The general journal sometimes referred to as the nominal journal, is a journal used to record transactions which do not belong in any of the other special journals such as the sales, purchases, cash receipts, and cash disbursement journals. The general journal is simply a list of journal entries in chronological order, and is used to save time, avoid cluttering the general ledger with too much detail, and to allow for segregation of duties.
General Journal Entries
The general journal is a book of prime entry and the entries in the journal are not part of the double entry posting. Typically, the general journal entries record transactions such as the following:
- Opening entries
- Adjusting entries
- Correcting entries
- Accounting period end closing entries
- Allowance for doubtful accounts
- Fixed asset purchases and sales
- Depreciation adjustments
- Goods taken for personal use
- Transfer between subsidiary ledger personal accounts
The information recorded in the journal is used to make postings to the relevant accounts in the general ledger.
Information Listed in the General Journal
The information in the general journal is taken from the relevant source documents, and each entry includes the following:
- Transaction date
- Debit: Account title, general/subsidiary ledger reference, and amount
- Credit: Account title, general/subsidiary ledger reference, and amount
- Reason for the journal entry
The general/subsidiary ledger reference refers to the relevant account numbers in those ledgers. In certain instances (see below) an entry may need posting in both the subsidiary ledger and the general ledger and therefore a reference needs to included for both ledgers.
General Journal Entry Examples
The use of the general journal is a three step process.
- Information is recorded in the general journal from the appropriate source documents
- The journal line items are used to update the subsidiary ledgers (if appropriate)
- The journal line items are used to update the general ledger
It should be noted that, if the business maintains subsidiary ledger control accounts in the general ledger, then only step 3 above is part of the double entry bookkeeping posting.
1. General Journal is Updated from Source Documentation
Each transaction is entered into the general journal giving the information listed above. Typical general ledger journal entries would be shown as follows (some information has been omitted to simplify the example) :
Date: July 07
| Account | Debit | Credit |
|---|---|---|
| Purchases | 90 | |
| Accounts payable | 90 | |
| Total | 90 | 90 |
Reason: To correct purchase of goods from supplier ABC entered as 300 instead of 390
Date: July 31
| Account | Debit | Credit |
|---|---|---|
| Depreciation expense | 800 | |
| Accumulated depreciation | 800 | |
| Total | 800 | 800 |
Reason: To provide for depreciation of equipment for the month of July.
Date: July 31
| Account | Debit | Credit |
|---|---|---|
| Accounts payable control | 550 | |
| Accounts receivable control | 550 | |
| Total | 550 | 550 |
Reason: To transfer a balance on accounts payable ledger to accounts receivable ledger.
Date: July 31
| Account | Debit | Credit |
|---|---|---|
| Bad debt expense | 600 | |
| Allowance for doubtful accounts | 600 | |
| Total | 600 | 600 |
Reason: To allow for doubtful accounts at the month end.
2. General Journal Used to Update the Subsidiary Ledgers
On a regular (usually daily) basis, the line items in the journal are used to update the subsidiary ledgers as necessary. In the above example, the first general ledger journal is a correction of an error which involves the accounts payable ledger (a subsidiary ledger). The credit side of this entry needs to be entered in the account of supplier ABC in the accounts payable ledger. As the business maintains control accounts in the general ledger, this entry is not part of the double entry posting which is dealt with by step 3 below.
The other two items do not involve a subsidiary ledger and an entry it not required.
3. General Journal to General Ledger
Again, on a regular basis, each of the journals listed in the general journal is used to update the relevant accounts in the general ledger. As the business uses control accounts, all of these entries to the general ledger are part of the double entry bookkeeping posting.
Accounting General Journal Template
Our accounting nominal journal template will help a business to document and post journal entries in a consistent, standard format setting out the required information listed above.
About the Author
Chartered accountant Michael Brown is the founder and CEO of Double Entry Bookkeeping. He has worked as an accountant and consultant for more than 25 years in all types of industries. He has been the CFO or controller of both small and medium sized companies and has run small businesses of his own. He has been a manager and an auditor with Deloitte, a big 4 accountancy firm, and holds a BSc from Loughborough University.