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Journal Proper

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A journal proper is a book of original entry in which only certain types of financial transactions of a business are recorded in a certain order. Such types of transactions include the transactions of drawings, outstanding expenses, accrued incomes, reserves, provisions, interest on capital, drawing of goods and assets by the proprietor, loss of goods, and credit purchase and sale of other assets such as land, buildings, machinery and furniture.

Types of Entries

  1. Opening entries
    All the assets and liabilities of the previous year are required to be carried forward to current year by passing entries. Such entries are called opening entries and passed through the journal proper. The assets are debited and liabilities are credited while passing opening entries. The excess of assets over liabilities is credited to capital account.

  2. Closing entries
    The entries prepared for closing different ledger accounts in the process of preparing final account at the end of the year are called closing entries. Such entries are needed to transfer the expenses and incomes related with revenue nature to trading and profit and loss account. All those transactions are recorded in journal proper.

  3. Transfer entries
    The transfer of amount from one account to another account is made through journal proper. Transfers of gross profit and net profit or loss are required at the time of final accounts preparation. Besides such transfers, the settlement of accounts is also needed. Such transfers of amount from one account to another account are made by passing entries in the journal proper.

  4. Adjustment entries
    Incomes and expenses may occur after closing the ledger accounts at the end of accounting year. They appear in the form of adjustments. Such incomes and expenses should be adjusted either in trading account or profit and loss account or balance sheet. The entries passed for necessary adjustments are called adjustment entries.



  • A journal proper is a book of original entry in which only certain types of financial transactions of a business are recorded in a certain order. 
  • All the assets and liabilities of the previous year are required to be carried forward to current year by passing entries. 
  • Incomes and expenses may occur after closing the ledger accounts at the end of accounting year.
  • The entries prepared for closing different ledger accounts in the process of preparing final account at the end of the year are called closing entries.
.

Very Short Questions

Solution:

Adjusted Trial Balance

S.N.

Account Title

Unadjusted Trial Balance

Adjustments

Adjusted Trial Balance

Dr. Amt

Cr. Amt

Dr. Amt

Cr. Amt

Dr. Amt

Cr. Amt

1.

Capital

-

3,00,000

-

-

-

3,00,000

2.

Sales

-

8,00,000

-

-

-

8,00,000

3.

Bank loan

-

2,50,000

-

-

-

2,50,000

4.

Creditors

-

50,000

-

-

-

50,000

5.

Cash in hand

40,000

-

-

-

40,000

-

6.

Debtors

60,000

-

-

-

60,000

-

7.

Fixed Assets

7,00,000

-

-

70,000

6,30,000

8.

Office Expenses

2,00,000

-

-

-

2,00,000

-

9.

Salaries

2,50,000

-

10,000

-

2,60,000

10.

Other expenses

1,50,000

-

-

-

1,50,000

-

Adjustments:

a)

Depreciation

-

-

70,000

70,000

b)

Outstanding salaries

-

-

10,000

10,000

Total

14,00,000

14,00,000

80,000

80,000

14,10,000

14,10,000

Solution:

Adjusted Trial Balance

S.N.

Account Title

Unadjusted Trial Balance

Adjustments

Adjusted Trial Balance

Dr. Amt

Cr. Amt

Dr. Amt

Cr. Amt

Dr. Amt

Cr. Amt

1.

Capital

-

50,000

-

-

-

50,000

2.

Creditors

-

10,000

-

-

-

10,000

3.

Machinery

65,000

-

-

-

65,000

-

4.

Rent

8,000

-

-

1,000

7,000

5.

Salary

10,000

-

2,000

-

12,000

6.

Sales

-

80,000

-

-

-

80,000

7.

Purchases

30,000

-

-

-

30,000

-

8.

Sundry Assets

37,000

-

-

-

37,000

-

9.

Commission

-

10,000

3,000

-

-

7,000

Adjustments:

a)

Prepaid rent

-

-

1,000

-

1,000

-

b)

Outstanding salary

-

-

-

2,000

-

2,000

c)

Accrued commission

-

-

-

3,000

-

3,000

Total

1,50,000

1,50,000

6,000

6,000

1,55,000

1,55,000

Solution:

Adjusted Trial Balance

S.N.

Account Title

Unadjusted Trial Balance

Adjustments

Adjusted Trial Balance

Dr. Amt

Cr. Amt

Dr. Amt

Cr. Amt

Dr. Amt

Cr. Amt

1.

Opening stock

10,000

-

-

-

10,000

-

2.

Wages

5,000

-

2,000

-

7,000

-

3.

Purchases

2,00,000

-

-

-

2,00,000

-

4.

Sales

-

4,50,000

-

-

-

4,50,000

5.

Building

5,00,000

-

-

25,000

4,75,000

-

6.

Salary

10,000

-

-

3,000

7,000

-

7.

Creditors

-

1,50,000

-

-

-

1,50,000

8.

Capital

-

1,25,000

-

-

-

1,25,000

Adjustments:

a)

Outstanding wages

-

-

-

2,000

-

2,000

b)

Depreciation on building

-

-

25,000

-

25,000

-

c)

Prepaid salary

-

-

3,000

-

3,000

-

Total

7,25,000

7,25,000

30,000

30,000

7,27,000

7,27,000

0%
  • A journal proper includes the transaction of ______.

    accrued incomes
    drawings
    outstanding expenses
    all the options are correct
  • The entries prepared for closing different ledger accounts in the process of preparing final account at the end of the year are called ______.

    opening entries
    closing entries
    transfer entries
    adjustment entries
  • All the assets and liabilities of the previous year are required to be carried forward to current year by passing entries. Such entries are called ______.

    transfer entries
    adjustment entries
    opening entries
    closing entries
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