Journal Proper

Learning Objectives:

1. Define and explain journal proper.
2. When a journal proper is used?

Definition and Explanation:

Journal proper is book of original entry (simple journal) in which miscellaneous credit transactions which do not fit in any other books are recorded. It is also called miscellaneous journal. The form and procedure for maintaining this journal is the same that of simple journal.

The use of journal proper is confined to record the following transactions:-

1. Opening entries
2. Closing entries
3. Transfer entries
4. Adjustment entries
5. Rectification entries
6. Entries for which there is no special journal
7. Entries for rare transactions

Opening Entries:

When a businessman wants to open the book for a new year, it is necessary to Journalise the various assets and liabilities before the new accounts are opened in the ledger. The journal entries so passed are called "opening entries". Suppose a businessman opens a new set of books on January 1, 1991 with cash in hand $100, debtors $200, stock in trade $320, machinery $700, furniture $150, bank loan $300, capital $1,070 the respective opening entry in the journal will be:

Cash Sundry debtors Stock in trade Machinery Furniture & fitting	100 200 320 700 200
To Sundry creditors To Bank loan To Capital		150 300 1,070
(Being the incorporation of assets and liabilities at this date)

Closing Entries:

When the books are balanced at the close of the accounting period with a view to paper final accounts it is necessary that balance of all the income and expenses accounts must be transferred to trading and profit and loss account. The process of transferring balances to the trading and profit and loss account at the end of year is called closing the books and entries passed at that time are called closing entries. For example on 31st December, 1991 the balance in expenses accounts are: Salary $500; rent $200; Stationary $50; legal charges $100; and income accounts are: commission received $50. These balance will be recorded in profit and loss account though the following closing entries:

Profit and loss account To Salary To Rent To Stationary To Legal charges (Being the closing entry)	850	500 200 50 100
Commission received account To Profit and loss account (Being the closing entry)	50	50

Transfer Entries:

When accounts are transferred from one account to another for combination of allied items, it is necessary to pass transfer entry. For example, Drawings $500 is transferred from the drawings account to the capital account to find out the net capital. The transfer entry will be passed as follows:

Capital Account To Drawings account (Being the transfer entry)

500

500

Adjusting Entries:

Modification of the accounts at the end of an accounting period is called adjustments. If there be any event affecting the related period of accounts but left out of the books, the same should be incorporated in the books before the preparation of the final accounts. This is done by means of adjusting entries through the journal proper. For example at the end of the year it is found that rent $50 is outstanding. It is not recorded in the books. It will be taken into account by means of adjusting entry which is as follows:

Rent account To Outstanding rent account (Being outstanding rent recorded)

50

50

Rectification Entries:

When an error is detected in the books, the same is rectified through an entry in the journal proper; thus is called rectification entry. For example, it was detected that an expenditure of $ 100 on repair to building was charged to building account. It is corrected through the following entry in the journal proper:

Building repair account To Building account

100

100

Entries of Which There is No Special Journal:

When a trader cannot record the entries in the above mentioned sub-journals, the same are entered in the journal proper. The common transactions which cannot be recorded in any of the book of original entry are:

• Distribution of goods as free sample.
• Distribution of goods as charity.
• Goods destroyed by fire.
• Goods stolen away by employees.
• Exchange of one asset for another asset etc.

Entries for Rare Transactions:

In a business it may happen sometimes that transactions are usually rare. Journal proper is used for such rare transactions.