Examples of Journal Entries

To study the journal entries example is obviously a good way to get thorough knowledge of journal entries. Just learn the rules of double entries and to make some journal entries of simple purchase and sale transactions is not enough for becoming the master in accounting. You should know every type of transactions and journal entries. You also know how to pass the journal entry, what account will be debited and what account will be credited in this journal entry.

Following are some examples of  translations and Journal Entries, its analysis is done on the basis of rules of double entry system:

  1. Proprietor has brought Cash as capital Rs. 1,00,000

a) What comes in business will be debited

Cash has come into business so cash account will be debited in journal entry.

b) Who is giver will be credited

Proprietor is giver of cash to business but he has business motive and he gives the money to business as capital.

Journal Entry :

Cash Account – 1,00, 000 DR (DEBIT)

Proprietor’s capital Account – 1,00,000 CR ( Credit )

2. Rs. 5,0000 Goods purchased from Suresh on credit basis

a) What comes in business will be debited

Goods have come in business, so its financial value will be debited with the name of purchase account.

b) Name of person is given from whom we bought the goods on credit

Who is giver, will be credited.

Suresh is giver, so his account will be credited.

Journal Entry :

Purchase account – 50,000 debit

Suresh account – 50,000 credit

3. Rs. 16,800 furniture purchased through cash

a) What comes in business will be debited. In this transaction, furniture came in business, so we will open furniture account in the debit side of journal entry.

b) Cash is also asset and we paid for purchasing of furniture. 2nd rule’s second part will be applied.

Journal Entry :

Furniture Account – Rs.16,800 Debit

Cash Account – Rs.16,800 Credit

4. Rs. 8500 Goods sold on credit to Kumar

a) Kumar is receiver of goods, so his personal account will be debited.

b) Goods go out, so, goods or sale account will be credited.

Journal Entry :

Kumar Account – Rs.8,500 Debit

Sale Account – Rs.8,500 Credit

5. Rs.12,000 shop Rent paid to landlord

a) Rent is an item of expenses, so it will be debited.

b) Cash is an item of asset and it goes out, so it will be credited.

Rent Account – 12000 Debit

Cash Account – Rs.12000 Credit

8. Rs.4,500 Commission received in the form of cash

a) Cash comes in, so cash account will be debited.

b) Commission is an item of income, so commission account will be credited.

Cash Account – Rs. 4500 Debit

Commission Account – Rs. 4,500 Credit

9. Rs.55,000 Cash deposited into bank

a) Bank is receiver of cash, so bank account will be debited.

b) Cash goes out, so cash account will be credited.

Bank Account – Rs55,000 Debit

Cash Account – Rs.55,000 Credit

10. Rs. 22,000 Cash withdrawn from bank for office use

a) Cash comes in the business, so cash account will be debited.

b) Bank is the giver, so bank account will be credited.

Cash Account – Rs.22,000 Debit

Bank Account – Rs.22,000 Credit

11. Rs. 30,000 Cash drawn by proprietor from business for personal use

a) Proprietor is the receiver of cash, but business will give him as drawing which is decrease in his capital, so proprietor’s drawing account will be debited.

b) Cash goes out, so cash account will be credited.

Drawing Account – Rs.30000 Debit

Cash Account – Rs.30,000 Credit

12. Rs. 6500 Goods given as charity

a) Charity is an expense of business, so it will be debited.

b) Goods go out, so goods or purchase account will be credited.

Charity Account – Rs.6500 Debit

Purchase Account – Rs.6500 Credit

13. Bad Debts written off Rs. 5550

a) Bad debt is loss of business due to not paying the amount by our debtors, so it will be debited.

b) There is decrease in debtor. We are applying what goes from business, debtor is also our asset, if he does not pay, and it means this asset has gone from business, so its account will be credited.

Bad Debt Account – Rs.5,550 Debit

Debtor Account – Rs.5550 Credit

14. Bad debts recovered in cash Rs. 3800

a) Cash comes in, so cash account will be debited.

b) Bad debts recovered are an income, so its account will be credited.

