Financial Accounting
Journal Entry
(From Basic to Advance)
Author
Name
Learning Outcomes
Introduction
Classification of Accounts
Rules of Debit and Credit
Identification of Accounts
Format of Journal
Simple Journal Entry
Entries for cash and trade discount
Compound Journal Entry
Journal
Entry
Introduction
In the daily life of the businessman , lots of transactions occur.
To have a proof of all the transactions , Businessman records it
in the Books of Accounts i.e. the Journal.
Journal is known as the Primary Book or the Books of Original
Entry.
Classification of Accounts
Journal
Entry
Classification of Accounts
There are 2 types of Accounts:-
Personal Account: Account of Any individual or Any legal
registered Entity
Impersonal Account: There are 2 types of Impersonal
Account:-
Real Account: All Assets except Debtors
Rules of Debit and Credit
Journal
Entry
Rules of Debit And Credit
Personal Account:
“Dr. the Receiver Cr. The Giver”
Real Account:
“Dr. What Comes In Cr. What Goes Out
Nominal Account:
“Dr. All the Expenses/Losses Cr. All Incomes/Gains”
Identification of Accounts
Journal
Entries
Identification Of Accounts
1. Cash 10. Purchases 19. Depreciation
2. Bank 11. Bad Debts Recovered20. Debtors
3. Outstanding salaries
12. Plant & Machinery
4. Sales 13. Capital
5. Accrued interest 14. Interest (Paid)
6. Leasehold property 15. Bank Overdraft
7. Drawings 16. Prepaid Rent
8. Discount Received 17. Carriage Inward
9. Bad Debts Written Off
18. Goodwill
Format of Journal
Journal Entry
FORMAT
Date/S No. Particulars LF Dr. Cr.
2021 Amount Amount
Cash A/C _______________Dr.
Jan 1 To Capital A/C
[Being Capital Introduced] 1,00,000 . 1,00,000 .
Simple Journal Entry
Journal
Entry
Simple Journal Entry
Simple Journal Entry consists of one debit account and one
credit account
Date/S No. Particulars LF Dr. Cr.
For eg.
2021 Amount Amount
Cash A/C _______________Dr.
Jan 1 To Capital A/C
[Being Capital Introduced] 1,00,000 . 1,00,000 .
Illustration 1
Simple Journal Entry - ILLUSTRATION
1
Journalise the following transactions:-
15,00
0
Solution (pg no. 1)
L
Date Particulars Dr. Cr.
F
Solution (pg no. 2)
L
Date Particulars Dr. Cr.
F
Solution (pg no. 3)
L
Date Particulars Dr. Cr.
F
Illustration 2
Simple Journal Entry - ILLUSTRATION
2
Journalise the following transactions:-
Solution (pg no. 1)
L
Date Particulars Dr. Cr.
F
Solution (pg no. 2)
L
Date Particulars Dr. Cr.
F
Solution (pg no. 3)
L
Date Particulars Dr. Cr.
F
Illustration 3
Simple Journal Entry - ILLUSTRATION
3
Journalise the following in the books of Amit Saini, Gurugram (Haryana):-
(i) Goods of ₹ 5,000 were used by him for domestic purpose.
(ii) ₹ 2,000 due from Sohan became bad debts.
(iii) Goods of ₹ 6,000 were destroyed by fire and were not insured.
(iv) Paid ₹ 4,000 in cash as wages on installation of machine.
(v) Sold goods to Arjun of Delhi of list price ₹ 20,000.
(vi) Received cash for a bad debt written off last year ₹ 2,000.
(vii) Goods of ₹ 1,000 given as charity.
(viii) Received ₹ 9,750 from Ramesh in full settlement of his account of ₹
10,000.
(ix) Paid rent in advance ₹ 4,000.
Solution (pg no. 1)
L
Date Particulars Dr. Cr.
F
Solution (pg no. 2)
L
Date Particulars Dr. Cr.
F
Solution (pg no. 3)
L
Date Particulars Dr. Cr.
F
Entries for Discount
Entries for
Discount
Types of Discounts
There are two types of discount:
Trade Discount
Cash Discount
Trade Discount
It is given on purchase of goods in large quantity and is
displayed in “%”.
It is used to attract customers so that they purchase large
quantity of goods
Entries for
Discount
Cash Discount
It is given on the cash payment of the transaction.
It’s entry is passed in Journal.
It is given to encourage cash payment from the customers.
It is recorded as Discount Allowed / Discount Recieved
depending upon the nature of the discount.
Compound Journal Entry
Journal
Entry
Compound Journal Entry
Compound Journal Entry is an accounting entry which affects
two or three accounts.
For eg.
Date/S No. Particulars LF Dr. Cr.
2021 Amount Amount
Cash A/C _______________Dr.
Bank
Jan 1 A/C________________Dr.
To Capital A/C 1,00,000 4,00,000 . 5,00,000 .
[Being Capital Introduced]
Illustration 1
Compound Journal Entry -
ILLUSTRATION 1
Pass Journal entries in the
₹
books of Hari Shankar & Co.
2017
from
April the
1 following: Commenced business with cash 50000
2 Purchased goods from Subhash 20000
4 Sold goods to Ramnath 15000
6 Ramnath returned defective goods 1000
10 Received cash from Ramnath and 13800
Discount allowed 200
12 Gopal sold goods to us 10000
14 Paid to Gopal in full settlement of his account after deducting 5% discount.
15 Paid Rent 10000
16 Paid Rent of Hari Shankar's residence 5000
18 Purchased goods for cash from Govind for ₹ 6,000 at 20% trade discount.
20 Purchased goods from Govind for ₹ 10,000 at 20% trade discount.
24 Paid to Govind ₹ 7,850 in full settlement of his account.
25 Paid to Subhash ₹ 4,750; discount received ₹ 250.
30
Paid Wages ₹ 400; Salaries ₹ 4,000; Advertisement expenses ₹ 800 and Trade expenses ₹
1,000.
Solution (pg no. 1)
L
Date Particulars Dr. Cr.
F
Solution (pg no. 2)
L
Date Particulars Dr. Cr.
F
Solution (pg no. 3)
L
Date Particulars Dr. Cr.
F
Solution (pg no. 4)
L
Date Particulars Dr. Cr.
F
Solution (pg no. 5)
L
Date Particulars Dr. Cr.
F
Solution (pg no. 6)
L
Date Particulars Dr. Cr.
F
Illustration 2
Compound Journal Entry -
Enter the following
ILLUSTRATION 2
transaction in the Journal
of
2017
Marutinandan Stores: Particulars
Jan. 10 Purchased goods from Ghanshyam of the list price of ₹ 50,000 at 15% trade discount.
13 Returned goods to Ghanshyam of the list price of ₹ 2,000.
15 Paid cash to Ghanshyam ₹ 40,000 in full settlement of his account.
20 Purchased goods from Raghu of the list price of ₹ 60,000 at 10% trade discount.
22 Returned goods to Raghu of the list price of ₹ 5,000.
25 Paid cash to Raghu ₹ 49,000 in full settlement of his account.
Solution (pg no. 1)
L
Date Particulars Dr. Cr.
F
Solution (pg no. 2)
L
Date Particulars Dr. Cr.
F
Solution (pg no. 3)
L
Date Particulars Dr. Cr.
F
