                 D. none of the above
2. From which source document is the purchases journal prepared? A. Invoice issued to customers B. receipt C. invoice receipt from suppliers D. debit note

 

THEORY

1. Where in the books of a business will you record?
2. Credit purchases of goods for resale
3. Goods returned by customers to us
4. Goods your company returned to suppliers
5. Mention three uses of the general journal

 

See also

SOURCE DOCUMENTS

INTRODUCTION TO BOOKEEPING

MONITORING AND CONTROL OF CHEMICALS

CONSUMER

FORM OF BUSINESS ORGANIZATION