Every business transaction is recorded in the journal according to the rules of debit and credit. The recording of a financial transaction in the journal is called journal entries. Journal entries consist of the name of debit and credit involved in the financial transaction with a brief narration. It is the basis of making ledger.
Example:
Baisakh 10 Cash of Rs.10000 received from Sabin.
Baisakh 11 Paid for the salary of Rs.5000 and rent Rs.5000.
Journal Entries
Date | Particular | L.F | Debit Rs. | Credit Rs. |
Baisakh 10 | Cash a/c.............................Dr. | 10,000 | ||
To Sabin's a/c | 10,000 | |||
(Being cash received from Sabin) | ||||
Baisakh 11 | Salary a/c....................................Dr. | 5000 | ||
Rent a/c......................................Dr. | 5000 | |||
To Cash a/c | 10,000 | |||
(Being paid for salary and rent) |
Simple journal entry is composed of one debit and another credit account.
Compound journal entry is the combination of two or more than two simple journal entries. It contains two or more than two accounts either in debit or in credit. In fact, two or more simple entries can be combined and passed one compound entry if the data and an account of these entries are common. The journal entry of Baisakh 11shown above is the compound journal entry.
Journaling simple transactions
Example
Chaitra 1: Hari started a business with cash of Rs. 55,000.
Chaitra 5: Hari deposited cash of Rs. 45000 in the bank as his additional capital.
Chaitra 7: Hari withdrew cash of Rs. 2000 from the business as his additional capital.
Chaitra 8: Hari withdrew cash of Rs 3000 from the bank for his personal use
Chaitra 9: Hari Withdrew goods of Rs.4000 from the business for his personal use.
Required: Journal Entries
Journal Entries
Date | Particular | L.F | Debit Rs. | Credit Rs. |
Chaitra1 | Cash a/c.............................Dr. | 55,000 | ||
To Capital a/c | 55,000 | |||
(Being business started with cash) | ||||
Chaitra5 | Bank a/c....................................Dr. | 45000 | ||
To Capital a/c | 45000 | |||
(Being the owner deposited cash in the bank as his additional capital) | ||||
Chaitra7 | Drawing a/c................................Dr. | 2000 | ||
To Cash a/c | 2000 | |||
(Being cash withdrew from business for personal use) | ||||
Chaitra8 | Drawing a/c...................................Dr. | 3000 | ||
To Bank a/c | 3000 | |||
(Being cash sales) | ||||
Chaitra9 | Drawing a/c...................................Dr. | 4000 | ||
To Purchase a/c | 4000 | |||
(Being goods withdrew from the business for personal use) |
Transaction of same data having a common account in one aspect are compound transactions. A single entry is passed for such compound transaction, which is known as compounded journal entry.
Example
Journal Entries
Date | Particular | L.F | Debit Rs. | Credit Rs. |
1 | Cash a/c.......................................Dr. | 950 | ||
Discount allowed a/c.......................Dr. | 50 | |||
To Nischal's a/c | 1000 | |||
(Being cash received from Nischal and allowed discount) | ||||
2 | Reema's a/c....................................Dr. | 800 | ||
To Discount received a/c | 50 | |||
To Cash a/c | 750 | |||
(Being cash paid to Reema and received discount) | ||||
3 | Cash a/c........................................................Dr. | 950 | ||
Discount allowed a/c........................................Dr | 50 | |||
To Tilak's a/c | 1000 | |||
(Being cash received from Tilak and allowed discount) | ||||
4 | Uma's a/c...................................Dr. | 1000 | ||
To Discount received a/c | 50 | |||
To Cash a/c | 950 | |||
(Being cash paid to Uma and received discount) |
Journalize the following transactions:
Date |
Transactions |
1st January 2016 |
Commenced business with cash of Rs. 1,00,000. |
12th January 2016 |
Deposited cash in the bank Rs.10,000. |
21st January 2016 |
Bought machinery worth Rs. 20,000 and paid by cheque. |
25th January 2016 |
Paid for installation charges Rs. 1,000. |
Required: Journal Entries
Solution:
Journal Entries
Date | Particulars | L.F. | Debit Rs. | Credit Rs. |
2016-01-01 | Cash a/c ……………………………Dr. | 1,00,000 | ||
To capital a/c | 1,00,000 | |||
(Being business commenced with cash) | ||||
2016-01-12 | Bank a/c……………………………..Dr. | 10,000 | ||
To cash a/c | 10,000 | |||
(Being cash deposited in the bank) | ||||
2016-01-21 | Machinery a/c…………………….Dr. | 20,000 | ||
To bank a/c | 20,000 | |||
(Being machinery purchased and paid through cheque) | ||||
2016-01-25 | Machinery a/c…………………….Dr. | 1,000 | ||
To cash a/c | 1,000 | |||
(Being installation charge paid) |
Solution:
Journal Entries
Date | Particulars | L.F. | Debit Rs. | Credit Rs. | |
a) | Cash a/c……………..Dr. | 20,000 | |||
To capital a/c | 20,000 | ||||
(Being business started with cash) | |||||
b) | Purchase a/c…………………………Dr. | 12,000 | |||
To cash a/c | 8,000 | ||||
To Upendra’s a/c | 4,000 | ||||
(Being goods purchased and partial payment made) | |||||
c) | Cash a/c……………………..Dr. | 5,200 | |||
To equipment a/c | 5,000 | ||||
