The Journal is a textual record of events (Debit and Credit) that is characterized by the fact that all the records it contains are in a sequential chronological order.
Debit and Credit
Journals can be viewed as pages of a book. Each page has lines and columns. A journal page has columns for the date, account name, and two columns for dollar amounts, referred to as the Debit and Credit columns.
Entries are transferred (Posted) from the journal to the ledger pages on a regular basis.
When do we use Debit or Credit?
When to use a debit or credit to record a journal entry is one of the biggest problems for beginning accounting students. It doesn’t have to be difficult, if you remember a few simple rules.
All journal entries follow the rules of debit and credit. Remember the Accounting Equation?
–Increase in assets is reported on the debit side of a journal entry.
–Decrease in assets is reported on the credit side of a journal entry.
Functions of the General Journal
–Buying and selling of fixed assets on credit
2009 June 1, Bought furniture on credit from Kull dunne for $1 000.
–Return of Fixed Assets
2009 June 5, $1,000 Furniture returned to Kull Dunne.
–Transfer of Creditors
We owed Bee Bobby $500. On June 10 2009 Bee Bobby’s business is taken over by Rune Crumbe who we will know owe the $500.
–Settlement of Debt
2009 June 15 We receive machinery valued $250 from Carl reeves in settlement of his debt of $500.
On July 1 2009 V. Nemhard Opens his books of accounting to start business. At that date His records reflect:
Premises $2 000
Fixtures and Fittings $1 000
Motor Vehicle $400
Stock of goods $200
Debtors:Vanne Style $100
Pryce Goonie $60
Creditors: Evelyn Dianne $250
Devlin Cole $200
The Above transactions are journalized by date order below.