JOURNAL PROPER

 3.4 JOURNAL PROPER         👈

You have leamt that certain types of transactions which are repetitive and large in number are recorded in special journals called subsidiary books. The remair~ing transactions are to be recorded in the journal itself which is now called the Journal Proper. As a matter of fact, all events and transactions for which the finn does not maintain a special journal shall be recorded in the Journal Proper. The following are the examples of transactions which shall usually be recorded in Journal Proper.

1     Opening Entry 

2     Closing Entries 

3     Transfer Entries 

4     Adjustment Entries 

5     Rectification Entries 

1     Miscellaneous Entries

Let us now briefly discuss them one by one. 

1 Opening Entry: An opening entry is passed ilk the journal for opening a new set of accounts. This may be needed at the time of commencement of business ar at the commencelnent of new accounting year, If'a person commences business only with cash, there is nu need to pass a journal entry. The cash brought In is simply entered in the Cash Book, But, if he also brings some other assets, an opening entry will have to be recorded in the journal. You will debit the concerned assets accounts and credit the Capital Account. In case of a running business, an opening entry is passed at the commencement of the new accounting year to incorporate the balances of various assets and liabilities brought forward from the previous year into the current year's books. You have already leamt about it in Unit .

2 Closing Entries: At the end of each accounting year, when firla1 accounts are prepared, the nominal accounts are closed by transferring them to Trading Account or,Profit and Loss Account. The journal entries passed for this purpose are called 'Closing Entries'. These entries are explained later in Unit 7. 

3 Transfer Entries: When an amount is to be transferred from one account to another, you have to pass an entry in the Journal Proper in order to effect the transfer. Such ehtries are called 'Transfer Entries', Suppose, you want to transfer proprietor's total dkwings made dukng the year to his Capital Accouqt. Total drawings appear in Drawings Account which shows a debit balance. You will transfer this balance to Capital Account by passing the following entry in the Journal Proper:

Capital Account         Dr. 

     To Drawings Accouht

 (Being Transfer entry) 

4 Adjustment Entries: At the time of preparing the final accounts, it becomes necessary to bring into books of account certain unrecorded items like closing stock, depreciation on fixed assets, interest on capital, expenses incurred but not yet paid, income earned but not yet received, etc. Entries passed in the Journal Proper to record such items are called 'Adjustment Entries'. These entries are explained in detail later in Unit 8

5 Rectification Entries: You may commit errors while recording transactions in various books or while posting, totalling, balancing, etc. Such errors are generally corrected through entries in Journal Proper and are known as 'Rectification Entries'. Errors and their rectifications will be dealt with in Unit 9

6 Miscellaneous Entries: If, in addition to the entries mentioned above, there is any transaction which cannot be recorded in any of the special journals, it will be entered in the Journal Proper. Examples of such transactions are: 

i) Credit purchases of fixed assets, investments, etc. 

ii) Credit sales of fixed assets, investments, etc. 

iii) Withdrawal of goods from the business by the owner for his personal use. 

iv) Loss of goods by theft, accident, fue, etc. 

v) Special allowances received from suppliers or given to c~istomers. 

vi) Endorsement or dishonour of bills. 

vii) Writing off bad debts.  

Look at the Illustration 2 for entries of such transactions in the Journal Proper.

Illustration 2

Enter the following transactions in Journal Proper of Kansal Enterprises. 1988

May 3 Sold office van for Rs.15,000 to Ahmed Ali. 

" 8 The prhprietor took away goods worth Rs. 1,000 for personal use. I 

" 15 Fire broke out in the premises and goods worth Rs. 5,000 were destroyed. 

" 21 Purchased furniture on credit for Rs. 2,000 from Singh & Co. for the office. 

" 25 Amount'of Rs. 500 due from Shyam is irrecoverable, as he became insolvent. 

" 28 Misra, a customer, informed that some goods were damaged in transit. An 

allowance of Rs. 50 was granted to him for repairs.

Check Your Progress B  .