Journal is an adjustment Voucher, normally used for non cash transaction like adjustment between Ledger Accounts.
Firstly press F7 then opend journal voucher screen.
and record booked entry like as-----
(1) Salary A/c Dr. 1000.00
To Salary Payable A/c 1000.00
( Being salary due for the month...................)
(2) Salay Payable A/c Dr. 1000.00
To Bank A/c or Cash 1000.00
( Being Salary Paid vide ch. no........ or cash)
============================================
Firstly press F7 then opend journal voucher screen.
and record booked entry like as-----
(1) Salary A/c Dr. 1000.00
To Salary Payable A/c 1000.00
( Being salary due for the month...................)
(2) Salay Payable A/c Dr. 1000.00
To Bank A/c or Cash 1000.00
( Being Salary Paid vide ch. no........ or cash)
============================================
Following are some examples of translations and Journal Entries, its analysis is done on the basis of rules of double entry system:
1. Cash brought in by proprietor as capital Rs. 30000
a) What comes in business will be debited
Cash has come in business; cash account will be debited in journal entry.
b) Who is giver will be credited
Proprietor is giver of cash to business but he has business motive and he gives the moneyto business as capital.
Journal Entry
Cash Account Debit 30, 000
Proprietor’s capital Account Credit 30,000
2. Goods purchased on credit from Madan Lal Rs. 5,000
a) What comes in business will be debited
Goods have come in business, so its financial value will be debited with the name of purchase account.
b) Name of person is given from whom we bought the goods on credit, so Ist rule’s second part will be applied.
Who is giver, will be credited.
Madan lal is giver, so its account will be credited.
Purchase account debit 5000
Madan Lal account credit 5000
3. Furniture purchased for cash Rs. 10000
a) What comes in business will be debited. In this transaction, furniture came in business, so we will open furniture account in the debit side of journal entry.
b) Cash is also asset and we paid for purchasing of furniture. 2nd rule’s second part will be applied.
Furniture Account Debit 10,000
Cash Account Credit 10,000
4. Goods sold on credit to Dev Raj Rs. 1600
a) Dev Raj is receiver of goods, so his personal account will be debited.
b) Goods go out, so, goods or sale account will be credited.
Dev Raj Account Debit 1600
Sale Account Credit 1600
5. Goods purchased for cash Rs. 4500
a) Goods come in, so goods or purchase account will be debited
b) Cash goes out, so cash account will be credited.
Purchase account debit 4500
Cash account credit 4500
6. Goods sold for cash Rs. 2100
a) Cash comes in, so cash account will be debited.
b) Goods go out, so goods or sale account will be credited.
Cash account debit 2100
Sale account credit 2100
7. Rent paid for shop to landlord 3000
a) Rent is an item of expenses, so it will be debited.
b) Cash is an item of asset and it goes out, so it will be credited.
Rent Account Debit 3000
Cash Account Credit 3000
8. Commission received in cash 2000
a) Cash comes in, so cash account will be debited.
b) Commission is an item of income, so commission account will be credited.
Cash Account Debit 2000
Commission Account Credit 2000
9. Cash deposited into bank 5000
a) Bank is receiver of cash, so bank account will be debited.
b) Cash goes out, so cash account will be credited.
Bank Account Debit 5000
Cash Account Credit 5000
10. Cash withdrawn from bank for office use Rs. 2000
a) Cash comes in the business, so cash account will be debited.
b) Bank is the giver, so bank account will be credited.
Cash Account Debit 2000
Bank Account Credit 2000
11. Cash drawn by proprietor from business for personal use Rs. 3000
a) Proprietor is the receiver of cash, but business will give him as drawing which is decrease in his capital, so proprietor’s drawing account will be debited.
b) Cash goes out, so cash account will be credited.
Drawing Account Debit 3000
Cash Account Credit 3000
12. Goods given as charity Rs. 1000
a) Charity is an expense of business, so it will be debited.
b) Goods go out, so goods or purchase account will be credited.
