Virtual Kollage: Daybooks

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Daybooks



DAY BOOKS (JOURNALS)
Journals or daybooks are used to record transactions on daily basis and usually before those transactions are posted into the ledger accounts. The main advantage is to summarize transactions before they are entered into the ledger accounts. They are also called day books, subsidiary books, books of original entry, prime books, etc. They are seven in all as follows:
  
1.      Purchases Journal: This is a journal that is used to record all credit purchases. The source document for recording transactions in this journal is the invoice received from credit suppliers. The format may be as follows:
                                    PURCHASES JOURNAL

Date

Narrative / Details
Ledger Reference
Invoice
Details

Amount
Note that the journals can also be prepared on columnar basis to analyze the various transaction by column.










$


Note: There are several formats for presenting the journals. The format used depends on the volume of details the business wants to show.

2.      Sales Journal: This is a journal that is used to record all credit sales. The source document for recording transactions in this journal is the invoice issued to credit customers. The format may be as follows:
                                    SALES JOURNAL

Date

Narrative / Details
Ledger Reference
Invoice
Details

Amount











$


3.      Returns Inwards Journal: This is a journal that is used to record all credit sales that are returned by customers. It is also called Sales Returns journal. The source document for recording transactions in this journal is credit note issued to the customer. The format may be as follows:
              
RETURNS INWARDS JOURNAL

Date

Narrative / Details
Ledger Reference
Invoice
Details

Amount
Note that the journals can also be prepared on columnar basis to analyze the various transaction by column.










$


4.      Returns Outwards Journal: This is a journal that is used to record all credit purchases that are returned to suppliers. It is also called Purchases Returns journal. The source document for recording transactions in this journal is debit note issued to the supplier. The format may be as follows:
                   
                       RETURNS OURTWARDS JOURNAL

Date

Narrative /  Details
Ledger Reference
Invoice
Details

Amount
Note that the journals can also be prepared on columnar basis to analyze the various transaction by column.










$


5.      Cash Book: This is used to record all cash transactions of the business. Cash means cash in hand and cash at bank. The cash book can be a single column type, double column type or three column type. Note that the cash book is both a journal and ledger. The various formats or the cash book are as follows:
                                  
  SINGLE COLUMN CASH BOOK
Date
Narrative / Details
Ref
 Amount
Date
Narrative/ Details
Ref
Amount

Jan 1
Jan 3

Balance
Sales

$
600
950

Jan 11

Salaries

GL 2
$
500



                                                                DOUBLE COLUMN CASH BOOK
Date
Narrative
Ref
Cash
Bank
Date
Narrative
Ref
Cash
Bank

Jan 1
Jan 3
Jan 10

Balance
Sales
T. Bow

 b/f         
 GL 3
SL 11  
$


10

600
420
590

Jan 11
Jan 20

Salaries
Gecko Ltd.

GL2 GL5
$

40

390
990

                                                               THREE COLUMN CASH BOOK
Date
Narrative
Ref
Discount
Cash
Bank
Date
Narrative
Ref
Discount
Cash
Bank

Jan 1
Jan 3
Jan 10

Balance
Sales
T. Bow

 b/f         
 GL 3
SL 11  
$

12
10


420


600

590

Jan 11
Jan 20

Salaries
Gecko Ltd.

GL2 GL5
$

40

390



990


6.      Petty Cash Book: This is used to record all minor (petty) cash transactions of a business. It may take several formats. One of these may be as follows: The initial amount given to the petty cashier is called cash float. The IMPREST system where the petty cashier is given an initial amount called cash float to be used on small expenses, so that reimbursement is made where necessary.


                                                               
                                                                         PETTY CASH BOOK
Receipt
Date
Narrative
Voucher No.
Total
Analysis
Electricity
Water
Stationery
Transport
Others
$
1,000

Jan 1
Jan 3
Jan 10

Balance
Grow Ltd,
T. Bow


10
11
$

420
590
$

  20
$

400
$

$


590
$






7.      General Journal: This is used to record all other transactions that cannot be recorded in the other journals. Example of such transactions are;
·         Sale and Purchases of fixed assets on credit;
·         Correction of errors;
·         Transfers from one ledger account into another;
·         Recording of opening and closing entries of assets and liabilities; etc.
·         Sales and Purchases of a business
All transactions entered in the journal are narrated.
 The format is as follows:

General Journal
Date
Narrative
Reference
Debit
Credit

Jan 14

Motor Vehicle
GL Motors
Motor vehicle bought on credit


$
2,500
$

2,500




NB:   The type of discount recorded in the cash book is cash discount but not trade discount. The difference between the two is that, cash discount is given on prompt payment or on settlement of account while trade discount or quantity discount is given on bulk purchases.

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