General Journal

General Journal

General Journal

The general journal is used to record transactions which do not fit the requirements of the specialist journals such as the cash receipts journal, the cash payments journal, the sales journal and the purchases journal. It records all other transactions. These transactions are varied, hence the name 'general' journal.

The format of the general journal provides a guide for posting to the general ledger. It identifies the accounts to be debited and credited and then gives a brief explanation of the transaction (this is called a narration). If a business did not maintain specialist journals, all transactions could be recorded through the general journal.

Examples of transactions recorded in the general journal are:

1. opening entries
1. to record the assets, liabilities and equity to start the accounting system of a business – to 'open' its accounting records (a once only entry)
2. the purchase of non-current assets on credit
1. such as the purchase of vehicles, equipment, furniture on credit
2. if the above were purchased for cash, the transaction would be recorded in the cash payments journal
3. the owner's contribution of capital in assets other than cash to the business (or drawings of an asset other than cash)
1. such as the owner contributing her/his own computer or office furniture to the business (or taking them from the business)
2. if the owner contributes capital in the form of cash, the transaction is recorded in the cash receipts journal (of if he/she takes cash drawings, the transaction is recorded in the cash payments journal).
3. 
   

Example 1: Opening entry

Imagic Photographic Services General Journal
Date	Details	Post ref.	Debit	Credit
Jan 1	Bank		20 400
	Equipment		10 200
	Cameras		9 400
	Loan from Ausbank			15 000
	Capital			25 000
	Assets, liabilities and capital at commencement of business
	Narration explains the entry	These amounts will be debited to accounts in the ledger		These amounts will be credited to accounts in the ledger

Example 2: Purchase of non current asset on credit

Imagic Photographic Services General Journal
Date	Details	Post ref.	Debit	Credit
Feb 8	Computer equipment		1 200
	GST Paid		120
	Computer Junction			1 320
	Purchase of computer on credit from Computer Junction
	Narration explains the entry	$1 200 will be debited to computer equipment account $120 will be debited to GST Paid		$1 320 will be credited to Computer Junction account  (a sundry creditor)

Example 3: Owner's contribution of asset other than cash

Imagic Photographic Services General Journal
Date	Details	Post ref.	Debit	Credit
Mar 5	Office furniture		700
	Capital			1 200
	Contribution of owner’s personal office furniture to the business
	Narration explains the entry	$700 will be debited to office furniture account		$700 will be credited to capital account