Special Journals Definition, Types, & Advantages

If possible, different individuals should record transactions in each of the special journals. In small businesses, where transactions occur infrequently, each transaction is recorded in a general journal and then posted to the related accounts in the general ledger. Some businesses simply have one column to record the sales amount whereas others need additional columns for sales tax, delivery fees charged to customers etc. The multi-column journal should always have an ‘other’ column to record amounts which do not fit into any of the main categories.

Subsidiary Ledgers

Likewise, wewould record a sale of goods on credit in the sales journal, as adebit to accounts receivable and a credit to sales. Companies usinga perpetual inventory system also record a second entry for a salewith a debit to cost of goods sold and a credit to inventory. The accounts payable subsidiary ledger holds the details about all of the amounts a company owes to people and/or companies. In the accounts payable subsidiary ledger, each vendor (the person or company from whom you purchased inventory or other items) has an account that shows the details of all transactions.

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The subsidiary (customer) ledgers would be updated daily but at the end of the period, the TOTALS only would be recorded in posted directly into the accounts listed with no journal entry necessary. And the accounts receivable subsidiary ledger for Baker Co. would also show the payment had been posted (Figure 7.22). Therefore, one or more individuals must record the transactions by hand in the appropriate journals. These transactions must then be posted by hand to the appropriate general and subsidiary ledgers. The subsidiary (customer) ledgers would be updated daily but at the end of the period, the TOTALS only would be recorded in posted directly into the accounts listed with no journal entry necessary. The total of all of the cash disbursements for the month would be recorded in the general ledger Cash account ((Figure)) as follows.

Savings in Bookkeeping Expenses

The Post Ref. column in the subsidiary ledger and controlling accounts is labeled SJ-1 to represent page 1 of the sales journal. To create the sales journal entry, debit your Accounts Receivable account for $240 and credit your Revenue account for $240. Special Journals (also known as subsidiary journals) are chronological records of frequently occurring transactions such as sales, purchases and cash receipts/payments. Paying bills is recorded in the cash disbursements journal(Figure7.11) and is always a debit to Accounts Payable (or anotherpayable or expense) and a credit to Cash.

• Payroll and other disbursements will require their ownjournals to accurately track transactions.
• Under the periodic inventory method, the July 6 shipping costs would go to a Transportation In account and the July 25 discount would go to Purchases Discounts.
• A notation would be made in the reference column to indicate the payment had been posted to Baker Co.’s accounts receivable subsidiary ledger.
• In large businesses, where transactions of various categories occur hundreds or thousands of times each month, it is inconvenient to record them in the general journal.
• Read on to learn how to make a cash sales journal entry and credit sales journal entry.

Cash Receipts Journal

In the cash receipts journal, the credit can be to Accounts Receivable when a customer pays on an account, or Sales, in the case of a cash sale, or to some other account when cash is received for other reasons. For example, if we overpaid our electric bill, we could get a refund check in the mail. We would use the cash receipts journal because we are receiving cash, but the credit a special journal that is intended only for credit sales is called a journal. would be to our Utility Expense account. If you look at the example in (Figure), you see that there is no column for Utility Expense, so how would it be recorded? We would use some generic column title such as “other” to represent those cash transactions in the subsidiary ledger though the specific accounts would actually be identified by account number in the special journal.

Recording all such transaction directly in general journal would be extremely time consuming and error prone. It is much easier and simple to summarize all sales transactions during a week, for example, and transfer the total amount to general records. Here is the information from the accounts receivable subsidiaryledger.

Better Internal Control

• Any accounts used in the Other Accounts column must be enteredseparately in the general ledger to the appropriate account.Figure 7.25 shows how the refund would be posted to theutilities expense account in the general ledger.
• This total is then posted as a debit in the accounts receivable control account and as a credit to the general ledger sales account.
• Special journals handle specific transactions such as cash receipts or sales.
• Also at the end of the month, the total debit in the cost of goods sold column and the total credit to the merchandise inventory column would be posted to their respective general ledger accounts.
• The names of columns vary based on the type of transaction in a special journal.
• The benefits of using a special journal instead of the general journal for the repetitive transactions have been eliminated with today’s inexpensive yet powerful accounting software.
• In the cash receipts journal, the credit can be to Accounts Receivable when a customer pays on an account, or Sales, in the case of a cash sale, or to some other account when cash is received for other reasons.