Definitions

Special Journals

Special journal

Special Journals are designed to facilitate the process of journalizing and posting transactions. Special Journals are used for the most frequent transactions in a business. For example, in merchandising businesses, companies acquire merchandise from vendors, and then in turn sell the merchandise to individuals or other businesses. Sales and purchases are the most common transactions for the merchandising businesses. A retail store probably needs to record the following transactions many times a day for sales on account and cash sales:

Figure 1


Description Debt Credit
Accounts Receivable XXX
Sales XXX
Sales Tax Payable XXX

Description Debt Credit
Cash XXX
Sales XXX
Sales Tax Payable XXX

To save time for journalizing the entries, and posting the entries to the general ledgers and subledgers, Special Journals are used by some businesses. Even if the Special Journals are used, the business still needs to use general journal for infrequent transaction, such as adjusting entries and closing entries.

Types of Special Journals

The types of Special Journals that a business uses are determined by the nature of the business. Special journals are designed as a simple way to record the most frequently occurring transactions. There are four types of Special Journals that are frequently used by merchandising businesses:

• Sales journal
• Cash receipts journal
• Purchases journal
• Cash payments journal

Sales journal is used to record all sales of merchandise on account; Cash receipts journal is used to record only cash receipts transactions; Purchases journal is used to record only purchases of merchandise on account; Cash payments journal is used to record only cash payments transactions.

Format of Special Journals

In General Journal, transactions are recorded in several lines (see Figure 1), and each transaction is posted to the general ledger separately. For example, if fifty sales on account were made during one day, fifty ledger postings would have to be made to three general ledger accounts: Accounts Receivable, Sales, and Sale Tax Payable. In special journal, transactions are recorded in a single line, and the format of the journal made it possible to post only the total amount for each account to the general ledger. For example, if fifty sales on account were made during one day, only the total amount for Accounts Receivable, Sales, and Sales Tax Payable were posted to the general ledger. Thus the posting process is more efficient. Figure 2 shows the example formats of the Special Journals.

Figure 2:

SALES JOURNAL

Date Sale No. To Whom Sold Post. Ref. Accounts Receivable Debit Sales Credit Sales Tax Payable Credit
April 1 900 A. Smith $1,000 $1,000 $60
April 1 901 B. Johnson $2,000 $2,000 $120
April 1 902 C. Chang $1,000 $1,000 $60
April 4 904 D. Garcia $1,000 $1,000 $60

CASH RECEIPT JOURNAL

Date Account Credited Post Ref. General Credit Accounts Receivable Credit Sales Credit Sales Tax Payable Credit Cash Credit
May 1 B. Johnson $1,000 $1,000
May 3 C. Chang $1,000 $1,000
May 5 A. Smith $1,000 $1,000
May 8 Interest Payable $400 $400

PURCHASES JOURNAL

Date Invoice No. From Whom Purchased Post Ref. Purchased Debit / Accounts Payable Credit
June 2 6321 BCD Corp. $12,000
June 5 12D Telecom8 Inc $800
June 21 412 Furniture-X $2,000

CASH PAYMENTS JOURNAL

Date Check No. Account Debited Post Ref. General Debit Accounts Payable Debit Purchases Credit Cash Credit
July 1 1254 Rent Expense $1,200 $1,200
July 2 1255 BCD Corp. $12,000 $12,00
July 2 1256 Furniture-X $1,200 $1,200

Reference

Heintz, James A. and Parry, Robert W. Jr. (2008). College Accounting (19th Edition) P440-459. Thomson South-Western. ISBN-13: 978-0-324-37616-6

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