Charity Account Debit 1000
Purchase Account Credit 1000
13. Bad Debts written off Rs. 500
a) Bad debt is loss of business due to not paying the amount by our debtors, so it will be debited.
b) There is decrease in debtor. We are applying what goes from business, debtor is also our asset, if he does not pay, and it means this asset has gone from business, so its account will be credited.
Bad Debt Account Debit 500
Debtor Account Credit 500
14. Bad debts recovered in cash Rs. 300
a) Cash comes in, so cash account will be debited.
b) Bad debts recovered are an income, so its account will be credited.
Cash Account Debit 300
Bad Debts Recovered Account Credit 300
15. Carriage paid on machinery ( expenses on purchase of asset ) Rs. 1000
a) Carriage on purchase of machinery is part of cost of machinery, so machinery account will be debited.
b) Cash goes out, so cash account will be credited.
Machinery Account Debit 1000
Cash Account Credit 1000
16. Depreciation on fixed assets Rs. 500
a) Depreciation on fixed assets is the loss of business, and every loss will be debited.
b) There is a decrease in asset and we will apply what goes from business on it. So, asset account will be credited.
Depreciation Account Debit 500
Fixed Asset Account Credit 500
17. Carriage paid on the behalf of buyer Rs. 1000
a) This is not our expenses, but this is increase our current asset and its name is debtor, so we will apply what comes in rule on it.
b) Cash goes out, so cash account will be credited.
Debtor account Debit 1000
Cash Account Credit 1000
18. Goods given as free samples Rs. 1500
a) Goods are given for advertising, advertising is an expense of business, and so advertising account will be debited.
b) Goods go out at the cost price, so goods or purchase account will be credited.
Advertising Account Debit 1500
Purchase Account Credit 1500
19. Interest allowed on capital Rs. 600
a) Interest is an expense of business, so it will be debited.
b) There is an increase in the amount of capital. Capital is liability account, so increase in the amount of capital will be also shown in the credit side of journal entry.
Interest on capital Account Debit 600
Capital Account Credit 600
20. Interest charged on drawings Rs. 500
a) Decrease in capital or increase in drawing will be debited.
b) Interest on drawing is an income of business.
Drawing Account Debit 500
Interest on drawing account Credit 500
21. Bank charges or interest charged by bank Rs. 200
a) Bank charges are the expenditures of business, so it will be debited.
b) There is decrease in bank balance, so bank account will be credited.
Bank charge Account Debit 200
Bank account Credit 200
22. Goods lost by fire Rs. 800
a) Goods lost by fire are the loss of business, so loss by fire account will be debited.
b) There is decrease in goods or stock at cost, so purchase account will be credited.
Loss by Fire Account Debit 800
Purchase Account Credit 800
23. Goods insured and a claim is admitted by insurance company in full or in part.
a) Insurance company will be our debtor. Transaction has increase in debtors because we have to get money from insurance company. So, this account will be debited.
b) Decrease in loss by fire, so this account will be credited.
Insurance company Account Debit XXXX
Loss by Fire Account Credit XXXX
24. Loan taken Rs. 1,00,000
a) Cash comes in, so cash account will be debited.
b) Lender is giver, so his loan account will be credited.
Cash Account Debit 1, 00,000
Lender’s loan Account Credit 1,00,000
25. Interest paid on loan. Rs. 1000
a) Interest is an expense of business, so it will be debited.
b) Cash goes out, so it will be credited.
Interest on loan Account Debit 1000
Cash Account Credit 1000
26. Interest on loan due but not paid in cash. Rs. 500
a) Interest is an expense of business, so it will be debited.
b) Increase in creditors will be credited in journal entry.
Interest on loan Account Debit 500
Loan or Creditor Account 500
27. Investment purchased Rs. 50,000
a) Asset in the form of investment comes in, so investment account will be debited.
b) Cash goes out, so its account will be credited.
Investment Account Debit 50000
Cash Account Credit 50000
28. Cash stolen from office. Rs. 6000
a) Cash stolen from office is loss of business, so this account will be debited.
b) Cash goes out, so its account will be credited.
