In the ledger folio column, checks are placed for the individual cash sales entries, the posting usually being made from the summary in the sales journal, as explained a little later, or from the total of the Cash Sales column in the cash book if the other method is not employed. In the summary entry of the illustration, it is assumed that a Cash account is kept in the ledger. Hence “Cash, Dr.” is shown posted to ledger Cash account on page 4; and the total Sales Discount, also debit, on page 20. The student should note the method of showing the amount of cash received during the current week, this amount comprising the “Cash, Dr.” posting to the ledger Cash account. Of course, the itemized credits, except the cash sales, are posted to their respective accounts, as indicated in the ledger folio column.
The use of the Sundry column for extension of the miscellaneous items makes proof of the distribution possible. The sum of “Net Cash” and “Sales Discounts”—both debit items—must equal the sum of all the other columns.
Handling Columnar Analysis of Cash Sales.—If all sales, both cash and “on time,” are entered in the sales journal, the totals of these two classes of sales are posted to the ledger Sales account from the summary in the sales journal. In this case there is no need of a separate Cash Sales column in the cash book, because such a column would simply duplicate the Cash Sales entry in the sales journal. Needless to say, cash sales always appear in the Net Cash column of the cash book, because they are cash receipts, but the “Ledger Folio” must be checked.
Sometimes two sales accounts are kept in the ledger, one for cash and the other for “time” sales. Here, also, if there is a Cash Sales column in the sales journal, no posting of cash sales from the cash book is necessary. On the other hand, if cash sales are omitted from the sales journal, then the cash book should provide for a Cash Sales column and the posting must be made from the total of this column in the cash book.
Illustration and Explanation of the Analytic Cash Disbursements Journal.—The cash disbursements columnar record corresponding to the cash receipts shown above, would appear as in [Form 13]. As with cash receipts, the illustration is not presented as a standardized form but merely for the purpose of showing the method of analysis. Postings are made or omitted, and the same considerations govern the making and posting of the summary entry, as in cash receipts. Being few in number, cash purchases are not shown in a separate column. The treatment of discounts received on purchases is exactly parallel to that of sales discount.
Since all net cash appears in Net Cash column on either side of the cash book, the cash balance is found by taking the difference between these two columns. The two sides must be ruled up and closed on corresponding lines and as of the same date.
CHAPTER XX
THE MODERN JOURNAL
Matter Left for Record in the Journal.—By the use of a cash receipts, a cash disbursements, a purchase, and a sales journal, four principal classes of transactions are taken out of the old-time journal and entered in separate books of record. If transactions of any other class are numerous enough to justify the use of a separate book of record, such a record should be set up. Although the number of subsidiary journals, each recording one kind of transaction, may become very large, nevertheless in practically all cases it is necessary to retain the general journal (often referred to simply as “the Journal”), in order to take care of such miscellaneous items as are not recorded in any of the special journals.
The standard form of journal was illustrated in [Chapter XVI], where it was stated that a journal must provide space for date of entry, account classification, ledger folio index, debit and credit money columns, and explanation. As an explanation of the form, method of use, proper observance of margins, etc., was made there, it need not be repeated here.
Kinds of Transactions Recorded in the Journal.—When the number of subsidiary journals used is limited to the cash receipts, cash disbursements, purchase, and sales journals, as is frequently the case, all items not affecting these four books should be entered in “the Journal”; i.e., transactions involving notes receivable and notes payable; adjustments with customers and creditors resulting from return of goods or claims and allowances thereon; and all formal opening, adjusting, and closing entries. Furthermore, there is usually a number of other transactions, which because of their special and unusual nature cannot be grouped with the items of the special journals and must therefore be entered in the general journal.