A cash disbursements journal is where you record your cash (or check) paid-out transactions. It can also be called a purchases journal or an expense journal.

There are many different types and styles of cash disbursements journals. If you will be recording expenses manually in a journal, visit an office supply store. They should have different types to choose from. Look at the column headings, and choose the journal that best meets the needs of your business. You might consider a disbursements journal that is integrated with your checkbook — this may save you some time because your journal entry is made at the same time as you write the check.

If you are using computer software, you probably won't have to decide which type of journal to use. Your program will probably have some type of disbursements journal, but may allow you to customize it based on your business needs.

If you use the accrual basis of accounting, as we recommend, you'll record expenses at the time you purchase goods or services, even if you purchase on credit.

 

You own a variety store. You purchase from your main supplier, on account, items totaling $7,800. Most of the purchase is inventory for resale, but also included are $100 of office supplies. Make the following entry in your purchases journal:

	Debit	Credit
Purchases	7,700
Office supplies expense	100
Accounts payable		7,800

Next month, after receiving a statement from your supplier, you write a check to settle your account. Make the following entry in your purchases journal:

	Debit	Credit
Accounts payable	7,800
Cash		7,800

Assume that your business is a retail store that sells merchandise for resale. Here is an example of a few entries in a purchases journal. The following transactions occurred:

(Note: All dollar amounts have been rounded off to the nearest dollar.)

• On February 2, you paid your electric bill of $177.
• Also on February 2, you bought merchandise inventory on account from Ash Wholesale at a cost of $9,500.
• On February 5, you spent $82 at Atkins Service Station to fill up your delivery vehicles with gas. You charge it all to the account you maintain with Atkins.
• On February 8, you write a check for $9,500 in payment of the bill you receive from Ash.
• On February 10, you write a check for $82 to Atkins Service Station to settle your account there.
• Upon completion of this journal page, you should foot all seven amount columns. Since you are using a double-entry accounting system, you can see if all entries were recorded correctly. Check to see if the sum of the debits equals the sum of the credits. Total debits: 0 + 9,582 + 9500 + 82 + 177 = 19,341. Total credits: 9,759 + 9,582 = 19,341.

If the sum of the debit columns doesn't equal the sum of the credit columns, you have a problem that you should track down right away. You may have entered one of the amounts in the wrong column. You might have simply added incorrectly when computing the totals. It is usually easy to pinpoint the error because the debits should equal the credits for each transaction.

Your purchases journal may have many more columns than this sample because you probably will have more expense classifications.