Tuesday, 23 December 2014

Example of Journal Entries

Example of Journal Entries

The General Entries is the language of accounting and transaction are recorded in term of debit and credit.  All General entries are recorded on the bases of basic rules of debit and credit described as under

Item
Decision bases
Debit /Credit
Asset and Expenses
increases
Debit
Asset and Expenses
Decrease
Credit
Income and Liabilities
Increase
Credit
Income and Liabilities
Decrease
Debit
Equity or Capital
Increase
Credit
Equity or Capital
Decrease
Debit

Learning point

The rule of debit and credit is same for asset and expenses
The rule of debit and credit is same for income, liabilities and equity

Example of Expenses Journal entry

ABC & CO paid a salary of $ 200 to Mr. Ali Khan for the month of March, 2012 and also paid a rent for the shop $ 3000 for the month of March, 2012. Salary and rent account will be debited being increase in expenses and cash account is credited due to decrease in asset.

Date
Particulars
Debit
Credit
March,2012
Salary
200

March,2012
  Cash

200
March,2012
Rent a/c
300

March,2012
  Cash

300

Example of Journal entry for asset purchases

ABC & Co purchase furniture of $ 500 in cash from the market. Furniture account will be debited being increase in asset and cash account is credited being decrease in asset. In this example one asset increasing and other is decreasing.

Date
Particulars
Debit
Credit
March,2012
Furniture a/c
500

March,2012
  Cash

500




Example of journal entry for income

ABC & Co sold sugar of $ 600. The cash account will be debited because of increase in asset and sales account will be credited due to increase income.

Date
Particulars
Debit
Credit
March,2012
Cash a/c
600

March,2012
  Sales

600

Example of journal entry for Liability

ABC Company has made purchases of $ 3000 from XYZ & Co. But payment shall be made in next year. According to accrual rule of accounting transaction are recorded as and when they incur and not bases of the cash payment.

Date
Particulars
Debit
Credit
March,2012
Purchases a/c
3,000

March,2012
    XYZ & Co

3,000

Example of journal entry for equity

ABC Company directors invested $ 10,000 in the company. Equity is just another type of liability which is to be paid by the business in long term this is the reason that rule of debit and credit are same for equity and liability.

Date
Particulars
Debit
Credit
March,2012
Cash a/c
10,000

March,2012
    Equity

10,000


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