Journal
• Journal records all daily transactions of a business into the
order in which they occur.
• Journal:
• A book containing a chronological record of transactions.
• The books in which the transactions are recorded first.
• Hence, it is the book of Original Record.
• Journal does not replace but precedes the ledger.
• Journalising:
• The process of recording transaction in a journal, is termed as
journalising.
Dr. Suryakanta Nayak 1
Journal
JOURNAL
Date Particulars L.F. Debit Credit
(Rs) (Rs)
Dr. Suryakanta Nayak 2
Journal
• Purchased office Furniture of ₹ 90,000 on 2nd September 2023.
JOURNAL
Date Particulars L.F. Debit Credit
(Rs) (Rs)
2023 Furniture Account Dr. 90,000
Sep. 02 To Cash Account 90,000
(Being furniture purchased on cash)
Dr. Suryakanta Nayak 3
Transactions
• Purchased goods for cash ₹ 25,000.
• Sold goods for cash ₹ 20,000.
• Purchased goods from Mr. Bansal for cash ₹ 10,000.
• Sold goods to Mr. Charles ₹ 8,000 on credit.
• Purchased furniture for ₹ 6,000
• Paid rent ₹ 1,500
• Paid wages
• Purchased goods from Ajit on credit
• Dividend received
• Machinery sold
• Outstanding for salaries
Dr. Suryakanta Nayak 4
Journal
• Purchased goods for cash ₹ 25,000. (Purchase Dr. and Cash Cr.)
• Sold goods for cash ₹ 20,000. (Cash Dr. and Sales Cr.)
• Purchased goods from Mr. Bansal for cash ₹ 10,000. (Purchase Dr.
and Cash Cr.)
• Sold goods to Mr. Charles ₹ 8,000 on credit. (Charles Dr. and Sales
Cr.)
• Purchased furniture for ₹ 6,000 (Furniture Dr. and Cash Cr.)
• Paid rent ₹ 1,500 (Rent Dr. and Cash Cr.)
• Paid wages (Wages Dr. and Cash Cr.)
• Purchased goods from Ajit on credit (Purchases Dr. and Ajit Cr.)
• Dividend received (Cash Dr. and Dividend Cr.)
• Machinery sold (Cash Dr. and Machinery Cr.)
• Outstanding for salaries (Salary Dr. and Outstanding Salary Cr.)
Dr. Suryakanta Nayak 5
6
Discount
• Cash or bank account and discount account go together.
• It means if cash is debited, the discount account should
also be debited.
• In case the cash is credited, the discount account should
also be credited.
• When cash is received, discount is allowed to debtors.
• When cash is paid, discount is earned from the
creditors.
Dr. Suryakanta Nayak 7
Journalising
• Ramesh started business by introducing the following
assets:
Cash ₹ 10000
Furniture ₹ 20000
Plant ₹ 30000
Goods ₹ 20000
Dr. Suryakanta Nayak 8
Journalising
• Ramesh started business by introducing the following assets:
Cash ₹ 10000
Furniture ₹ 20000
Plant ₹ 30000
Goods ₹ 20000
Cash a/c Dr. 10000
Furniture a/c Dr. 20000
Plant a/c Dr. 30000
Purchases a/c Dr. 20000
To Ram’s Capital a/c 80000
(Being commencement of business with cash and other assets)
9
Journalising
• Ramesh purchased goods of the invoice of ₹ 10,000 at
10% trade discount from Suresh.
Dr. Suryakanta Nayak 10
Journalising
• Ramesh purchased goods of the invoice of ₹ 10,000 at
10% trade discount from Suresh.
• Purchases a/c Dr. 9000
To Suresh a/c 9000
Dr. Suryakanta Nayak 11
Journalising
• Ramesh supplied goods costing ₹ 1000 to Suresh at
invoice price of 10% above cost at a trade discount of
5%.
Dr. Suryakanta Nayak 12
Journalising
• Ramesh supplied goods costing ₹ 1000 to Suresh at
invoice price of 10% above cost at a trade discount of
5%.
• Suresh a/c Dr. 1045
To sales a/c 1045
Dr. Suryakanta Nayak 13
Journalising
• Ramesh installed further machinery of ₹ 20000 and
paid wages for installation ₹ 2000. The machinery was
supplied by m/s surya brothers.