Loss by Theft Account Debit 6000
Cash Account Credit 6000
29. Cash paid to a creditor in full settlement ( When cash discount is received) Amount due to Madan Lal Rs. 5000 paid him Rs. 4950 in full settlement.
a) Decrease in creditors = Debit
b) Decrease in cash = Credit
c) Discount received is income of business = credit
Madan Lal Account Debit 5000
Cash Account Credit 4950
Discount Received Account Credit 50
30. Cash received from a debtor in full settlement (When cash discount is allowed). Amount receivable from Dev Raj Rs. 1600, received from him Rs. 1570.
a) Increase in cash = Debit
b) Discount allowed is the loss of business = Debit
c) Decrease in debtors = credit
Cash Account Debit 1570
Discount Allowed Account Debit 30
Dev Raj Account Credit 1600
=======================================================
1. Cash brought in by proprietor as capital Rs. 30000
a) What comes in business will be debited
Cash has come in business; cash account will be debited in journal entry.
b) Who is giver will be credited
Proprietor is giver of cash to business but he has business motive and he gives the moneyto business as capital.
Journal Entry
Cash Account Debit 30, 000
Proprietor’s capital Account Credit 30,000
2. Goods purchased on credit from Madan Lal Rs. 5,000
a) What comes in business will be debited
Goods have come in business, so its financial value will be debited with the name of purchase account.
b) Name of person is given from whom we bought the goods on credit, so Ist rule’s second part will be applied.
Who is giver, will be credited.
Madan lal is giver, so its account will be credited.
Purchase account debit 5000
Madan Lal account credit 5000
3. Furniture purchased for cash Rs. 10000
a) What comes in business will be debited. In this transaction, furniture came in business, so we will open furniture account in the debit side of journal entry.
b) Cash is also asset and we paid for purchasing of furniture. 2nd rule’s second part will be applied.
Furniture Account Debit 10,000
Cash Account Credit 10,000
4. Goods sold on credit to Dev Raj Rs. 1600
a) Dev Raj is receiver of goods, so his personal account will be debited.
b) Goods go out, so, goods or sale account will be credited.
Dev Raj Account Debit 1600
Sale Account Credit 1600
5. Goods purchased for cash Rs. 4500
a) Goods come in, so goods or purchase account will be debited
b) Cash goes out, so cash account will be credited.
Purchase account debit 4500
Cash account credit 4500
6. Goods sold for cash Rs. 2100
a) Cash comes in, so cash account will be debited.
b) Goods go out, so goods or sale account will be credited.
Cash account debit 2100
Sale account credit 2100
7. Rent paid for shop to landlord 3000
a) Rent is an item of expenses, so it will be debited.
b) Cash is an item of asset and it goes out, so it will be credited.
Rent Account Debit 3000
Cash Account Credit 3000
8. Commission received in cash 2000
a) Cash comes in, so cash account will be debited.
b) Commission is an item of income, so commission account will be credited.
Cash Account Debit 2000
Commission Account Credit 2000
9. Cash deposited into bank 5000
a) Bank is receiver of cash, so bank account will be debited.
b) Cash goes out, so cash account will be credited.
Bank Account Debit 5000
Cash Account Credit 5000
10. Cash withdrawn from bank for office use Rs. 2000
a) Cash comes in the business, so cash account will be debited.
b) Bank is the giver, so bank account will be credited.
Cash Account Debit 2000
Bank Account Credit 2000
11. Cash drawn by proprietor from business for personal use Rs. 3000
a) Proprietor is the receiver of cash, but business will give him as drawing which is decrease in his capital, so proprietor’s drawing account will be debited.
b) Cash goes out, so cash account will be credited.
Drawing Account Debit 3000
Cash Account Credit 3000
12. Goods given as charity Rs. 1000
a) Charity is an expense of business, so it will be debited.
b) Goods go out, so goods or purchase account will be credited.
