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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