Topic 3: General Journal entries

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Steps to record General Journal entries

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1. Identify which accounts are affected (at least 2). 2. Identify what types of accounts they are (Assets, Liabilities, Owner's Equity, Revenue, Expenses). 3. Identify whether they are increasing or decreasing. 4. Identify whether the account should be debited or credited. 5. Record date, account, amount into the General Journal.

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D.E.A. L.E.R

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D.E.A. L.E.R is a mnemonic for remembering account types: - D.E.A: Dividends, Expenses, Assets (increase with debits) - L.E.R: Liabilities, Equity, Revenue (increase with credits)

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Account Payable: Credit purchase

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Account Payable (L) ↑ C     

Inventory (A) ↑ D                

GST Clearing (L) ↓ D

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Payment to Account Payable

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Account Payable (L) ↓ D    

Cash at bank (A) ↓ C

If there is a discount offered for paying early: Discount revenue (R) ↑ C

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Purchase return

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Account payable (L) ↓ D    

Inventory (A) ↓ C                

GST Clearing (L) ↑ C

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Account Receivable: Credit sale

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Account Receivable (A) ↑ D

GST Clearing (L) ↑ C

Sales (R ) ↑ C                         

Inventory (A) ↓ C                 

Cost of sales (Ex) ↑ D           

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Receipt from Account Receivable

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Account Receivable (A) ↓ C

Cash at bank (A) ↑ D

If there is a discount offered for paying early: Discount expense (Ex) ↑ D

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Sales return

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Account Receivable (A) ↓ C

GST Clearing (L) ↓ D

Sales (R ) ↓ D                         

Inventory (A) ↑ D                  

Cost of sales (Ex) ↓ C           

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Cash drawings by owner

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Drawing (OE) ↓ D

Cash at bank (A) ↓ C

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Drawing of inventory by owner for personal use

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Drawing (OE) ↓ D

Inventory (A) ↓ C