accounting journals

Using accounting journals is a great way to keep track of all your business transactions without using a computer software program.

There are many kinds of accounting journals.  You can set one up for each type of transaction, like sales, cash receipts, purchases, payroll, disbursements, etc. 


In this example I found on the web, we have a Sales Journal.  This type of journal would be used to track each sale.  The information collected here includes the date, reference number, customer, gross amount of sale, sales tax amount, and net sale.  The gross sale amount is what the customer owes you.  The sales tax amount is payable to your state sales tax department.  And the net amount is your sale amount.

 

But I’m going to suggest using just 3 journals – a combination Sales/Cash Receipts Journal, a Cash Disbursements Journal, and a General Journal.


sales / cash receipts journal


A combination Sales/Cash Receipts Journal combines the tracking of each sale and corresponding receivable owed to you, with the tracking of all monies you receive.  You could separate these functions and have a journal for each, but it can be done all in one accounting journal.

Take a look at this format below.

DATE    RE#         NAME           AMOUNT       SALE        SALES TAX     RECEIVABLE       MISC INCOME

                                

 

These columns could be used to record a sale –

DATE          REF#   NAME                     AMOUNT    SALE    SALES TAX    RECEIIVABLE MISC INCOME

01/01/XX  4502 Chummy company $100       $93     $ 7          $100                      

**This means on Jan 1 of year "xx", you made a sale on Invoice # 4502 to Chummy Company in the amount of $100.  $93 was the product or service total, and $7 is the sales tax we're charging the customer, and $100 is the total amount they owe us.

 

These columns can also be used to record a receipt of money from a customer –

 

  DATE           REF#     NAME                       AMOUNT     SALE     SALES TAX     RECEIVABLE      MISC INCOME

01/31/XX  3451 Chummy Company     $100                                    - $100                         

 

These columns can also be used to record the receipt of other income -

  DATE           REF#     NAME                       AMOUNT     SALE     SALES TAX     RECEIVABLE      MISC INCOME

02/05/XX                   MY BANK                       $10                                                                                  $10            

 

This is a simple example, but hopefully you can see the many uses of this type of spreadsheet.  You can also create this accounting journal using 13 column accounting paper if you prefer to use pen and paper.


The second type of journal I suggest using is a cash disbursements journal.


Cash disbursements accounting journal

This type of journal is used to record all disbursements – check or ACH – for your business.  It can be created the same way, either with a computer spreadsheet or 13 column accounting paper.

 

Here’s an example I found on the web.  This is a purchased check register system (like a One-Write System) that lets you write a check and distribute it to your expense accounts at the same time.


Here's an example I made in excel:

This type of accounting journal is used separately from writing the check.  You would enter the check number, date, who you wrote the check to, a description of what you paid for – rent/supplies/etc – and then the amount of the check.  That’s the left side of the spreadsheet.  On the right side you would have a column your most common expenses. Then add 2 columns marked ‘other’. 

If you pay for something and there’s no column for it, you can either make a new column for that type of purchase, or use the ‘other’ column.  Write in the amount under ‘other’, and use the next column for the account you want to use.  In my example above I’ve written a shortened version of the word insurance.

 

The next accounting journal I suggest using is a General Journal.


general journal


When using journals, you will find occasionally you have a business transaction that does not involve cash.  These types of transactions don’t fit in your Cash Receipts Journal or your Cash Disbursements Journal.  But they still need to be documented.

A general journal is a simple 4 or 6 column spreadsheet that you can use to enter these business transactions.

Non-cash business transactions could be:

·         Recording depreciation

·         Owner contributions of equipment or other assets

·         Recording throwing out obsolete inventory

·         Donating inventory or other assets

·         Recording a bad debt

·         Accruing expenses

 

These are just some examples.  You won’t see these types of transactions often, but you will need a journal to record them in.


For more detailed instructions on setting up and using journals, check out my ebook, Manual Accounting Systems. This ebook shows you how to set up your own journals, and offers step by step instructions, with illustrations, on how to use them to record different business transactions.