Charity Account Debit 1000
Purchase Account Credit 1000
13. Bad Debts written off Rs. 500
a) Bad debt is loss of business due to not paying the amount by our debtors, so it will be debited.
b) There is decrease in debtor. We are applying what goes from business, debtor is also our asset, if he does not pay, and it means this asset has gone from business, so its account will be credited.
Bad Debt Account Debit 500
Debtor Account Credit 500
14. Bad debts recovered in cash Rs. 300
a) Cash comes in, so cash account will be debited.
b) Bad debts recovered are an income, so its account will be credited.
Cash Account Debit 300
Bad Debts Recovered Account Credit 300
15. Carriage paid on machinery ( expenses on purchase of asset ) Rs. 1000
a) Carriage on purchase of machinery is part of cost of machinery, so machinery account will be debited.
b) Cash goes out, so cash account will be credited.
Machinery Account Debit 1000
Cash Account Credit 1000
16. Depreciation on fixed assets Rs. 500
a) Depreciation on fixed assets is the loss of business, and every loss will be debited.
b) There is a decrease in asset and we will apply what goes from business on it. So, asset account will be credited.
Depreciation Account Debit 500
Fixed Asset Account Credit 500
17. Carriage paid on the behalf of buyer Rs. 1000
a) This is not our expenses, but this is increase our current asset and its name is debtor, so we will apply what comes in rule on it.
b) Cash goes out, so cash account will be credited.
Debtor account Debit 1000
Cash Account Credit 1000
18. Goods given as free samples Rs. 1500
a) Goods are given for advertising, advertising is an expense of business, and so advertising account will be debited.
b) Goods go out at the cost price, so goods or purchase account will be credited.
Advertising Account Debit 1500
Purchase Account Credit 1500
19. Interest allowed on capital Rs. 600
a) Interest is an expense of business, so it will be debited.
b) There is an increase in the amount of capital. Capital is liability account, so increase in the amount of capital will be also shown in the credit side of journal entry.
Interest on capital Account Debit 600
Capital Account Credit 600
20. Interest charged on drawings Rs. 500
a) Decrease in capital or increase in drawing will be debited.
b) Interest on drawing is an income of business.
Drawing Account Debit 500
Interest on drawing account Credit 500
21. Bank charges or interest charged by bank Rs. 200
a) Bank charges are the expenditures of business, so it will be debited.
b) There is decrease in bank balance, so bank account will be credited.
Bank charge Account Debit 200
Bank account Credit 200
22. Goods lost by fire Rs. 800
a) Goods lost by fire are the loss of business, so loss by fire account will be debited.
b) There is decrease in goods or stock at cost, so purchase account will be credited.
Loss by Fire Account Debit 800
Purchase Account Credit 800
23. Goods insured and a claim is admitted by insurance company in full or in part.
a) Insurance company will be our debtor. Transaction has increase in debtors because we have to get money from insurance company. So, this account will be debited.
b) Decrease in loss by fire, so this account will be credited.
Insurance company Account Debit XXXX
Loss by Fire Account Credit XXXX
24. Loan taken Rs. 1,00,000
a) Cash comes in, so cash account will be debited.
b) Lender is giver, so his loan account will be credited.
Cash Account Debit 1, 00,000
Lender’s loan Account Credit 1,00,000
25. Interest paid on loan. Rs. 1000
a) Interest is an expense of business, so it will be debited.
b) Cash goes out, so it will be credited.
Interest on loan Account Debit 1000
Cash Account Credit 1000
26. Interest on loan due but not paid in cash. Rs. 500
a) Interest is an expense of business, so it will be debited.
b) Increase in creditors will be credited in journal entry.
Interest on loan Account Debit 500
Loan or Creditor Account 500
27. Investment purchased Rs. 50,000
a) Asset in the form of investment comes in, so investment account will be debited.
b) Cash goes out, so its account will be credited.
Investment Account Debit 50000
Cash Account Credit 50000
28. Cash stolen from office. Rs. 6000
a) Cash stolen from office is loss of business, so this account will be debited.
b) Cash goes out, so its account will be credited.