Cash Account – Rs.3800 Debit

Bad Debts Recovered Account – Rs.3800 Credit

15. Carriage paid on machinery ( expenses on purchase of asset ) Rs. 1000

a) Carriage on purchase of machinery is part of cost of machinery, so machinery account will be debited.

b) Cash goes out, so cash account will be credited.

Machinery Account Debit 1000

Cash Account Credit 1000

16. Depreciation on fixed assets Rs. 500

a) Depreciation on fixed assets is the loss of business, and every loss will be debited.

b) There is a decrease in asset and we will apply what goes from business on it. So, asset account will be credited.

Depreciation Account Debit 500

Fixed Asset Account Credit 500

17. Carriage paid on the behalf of buyer Rs. 1000

a) This is not our expenses, but this is increase our current asset and its name is debtor, so we will apply what comes in rule on it.

b) Cash goes out, so cash account will be credited.

Debtor account Debit 1000

Cash Account Credit 1000

18. Goods given as free samples Rs. 1500

a) Goods are given for advertising, advertising is an expense of business, and so advertising account will be debited.

b) Goods go out at the cost price, so goods or purchase account will be credited.

Advertising Account Debit 1500

Purchase Account Credit 1500

19. Interest allowed on capital Rs. 600

a) Interest is an expense of business, so it will be debited.

b) There is an increase in the amount of capital. Capital is liability account, so increase in the amount of capital will be also shown in the credit side of journal entry.

Interest on capital Account Debit 600

Capital Account Credit 600

20. Interest charged on drawings Rs. 500

a) Decrease in capital or increase in drawing will be debited.

b) Interest on drawing is an income of business.

Drawing Account Debit 500

Interest on drawing account Credit 500

21. Bank charges or interest charged by bank Rs. 200

a) Bank charges are the expenditures of business, so it will be debited.

b) There is decrease in bank balance, so bank account will be credited.

Bank charge Account Debit 200

Bank account Credit 200

22. Goods lost by fire Rs. 800

a) Goods lost by fire are the loss of business, so loss by fire account will be debited.

b) There is decrease in goods or stock at cost, so purchase account will be credited.

Loss by Fire Account Debit 800

Purchase Account Credit 800

23. Goods insured and a claim is admitted by insurance company in full or in part.

a) Insurance company will be our debtor. Transaction has increase in debtors because we have to get money from insurance company. So, this account will be debited.

b) Decrease in loss by fire, so this account will be credited.

Insurance company Account Debit XXXX

Loss by Fire Account Credit XXXX

24. Loan taken Rs. 1,00,000

a) Cash comes in, so cash account will be debited.

b) Lender is giver, so his loan account will be credited.

Cash Account Debit 1, 00,000

Lender’s loan Account Credit 1,00,000

25. Interest paid on loan. Rs. 1000

a) Interest is an expense of business, so it will be debited.

b) Cash goes out, so it will be credited.

Interest on loan Account Debit 1000

Cash Account Credit 1000

26. Interest on loan due but not paid in cash. Rs. 500

a) Interest is an expense of business, so it will be debited.

b) Increase in creditors will be credited in journal entry.

Interest on loan Account Debit 500

Loan or Creditor Account 500

27. Investment purchased Rs. 50,000

a) Asset in the form of investment comes in, so investment account will be debited.

b) Cash goes out, so its account will be credited.

Investment Account Debit 50000

Cash Account Credit 50000

28. Cash stolen from office. Rs. 6000

a) Cash stolen from office is loss of business, so this account will be debited.

b) Cash goes out, so its account will be credited.

Loss by Theft Account Debit 6000

Cash Account Credit 6000

29. Cash paid to a creditor in full settlement ( When cash discount is received) Amount due to Akshay Rs. 5000 paid him Rs. 4950 in full settlement.

a) Decrease in creditors = Debit

b) Decrease in cash = Credit

c) Discount received is income of business = credit

Akshay Account Debit 5000

Cash Account Credit 4950

Discount Received Account Credit 50

30. Cash received from a debtor in full settlement (When cash discount is allowed). Amount receivable from santosh Rs. 1600, received from him Rs. 1570.

a) Increase in cash = Debit

b) Discount allowed is the loss of business = Debit

c) Decrease in debtors = credit

Cash Account Debit 1570

Discount Allowed Account Debit 30

Santosh Account Credit 1600