Introduction to General Ledger Transactions
To process general ledger transactions in Sage Pastel Partner, we use the ENTRY TYPE called “general journals.” The ENTRY TYPE represents the book of original entry. Whenever you hear “entry type,” remember it refers to the book of original entry.
Accessing the General Journal
- Click on Process: Navigate to the Process menu.
- Select Journals: From the dropdown, select Journals.
- Click on General Journal: This will open the General Journal window.
Before we dive into capturing general ledger transactions, let’s define some key terms.
What Are General Ledger Transactions?
General Journal transactions are defined as transactions that are not:
- Cashbook transactions
- Customers or Debtors transactions
- Suppliers or Creditors transactions
Defining Cashbook, Debtors, and Creditors Transactions
Cashbook Transactions: These include all transactions involving cash, bank, and electronic money (credit cards, ecocash, debit cards). If a transaction involves cash in any form, it is captured through the cashbook.
Debtors Transactions: These involve sales and returns of products and services to customers or debtors done on account (i.e., no cash involved). These are captured through the Customer Journal. If cash is involved, the transaction is captured through the cashbook instead.
Creditors Transactions: These involve purchases and returns of products and services from suppliers or creditors done on account. These are captured through the Suppliers Journal. If cash is involved, the transaction is captured through the cashbook instead.
Determining the Transaction Type
Before capturing a transaction, you must identify its type:
- Is this a General Ledger transaction?
- Is this a cashbook transaction?
- Is this a Customers/Debtors transaction?
- Is this a Suppliers/Creditors transaction?
Choose the appropriate entry type or book of original entry accordingly. This step is crucial.
Understanding the General Journal Window
The General Journal window consists of the following fields:
- Entry Type: The name of the book of original entry (General Journal in this case).
- Period: The month the transaction occurred.
- Date: The date on which the transaction occurred.
- Account: The general ledger account being debited or credited.
- Reference: A code to trace the transaction.
- Description: Describes the nature of the transaction.
- Debit Column: Enter the amount if debiting the account.
- Credit Column: Enter the amount if crediting the account.
- Project: The cost center affected by the transaction.
- Contra Account: The account that will be debited or credited based on the account column entry.
Buttons in the General Journal Window
- Delete: Delete a line or the entire batch.
- Insert: Insert a line in the batch.
- Match: Not applicable here.
- Inclusive/Exclusive: Not applicable here.
- Preview: Preview transactions before updating.
- Print: Print the batch.
- Update: Post transactions to the general ledger, automatically updating the trial balance, income statement, and balance sheet.
- Batch: Update batch settings.
- Settings: Automate some batch processes, like incrementing reference numbers.
Capturing Transactions: Single Line vs. Double Line Processing
Single Line Processing
- Select Period: Choose the period.
- Enter Date: Input the transaction date.
- Choose Account: Select the account to be debited or credited.
- Enter Reference: Input the reference code.
- Enter Description: Describe the transaction.
- Enter Amount: In the debit or credit column.
- Enter Cost Center: Input the cost center.
- Enter Contra Account: Input the contra account.
Double Line Processing
- First Line (Debit Entry):
- Select period.
- Enter date.
- Choose account.
- Enter reference.
- Enter description.
- Enter amount in the debit column.
- Enter cost center.
- Leave contra account blank.
- Second Line (Credit Entry):
- Select period.
- Enter date.
- Choose account.
- Enter reference.
- Enter description.
- Enter amount in the credit column.
- Enter cost center.
- Leave contra account blank.
Example: Recording a Rent Transaction
Transaction: On 2 July 2019, rent amounting to $3,000 is owed to Sundry Supplier (Beta Bricks).
Steps to Capture the Transaction
- Define the Transaction:
- Determine if it’s a General Ledger, cashbook, Debtors, or Creditors transaction. In this case, it is a General Ledger transaction.
- Identify Accounts:
- Debit: Rent Expense Account
- Credit: Rent Payable Account
- Choose Processing Method: Single line or double line.
Using Single Line Method
- Select period.
- Enter date.
- Enter Rent Expense Account (debit).
- Enter reference number.
- Enter description.
- Enter amount ($3,000) in the debit column.
- Enter cost center.
- Enter Rent Payable Account (contra account).
- Update.
Using Double Line Method
- First Line (Debit Entry):
- Select period.
- Enter date.
- Enter Rent Expense Account.
- Enter reference number.
- Enter description.
- Enter amount ($3,000) in the debit column.
- Enter cost center.
- Leave contra account blank.
- Second Line (Credit Entry):
- Select period.
- Enter date.
- Enter Rent Payable Account.
- Enter reference number.
- Enter description.
- Enter amount ($3,000) in the credit column.
- Enter cost center.
- Leave contra account blank.
- Update.
By following these steps, your trial balance, income statement, and balance sheet will be automatically updated in Sage Pastel Partner, streamlining your accounting processes.
