General Ledger Journals

General Ledger & Journals

What Information does a General Ledger and General Journal contain ?

Let's take a look at a sample record for each to find out exactly what financial information they provide.

General Ledger

Name of Account and Account Number
Date of Posting
Description-additional notes about the entry if needed
Posting Reference-journals name (abbreviation) , page, and entry reference
Amounts of the debits or credits transferred (posted) from the General Journal
Current Balance of the Account

Sample of a General Ledger Page

The Posting Reference GJ-1-1 refers to:

GJ-General Journal

1-Page 1

1-Entry Number 1

Account Name:Cash				Account Number:100
Date	Description	Post Ref	Debit Amount	Credit Amount	Balance
Jan 1,xxxx	Beginning Balance				5000
Jan 5,xxxx		GJ-1-1		1000	4000
Jan 8,xxxx		GJ-1-2	200		4200
Jan 10,xxxx		GJ-1-3		400	3800

Notice that the account has an amount column for debits (left side or first column) and an amount column for credits (right side or second column).

General Journal

Journals are preliminary records where business transactions are first entered into the accounting system. The journal is commonly referred to as the book of original entry.

Specialized Journals-are journals used to initially record special types of transactions such as sales, cash disbursements, and cash receipts in their own journal.

The end result of double entry bookkeeping is having an up to date , in balance, and properly

posted Ledger. In our prior lessons we recorded all our debits and credits (transactions) directly in the General Ledger. This would work for a small business that had very few transactions

but would become unwieldy for most businesses with any volume of activity. By its very definition the General Ledger is supposed to be a summary record of a business’s

financial transactions.

It logically follows that since we only want summary amounts in our Ledger we need to record

our detail entries some place else first. What record(s) do we use to do this ? You’re right ! Journals are our preliminary records. All our transactions are first entered in a preliminary record called a journal or book of original entry. This process is called journalizing.

After our business transactions have been entered in our journal(s), they are then periodically (usually monthly) summarized and totaled and then transferred (posted) to the General Ledger as summary entries.

What type of information is included in the Journal Record ?

Entry Number
Date of each transaction
Names and/or the account numbers of the accounts to be debited or credited
Amounts of the debits and credits
Posting Reference-Account Number in the General Ledger
Explanation or description of the entry

The journals contain all the chronological (by date) information necessary to record debit and credit amounts in the accounts of the General Ledger.

Sample Of A General Journal Page

General Journal			Page 1
Entry No	Date	Account Name	Post Ref.	Debit	Credit
GJ-1-1	Jan 5,xxxx	Supplies	502	1000
		Cash	100		1000
Record Supplies Expense
GJ-1-2	Jan 8,xxxx	Cash	100	200
		Sales	300		200
Record Cash Sale
GJ-1-3	Jan 10,xxxx	Advertising Expense	500	400
		Cash	100		400
Record Advertising Expense
GJ-1-4	Jan 20,xxxx	Utilities		650
		Cash			650
Record Utilities Expense

Do you notice anything odd about any of our entries in our General Journal ?

Look at entry number 4 (GJ-1-4). It doesn’t have a posting reference. Why not ? The answer is simple. Entry Number 4 has not yet been posted to the General Ledger. This is our way of keeping up with what entries have and have not been posted to the General Ledger.

Let's continue by taking a look at ABC Mowing's Balances.

The Balances in our Table are the Beginning Balances in ABC's General Ledger Accounts presented below.

ABC's Beginning Account Balances as of December 1,xxxx
Assets		Liabilities		Equity
Cash	5,500	Accounts Payable	(2,000)	Owner's Capital	(7,500)
Accounts Receivable	1,600			Mowing Revenues	(1,000)
Mowing Equipment	2,500			Advertising Expense	200
				Mulch Expense	100
				Owner Draws	600

Note: Credit Balances are indicated using parentheses ()

ABC Transactions for December xxxx

1. December 2, xxxx ABC mows a client’s yard and receives a check # 484 from the customer for $50 for the service provided.

