Title:

General Journal Entries

Products: Paramo Pro, WRC
Last Updated: 10 April 2015
Related Links:  End of Year Adjustments

This page is used to make entries in the general ledger:

General Journal Manual Entry

general journal entry

Opening Balances

Opening Balances must be entered at the time of conversion from a previous system. The closing balances of the previous day to conversion must be noted and entered using the general journal. 

Opening balances for Customers and Suppliers

Opening balances can be imported and entries automatically made.  Alternatively, after a supplier or customer record has been created, opening balances can be recorded using the general journal

Entering an Opening Balance for a Bank Account (with money in the account)

This is similar to entering a opening balance for a current asset account  

Entering an Opening Balance for a Credit Card Account (with money owing to the Credit Card Company )

This is similar to entering a opening balance for a current or long term liability account  

Entering an Opening Balance for a major Asset Account

Other Journal Entries

Purchase of Goods for use in Sales by Cash

Purchase of goods directly for resale will avoid using a purchase ledger supplier account

Alternatively use  Payments and Receipts, especially if tax is charged

Acquisition of an Asset on Credit

An asset is a company acquisition that has a lifetime of greater than one year.

If the asset is of high value, it may have its own asset account created. Otherwise, the debit should be make to an appropriate asset class general ledger account.

At payment time:

Notes:

Acquisition of an Asset by Cash

alternatively use the Bank Payments and Receipts, especially if tax is charged. 

Bad Debt Recovered

If a invoice previously written off as a bad debt is recovered, then  the following journal entries are required:

Sale of Fixed Assets on Credit

This transaction will come under the Other Revenue category.

at payment time

Notes:

Sale of Fixed Assets For Cash

If a fixed asset is sold, then the asset value and the depreciation will have to be closed off in the general ledger, and the profit or loss determined. The depreciation may have been 'overprovisioned' or 'underprovisioned' according to the realisabale value.

Dispose of the original asset value with the following entries:

Dispose of the asset depreciation with the following entries:

The money received from the sale ( or part exchange value):

Transfer the disposal account (e.g Fixed Asset Disposal) balance. The account balance must be zeroed.  A credit on the account balance shows a profit on the sale.

A debit on the disposal account balance shows a loss on the sale

Alternatively instead of using an accumulated depreciation account, you can

  1. Create an expense depreciation account (account type expense) and Debit the account , and
  2. Credit the appropriate asset account.

Business Expenses Charged to Owner 

If the business owner uses business facilities for personal use, this should be charged to the drawings or similar account. To record the  transaction:

Goods taken for Owner's Use;

If the business owner takes goods used for sale for personal use, this should be charged to the drawings or similar account. To record the  transaction:

  1. Debit the Drawings account, and
  2. Credit the Purchases account.

Note: If the goods taken were to have VAT charged on them when sold to a customer, this must be accounted for:

  1. Debit the Drawings account with the VAT or sales tax, and
  2. Credit the Tax or VAT account.
  3. You can also modify the Bank Payments and Receipts  function for this. 

Point of Sale

Normally , sales have entries in the sales ledger.  Sales are made on credit terms or payments on account.  A point if sale (POS) is as sale of inventory items or services (comprising the primary business)  to a customer not in the sales ledger. To make a POS sale,  create a new sales account (account type Revenue-Sales) in the general ledger specifically for this.

To record a point of sale

Alternatively use the Bank Payments and Receipts , especially if tax is charged 

Some End of Year Adjustments to Profit and Loss

End of year adjustments increase or decrease the Net profit (the Profiit and Loss balance) and do not effect the Gross Profit

Some Sales and Purchase Ledger Entries

Customer Payment Returned by Bank

if a customer cheque, which has been entered as payment, is returned by the bank (or credit card payer):

alternatively, use the Accounts - Bank - Customer - Reverse Payment  or Reverse Invoice Payment function

Customer Interest Charged

if a charge need to be applied to a customer account for late payment of invoices:

Reverse Payment Made to a Supplier

if a payment has been made to a supplier account against invoices entered, and the payment needs to be stopped

alternatively, use the Accounts - Bank - Supplier - Reverse Payment  or Reverse Invoice Payment function .  

Supplier  Interest Charged

if the supplier charges interest for late payment of invoices :

alternatively, use the Accounts - Bank - Supplier - Interest Charged function and  change the GL account to an Interest charged or similar account

Customer Bad Debt Entry

Closing a customer invoice as a bad debt must be done from the payments from customers function

Note: Sales tax (or VAT) can be reclaimed on a bad debt. However to reclaim tax, certain conditions may apply: e.g. the invoice must be more that 6 months overdue from date of issue.  Tax that can be reclaimed from a bad debt is recorded in the Tax Journal - bad Debt Reversals