Special Journals - BC Bookkeeping Tutorials|dwmbeancounter.com

Special Journals were briefly discussed in the Introduction to this tutorial. In this Lesson, we're going learn more about what they are and how they're used.

Special journals are nothing more than journals designed and used for recording a single type of transaction such as receiving cash or writing checks. What makes them special ? Simply that they only record certain types of transactions.

How do I know which special journal to use ? It's easy. The definition of the special journal tells you exactly what type of transaction should be recorded in what journal.

Let's use an easy illustration that we are all familiar with, a kitchen drawer, to make my point clear. In the drawer is one of those fancy plastic dividers that is used to store your eating utensils. Your rules and definitions for storing your eating utensils are:

After washing and drying your eating utensils you pick up a spoon. Based on your rules and definitions what bin are you going to put it in ? I know I'm insulting your intelligence. Of course it goes in Bin 3.

It's not any different than how you determine what Special Journal to use when you record a transaction. The definition and rules of the special journal tell you in what journal the transaction should be recorded in.

If you recall, the steps for analyzing and recording a transaction are:

2. Understand how the transaction (event) affects the business-the type of transaction and whether it needs to be recorded in the formal bookkeeping records.

3. Determine what accounts are affected and whether the transaction increases or decreases the account balance.

4. Use the business's Chart of Accounts when necessary to determine the account numbers that represent these accounts.

5. Use the debit and credit rules to determine if the accounts are debited or credited.

6. Determine what Journal should be used to record the transaction.

7. Do It-Record the transaction.

Let's look at Step 6

Determine what Journal should be used to record the transaction.

How do we do this ? All we have to do, based on our definitions, is determine what bin (Special Journal) to put our forks, knives, and spoons (type of transaction) in.

First let's review the Definitions for the Special Journals.

The Purchase Returns & Allowances Journal is a special journal that is used to record the returns and allowances of merchandise purchased on account.

Let's make a simple chart for six of the major Special Journals that tells us what type of transactions are recorded in these special journals.

Type of Transaction Recorded:

Product Sales/Fees billed to customers who we have granted credit (charge sales)

Type of Transactions Recorded:

Purchase of any expense on account

Purchase of supplies on account

Purchase of equipment on account

Purchase of any other asset on account

Type of Transaction Recorded:

Cash payments to employees for salary & wages

See, it's really quite easy to determine what journal to use to record business transactions. A little common sense goes a long way.

Remember it's your business and you could if you had a special need design your own special journal. If you wanted to know how much cash you received from customers in different states without doing a special analysis you could set up special cash receipts journals for all 50 states. But in this day and age a computer with good bookkeeping software would provide you with this and many more types of customer analyses.