How does the General
Journal work?
Source Document: Journal Narration or Journal Voucher
Many transactions that are entered in the General Journal need authorisation form senior
staff members. A journal voucher is then used & can also serve as a source document.
For every debit entry, there should also be a credit entry. Every journal entry shows which
account must be debited & which must be credited.
Transactions include:
- Cancellation of discount on dishonoured cheque from debtor
- Interest charged om overdue account of a debtor
- Interest charged in overdue account of a creditor
- Writing off bad debts (irrecoverable debts)
- Bad debts recovered (entered in CRJ)
- Withdrawal of goods by owner
- Correction of errors
Format of the General Journal:
Doc Day Details Fol. Debit Credit Debtors Control Creditors Control
no. Debit Credit Debit Credit
JV1 01 Account that should 20 20
be debited in
General Ledger
Account that should 20
be credited in
General Ledger
Description of
specific transaction
Totals of these columns will be posted to
Debtors Control & Creditors Control in
General Ledger as Journal Debits &
Journal Credits
, Cancellation of discount
allowed
A debtor paid his/her account and the business allowed discount. The cheque then got send
back by the band and marked: Refer to drawer (RD). This means that the discount the
business allowed, should be cancelled.
Reversal transaction: Bank → credited (amount owed WITHOUT discount)
Debtors control → debited (amount PLUS discount)
Discount allowed → credited (amount of the discount)
Dr Debtors control Cr Dr Discount allowed Cr
Discount allowed Debtors control
Assets increase (+) Owner’s equity
increases (+)
Interest on overdue
accounts of debtors
Every business needs to encourage debtors to pay their accounts within a certain period. If
the debtor is overdue, the business will charge interest on the overdue amount. The
account, Interest Received, will be used. This is seen as an income for the business,
therefore Owner’s Equity will also increase.
Dr Debtors control Cr Dr Interest on overdue accounts Cr
Interest on overdue Debtors control
accounts R250 R250
Assets increase (+) Owner’s equity
increase (+)
Journal work?
Source Document: Journal Narration or Journal Voucher
Many transactions that are entered in the General Journal need authorisation form senior
staff members. A journal voucher is then used & can also serve as a source document.
For every debit entry, there should also be a credit entry. Every journal entry shows which
account must be debited & which must be credited.
Transactions include:
- Cancellation of discount on dishonoured cheque from debtor
- Interest charged om overdue account of a debtor
- Interest charged in overdue account of a creditor
- Writing off bad debts (irrecoverable debts)
- Bad debts recovered (entered in CRJ)
- Withdrawal of goods by owner
- Correction of errors
Format of the General Journal:
Doc Day Details Fol. Debit Credit Debtors Control Creditors Control
no. Debit Credit Debit Credit
JV1 01 Account that should 20 20
be debited in
General Ledger
Account that should 20
be credited in
General Ledger
Description of
specific transaction
Totals of these columns will be posted to
Debtors Control & Creditors Control in
General Ledger as Journal Debits &
Journal Credits
, Cancellation of discount
allowed
A debtor paid his/her account and the business allowed discount. The cheque then got send
back by the band and marked: Refer to drawer (RD). This means that the discount the
business allowed, should be cancelled.
Reversal transaction: Bank → credited (amount owed WITHOUT discount)
Debtors control → debited (amount PLUS discount)
Discount allowed → credited (amount of the discount)
Dr Debtors control Cr Dr Discount allowed Cr
Discount allowed Debtors control
Assets increase (+) Owner’s equity
increases (+)
Interest on overdue
accounts of debtors
Every business needs to encourage debtors to pay their accounts within a certain period. If
the debtor is overdue, the business will charge interest on the overdue amount. The
account, Interest Received, will be used. This is seen as an income for the business,
therefore Owner’s Equity will also increase.
Dr Debtors control Cr Dr Interest on overdue accounts Cr
Interest on overdue Debtors control
accounts R250 R250
Assets increase (+) Owner’s equity
increase (+)
