JOURNAL ENTRIES

Journal Entries

                “Journal” is the word  came from Latin word, It means daily recorded book. Recording is the basic function of accounting.

                “Entry” means a summary of business transaction. Journal entries also called prime entries, because the transactions of business starts from this book only.

Golden - Rules for journal entries

            Accounts broadly divided into two categories. They are 

(i) Personal Accounts 

(ii) Impersonal Accounts 

Again Impersonal Accounts divided into a) Real Account b) Nominal Account.

Various rules and types of Accounts showed in a diagram format as follows

Personal Accounts

Natural Personal Accounts : Sreenivas , Raju, Ramu, Shoban etc.

Artificial Personal  Accounts: R.S.Brothers, J.C Brothers, Bomma College etc.

Representative Personal Accounts: Prepaid Salaries, outstanding Wages etc.

Rule

                                                    Debit the Receiver        and              Credit the Giver

                                                                                 Ex: Rs 5,000/- Deposited in  S.B.H

                                                                     S.B.H A/c             Dr           5,000

                                                                                                   To Cash A/c                        5,000

Impersonal Accounts

Real Account: Cash, Buildings, Land, Machinery etc.

Rule

    Debit what comes into the  and  Credit what goes out from org.

                                                                                                                  

                                                                         Ex: Computer  Purchased Rs 20,000/-

                                                                               Computer A/c   Dr           20,000

                                                                                                    To Cash A/c                        20,000

Nominal Account: Salaries paid, commission received, Discount allowed etc

Rule

             Debit all expenses and losses     & Credit all incomes and gains

Entries in Personal Accounts

1.       Rs 20,000/- deposited in Andhra Bank on 23-06-2010

2.       Rs 20,000/- withdrawn from I.C.I.C.I on 24-06-2010

3.       Srinivas commenced business with cash Rs 1,00,000

4.       Received cash from Goyal  Rs 8,000 on account

5.       Issued cheque to shoban Rs 7,500

6.       Cash withdrawn from office for personal use Rs 1,000 and withdrawn Rs 15,000 from Bank

7.       Goods withdrawn for personal use Rs.2,000

8.       Goods returned to Ajay 2,000

9.       Goods returned by Deepak 1500

10.   Received cash from Vishwanadam, Allowed discount 4,400 and 100.

11.   Paid Raja gopalan by cheque and discount allowed by him 4,900 and 100 respectively

12.   Outstanding for Salaries Rs 3,000

13.   Paid to Suresh Rs 1500

Compound Entries: Some times there are a number of transactions on the same date relating to one particular account or of one particular nature. Such transactions may be recorded by means of a single Journal entry instead of passing several Journal entries.

14.   Payment made to Ram Rs 1,000. He allowed a cash discount of Rs 50.

15.   Cash received from sreenivas Rs 800 and allowed him Rs 50 as discount.

16.   A running business was purchased by mohan with the following Assets & Liabilities.

Cash Rs 2,000; Land Rs 4,000; Furniture Rs 1,000; Stock Rs 2,000; Creditors Rs 1,000; Bank overdraft Rs 2,000

“Journal Book”

Dr                                                                                                                                                                           Cr

Date	Particulars	L.F	Debit	Credit
23-06-10	Andhra Bank A/c           Dr To Cash A/c [Being cash deposited in Andhra Bank]		20,000	20,000
24-06-10	Cash A/c          Dr To ICICI A/c [Being cash withdrawn from ICICI]		20,000	20,000
25-06-10	Cash  A/c                                          Dr To Sreenivas Capital     A/c   [Being commencement of Business]		1,00,000	1,00,000
26-06-10	Cash  A/c                      Dr To Goyal  A/c [Being cash received from Goyal]		8,000	8,000
27-06-10	Shobhan   A/c                    Dr To Bank  A/c [Being cheque issued to Shobhan]		7,500	7,500
28-06-10	Drawings  A/c                Dr To Cash  A/c [Being cash withdrawn from office for personal use]		1,000	1,000
28-06-10	Drawings  A/c                    Dr To Bank  A/c [Bing cash withdrawn from bank for personal use]		15,000	15,000
29-06-10	Drawings  A/c                 Dr To Goods  A/c [Being goods withdrawn for personal use]		2,000	2,000
30-06-10	Ajay  A/c                                          Dr To Purchase Returns A/c [Being purchase returns to Ajay]		2,000	2,000
30-06-10	Sales Returns  A/c                Dr To Deepak  A/c [Being Sales Returns from Deepak]		1,500	1,500
01-07-10	Rajagopal A/c                Dr To Bank A/c [Being cheque issued to Raja Gopal]		4,900	4,900
01-07-10	Rajagopal  A/c             Dr To Discount A/c [Being Discount allowed by him]		100	100
02-07-10	Cash  A/c                                  Dr To Vishwanadam  A/c [Being cash received from vishwanadam]		4,400	4,400
02-07-10	Discount A/c                            Dr To Vishwanadam A/c [Being Discount allowed to vishwanadam]		100	100
03-07-10	Salaries  A/c                                          Dr To Outstanding Salaries A/c [Being Salaries outstanding ]		3,000	3,000
04-07-10	Suresh  A/c                Dr To Cash A/c [Being cash paid to Suresh]		1,500	1,500
05-07-10	Ram  A/c                               Dr To Cash        A/c To Discount A/c [Being payment to Ram Rs 1,000 and he allowed Rs 50 as discount]		1,050	1,000 50
06-07-10	Cash  A/c                            Dr Discount  A/c                    Dr To Suresh  A/c [Being cash received from Suresh Rs 800 and discount allowed Rs 50]		800 50	850
07-07-10	Cash  A/c                      Dr Land A/c                      Dr Furniture  A/c             Dr Stock A/c                     Dr To Creditors   A/c To Bank O.D   A/c To Capital       A/c [Being commencement of Business by mohan by taking over a running business] Note: The difference between Assets & Liabilities is called Capital.		2,000 4,000 1,000 2,000	1,000 2,000 6,000