Other Journal

SPECIAL JOURNALS:  First, the illustrated journal was referred to as a "general" journal.  All transactions and events can be recorded in the general journal.  However, a business may sometimes use "special journals."  Special journals are totally optional; they are typically employed when there are many redundant transactions.  Thus, a company could have special journals for each of the following: cash receipts, cash payments, sales, purchases, and/or payroll. Purchase Invoice Daybook Date Supplier Name Reference Amount Electricity Widgets 10 July 2006 Electricity Company PI1 1000 1000   12 July 2006 Widget Company PI2 1600   1600 ------- ------- ------- Total 2600 1000 1600 ==== ==== ==== Credit Debit Debit Trade Electricity Widgets Creditors G/L G/L control a/c a/c a/c Sales Invoice Daybook Date Customer Name Reference Amount Parts Service 2 July 2006 JJ Manufacturing SI1 2500 2500   29 July 2006 JJ Manufacturing SI2 3200   3200 ------- ------- ------- Total 5700 2500 3200 ==== ==== ==== Debit Credit Credit Trade Sales Sales debtors Parts Service control a/c a/c a/c   These special journals do not replace the general journal.  Instead, they just strip out recurring type transactions and place them in their own separate journal.  The transaction descriptions associated with each transaction found in the general journal are not normally needed in a special journal, given that each transaction is redundant in nature.  Without special journals, you can well imagine how voluminous a general journal could become.  But, for learning purposes, let's just rely on the general journal to accomplish our goals. PAGE NUMBERING:  Second, notice that the illustrated journal consisted of two pages (labeled page 1 and page 2).  Although the journal is chronological, it is helpful to have the page number indexing for transaction cross-referencing and working backward from financial statement amounts to individual transactions. BUT, WHAT ARE THE ACCOUNT BALANCES?:  The general journal is a great tool to capture transaction and event details, but it certainly does nothing to tell a company about the balance in each specific account.  For instance, how much cash does Xao Corporation have at the end of January?  One could go through the journal and net the debits and credits to Cash ($25,000 - $2,000 + $4,000 - $500 + $4,800 - $5,000 = $26,300).  But, this is tedious and highly susceptible to error.  It would become virtually impossible if the journal were hundreds of pages long.  A better way is needed.  This is where the general ledger comes into play.