Journal Proper

However many subsidiary books a business keeps, some transactions never fit any of them. The Journal Proper (also called the Journal Residuary) is the book of original entry that records EVERY transaction not covered by the Cash Book, Purchase Book, Sales Book, Returns Books, or the Bills Books.

Typical transactions recorded in the Journal Proper

• Opening entries — bringing forward the balances of assets, liabilities and capital from the end of the previous accounting year (or when a fresh set of books is opened).
• Closing and transfer entries — e.g. transferring the balances of trading/nominal accounts to the Trading and Profit and Loss Account at year-end.
• Rectification entries — correcting errors discovered in the books.
• Adjustment entries — outstanding expenses, prepaid expenses, accrued income, income received in advance, and depreciation.
• Credit purchase or sale of an asset not meant for resale (e.g. furniture, machinery, a computer bought or sold on credit) — since these are not "goods," they never go in the Purchase Book or Sales Book.
• Goods withdrawn by the proprietor for personal use (Drawings), or given away as free samples or charity — both are recorded at cost, by crediting the Purchases Account.
• Dishonour of a bill of exchange, and certain other bill-related entries.
• Any other transaction that does not naturally belong in any of the other books.

Illustration 7 — Journalising in the Journal Proper

Journalise the following in the books of a trader:

1. Started business with cash ₹50,000, goods ₹10,000, furniture ₹5,000, and a bank loan outstanding of ₹8,000 (opening entry).
2. Purchased a computer for office use on credit from Digital Solutions for ₹25,000.
3. Goods costing ₹800 taken by the proprietor for personal use.
4. Goods worth ₹400 given away as charity.
5. ₹500 due from Naresh, a debtor, is now written off as a bad debt. Working for (i): Capital = Total assets brought in − liabilities taken over = (₹50,000 + ₹10,000 + ₹5,000) − ₹8,000 = ₹57,000. Journal Proper