Loss by Theft Account Debit 6000
Cash Account Credit 6000
29. Cash paid to a creditor in full settlement ( When cash discount is received) Amount due to Madan Lal Rs. 5000 paid him Rs. 4950 in full settlement.
a) Decrease in creditors = Debit
b) Decrease in cash = Credit
c) Discount received is income of business = credit
Madan Lal Account Debit 5000
Cash Account Credit 4950
Discount Received Account Credit 50
30. Cash received from a debtor in full settlement (When cash discount is allowed). Amount receivable from Dev Raj Rs. 1600, received from him Rs. 1570.
a) Increase in cash = Debit
b) Discount allowed is the loss of business = Debit
c) Decrease in debtors = credit
Cash Account Debit 1570
Discount Allowed Account Debit 30
Dev Raj Account Credit 1600
=======================================================
Example
Company A was incorporated on January 1, 2010 with an initial capital of 5,000 shares of $20 par value common stock. During the first month of its operations, the company engaged in following transactions:
| Date | Transaction |
| Jan 2 | An amount of $36,000 was paid as advance rent for three months. |
| Jan 3 | Paid $60,000 cash on the purchase of equipment costing $80,000. The remaining amount was recognized as a one year note payable with interest rate of 9%. |
| Jan 4 | Purchased office supplies costing $17,600 on account. |
| Jan 13 | Provided services to its customers and received $28,500 in cash. |
| Jan 13 | Paid the accounts payable on the office supplies purchased on January 4. |
| Jan 14 | Paid wages to its employees for first two weeks of January, aggregating $19,100. |
| Jan 18 | Provided $54,100 worth of services to its customers. They paid $32,900 and promised to pay the remaining amount. |
| Jan 23 | Received $9,300 from customers for the services provided on January 18. |
| Jan 25 | Received $4,000 as an advance payment from customers. |
| Jan 26 | Purchased office supplies costing $5,200 on account. |
| Jan 28 | Paid wages to its employees for the third and fourth week of January: $19,100. |
| Jan 31 | Paid $5,000 as dividends. |
| Jan 31 | Received electricity bill of $2,470. |
| Jan 31 | Received telephone bill of $1,494. |
| Jan 31 | Miscellaneous expenses paid during the month totaled $3,470 |
The following table shows the journal entries for the above events.
| Date | Account | Debit | Credit |
| Jan 1 | Cash | 100,000 | |
| Common Stock | 100,000 | ||
| Jan 2 | Prepaid Rent | 36,000 | |
| Cash | 36,000 | ||
| Jan 3 | Equipment | 80,000 | |
| Cash | 60,000 | ||
| Notes Payable | 20,000 | ||
| Jan 4 | Office Supplies | 17,600 | |
| Accounts Payable | 17,600 | ||
| Jan 13 | Cash | 28,500 | |
| Service Revenue | 28,500 | ||
| Jan 13 | Accounts Payable | 17,600 | |
| Cash | 17,600 | ||
| Jan 14 | Wages Expense | 19,100 | |
| Cash | 19,100 | ||
| Jan 18 | Cash | 32,900 | |
| Accounts Receivable | 21,200 | ||
| Service Revenue | 54,100 | ||
| Jan 23 | Cash | 15,300 | |
| Accounts Receivable | 15,300 | ||
| Jan 25 | Cash | 4,000 | |
| Unearned Revenue | 4,000 | ||
| Jan 26 | Office Supplies | 5,200 | |
| Accounts Payable | 5,200 | ||
| Jan 28 | Wages Expense | 19,100 | |
| Cash | 19,100 | ||
| Jan 31 | Dividends | 5,000 | |
| Cash | 5,000 | ||
| Jan 31 | Electricity Expense | 2,470 | |
| Utilities Payable | 2,470 | ||
| Jan 31 | Telephone Expense | 1,494 | |
| Utilities Payable | 1,494 | ||
| Jan 31 | Miscellaneous Expense | 3,470 | |
| Cash | 3,470 |
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