Journal entries in accounting [Basics]

Journal is one of the most important book of account, in which business transactions are recorded systematically. In layman’s term, we can say it is a book of daily records.

Journal Entries

When a businessman completes a business transaction, he records it in the rough or waste book in a short and summarized form. Then this business information from the rough book is recorded in a journal. Thus, business transactions are recorded in a journal on the basis of the rough book or waste book.

The word journal is derived from the latin word “jour”, which means “a day”. Accordingly, a journal is a book of daily records. Journal is one of the main books of original entry in which transactions are recorded for the first time, from source documents. Therefore it is also known as the book of original entry.

This whole process of recording entries in summarized form is known as journalization.

Before we move ahead make sure that you know the Three Golden Rules of Accounting. It is necessary to understand what to debit and what to credit.

RelatedClassification of Accounts

Let’s move to some basic journal entries with examples.

Journal Entries: Example 1

  1. Mr. A started business with cash $1000.
  2. Mr A open a bank account in X bank by depositing $800.
  3. Mr. A brought goods worth $800.
  4. Mr A sold goods worth $400.

In the Books of Mr. A

1Cash A/c. ………. Dr.
To Capital A/c.
(Being cash invested in Business)

2X Bank A/c. ………. Dr.
To Cash A/c.
(Being cash is deposited in Bank A/c.)

3Goods A/c. ………. Dr.
To Cash A/c.
(Being the goods purchased on cash)

4Cash A/c. ………. Dr.
To Goods A/c.
(Being the goods sold on cash)

 Total $30,000$30,000

Working Note: N/A

This is how journal entries are made in the journal book.

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  1. Sanjay Vijay Rajak Avatar
    Sanjay Vijay Rajak

    Please share some more examples.

    1. AtulHost Avatar

      Challenge accepted. I will share some more in coming days. Stay tuned.

  2. Manisha Kohli Avatar
    Manisha Kohli

    Good example to clear basic journal entry concept.

    1. AtulHost Avatar

      Thanks for your feedback Manisha. You can subscribe us for more updates.

  3. Gurdeep Sharma Avatar
    Gurdeep Sharma

    Very best examples for freshers. Point of view and the base is clear now for accounts. Thanks.

    1. AtulHost Avatar

      Most welcome to the kind feedback.

  4. Vishwa lakshmi Avatar
    Vishwa lakshmi

    Hi Atul,

    I do have a doubt we will pass journal entry in tally as mentioned below can you please give explanation for below enrties

    Profeesional fee....dr 15,000
    SGST@9% ........dr 1,350
    CGST@9%........dr 1,350
    TDS on 1,500
    Party 16,200

    1. AtulHost Avatar

      It is some kind of legal or professional expenses.