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

3. Books of Original Entry ( 原始分錄簿 ) and Ledgers ( 分類帳 ). References ： Chapter 11-14, 19. A Introduction. Books to record all the T accounts. The expansion of the business, transactions increase ， the numbers of T accounts are numerous.

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

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  1. 3 Books of Original Entry (原始分錄簿) and Ledgers (分類帳) References： Chapter 11-14, 19

  2. 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).

  3. 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】

  4. Transactions Classifying the transactions Credit Sales Credit Purchases Returns Inwards Returns Outwards Cash and cheque receipts and payment Others Sales Journal Purchases Journal Returns Inwards Journal Returns Outwards Journal Cash Book/ Petty Cash Book Journal Posting to the double entry accounts in the ledgers： Sales ledger Purchases ledger General ledger p. 116

  5. C Ledgers • 3 kinds of ledgers： Sales ledger－records each debtor’s T A/C Purchases ledger－records each creditor’s T A/C General ledger －records the rest of the accounts, such as expenses, Fixed assets, capital, etc.

  6. D Sales Journal and Sales Ledger D1 Sales Journal • Record all credit sales • There is no debit items in “Sales A/C”, so the “Sales A/C” transforms to a statement(表), i.e, Sales Journal.

  7. 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.

  8. *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 debts • The entry is recorded at the time of repayment of debts.

  9. Sales Journal 2008 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)

  10. D2 Sales Ledger • After 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.

  11. Sales Journal Posting each sales transactions Posting the total to the Sales A/C （Record each credit sales） Sales Ledger General Ledger Debtors: Rabbit Co. Dr. $ Sales A/C Cr. $

  12. E Purchases Journal and Purchases Ledger E1 Purchases Journal • Record all credit purchases • There is no credit items in “Purchases A/C”, so the “Purchases A/C” transforms to a statement(表), i.e, Purchases Journal.

  13. 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.

  14. Purchases Journal 2006 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)

  15. E2 Purchases Ledger • After 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.

  16. Purchases Journal Posting the total to the Purchases A/C Posting each purchases transaction （Record the credit purchases） General Ledger Purchases Ledger Purchases Dr. $ Creditors: Celery Co Cr. $

  17. 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.

  18. Returns Inwards Journal 2006 Particular Credit Note No. $ Mar 1 Rabbit Co. 50 10 Pepper Co. 10 31 Transferred to returns inwards A/C 60 (in General Ledger)

  19. Returns Inwards Journal Posting the total to the returns inwards A/c Posting each returns transaction (Record each items in Credit Notes) General Ledger Sales Ledger Returns Inwards A/C Dr. $ Debtors: Carrot Co. Cr. $

  20. 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.

  21. Returns Outwards Journal 2006 Particular Debit Note No.$ Mar 1 Celery Co. 20 5 Carrot Co. 10 31 Transferred to returns Outwards A/C 30 (in General Ledger)

  22. Returns Outwards Journal Posting each transaction in debit notes Posting the total to the Returns Outwards A/C (Recording each items in Debit Notes) Purchases Ledger General Ledger Creditors: Celery Co. Dr. $ Returns Inwards A/C Cr. $

  23. H Classification of T Accounts T字帳的分類 Accounts Personal Accounts Impersonal Accounts 人名帳戶 非人名帳戶 Debtors (Sales Ledger) Creditors (Purchases Ledger) Real Accounts 實帳戶 Nominal Accounts 虛帳戶 Records assets and Liabilities in General Ledger Records expenses, incomes, and Capital in General Ledger

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