Basic Accounting Journal Entries


Previous lesson: The Accounting Cycle
Next lesson: Accounting Journals






Accounting journal The journal is the book of first entry.

It used to be an actual book that the bookkeeper would use to make accounting entries.

These days bookkeepers enter transactions on the computer using an accounting program.

Our recording in the journal is also called a journal or a journal entry.

The journals look like this:

Journals

Does this look at all familiar? It should – we have been doing this throughout the previous section on double-entry accounting.

Journals are simply debits and credits in chronological (date) order.

The purpose of journals is to keep a day-to-day record of a business and its transactions.

Each transaction also requires a brief explanation of the transaction (below the debit and credit). This explanation should accurately describe what took place, so that anyone who glanced at it for the first time could easily identify what occurred.

Each journal can also be matched to the relevant supporting document (such as a check stub or a receipt) by use of a cross-referencing code or folio number. This code or folio number simply cross-references between one document and another. If the first transaction above of $15,000 capital was made by issuing check number 38, then one could write ‘Ch-38’ (for example) under the folio number.

Journal entry

Using the folio number to match a journal entry to a source document would enable a person to easily trace the recorded transaction back to the source document and verify that the transaction actually took place (as evidenced by the source document).

Journals may also often include a cross-referencing code or folio number to cross-reference between the journal entries and the accounts (the next step). Each specific item, such as bank, would have its own folio number, and this would be used to cross-reference from the journal entry involving ‘bank’ to the banks’ account in the ledger (this will be covered in the next section). The folio numbers make it simple to trace information through the steps in the accounting cycle.

These cross-referencing numbers or codes would work like this:

Journal entries

‘Sal-1’ is the individual code for the ‘salaries’ account. ‘J-1’ is the code for ‘journal page 1’. One could thus follow information from the journal entry to an account in the ledger, or from an account in the ledger back to the journal entries.

There are actually various different types of journals, and in our next lesson we're going to see what they look like and how they work.




Previous lesson: The Accounting Cycle
Next lesson: Accounting Journals



Read Other Questions Relating to This Lesson
(along with their answers)

Click below to see questions and solutions on this same topic from other visitors to this page...

Name the Accounts Question 
Which accounts will be affected in the following transactions: 1. Receipts from cash costumers, P16, $420. 2. Received bill for gasoline used by …

Debit and Credit Abbreviations? 
Q: What are the abbreviations for Debit and credit? For example: Purchase A/c dr 0000 To Cash A/c ( ? ) …

Journal Entry Question:
Purchase with Personal Funds
 
On 25th March 2011 Mr. A purchased goods to the value of rs. 25000. Due to a shortage of funds in the business he paid the amount from his personal account. …

Journal Entry Question: Complex Capital Investment 
What is the journal entry for the following transaction: Mr. A starts his business by bringing $1000 cash, accounts receivable $500, furniture $1000 …

Journal Entry - Purchasing Goods 
Q: What is the journal entry for the following? Purchase goods from KJ Mehta for cash 5,000 Rupees

Journal Entries and Ledger Exercise 
Q: Mr Robert commenced business on 1st January, 2011 with a capital of $100,000 in cash. On the same date he opened the bank account in ADCB and deposited …

Journal Entry for Bad Debts? 
Q: What is the journal entry for bad debts?

Purchase Returns & Discounts Question 
Q: If I bought 3 units of merchandise on account and returned 1 due to defects, and was given a credit memo, what would the entry be? Debit: Credit …

Entry for Returned Cheque 
Q: Dear Sir, Can you please explain what will be the journal entry when a cheque we issued returned by bank and when they reproduce it? A: The …

Journal Entry Question 
Q: What's the entries for the following: 1 - Business started with cash 8,000 and plant & machinery 3,000. 2 - Stock purchase for sale (cash purchase)= …

Recording Retained Earnings
in the Journal
 
Q: How do you record retained earnings in the journal? A: Earnings means profits and retained earnings is all the net profits one accumulated. …

Journal Entry - Purchasing Furniture 
Record the entry for the folowing: Mr Bank purchased furniture in cash

Journal Entry for Overtime 
Q: Journal entry for overtime? A: Same as for regular salary expense, except that you could have this as a separate expense called "overtime." I.e. …

Journal Entry for Shares Issued 
Q: Make a journal entry for the following (assume that this occurred in the second half of 2009): a) issued additional shares for 1,200 in cash.

Capital Investment Journal Entry 
Ali starts the business with cash 10000

Accounting Journals:
Gift And Shipment
 
Q: What are the journal entries for the following: 1) Received gift of Rs 51,000 from father-in-law by check, which is deposited into business bank …

Journal Entries Question:
Perpetual Inventory System & Credit Card Transaction
 
Q: Prepare journal entries for the following credit card sales transactions using the perpetual inventory system: Sold $10,000 of merchandise, that …

Journal Entries Accrual Items Question 
Q: I want to know how do you make the following journal entries: 1. Outstanding expense - rs 3,000 2. Accrued interest - rs 4,000 3. An amount of …

Journal Entry - Payment on Account 
What would be the entries in the journal if the problem is like this: "made payments on account, 17,000.00" ?

Transactions Exercise (Malaysia) 
What accounts are affected by the following transactions (RM = Malaysian Ringgit = Malaysian currency): July 1 Purchased goods from CBA Bhd. RM 800 …

Journal Entries and T Accounts Exercise 
Create journal entries and draw up the T-accounts for the following transactions (Rs. = Rupees = Indian currency): 1. Harish started business with cash …

Folio Numbers 
What does b1 and n2 mean?

Calculate the gross profit/loss if: 
(Rs = Rupees, official currency of Pakistan, India and Sri Lanka. O/B = Opening Balance) Q:Sales Rs.60000 Cost of sales Rs.50000 O/B Stock Rs.10000 …

Deep knowledge of adjustment entries  
Q: Dear Sir, I want to get deep knowledge of adjustment entries. Hope you revert soon. Vakil Singh Bhatia A: Vakil, I do not cover adjusting …

Journal Entry:
Issuing Shares for Assets
 
Q: How would you write this in a journal entry: a company issued 2,660 shares of its common stock after $31,360 in cash and computer equipment with a …

Cash Book 
Q: What is the cash book?

Pay salaries - credit bank? 
When we pay salaries to the staff, why are we crediting the bank? Hussain, thank you for your question. Remember that the bank account is an …



Return from Basic Accounting Journal Entries to The Accounting Cycle

Return from Basic Accounting Journal Entries to Home Page

New! Comments

Have your say about what you just read! Leave me a comment in the box below.

Search this site:


All the lessons on this site, plus much, much more...

Accounting Basics Book

Available Now On


Subscribe to
The Student Accountant newsletter

Your E-mail Address
Your First Name (optional)
Then

Don't worry — your e-mail address is totally secure.
I promise to use it only to send you The Student Accountant.