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Books of Original Entry ( 原始分錄簿 ) and Ledgers ( 分類帳 )

References：Chapter 11-14, 19

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A Introduction

Books to record all the T accounts.The expansion of the business, transactions increase， the numbers of T accounts are numerous.Thus the T accounts are classified into 3 Ledgers and 7 Books (Books of Original Entry).

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B Books of Original Entry

1 Sales Journal ( Day Book)2 Purchases Journal (Day Book)3 Returns Inwards Journal (Day Book)4 Returns Outwards Journal (Day Book)5 Cash Book【 Explain later】6 Petty Cash Book【 Explain later】7 Journal【 Explain later】

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Transactions

Classifying the transactions

CreditSales

CreditPurchases

ReturnsInwards

ReturnsOutwards

Cash andcheque receipts

and payment

Others

ReturnsInwardsJournal

SalesJournal

ReturnsOutwardsJournal

PurchasesJournal

Cash Book/Petty Cash

BookJournal

p. 116

Posting to the double entry accounts in the ledgers：

Sales ledgerPurchases ledgerGeneral ledger

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C Ledgers

3 kinds of ledgers：Sales ledger－ records each debtor’s T A/CPurchases ledger－ records each creditor’s T A/CGeneral ledger － records the rest of the accounts, such as expenses, Fixed assets, capital, etc.

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D Sales Journal and Sales Ledger

D1 Sales JournalRecord all credit salesThere is no debit items in “Sales A/C”, so the “Sales A/C” transforms to a statement( 表 ), i.e, Sales Journal.

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Examples of Sales Journal：

The credit sales transactions in January, 2008 of Green Co. are as follow：Jan 5, sold $500 goods on credit to Rabbit Co. and offered 1% trade discounts* to Rabbit Co.Jan 15, sold $100 goods on credit to Pepper Co. If Pepper Co. pays the debt within 1 month, Pepper can enjoy 2% cash discounts**。Jan 28, sold $500 goods to Pump Co. and offered 1% trade discounts. If Pump Co. pays the debt within 1 weeks, Pump can enjoy 2% Cash discounts.

You are required to prepare：The Sales Journal to record the above transaction.

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*Trade discount: offered to customers to attract large-quantity transactions. Directly deducted from the list price, no double entry is required.

**Cash discounts:Encourage the early repayment of debtsThe entry is recorded at the time of repayment of debts.

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Sales Journal2008 Particular Inv. No. $Jan 5 Rabbit Co 495 15 Pepper Co 100 28 Pump Co 495 31 Transferred to sales A/C 1090

(in General Ledger)

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D2 Sales LedgerAfter recording each transaction in the Sales Journal, the transaction is posted to the Debtors A/C in the Sales Ledger.At the end of month or year, the total of the Sales Journal is posted to the “Sales A/C” in the General Ledger.

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Sales Journal

（ Record each credit sales）

Sales A/CCr. $

Debtors: Rabbit Co. Dr. $

General LedgerSales Ledger

Posting each sales

transactions

Posting the total to the Sales A/C

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E Purchases Journal and Purchases Ledger

E1 Purchases JournalRecord all credit purchasesThere is no credit items in “Purchases A/C”, so the “Purchases A/C” transforms to a statement( 表 ), i.e, Purchases Journal.

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Examples of Purchases Journal：The credit purchases transactions of Cucumber Co. in

February 2008 are as follows：Feb 6, bought goods $200 on credit from Celery Co., and received 1% trade discounts.Feb 17, bought $100 goods on credit from Carrot Co. If the debt is repaid within 1 week, 2% cash discounts is offered.Feb 27, bought $200 goods on credit from Spinach Co, and received 1% trade discounts. If the debt is repaid within 1 week, 2% cash discounts is offered.

You are required to prepare：The Purchases Journal to record the above

transaction.

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Purchases Journal2006 Particular Inv. No. $Feb 6 Celery Co. 198 17 Carrot Co.

100 27 Spinach Co. 198 28 Transferred to Purchases A/C

496 (in General Ledger)

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E2 Purchases LedgerAfter recording each transaction in the Purchases Journal, the transaction is posted to the Creditors A/C in the Purchases Ledger.At the end of month or year, the total of the Purchases Journal is posted to the “Purchases A/C” in the General Ledger.

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Purchases Journal

（ Record the credit purchases）

Creditors: Celery CoCr. $

Purchases

Dr. $

Purchases LedgerGeneral Ledger

Posting each purchases transaction

Posting the total to the Purchases

A/C

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F Returns Inwards Journal( 銷貨退回簿 )

Customers (Debtors) demand to return goods to our company. When we accept the goods returned, we issue a 【Credit note】 to the customers.Examples：Goods returned to Cucumber Co in March, 2006

are as follows：March 1, Rabbit Co. returned $50 goods to us (After deducted 1% trade discounts). March 10, Pepper Co. returned $10.

You are required to prepare：The Returns Inwards Journal to record the above

transaction.

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Returns Inwards Journal2006 Particular Credit Note No. $Mar 1 Rabbit Co. 50

10 Pepper Co. 1031 Transferred to returns inwards A/C 60

(in General Ledger)

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Returns Inwards Journal

(Record each items in Credit Notes)

Debtors: Carrot Co.

Cr. $Returns Inwards A/C Dr. $

Sales LedgerGeneral Ledger

Posting each returns

transaction

Posting the totalto the returns inwards A/c

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G Returns Outwards Journal

Our company demands to returns the goods to suppliers (Creditors). We issue a 【Debit note】with the goods returns to the suppliers.Examples：Cucumber Co returned goods in March, 2006

are as follows：March 1, returned $20 goods to Celery Co. (After deducted 1% trade discounts). March 5, returned $10 goods to Carrot Co.

You are required to prepare：The Returns Outwards Journal to record the

above transaction.

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Returns Outwards Journal2006 Particular Debit Note No.

$Mar 1 Celery Co. 20 5 Carrot Co. 10 31 Transferred to returns Outwards A/C 30

(in General Ledger)

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Returns Outwards Journal

(Recording each items in Debit Notes)

Returns Inwards A/C

Cr. $ Creditors: Celery Co. Dr. $

General LedgerPurchases Ledger

Posting each transaction in

debit notes

Posting the total to the Returns Outwards A/C

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H Classification of T Accounts T 字帳的分類

Accounts

Nominal Accounts 虛帳戶

Real Accounts實帳戶Creditors

(Purchases Ledger)

Debtors(Sales Ledger)

Records assets

andLiabilitiesin General

Ledger

Recordsexpenses,incomes,

and Capitalin General

Ledger

人名帳戶 PersonalAccounts 非人名帳戶Impersonal

Accounts