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7.3 Analyze and Journalize Transactions Using Special Journals

Using Special Journals​

Let's work through examples of recording transactions in special journals for a Luxembourg retail business.

Example Business: Mode Luxembourg SARL​

A retail clothing store with the following transactions in November:

Transaction 1: Credit Sale​

Transaction: Sell €1,000 merchandise on credit to Customer A (excluding VAT), VAT 17%. Invoice INV-001.

Sales Journal Entry:

Sales Journal
Date       Invoice #    Customer      Amount    VAT 17%    Total
─────────────────────────────────────────────────────────────────
Nov 5      INV-001     Customer A    €1,000     €170      €1,170

Posting:

  • To Customer A's account in Accounts Receivable subsidiary ledger: €1,170
  • To Sales Revenue (general ledger): €1,000
  • To VAT Payable (general ledger): €170
  • To Accounts Receivable (general ledger): €1,170

Transaction 2: Credit Purchase​

Transaction: Purchase €2,000 inventory on credit from Supplier X (excluding VAT), VAT 17%, recoverable. Invoice SUP-001.

Purchases Journal Entry:

Purchases Journal
Date       Invoice #    Supplier      Amount    VAT 17%    Total
─────────────────────────────────────────────────────────────────
Nov 8      SUP-001     Supplier X    €2,000     €340      €2,340

Posting:

  • To Supplier X's account in Accounts Payable subsidiary ledger: €2,340
  • To Inventory (general ledger): €2,000
  • To VAT Recoverable (general ledger): €340
  • To Accounts Payable (general ledger): €2,340

Transaction 3: Cash Sale​

Transaction: Sell €500 merchandise for cash (excluding VAT), VAT 17%.

Cash Receipts Journal Entry:

Cash Receipts Journal
Date       Source        Cash      Sales    Receivables    VAT
─────────────────────────────────────────────────────────────────
Nov 10     Cash Sale    €585      €500         -          €85

Posting:

  • To Cash (general ledger): €585
  • To Sales Revenue (general ledger): €500
  • To VAT Payable (general ledger): €85

Transaction 4: Payment to Supplier​

Transaction: Pay €2,340 to Supplier X for previous purchase.

Cash Disbursements Journal Entry:

Cash Disbursements Journal
Date       Payee          Cash    Purchases    Payables    Expenses
─────────────────────────────────────────────────────────────────
Nov 12     Supplier X    €2,340      -        €2,340         -

Posting:

  • To Cash (general ledger): €2,340 (decrease)
  • To Accounts Payable (general ledger): €2,340 (decrease)
  • To Supplier X's account in Accounts Payable subsidiary ledger: €2,340

Transaction 5: Collection from Customer​

Transaction: Receive €1,170 payment from Customer A.

Cash Receipts Journal Entry:

Cash Receipts Journal
Date       Source          Cash      Sales    Receivables    VAT
─────────────────────────────────────────────────────────────────
Nov 15     Collection     €1,170      -      €1,170          -

Posting:

  • To Cash (general ledger): €1,170
  • To Accounts Receivable (general ledger): €1,170 (decrease)
  • To Customer A's account in Accounts Receivable subsidiary ledger: €1,170

Transaction 6: Expense Payment​

Transaction: Pay €1,200 rent expense.

Cash Disbursements Journal Entry:

Cash Disbursements Journal
Date       Payee      Cash    Purchases    Payables    Expenses
─────────────────────────────────────────────────────────────────
Nov 18     Rent      €1,200      -           -        €1,200
                                                      (Rent)

Posting:

  • To Cash (general ledger): €1,200 (decrease)
  • To Rent Expense (general ledger): €1,200

Luxembourg VAT Considerations​

Multiple VAT Rates:

Example: Restaurant with different VAT rates

Sales Journal Entry:

Sales Journal
Date       Invoice #    Customer    Amount    VAT 3%    VAT 14%    VAT 17%    Total
─────────────────────────────────────────────────────────────────────────────────
Nov 20     INV-002     Customer B  €100      €3        -          -         €103
           (Food)
Nov 20     INV-003     Customer B  €50       -         €7         -          €57
           (Wine)
─────────────────────────────────────────────────────────────────────────────────
Totals                 €150        €3        €7         -         €160

Posting:

  • Sales Revenue: €150
  • VAT Payable (3%): €3
  • VAT Payable (14%): €7
  • Accounts Receivable: €160

Posting from Special Journals​

Posting Rules:

  1. Individual Line Items: Post to subsidiary ledgers (customer/supplier accounts)
  2. Column Totals: Post to general ledger accounts
  3. Frequency: Can post daily, weekly, or monthly
  4. Verification: Total of subsidiary ledger should equal general ledger control account

Example: Posting Sales Journal Totals

Sales Journal Total:

  • Total Sales: €4,500
  • Total VAT: €765
  • Total Receivables: €5,265

General Ledger Posting:

700000 Sales Revenue
─────────────────────────────
        │  Nov 30  Sales J    €4,500

430000 VAT Payable
─────────────────────────────
        │  Nov 30  Sales J      €765

410000 Accounts Receivable
─────────────────────────────
Nov 30  Sales J    €5,265  │

Luxembourg Compliance Note​

When using special journals in Luxembourg:

  • Must track VAT by rate
  • Must include PCN account numbers
  • Must maintain proper audit trail
  • Must support FAIA export
  • Must be exportable for eCDF
  • Software often handles this automatically

Think It Through​

A business has 50 credit sales in a month. Compare the efficiency of recording these in a general journal versus a sales journal. How much time and effort would be saved?