Journal Entry 1 GJ-1-1

2. December 4, xxxx ABC purchases $100 worth of office supplies for inventory and stores them in their storage room. The office supply store gives them an invoice # 983 that allows them to pay for them in 15 days (on account).

Journal Entry 2 GJ-1-2

3. December 8, xxxx ABC places an ad in the local newspaper receives the invoice from the supplier # 555 and writes a check # 900 for $25 to the newspaper.

Journal Entry 3 GJ 1-3

4. December 10, xxxx ABC purchases five mowers for $10,000 and finances them with a note from the local bank.

Journal Entry 4 GJ 1-4

5. December 15, xxxx ABC mows another customer’s yard and sends the customer a bill (invoice # 1000) for $75 for the service they performed. They allow their customer 10 days to pay them for this service (on account).

Journal Entry 5 GJ 1-5

6. December 20, xxxx the owner of ABC needs a little money to pay some personal bills and writes himself a check # 901 for $500.

Journal Entry 6 GJ 1-6

7. December 22, xxxx ABC pays the office supply company $100 with a check # 902 for the office supplies that they charged (promised to pay).

Journal Entry 7 GJ 1-7

8. December 27, xxxx ABC receives a check # 55 from the customer who they billed (invoiced) $75 for services and allowed 10 days to pay.

Journal Entry 8 GJ 1-8

9. December 29, xxxx ABC purchased some mulch for $60 and received an invoice # 777 from their supplier who allows them 15 days to pay. The mulch was used on a customer’s yard.

Journal Entry 9 GJ 1-9

10. December 31, xxxx ABC bills (prepares an invoice # 1001) the customer $80 for the mulch and mowing his yard and receives a check for $80 from the customer.

Journal Entry 10 GJ 1-10

ABC's General Journal

General Journal			Page 1
Entry Number	Date	Account Name	Post Ref.	Debit	Credit
GJ-1-1	Dec 2,xxxx	Cash	100	50
		Mowing Revenue	400		50
Record Customer Check # 484 and revenue from mowing job
GJ-1-2	Dec 4,xxxx	Inventory-Office Supplies	115	100
		Accounts Payable	200		100
Record Invoice # 983 for office supplies purchased on account
GJ-1-3	Dec 8,xxxx	Advertising Expense	510	25
		Cash	100		25
Record Check # 900 for advertising services
GJ-1-4	Dec 10,xxxx	Mowing Equipment	150	10000
		Note Payable-Bank	210		10000
Record purchase of mowing equipment financed by bank note
GJ-1-5	Dec 15,xxxx	Accounts Receivable	110	75
		Mowing Revenue	400		75
Record Invoice # 1000 on account to customer for revenue earned mowing yard
GJ-1-6	Dec 20,xxxx	Owner's Draw	310	500
		Cash	100		500
Record owner's draw Check # 901
GJ-1-7	Dec 22,xxxx	Accounts Payable	200	100
		Cash	100		100
Record Check #902 paid to supplier for office supplies charged on account (Invoice # 983)
GJ-1-8	Dec 27,xxxx	Cash	100	75
		Accounts Receivable	110		75
Record Customer's Check # 55 received from customer on account
GJ--1-9	Dec 29,xxxx	Mulch Expense	520	60
		Accounts Payable	200		60
Record Invoice # 777 with credit terms for purchase of mulch
GJ-1-10	Dec 31,xxxx	Cash	100	80
		Mowing Revenue	400		80
Record Check # 555 received from customer paying our Invoice # 1001 for mowing services

ABC's General Ledger

Account Name: Cash			Account Number: 100
Date	Description	Post Ref.	Debit	Credit	Balance
Dec 1	Beg Bal.				5500
Dec 2		GJ-1-1	50		5550
Dec 8		GJ-1-3		25	5525
Dec 20		GJ-1-6		500	5025
Dec 22		GJ-1-7		100	4925
Dec 27		GJ-1-8	75		5000
Dec 31		GJ-1-10	80		5080

