What is a Journal Entry ? For Beginners | Simple introduction | Examples | Accounting

JOURNAL ENTRY

What Is a Journal Entry in Accounting ?

A journal entry is a recorded of the business transactions in the accounting books of a business. A properly documented journal entry consists of the correct date, amounts to be debited and credited, description of the transaction and a unique reference number.

       As a small business owner or you typically assume that of a book keeper or accountant is a Part of that job is recording on journal entries.

KEY TAKEAWAYS 

• A journal is a detailed record of all the transactions done by a business.
• When a journal entry is recorded into a company's journal, it's usually recorded using a double-entry method, but can also be recorded using a single-entry method of bookkeeping.
• Journal is also used in the financial world to refer to a trading journal that details the trades made by an investor and why.

Using the single - Entry method in journal

Single-entry bookkeeping is rarely used in accounting and business. It is the most basic form of accounting and is set up like a checkbook, in that there is only a single account used for each journal entry. It is a simple running total of cash inflows and cash outflows.

For Examples -

Q.Purchase Goods from Amit Suppliers on credit of Rs.2,00,000.

Ans. 

Purchase  a/c        Dr.	2,00,000
To Amit Supp. a/c		2,00,000

Using double - Entry Book-keeping in journal 

Double-entry bookkeeping is the most common form of accounting. It directly affects the way journals are kept and journal entries are recorded. Every business transaction is made up of an exchange between two accounts. This means that each journal entry is recorded with two columns

For Examples -

Q. Purchased goods from Kareem for Rs. 60,000 at a trade discount of 10% and cash discount of 2%

Ans.

Purchase a/c…      Dr.	54,000
To Disc. Received a/c…		52,920
To Cash a/c…		1,080

GOLDEN RULES

Illustration 0.1

1. April 01, 2019. Anise Started business with Cash Rs.2,00,000.

2. April 02, 2019. Purchase Goods from Amit Suppliers on credit of Rs.1, 50,000.
3. April 04, 2019. Purchase furniture on Cash Rs. 80,000.
4. April 07, 2019. Purchase machine on cash Rs.8,500.
5. April 09, 2019. Deposit Cash in to Bank Rs. 25,000.
6. April 11, 2019. Sold Goods to Khan Brothers on cash Rs.6,000.
7. April 14, 2019. Sold Goods to Rahul(or credit) Rs. 12,000
8. April 18,2019. Owner withdraw of worth Rs. 2,000 for personal use.
9. April 20,2019. Owner withdraw of worth Rs. 5,500 for office use.
10.April 22,2019. Sales of goods Rs.11,000 in cash.

Solution 0.1

Illustration 0.2

1. May 2,2019.Mr. Raj started business by introducing capital of Rs.2,50,000 in Cash.

2. May 4,2019.Car purchased from Ganesh Traders of Rs. 1,00,000 on Credit.
3. May 7,2019.Mr. Raj Purchased  furniture  for Own  business  use of Rs. 1,800 by making payment by cheque.
4. May 10,2019.Plant & Machinery purchased from Ramesh Agro Co. of  Rs. 2,50,000 on cash.
5. May 11,2019.Purchased Goods from Amit Suppliers on credit of  Rs.3,50,000.
6. May 13,2019.Goods worth Rs. 12000 distributed as sample.
7. May 15,2019.Goods worth Rs. 6000 Destroyed by fire (or stolen).
8. May 17,2019.Purchased goods are returned to the supplier Rs.50,000.
9. May 18,2019.Electricity Charges Paid Rs.4,000.
10.May 20,2019.Sold goods to shyam Rs.20,000.
11.May 22,2019.Telephone Charges Rs. 2,500 on the same date.
12.May 23,2019.Depreciation charge on Plant & machinery  Rs.8000 during the year.
13.May 27,2019.Cash paid for rent Rs. 15,000.
14.May 29,2019.Goods return by Shyam Rs.1,400.

Solution 0.2

Illustration 0.3

1.June 2,2019.Business started with cash in Hand Rs. 1,30,000 and; stocks of goods Rs.15,000; Land worth Rs. 10,000 ,Assets are cash in hand Rs.20,000; Plant & Machinery Rs.55,000;Furniture Rs.50,000; liability are Mr.raj Rs.20, Rs.20,000 000

2.June 4,2019.Purchased goods from Kareem for Rs. 60,000 at a trade discount of 10% and cash discount of 2%
3.June 7,2019.Sold goods to Ram of list price Rs.20000 at trade discount of 10% and cash discount of 5%
4.June 8,2019.Mr. Rahul paid wages for the labour of Rs.800 in Cash
5.June 11,2019.Purchase Goods for Cash Rs. 2,000 and for Credit Rs. 10,000 from Khalid Retail Store.
6.June 12,2019.Sold Goods to Khan Brothers Rs. 12,000 and Cash Sales Rs. 5,000
7.June 14,2019.Khan brother says he can't pay us Rs.5,000.
8.June 18,2019.Received cash from khan brother against bad debt Rs. 5,000
9.June 20,2019.Nabil Bank balance Rs.1,50,000;
10.June 21,2019.Mr.Tarun Paid Salaries Expense Rs. 20,000
11.June 23,2019.Rohan Salary/(wages/rent) due was recorded Rs. 35,000 during the end of year.

12.June 24,2019.due Rs. 3,300 cash for an insurance policy covering the next 24 months.

Solution 0.3