Introduction

Different kind of business transaction is recorded in the journal in sequential order. When the journal transaction is recorded in the journal it becomes journal entries. Journal entries are the systematic order record of the financial transaction in the journal. 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. There is example of two transactions and their journal entries:

Baisakh 10 Cash of Rs. 20000 received from ram.

Baisakh 11 Paid for the salary of Rs. 1000 and rent Rs. 1000.

Journal Entries

Date	Particular	L.F	Debit Rs.	Credit Rs.
Baisakh 10	Cash a/c.............................Dr.		20,000
	To Ram's a/c			20,000
	(Being cash received from Ram)
Baisakh 11	Salary a/c....................................Dr.		1000
	Rent a/c......................................Dr.		1000
	To Cash a/c			2,000
	(Being paid for salary and rent)
	Total		22,000	22,000

Simple and compound journal entry

Simple journal entry is composed of one debit and another credit account. The journal entry of Baisakh 10 shown above is the simple journal entry.

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 1

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.

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)
	Total		1,09000	1,09000

Example 2:

1. Goods purchased for cash Rs. 2500
2. Cash sales made for Rs. 1500
3. Goods purchased from Krishna on credit for Rs. 6000
4. Purchased goods from MeghaCenter for rs. 8000
5. Returned goods to Megha Center of rs 500 being defective
6. Sold goods to Barsha Centre for rs 6000
7. Returned goods by Barsha Center of Rs. 300 being damaged.

Date	Particular	L.F	Debit Rs.	Credit Rs.
a	Purchase a/c.............................Dr.		2500
	To Cash a/c			2500
	(Beinggoods 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 Krishna a/c			6000
	(Being goods purchased from krishna on credit)
d	Purchase a/c...................................Dr.		8000
	To Megha center a/c			8000
	(Being good purchased from Megha center on credit)
e	Megha Center a/c...................................Dr.		500
	To Purchase a/c			500
	(Being goods returned to Megha Center)
f.	Barsha Center a/c...................................Dr.		6000
	To Sales a/c			6000
	(Being goods sold Barsha Center on Credit)
g	Sales return a/c............................Dr.		300
	To Barsha Center a/c			300
	(Being goods return by Barsha Center)
	Total		37,300	37,300

 

Example 3:

Pass journal entries of the following transaction:

1. Purchased furniture for cash Rs. 20,000
2. Purchased a machine from Mahakali Stationary Ltd. for Rs. 45000
3. Sold an old computer for rs. 3000

Journal Entries

Date	Particular	L.F	Debit Rs.	Credit Rs.
1.	Furniture a/c.............................Dr.		20,000
	To Siddhi's a/c			20,000
	(Being purchased furniture)
2.	Machinery a/c....................................Dr.		45000
	To Mahakali Stationary Ltd a/c			45000
	(Being machine purchased from Mahakali Stationary Ltd.)
3.	Cash a/c................................Dr.		3000
	To office equipment a/c			3000
	(Being cash paid to siddhi)
	Total		68,000	68,000

Journaling compound transactions

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 1:

1. Received cash of Rs. 950 from Mikal and allowed discount of Rs.50
2. Paid cash of Rs.750 to Anuradha and received discount of Rs.50
3. Received cash of Rs.950 from Tritha in full settlement of his account Rs. 1000
4. Paid cash of Rs. 95 to Usha in full settlement of her account Rs.1000

Journal Entries

Date	Particular	L.F	Debit Rs.	Credit Rs.
1	Cash a/c.......................................Dr.		950
	Discount allowed a/c.......................Dr.		50
	To Mikal's a/c			1000
	(Being cash received from Mikal and allowed discount)
2	Anuradha's a/c....................................Dr.		800
	To Discount received a/c			50
	To Cash a/c			750
	(Being cash paid to Anuradha and received discount)
3	Cash a/c........................................................Dr.		950
	Discount allowed a/c........................................Dr		50
	To Tirtha's a/c			1000
	(Being cash received from Tritha and allowed discount)
4	Usha's a/c...................................Dr.		1000
	To Discount received a/c			50
	To Cash a/c			950
	(Being cash paid to usha and received discount)
	Total		3800	3800