Account Name: Accounts Receivable			Account Number: 110
Date	Description	Post Ref.	Debit	Credit	Balance
Dec 1	Beg Bal.				1600
Dec 15		GJ-1-5	75		1675
Dec 27		GJ-1-8		75	1600

Account Name: Inventory-Office Supplies			Account Number: 115
Date	Description	Post Ref.	Debit	Credit	Balance
Dec 1	Beg Bal.				0
Dec 4		GJ-1-2	100		100

Account Name: Mowing Equipment			Account Number: 150
Date	Description	Post Ref.	Debit	Credit	Balance
Dec 1	Beg Bal.				2500
Dec 10		GJ-1-4	10000		12500

Account Name: Accounts Payable			Account Number: 200
Date	Description	Post Ref.	Debit	Credit	Balance
Dec 1	Beg Bal.				(2000)
Dec 4		GJ-1-2		100	(2100)
Dec 22		GJ-1-7	100		(2000)
Dec 29		GJ-1-9		60	(2060)

Account Name: Note Payable-Bank			Account Number: 210
Date	Description	Post Ref.	Debit	Credit	Balance
Dec 1	Beg Bal.				0
Dec 10		GJ-1-4		10000	(10000)

Account Name: Owner's Capital			Account Number: 300
Date	Description	Post Ref.	Debit	Credit	Balance
Dec 1	Beg Bal.				(7500)

Account Name: Owner's Draws			Account Number: 310
Date	Description	Post Ref.	Debit	Credit	Balance
Dec 1	Beg Bal.				600
Dec 20		GJ-1-6	500		1100

Account Name: Mowing Revenue			Account Number: 400
Date	Description	Post Ref.	Debit	Credit	Balance
Dec 1	Beg Bal.				(1000)
Dec 2		GJ-1-1		50	(1050)
Dec 15				75	(1125)
Dec 31				80	(1205)

Account Name: Advertising Expense			Account Number: 510
Date	Description	Post Ref.	Debit	Credit	Balance
Dec 1	Beg Bal.				200
Dec 8		GJ-1-3	25		225

Account Name: Mulch Expense			Account Number: 520
Date	Description	Post Ref.	Debit	Credit	Balance
Dec 1	Beg Bal.				100
Dec 29		GJ-1-9	60		160

So you know !

There are various symbols that are used to indicate Debits and Credits and whether an account’s balance is a Debit or a Credit. Ways and symbols you might run across are:

Dr for Debit and Cr for Credit
+ (Plus Sign) for Debit and – (Minus Sign) for Credit
No Bracket for Debit and < > (Brackets) for Credit
No Parentheses for Debit and ( ) (Parentheses) for Credit

Note : The plus (+) and minus (sign) are often used by accounting and bookkeeping programs to indicate debits and credits. Don’t get confused and think that the plus sign means an increase or that the minus sign means a decrease. They do not . In this case, they are simply symbols that mean either a debit or a credit.

In this Lesson, we illustrated the recording of ABC's transactions in the General Journal and the posting -transferring the balances to the the General Ledger Accounts.

You have now been introduced to some of bookkeeping and accounting’s formal records, namely the General Ledger and General Journal. You could get by with just these two records, but if your business like most has many transactions instead of the few that ABC had you’d be spending a heck of a lot of time recording and posting.

In this course the only Journal we'll use is the General Journal.

While you could record all your transactions just using this journal, bookkeeping has a better solution.

What’s the solution to streamlining the recording and posting processes.

Special Journals are the solution.

Instead of using just one journal to record all our business transactions we use many. Although this tutorial is not going to discuss the Special Journals in detail, I wanted to make you aware of them and the purpose they serve and the types of transactions recorded using them.

Some Special Journals a business will normally have are:

Cash Receipts Journal
Cash Disbursements Journal (Check Register)
Payroll Journal
Sales Journal
Purchase Journal
General Journal

All these journals are designed to record special types of business transactions and post the totals accumulated in these journals to the General Ledger periodically (usually once a month) using a manual system.

For a quick peak at Special Journals

Sorry, no Lesson can be tossed aside so let's learn about

the Trial Balance