Special journal

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Special Journals are designed to facilitate the process of journalizing and posting transactions. Special Journals are used for the most frequent transactions in a business. For example, in merchandising businesses, companies acquire merchandise from vendors, and then in turn sell the merchandise to individuals or other businesses. Sales and purchases are the most common transactions for the merchandising businesses. A retail store probably needs to record the following transactions many times a day for sales on account and cash sales:

Figure 1

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Description	Debit	Credit
Accounts Receivable	XXX
Sales		XXX
Sales Tax Payable		XXX

Description	Debit	Credit
Cash	XXX
Sales		XXX
Sales Tax Payable		XXX

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To save time for journalizing the entries, and posting the entries to the general ledgers and subledgers, Special Journals are used by some businesses. Even if the Special Journals are used, the business still needs to use general journal for infrequent transaction, such as adjusting entries and closing entries.

[edit] Types of Special Journals

The types of Special Journals that a business uses are determined by the nature of the business. Special journals are designed as a simple way to record the most frequently occurring transactions. There are four types of Special Journals that are frequently used by merchandising businesses:

• Sales journal
• Cash receipts journal
• Purchases journal
• Cash payments journal

Sales journal is used to record all sales of merchandise on account; Cash receipts journal is used to record only cash receipts transactions; Purchases journal is used to record only purchases of merchandise on account; Cash payments journal is used to record only cash payments transactions.

[edit] Format of Special Journals

In General Journal, transactions are recorded in several lines (see Figure 1), and each transaction is posted to the general ledger separately. For example, if fifty sales on account were made during one day, fifty ledger postings would have to be made to three general ledger accounts: Accounts Receivable, Sales, and Sale Tax Payable. In special journal, transactions are recorded in a single line, and the format of the journal made it possible to post only the total amount for each account to the general ledger. For example, if fifty sales on account were made during one day, only the total amount for Accounts Receivable, Sales, and Sales Tax Payable were posted to the general ledger. Thus the posting process is more efficient. Figure 2 shows the example formats of the Special Journals.

Figure 2:

SALES JOURNAL

Date	Sale No.	To Whom Sold	Post. Ref.	Accounts Receivable Debit	Sales Credit	Sales Tax Payable Credit
April 1	900	A. Smith		$1,000.00	$940.00	$60.00
April 1	901	B. Johnson		$2,000.00	$1,880.00	$120.00
April 1	902	C. Chang		$1,000.00	$940.00	$60.00
April 4	904	D. Garcia		$1,000.00	$940.00	$60.00

CASH RECEIPT JOURNAL

Date	Account Credited	Post Ref.	General Credit	Accounts Receivable Credit	Sales Credit	Sales Tax Payable Credit	Cash Debit
May 1	B. Johnson			$1,000			$1,000
May 3	C. Chang			$1,000			$1,000
May 5	A. Smith			$1,000			$1,000
May 8	Interest Receivable			$400			$400

PURCHASES JOURNAL

Date	Invoice No.	From Whom Purchased	Post Ref.	Purchased Debit / Accounts Payable Credit
June 2	6321	BCD Corp.		$12,000
June 5	12D	Telecom8 Inc		$800
June 21	412	Furniture-X		$2,000

CASH PAYMENTS JOURNAL

Date	Check No.	Account Debited	Post Ref.	General Debit	Accounts Payable Debit	Purchases Credit	Cash Credit
July 1	1254	Rent Expense		$1,200			$1,200
July 2	1255	BCD Corp.			$12,000		$1,200
July 2	1256	Furniture-X			$1,200		$1,200

References

Heintz, James A. and Parry, Robert W. Jr. (2008). College Accounting (19th Edition) P440-459. Thomson South-Western. ISBN 978-0-324-37616-6