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Special Accounting Journals

Module 009 Special Accounting Journals

This module covers topics relevant to a merchandising type of business. This

includes the different kinds of special journals used to record specific
transactions, namely the Sales Journal, Cash Receipts Journal, Cash Payments
Journal, and Purchases Journal. We will also include subsidiary ledgers and a
short discussion of Credit Memorandum and Debit Memorandum
After studying the module, you should be able to
1. Understand the meaning of special journals and subsidiary ledgers.
2. Understand its importance in a business, particularly in merchandising
type of business.
3. Use the different special journals and the subsidiary ledgers.
4. Understand the meaning of credit memo and debit memo.

Introduction
We have discussed in the previous modules the general journal or journal where we first
record the business transactions in chronological order. In the presence of special journals,
this general journal will be used to record all activities that do not fall under any of the
special journals.
Under the accounting information systems- manual and computerized, we arranged
transactions by their classification using special journals or modules (computerized).
Entering data in various modules (computerized accounting) and in special journals
(manual accounting) will be based on the same accounting principles.
In this module, we will be applying the manual system for us to understand the use of
special journals easier.

Kinds of Special Journals and Their Definition

A special journal is an accounting journal that is devised for recording one specific kind of
business transaction.
Kinds of special journals are:
1. Sales Journal (SJ)
2. Cash Receipts Journal (CRJ)
3. Purchases Journal (PJ)
4. Cash Payments Journal (CPJ)

Sales Journal is a special journal used to record sales on account.

Cash Receipts Journal is a special journal used to record the business cash receipts from
whatever source.

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Purchases Journal is used to record purchases of merchandise inventory, supplies or any

other asset on credit or on account.
Cash Disbursement Journal is a special journal for recording cash payments. This is also
called Check Register (as payments by checks is also cash payments) or Cash Disbursement
Journal.

Sales Journal
Many merchandisers sell their goods on cash basis and credit basis. The credit sales
are recorded in the SJ. Selling on account other assets aside from merchandise
inventory are recorded in the General Journal (GJ), simply because they rarely
happen.
A typical SJ has the following columns: Date, Invoice No., Accounts Debited (names
of the customers) Posting Reference, Accounts Receivable (Dr.)/Sales (Cr.), Cost of
Goods Sold (Dr.)/Inventory (Cr.). The last column for CGS/Inventory is added when
the perpetual inventory system is in use. The same column will be omitted under
the periodic inventory system.
Posting to the Ledgers
The entries in the Sales Journal are posted in the Accounts Receivable (A/R)
subsidiary ledgers and in the General Ledger (see illustrative example on the next
page). Posting in the A/R Subsidiary ledgers are done daily while in the general
ledger, it can be done monthly. This will help in determining daily who are the
debtors and how much they owe to the business. After the postings were done, the
total in the General Ledger-Accounts Receivable should be equal to the total of the
individual customer balances as seen in the subsidiary ledgers. We can then say
that the Accounts Receivable in the general ledger is a control account.
Subsidiary ledger is a detailed record of individual (customer) accounts or balances.
Below is an example of Sales Journal and the Postings to the Subsidiary and General
Ledgers
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Sales Journal Page 1

Date Invoice Account Post. Accounts Receivable (Dr.) Cost of Goods Sold (Dr.)
No. Debited Ref. Sales (Cr.) Inventory (Cr.)
2017
Apr 2 101 Maine Mendoza √ 2,500 1,000
10 102 Alden Richards √ 5,000 2,000
12 103 Vic Sotto √ 6,500 2,600
15 104 Pauleen Luna √ 10,000 4,000
18 105 Allan Katubo √ 8,500 3,400
30 Total 32,500 13,000
(103)/(500) (600)/(105)

Accounts Receivable subsidiary Ledger

General ledger
Maine Mendoza Accounts Receivable No. 103
Date P/R Debit Credit Balance Date P/R Debit Credit Balance
Apr 2 SJ1 2,500 2,500 Apr 30 JS1 32,500 32,500

Inventory No. 105

Alden Richards Date P/R Debit Credit Balance
Date P/R Debit Credit Balance Apr 30 JS1 13,000 13,000
Apr 10 SJ1 5,000 5,000

Sales No. 500

Date P/R Debit Credit Balance
Vic Sotto Apr 30 JS1 32,500 32,500
Date P/R Debit Credit Balance
Apr 12 SJ1 6,500 6,500

Cost of Goods Sold No. 600

Date P/R Debit Credit Balance
Apr 30 JS1 13,000 13,000
Pauleen Luna
Date P/R Debit Credit Balance
Apr 15 SJ1 10,000 10,000

Allan Katubo
Date P/R Debit Credit Balance
Apr 18 SJ1 500 8,500

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Cash Receipts Journal

Business transactions involving cash are very common and to record
recurring cash transactions, firms usually make use of Cash Receipts Journal
(CRJ).
Below is an example of CRJ.

Cash Receipts Journal Page 1

Debits Credits
Cost of
Date Sales Accounts Other Accounts Goods Sold (Dr.)
2017 Cash Discount Receivable Sales Account Titles P/R Amount Inventory (Cr.)
Apr 5 1,000 1,000 400
10 1,500 Notes Payable 222 1,500
12 2,450 50 2,500 Juan Santos √
15 850 850 340
21 900 900 Maria Clara √
26 450 Interest Income 404 450
29 1,850 1,850 740
30 9,000 50 3,400 3,700 1,950 1,480
(101) (400A) (103) (400) (x) ( 600)/(105)

The amounts on April 30 rows are totals. The enclosed numbers below are the
account numbers of the ledger to which the total are posted. The total (P1, 950)
marked (x) will not be posted. The accounts of Juan Santos and Maria Clara are
posted in their subsidiary ledgers, while the Notes Payable and Interest Income are
posted in the general ledger.
Note: I no longer present subsidiary ledgers and general ledger. Anyway, their
preparation is similar to the ones accompanying the Sales Journal.