Dr. Suryakanta Nayak 14
Journalising
• Ramesh installed further machinery of ₹ 20000 and
paid wages for installation ₹ 2000. The machinery was
supplied by m/s surya brothers.
• Machinery a/c Dr. 22000
To Cash a/c 2000
To Surya brothers a/c 20000
Dr. Suryakanta Nayak 15
Journalising
• Ramesh withdrew goods for personal use costing ₹
5000 (sale value ₹ 6000)
Dr. Suryakanta Nayak 16
Journalising
• Ramesh withdrew goods for personal use costing ₹
5000 (sale value ₹ 6000)
• Drawings a/c Dr. 5000
To Purchases a/c 5000
Dr. Suryakanta Nayak 17
Journalising
• Ramesh distributed goods costing ₹ 2000 (sale value ₹
2500) as free samples.
Dr. Suryakanta Nayak 18
Journalising
• Ramesh distributed goods costing ₹ 2000 (sale value ₹
2500) as free samples.
• Advertisements a/c Dr. 2000
To Purchases a/c 2000
Dr. Suryakanta Nayak 19
Journalising
• Ramesh sold goods to Mr. Dinesh for ₹ 5000.
Dr. Suryakanta Nayak 20
Journalising
• Ramesh sold goods to Mr. Dinesh for ₹ 5000.
• Dinesh a/c Dr. 5000
To Sales a/c 5000
Dr. Suryakanta Nayak 21
Journalising
• Dinesh became insolvent and the whole money due
from him was considered as bad debt.
Dr. Suryakanta Nayak 22
Journalising
• Dinesh became insolvent and the whole money due
from him was considered as bad debt.
• Bad debt a/c Dr. 5000
To Dinesh a/c 5000
Dr. Suryakanta Nayak 23
Journalising
• Amount due from Dinesh earlier written off bad debts
recovered in full.
Dr. Suryakanta Nayak 24
Journalising
• Amount due from Dinesh earlier written off bad debts
recovered in full.
• Cash a/c Dr. 5000
To Bad debt recovered a/c 5000
Dr. Suryakanta Nayak 25
Ledger Posting and Trial Balance
Dr. Suryakanta Nayak 26
Ledger Posting
• Classifying of the recorded transactions is done in the Ledger.
• Ledger:
• It is a book which contains various accounts.
• It is a set of accounts.
• It contains all accounts of the business enterprise whether personal, real or
nominal.
• Posting:
• It means transferring the debit and credit items from the journal to the
respective accounts in the ledger.
• The L.F. (Ledger Folio) column in the journal is used at the time when debits and
credits are posted in the ledger.
Dr. Suryakanta Nayak 27
Ledger Folio
• The page number of the Ledger on which the posting has been
done is mentioned in the L.F. column of the journal.
Dr. Suryakanta Nayak 28
Relationship Between Journal and Ledger
• Journal is the book of first entry or original entry while
Ledger is the book of second entry. (transactions are recorded
first of all in the Journal and then they are posted to the Ledger)
• Journal records transaction in a chronological order, while
ledger records transactions in an analytical order.
• Journal is more reliable as compared to the Ledger since
Journal is the book of original entry.
• The process of recording transactions in Journal is termed as
Journalising while the process of recording in ledger is called
as Posting. Dr. Suryakanta Nayak 29
Rules Regarding Posting
• Separate accounts should be opened in the Ledger for posting
transactions relating to different accounts recorded in the
journal.
• The concerned account which has been debited in the journal
should also be debited in the Ledger.
• The concerned account which has been credited in the journal
should also be credited in the Ledger.
Dr. Suryakanta Nayak 30
Use of the Word “To” and “By”
• The word “To” is used with the accounts which appear on the
debit side of a Ledger account.
• The word “By” is used with accounts which appear on the
credit side of the Ledger account.
Dr. Suryakanta Nayak 31
Ledger
Dr. Account Cr.
Date Particulars Amount (₹) Date Particulars Amount (₹)
Dr. Suryakanta Nayak 32
Ledger
Dr. Cash Account Cr.
Date Particulars Amount (₹) Date Particulars Amount (₹)
To Capital a/c **** By Suresh a/c ***
To Ramesh a/c *** By Salary a/c ***
Dr. Suryakanta Nayak 33
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