Cash
Disbursements Journal
A cash disbursements journal is where you record your cash
(or check) paid-out transactions. It can also be called a
purchases journal or an expense journal.
There are many different types and styles of cash
disbursements journals. If you will be recording expenses
manually in a journal,
visit an office supply store. They should have different types
to choose from. Look at the column headings, and choose the
journal that best meets the needs of your business. You might
consider a disbursements journal that is integrated with your
checkbook — this may save you some time because your journal
entry is made at the same time as you write the check.
If you are using computer software, you probably won't have
to decide which type of journal to use. Your program will
probably have some type of disbursements journal, but may allow
you to customize it based on your business needs.
If you use the accrual
basis of accounting, as we recommend, you'll record expenses
at the time you purchase goods or services, even if you purchase
on credit.
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You own a variety store. You purchase from
your main supplier, on account, items totaling
$7,800. Most of the purchase is inventory for
resale, but also included are $100 of office
supplies. Make the following entry in your
purchases journal:
|
|
|
Debit |
Credit |
Purchases |
7,700 |
|
Office supplies expense |
100 |
|
Accounts payable |
|
7,800 |
Next month, after receiving a statement from your supplier,
you write a check to settle your account. Make the following
entry in your purchases journal:
|
Debit |
Credit |
Accounts payable |
7,800 |
|
Cash |
|
7,800 |
Assume that your business is a retail store that sells
merchandise for resale. Here is an example of a few entries in a
purchases journal. The following transactions occurred:
(Note: All dollar amounts have been rounded off to the
nearest dollar.)
- On February 2, you paid your electric bill of $177.
- Also on February 2, you bought merchandise inventory on
account from Ash Wholesale at a cost of $9,500.
- On February 5, you spent $82 at Atkins Service Station to
fill up your delivery vehicles with gas. You charge it all
to the account you maintain with Atkins.
- On February 8, you write a check for $9,500 in payment of
the bill you receive from Ash.
- On February 10, you write a check for $82 to Atkins
Service Station to settle your account there.
- Upon completion of this journal page, you should foot
all seven amount columns. Since you are using a double-entry
accounting system, you can see if all entries were
recorded correctly. Check to see if the sum of the debits
equals the sum of the credits.
Total debits: 0 + 9,582 + 9500 + 82 + 177 = 19,341. Total
credits: 9,759 + 9,582 = 19,341.
PURCHASES JOURNAL FOR: FEBRUARY 2000 |
|
Cash |
Accounts Payable |
|
Date |
Descrip. |
Dr. |
Cr. |
Dr. |
Cr. |
Purch. Dr. |
Delivery Expense Dr. |
Utilities Exp. Dr. |
2 |
Edison Util. - electricity |
|
177 |
|
|
|
|
177 |
2 |
Ash Whlsle - inventory |
|
|
|
9,500 |
9,500 |
|
|
5 |
Atkins Serv. Station - gas |
|
|
|
82 |
|
82 |
|
8 |
Ash Whlsle - on account |
|
9,500 |
9,500 |
|
|
|
|
8 |
Atkins Serv. - on account |
|
82 |
82 |
|
|
|
|
Totals |
0 |
9,759 |
9,582 |
9,582 |
9,500 |
82 |
177 |
If the sum of the debit columns doesn't equal the sum of the
credit columns, you have a problem that you should track down
right away. You may have entered one of the amounts in the wrong
column. You might have simply added incorrectly when computing
the totals. It is usually easy to pinpoint the error because the
debits should equal the credits for each transaction.
Your purchases journal may have many more columns than this
sample because you probably will have more expense
classifications.
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