Accounting Journal Entries

Journal
Accounting journal is the recording of transactions in order of occurrence.

 

Journal Entries
Journal entry is an entry to the journal.
Journal entries include at least one debit entry and at least one credit entry.
This method is called as the double entry recording system.
Increases in debit accounts are recorded on the debit side of a journal entry.
Decreases in debit accounts are recorded on the credit side.
Increases in credit accounts are recorded on the credit side and decreases in credit accounts are recorded on the debit side.
Assets and expenses are debit accounts.
Liabilities, equity and revenues are credit accounts.
In all journal entries, the total of debit account amounts should be equal to the total of credit account amounts.
When the debit side total is same as the credit total, a journal entry is balanced.

 

Journal Entry Examples
Entity A had the following transactions in December 20×1:
1. December 2, Owner P created a new Entity B and invested $140,000 in cash.
2. December 9, Entity B borrowed $80,000 from a bank.
3. December 11, Entity B purchased 3,000 units of merchandise at $10 per unit in cash.
4. December 16, Entity B purchased 2,000 units of merchandise at $10 per unit on credit.
5. December 18, Entity B purchased equipment and paid $70,000 in cash.

 

1. Investment by owner

2. Borrowings from a bank

3. Purchase of merchandise in cash

4. Purchase of merchandise on credit

5. Purchase of equipment in cash

General Ledger

Balance Sheet

Review Questions

 

1. In which order are transactions recorded in the journal?
Transactions are recorded in the journal as they occur.
2. When is a journal entry balanced?
When the total on debit side is equal to the total on the credit side
3. What is the name of the left side of a T-account?
Left side of a T-account is called debit.
4. What is the name of the right side of a T-account?
Right side of a T-account is called credit.

 

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