THE JOURNAL
The journal could be defined as a book of original entry in which transactions of special nature, which can not be recorded in the other books of prime entry, are recorded in chronological order.
It is also known as Journal Proper, general journal, principal journal or just journal. The advantages of using journal include the following:
- It provides a convenient record of transactions in chronological order. This helps to make fraud by books keepers more difficult.
- It helps reduces the risk of omission of transaction since it instructs which accounts to be debited or credited.
iii. It provides explanations for complicated entries in the ledger.
Some of the main uses of the journal include but not limited to the following:
- Opening entries
- Closing entries
iii. The purchase and sale of fixed asset on credit
- The correction of errors in the ledger accounts
- Adjustment to any of the entries in the ledger.
The layout of the Journal:
- The date
- The name of the accounts to be debited and the amounts
- The name of the accounts to be credit and the amounts
- A description and explanation of the transaction. This is called narrative.
- A folio reference to the source documents giving proof of the transaction.
The general journal is therefore ruled to provide columns for:
Date: This shows the date the transaction
Details / Particulars: This shows the name of accounts to be debited and credited as well as the narrative which is a small explanation of the transaction and the source document reference.
Folio: this shows the ledgers containing the accounts with their page numbers.
Debit column: This shows the amount debited
Credit column: This shows the amounts credited
Opening Entries:
These are entries needed to open a new set of books.
Example:
- Babangida after being in business for some years without keeping proper records, now he decides to keep a double entry set of books on July 1 2013, he establishes that his assets and liabilities are as follows:
Assets: Van N3,700; Fixtures N1,800; Inventory N4,200, Debtors: B. Yohanna N95, D. Buchi N45; Bank N860; Cash N65.
Liabilities: Creditors – M Queen N129, C. Wadada N410.
You are required to show the journal entries needed to open the new set of accounts.
Journal
| Date | Particulars | Folio | Dr | Cr |
| 1/7/13 | Van Fixtures Debtors: B. Yohanna D. Buchi Inventory Bank Cash Creditors: M. Queen C. Wadada Capital Being Asset and liabilities at this data entered to glor the books | G.L G.L S.L S.L
C.L C.L P.L P.L G.L | N 3,700 1,800 98 45 4,200 860 65
10,765 | N
129 410 10,226
10,765 |
- Closing Entries: These are entries required to close down accounts. For example writing of a bad debt.
Example: A debt of N780 owing to us by Hmmadu is written of on August 31, 2014. Show the journal entries required to close the debtors account.
| Date | Particulars | Folio | Dr | Cr |
| 31/7/13 | Bad debts H Mmadu Being debt written off as bad debt | N 780
| N
780
|
| Bad Debts A/C | |
| N 31/8/14 H.mmadu 780 | N |
The ledger accounts will appear as follows
| H. MMadu A/C | |
| N Bal. 780 | N 31/8/14 Bal Debts 780 |
- The purchase and sale of fixed assets on credit.
Example:
A drilling machine is bought on credit from John Holt Nigeria Ltd for 100,550 on July 1, 2014 show the journal entry required and the ledger accounts.
| Date | Particulars | Folio | Dr N | Cr N |
| 1/7/13 | Machinery John Holt Nig Ltd Being purchase of drilling machine on credit purchase invoice No xx71 | G.L G.L
| 100,550
| 100,550
|
- Adjustments to any of the entries in the ledger: This includes all necessary changes that are needed to be made in the ledger accounts. e.g. transfers between accounts, cash discount / allowances on fixed assets e.t.c.
Example: K. Yahaya, a debtor owned N200,000 on 1 July 2014. He was unable to pay his account in cash but offers a four year old car in full settlement of the debt. This was accepted on July 10, 2014 show the journal entries.
Journal
| Date | Particulars | Folio | Dr N | Cr N |
| 10/7/13 | Car K. Yahaya Being accept in full settlement of debt | 200,000
|
200,000
|
Example:
We have only paid 50% of the cost a computer we bought from Zinox Nig Ltd for N40,000 when we discovered it was faulty on July 5, 2014, the computer was returned to the supplier who offered an allowance of N10,000 off his balance. Show the journal entry required to effect the charges that have occurred.
Correction of Errors: These are mistakes identified in the ledger accounts before and after the final accounts. This will be treated in details later.
Note: From the examples, it can be seen that
(i) The accounts to be debited are written first, followed by the accounts to be credited written indented to the right (through this practice is out of vogue).
(ii) The narrative follows after the accounts must have been written.
(iii) The totals of debit entries must be equal to the credit entries.
(iv) The journal is not part of the ledger but only a form of diary that instructs how the ledger is to be completed and explains the reasons for such entries.