Tag: sub-division of journal - 2 (subsidiary books)

Closing entries are used at the end of the accounting period to transfer the balances of temporary accounts (revenue and expense) to the permanent capital account (or income summary).

The sale of fixed assets (even obsolete ones) on credit is not a sale of inventory. Therefore, it is recorded in the General Journal, not the Sales Day Book.

The sale of an investment on credit is not a sale of inventory. It is recorded in the General Journal.

Closing entries are indeed recorded in the Journal Proper because they are non-routine entries that do not fit into any other special journal.

Reversing a discount allowed is a non-routine adjustment. It is recorded in the Journal Proper (the Journal).

When goods are sent on a 'sale or return' basis, the sale is only finalized when the customer approves the goods. A journal entry is passed to record the sale upon approval.

B receives a computer (asset) for 11,500 and writes off the remaining 13,500 as a bad debt, as the total claim was 25,000. The entry correctly debits the asset and the bad debt expense, and credits the debtor.

A narration is a brief explanation provided below each journal entry to describe the nature of the transaction for future reference and clarity.

A journal is the book of original entry where transactions are recorded as they occur. This recording process follows a chronological order, meaning transactions are entered by date.

The amount debited to Ram account is more than what should have been debited. The same goes for the amount credited to Sales account. Hence, Ram and Sales account are affected with overstated value of Rs.27.