Journal Example

Illustration 2.

2012$
December

 

1

1

3

6

13

15

 

20

25

30

 

Jack started business with cash

Deposited into bank

Bought goods on cash

Withdrawn cash from bank

Sold goods to Dimple on credit

Received cash from Peter

Discount allowed to him

Dimple paid cash

Cash sales made during the month

Rent paid for the month of December

Salary paid for the month of December

10000

7000

500

100

150

145

5

150

1000

50

75

 

Journalise the above transactions

 

Solution

DateParticularsL.F.Amount Dr ($)Amount Cr. ($)
(2006)

Dec. 1

 

Cash A/c                                                     Dr.

To Capital A/c

 

1

4

 

10000

 

 

10000

Dec  1Bank A/c                                                     Dr.

To Cash A/c

(being cash deposited into bank)

5

1

 

7000 

7000

Dec  3Purchase A/c                                             Dr.

To cash A/c

(Being goods purchased on cash)

7

1

 

500

 

 

500

 

Dec 6Cash A/c                                                     Dr

To Bank A/c

(Being cash withdrawn from bank)

1

5

 

100

 

 

100

 

Dec 13Dimple                                                            Dr

To Sales A/c

(Being sold to Dimple on credit)

9

7

 

150 

150

Dec 15Cash A/c                                                      Dr.

To Discount A/c Dr.

To  Peter A/c

(Being cash received from Peter and discount allowed to him)

1

12

10

 

145

5

 

 

 

150

Dec 20Cash A/c                                                     Dr

To Dimple

1

9

150 

150

Dec 25Cash A/c                                                      Dr

To Sales A/c

(Being goods sold for cash)

1

7

1000 

1000

Dec 30Rent A/c                                                        Dr.

Salaries A/c                                                  Dr.

To Cash A/c

(Being the amount paid for rent and salary for the month of Decuary)

13

14

1

50

75

 

 

 

125

 

 

Illustration 3.
Following are some examples of  translations and Journal Entries, we have analysed each entry with golden rules to understand it better

  1. Cash brought in by proprietor as capital $ 30000a) debit what comes in
    Cashcame in business; cash account will be debited in journal entry.b) credit the giver
    Proprietor gives cash to business

Journal Entry
Cash Account Debit 30,000                                
         To Capital Account 30,000

2. Goods purchased on credit from Monty for $ 5,000

a) debit what comes in

Goods have come in business
b) credit the giver

Monty is giver, so its account will be credited

Journal Entry.
Purchase account Dr. 5000
          To Monty                    5000

3. Furniture purchased for cash $ 10000

a) debit what comes in

furniture came in business
b) Cash is what goes out

Entry
Furniture Account Dr. 10,000
        To Cash Account         10,000

4. Goods sold on credit to Deven $ 1600

a) Deven is receiver of goods (DEBIT)
b) Goods go out (CREDIT)

Deven Account Dr. 1600
   To Sales Account               1600

5. Goods purchased for cash $ 4500

a) Goods come in, so purchase account DEBIT
b) Cash goes out, so cash account will be CREDIT

Purchase account Dr 4500
        To Cash account                      4500

6. Goods sold for cash $ 2100
a) debit what comes in, Cash comes in,
b) credit what goes out, Goods go out
Cash account Dr. 2100

      To Sale account 2100

7. Rent paid for shop to landlord $3000

a) debit all expenses, Rent is an item of expense,it will be debited.
b) credit what goes out Cash is an item of asset and it goes out

Entry
Rent Account Dr.  3000
      To Cash Account       3000

8. Commission received in cash $2000
a) debit what comes in ,Cash comes in, cash A/c will be debited.
b) Credit all incomes and gains, Commission is an item of income Credit it

Journal
Cash Account   Dr  2000
        To Commission Account  2000

9. Cash deposited into bank $5000

a) Bank is receiver of cash, so bank account will be debited.
b) Cash goes out, so cash account will be credited.

Bank Account Dr. 5000

     To Cash Account     5000

10. Cash withdrawn from bank for office use $ 2000

a) debit what comes in, Cash comes in the business
b) Bank is the giver, so bank account will be credited.

Cash Account Dr  2000

      To Bank Account  2000

11. Cash drawn by proprietor from business for personal use $ 3000

a) Debit the Receiver,Proprietor is the receiver of cash
b) Cash goes out, so cash account will be credited
Entry
Drawing Account Dr. 3000

        To Cash Account            3000

12. Goods given as charity $ 1000

a) Debit all expenses, Charity is an expense of business
b) Goods go out, so purchase account will be credited.
Entry
Charity Account Dr. 1000
          To Purchase Account 1000

In this way we have cleared the art of passing journal entries along with the explanation of each entry.

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