Purchases Journal
Purchases Journal (PJ) is used to record purchases of inventory, supplies and other
assets on account. Some companies use the purchases journal to record purely the
purchases of merchandise on credit.
Just like the other special journals, entries in the PJ are posted in the account
payable subsidiary ledgers, this time, for suppliers/sellers account, on a daily basis
and in the general ledger at the end of the month.
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Special Accounting Journals

An example of which is presented below:

Purchases Journal Page 1

Credit Debits
Date Accounts Other Accounts
2017 Account Credited Terms P/R Payable Inventory Supplies Account Title P/R Amount
Apr 4 Sony Trading 2/10 √ 5,000 5,000
6 Pioneer Store 2,eom √ 15,000 15,000
8 Office Warehouse n/30 √ 2,500 2,500
14 Deeco Electonics 2/10 √ 8,500 8,500
20 Abenson Trading 1/15 √ 4,000 4,000
23 Santiago furniture 2/10,n/30 √ 7,500 Furniture 120 7,500
28 SM Superstore n/30 √ 10,000 Equipment 140 10,000
30 Totals 52,500 32,500 2,500 17,500
(210) ( 103) (105) (x)

If the periodic inventory system is used, the column Inventory will

Replaced by Purchases.

Cash Payments Journal

Cash Payments Journal (CPJ), also called Check Register or Cash Disbursement Journal, is a
special journal used to record cash payments that occur frequently.
An example of a CPJ follows:

Cash Payments Journal Page 1

Debits Credits
Account Other Accounts
Date Ck. No. Debited P /R Accounts Payable Inventory Cash
2017
Apr 2 222 Advertising Expense 605 4,500 4,500
6 223 Office Supplies 125 3,000 3,000
10 224 ABC Corporation √ 10,000 1,000 9,000
18 225 XYZ Company √ 9,550 9,550
25 226 Merchandise Invnetory 130 12,000 12,000
30 Totals 19,500 19,550 1,000 38,050
(X) ( 201) ( 130) (101)

The entries in the CPJ have credits to Cash account. The credit to Inventory represents a
cash discount (because the perpetual inventory system is used.

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The entries in the Accounts Payable column are posted individually in the subsidiary ledger
and the total in the general ledger. Also, the total cash and total for Inventory will be posted
in the general ledger.

Debit and Credit Memoranda

There are some transactions that do not fit the special journals; hence, they are recorded in
the general journal. Examples are: depreciation of non-current assets expired prepaid
insurance, accrued salaries, etc.
There are some businesses that records sales returns and allowances and purchase returns
and allowances in the general journal. These returns and allowances are supported by
documents called credit memorandum and debit memorandum.
Credit Memorandum or credit memo is the document issued by the seller to credit a
customer’s account for returned merchandise. The issuance of a credit memo will result to
a debit to Sales Returns and Allowances account and a credit to Accounts Receivable.
Debit memorandum or Debit Memo is a document issued by the buyer when returning
merchandise. It informs the seller that the buyer no longer owes the seller for the amount
that corresponds to the returned goods.
This debit memo will result to an entry debiting Accounts Payable and crediting Inventory
or Purchases (if the periodic inventory system is used).

Glossary
Credit memorandum: a document evidencing or acknowledging the return of
merchandise by the buyer.
Debit memorandum: a document issued by the buyer /customer detailing the returned
merchandise.
Special journals: journals for specific and recurring business transactions.
Subsidiary ledger: records the details of the individual accounts of consumers or buyers
(if Accounts Receivable) and individual accounts of suppliers (if Accounts Payable).

References and Supplementary Materials

Books and Journals
Cabrera, ME. B. (2010). Fundamentals of Accounting 1.Manila, Philippines: GIC
Enterprises and Co., Inc.

Horngren, C. T., Harrison, W. T. Jr., Bamber, L. S., (2002). Accounting (International

Edition). New Jersey, USA: Prentice Hall

Garcia, P.C., Mojar, B.Q. & Gemanil, B. A. (2006).Basic Accounting Concepts and
Procedures. Quezon City, Philippines: Rex Book Store, Inc.
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Kimwell, M. B. (2009). Fundamentals of Accounting (Second Edition). Manila, Philippines.

GIC Enterprises and Co., Inc.
Online Supplementary Reading Materials
Subsidiary Ledgers - Cliffs Notes
https://www.cliffsnotes.com/.../accounting/accounting.../subsidiary-ledgers...special-jo...
Accessed: March 15, 2017

Financial Accounting Chapter 7 Special Journals and Subsidiary ...

wn.com/Financial_Accounting_Chapter_7_Special_Journals_And_Subsidiary_Ledgers
Accessed: March 15, 2017

Appendix I Subsidiary Ledgers and Special Journals - Financial ...

https://www.safaribooksonline.com/library/view/financial-accounting.../37_appi.html
Accessed: March 15, 2017

Online Instructional Videos

Subsidiary Ledgers And Special Journals - Slides 1-11 - YouTube
https://www.youtube.com/watch?v=jj_6ZXU1WAY
Accessed: March 16, 2017

Special Journals and Subsidiary Ledgers Recording Transactions ...

https://www.youtube.com/watch?v=2wm70N02GH4
Accessed: March 16, 2017

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