Books of original entries - Specialized Jounals

When a business is small, it can keep all transactions record in one general journal or day book. However, as the business grow, its scale of financial activates grow as well and more day to day financial transaction take place. As you know a business needs to record the detail of transaction as much as possible, for a large business its impossible record all financial transactions in one book because it need lot pages of a book to enter large number of transactions and it is difficult to find a specific transition and to detect an error in recording the transactions and even the single book would be too hard to handle and manage

The simple solution to this problem is the use of more than one book to record the details of transactions. When a business uses more than one book to record transactions, it put together all the similar transaction in a book. In each book we don’t record and mix transactions of different nature.

Books of original Entries
As we know books of original entries are the books in which we first record the transactions. These Specialized journals or day books are part of books of original entries. Thus we have separate book for each kind of transaction. For example sale of goods will be recorded in sales journal or sales day book

The Term day book and Journal
Most of the people find confusing while reading the terms journal and day book. Both Journal and Day book are the two names of one thing. We can use either term.

Types of specialized journal

Sales Journal or Sales day book - For recording credit sales
Purchase journal or purchase day book - For recording purchases on credit
Sales return journal or sale return day book - For recording sales return
Purchase return journal or purchase return day book - For recording purchases return
Cash receipts journal - For recording all kind of cash receipts
Cash payments journal - For recording all kind of cash payments

Sales journal or sales day book
Sales journal is used to record the entries or transactions for credit sales. Remember that sales journal is only used to record entries for credit sales not for cash sales and sales return
Simple double entry for credit sales

Debit--> Debtor-Customer’s name/description

Credit--> Sales

DATE
INVOICE
CUSTOMER/ACCOUNT DEBITED
FOLIO
AMOUNT $










TOTAL


Date Column: is used to record the date of credit sale
Invoice Column: is used to record the No. of invoice issued
Customer Column: is used to record the name of customer that purchased your goods
Folio Column: records reference to sales ledger account
Amount Column: Amount of credit sales that was made



Purchase journal or Purchase day book
Purchase journal is used to record the entries or transactions for credit purchases. Remember that purchase journal is only used to record entries for credit purchase not for cash purchase and purchase return

Simple double entry for credit purchase

Debit--> Purchases

Credit--> Creditor-Supplier’s name/description

DATE
INVOICE
SUPPLIER/ACCOUNT CREDITED
FOLIO
AMOUNT $










TOTAL


Date Column: is used to record the date of credit purchase
Invoice Column: is used to record the No. of invoice received
Supplier Column: is used to record the name of supplier from whom you did purchase the goods
Folio Column: records reference to purchases ledger account
Amount Column: Amount of credit purchases that was made

Sales return journal or sale return day book
When a business makes sales to customers, it’s possible that some customers will return the sold goods because of defects, sub standard goods or any other reason. When a customer returns the sold goods, it is recorded in sales journal and from sales journal it is transferred to sales ledger account.

Sales journal is used to record the entries or transactions for sales return or return inward.
Simple double entry for credit sales

Debit--> Sales return or return inward

Credit--> Debtor-Customer’s name/description

DATE
CREDIT NOTE
CUSTOMER/ACCOUNT CREDITED
FOLIO
AMOUNT $










TOTAL


Date Column: is used to record the date of sales return
Credit note Column: is used to record the No. of Credit note issued
Customer Column: is used to record the name of customer that returns your goods
Folio Column: records reference to sales return ledger account
Amount Column: Amount of sales return


Purchase return journal or purchase return day book
When we purchase goods for the purpose the reselling them, it’s likely that some of the goods would be defective and therefore, we return these defective goods to supplier. When we return goods to supplier, we record these purchases return in purchase return journal

Purchase return journal is used to record the entries or transactions for purchases return

Simple double entry for credit purchase

Debit--> Creditor-Supplier’s name/description

Credit-->Purchases return or return outward

DATE
DEBIT NOTE
SUPPLIER/ACCOUNT DEBITED
FOLIO
AMOUNT $










TOTAL


Date Column: is used to record the date of credit purchase
Debit note Column: is used to record the No. of debit note received
Supplier Column: is used to record the name of supplier to whom you returned goods
Folio Column: records reference to purchases return ledger account
Amount Column: Amount of purchases return


Cash receipt journal
Cash receipt journal is a specialized journal where all cash receipts are recorded for example cash received from debtor will be recorded in cash receipt journal.

Simple double entry for cash receipt

Debit--> Cash

Credit-->Debtor or account receivable or any other account

DATE
ACCOUNT CREDITED
FOLIO
CASH
DISCOUNT
SALES
DEBTOR
SUNDRY












TOTAL







Date Column: is used to record the date of cash receipt related transaction when business received cash
Account Credited Column: is used to record the source from where business has received cash payment or the credit side of double entry. For example a business has received cash from a debtor, Cash=Debit and Debtor=Credit therefore Debtor will be recorded in Account credited column
Folio Column: records reference to cash ledger account
Cash Column: is used to record the amount of cash received.
Discount Column: if any cash discount allowed, it will be recorded in it
Sales Column: In the case of cash sales the amount of sales will be recorded in it
Debtor Column: If cash was received from a debtor, the amount of cash that was received from debtor is recorded under this column
Sundry Accounts Column: is filled for those accounts which don’t have special column in cash receipt journal for example interest and commission received, cash received from the sale fixed asset like building etc



Cash payment journal
Cash payment journal is a specialized journal where all cash payments are recorded for example cash paid to creditor will be recorded in cash payment journal.

Simple double entry for cash receipt

Debit--> Debtor or account receivable or any other account

Credit--> Cash

DATE
ACCOUNT CREDITED
FOLIO
CASH
DISCOUNT
SALES
DEBTOR
SUNDRY












TOTAL







Date Column: is used to record the date of a cash payment related transaction. When business paid cash
Account debited Column: is used to record name of the person or organization to which the business has paid cash or Debit side of double entry. For example a business has paid cash to a creditor, Creditor=Debit and Cash=Credit therefore creditor will be recorded in Account debited column
Folio Column: records reference to cash ledger account
Cash Column: is used to record the amount of cash paid.
Discount Column: if any cash discount received, it will be recorded in it
Purchases Column: In the case of cash purchases the amount of purchases will be recorded in it
Creditor Column: If cash was paid to a creditor, the amount of cash that was paid to creditor is recorded under this column
Sundry Accounts Column: is filled for those accounts which don’t have special column in cash payment journal for example interest and commission paid, cash paid for the purchase of fixed asset like building, machinery etc.