To profit on sales a/c | 200 | ||||
(Being equipment sold on profit) | |||||
d) | Upendra’s a/c………………………Dr. | 4,000 | |||
To cash a/c | 3,800 | ||||
To discount received a/c | 200 | ||||
(Being payment made with discount) |
Journalize the following transactions of a business:
Date |
Transactions |
2012/01/01 |
Purchased goods for cash Rs.10,000 |
2012/01/10 |
Cash sales made for Rs.8,000 |
2012/01/22 |
Cash deposited into bank Rs.5,000 |
2012/01/29 |
Purchased furniture from Shyam Rs.10,000 |
Required: Journal Entries
Journal Entries
Date | Particulars | L.F. | Debit Rs. | Credit Rs. |
2012/01/01 | Purchase a/c…………………………Dr | 10,000 | ||
To cash a/c | 10,000 | |||
(Being goods purchased on cash | ||||
2012/01/10 | Cash a/c………………………Dr. | 8,000 | ||
To sales a/c | 8,000 | |||
(Being goods sold on cash) | ||||
2012/01/22 | Bank a/c………………………..Dr. | 5,000 | ||
To cash a/c | 5,000 | |||
(Being cash deposited in the bank) | ||||
2012/01/29 | Furniture a/c……………………………Dr. | 10,000 | ||
To Shyam’s a/c | 10,000 | |||
(Being furniture purchased on cash) |
Solution
Journal Entries
Date | Particulars | L.F. | Debit Rs. | Credit Rs. |
a) | Cash a/c………………..dr. | 2,000 | ||
To Furniture a/c | 2,000 | |||
(Being unused furniture disposed off.) | ||||
b) | Cash a/c…………….Dr. | 4,500 | ||
Discount allowed a/c……………….Dr. | 500 | |||
To Homeway Ltd. a/c | 5,000 | |||
(Being cash received with discount) | ||||
c) | Cash a/c……………………..Dr. | 40,000 | ||
To capital a/c | 40,000 | |||
(Being business started with cash) | ||||
d) | Bad debts a/c……………Dr. | 1,000 | ||
To Ashma’s a/c | 1,000 | |||
(Being amount due from Ashma written as bad debts) |
Journal Entries
Date | Particular | L.F | Debit Rs. | Credit Rs. |
a | Purchase a/c.............................Dr. | 2500 | ||
To Cash a/c | 2500 | |||
(Being goods purchase for cash) | ||||
b | Cash a/c....................................Dr. | 15000 | ||
To Sales a/c | 15000 | |||
(Being goods sold for cash) | ||||
c | Purchase a/c................................Dr. | 6000 | ||
To Sudip a/c | 6000 | |||
(Being goods purchased from Sudip on credit) | ||||
d | Purchase a/c...................................Dr. | 8000 | ||
To Meena center a/c | 8000 | |||
(Being good purchased from Meena center on credit) | ||||
e | Meena Center a/c...................................Dr. | 500 | ||
To Purchase a/c | 500 | |||
(Being goods returned to Meena Center) | ||||
f. | Beena Center a/c...................................Dr. | 6000 | ||
To Sales a/c | 6000 | |||
(Being goods sold Beena Center on Credit) | ||||
g | Sales return a/c............................Dr. | 300 | ||
To Beena Center a/c | 300 | |||
(Being goods return by Beena Center) |
v
Journal Entries
Date | Particular | L.F | Debit Rs. | Credit Rs. |
a | Purchase a/c.............................Dr. | 2500 | ||
To Cash a/c | 2500 | |||
(Being goods purchase for cash) | ||||
b | Cash a/c....................................Dr. | 15000 | ||
To Sales a/c | 15000 | |||
(Being goods sold for cash) | ||||
c | Purchase a/c................................Dr. | 6000 | ||
To Sudip a/c | 6000 | |||
(Being goods purchased from Sudip on credit) | ||||
d | Purchase a/c...................................Dr. | 8000 | ||
To Meena center a/c | 8000 | |||
(Being good purchased from Meena center on credit) | ||||
e | Meena Center a/c...................................Dr. | 500 | ||
To Purchase a/c | 500 | |||
(Being goods returned to Meena Center) | ||||
f. | Beena Center a/c...................................Dr. | 6000 | ||
To Sales a/c | 6000 | |||
(Being goods sold Beena Center on Credit) | ||||
g | Sales return a/c............................Dr. | 300 | ||
To Beena Center a/c | 300 | |||
(Being goods return by Beena Center) |
Journal Entries
Date | Particular | L.F | Debit Rs. | Credit Rs. |
1. | Furniture a/c.............................Dr. | 10,000 | ||
To Cash a/c | 10,000 | |||
(Being purchased furniture) | ||||
2. | Machinery a/c....................................Dr. | 75000 | ||
To Maheshwori Stationary Ltd a/c | 75000 | |||
(Being machine purchased from Maheshwori Stationary Ltd.) | ||||
3. | Cash a/c................................Dr. | 5000 | ||
To office equipment a/c | 5000 | |||
(Being old computer sold) |
When capital is invested to start a business, ______ the business.
person comes in
cash goes from
cash comes in
person goes out from
If the owner withdraws cash from the business for his personal use, he becomes ______.
giver
receiver
none
liable
When the goods are purchased on credit, purchase account is debited and the ______ account is credited.
supplier’s
consumer's
sales
drawing
The business returns goods to its supplier if the goods are ______.
found damaged
inferior in quality
found defective
all the options are correct
When the business sells goods on cash, ______
cash comes in
cash goes out
goods comes in
machinery comes in
ASK ANY QUESTION ON Journal Entries
You must login to reply
journal entry of "wages paid to labor of Rs. 2500"?
Feb 19, 2018
0 Replies
Successfully Posted ...
Please Wait...