Journal Entry Accounting Examples
The following Journal Entry example
A journal entry records accounting transactions of business throughout the accounting period. These entries are used to create ledgers and trial balances and later to create financial statements of the company. Such entries are intended to provide an overview of accounting entries. For example, if a company bought a car, the company’s assets would be increased by the value of the car. The cash account would be decreased as they used the cash to purchase the car.
First of all, business transactions are identified. Then the transactions must be analyzed as to which accounts are affected. Now, it can be recorded. It uses debits and credits to record the changes of transaction.
Let us see the top 6 examples of the journal entries in accounting:
Top 6 Examples of Journal Entries for Accounting
Example #1 – Revenue Journal Entries Accounting
Sales Journal Entry:
When sales are done on credit, journal entry for accounts receivable is debited and sales account is credited.
If cash sales happen, then the cash account is debited.
Allowance for Doubtful Accounts Entry:
At times customers are unable to pay. For such scenarios, setting up or adjustment for bad debt expense is done. For such entry, bad debt expense is debited and allowance for doubtful accounts is credited.
If in case such provisions are found, the doubtful accounts are debited and account receivable is credited.
Example #2 – Expense Journal Entries Accounting
Journal Entry for Accounts Payable:
In this case, the related asset or expense account is debited and the journal entry for the payable account is credited.
4.9 (1,067 ratings)
When payment is to account payable, accounts payable is debited and cash account is credited.
Journal Entry for Payroll:
In the case of payroll expenses, the wages expense, these accounts are debited, and the cash account is credited.
Journal Entry for Accrued Expense:
In this case, the applicable expense is debited and accrued expense is credited.
Journal Entry for Depreciation:
Petty Cash Journal Entry:
To establish a petty cash fund, petty cash is debited and cash account is credited.
Example #3 – Asset Journal Entries Accounting
Cash Reconciliation Entry:
There is usually a debt to the bank fees account, Office Supplies Account, Interest Account, etc. to recognize charges made by the bank, with a credit to the cash account.
Journal Entry for Prepaid Expense Adjustment:
In this case, the expense account is debited and the prepaid expense account is credited.
Purchased Inventory Journal Entry:
If the inventory is purchased worth $90000, $10000 in cash and $80000 on the account.
Journal Entry for the Fixed Asset:
When a fixed asset is added, the applicable fixed asset account is debited and accounts payable is credited.
Purchased Equipment for $600,000 in Cash.
Fixed Asset De-Recognition Entry:
When a fixed asset is removed, the accumulated depreciation account is debited and the applicable fixed asset account is credited. There could be a chance of a gain or loss in this regard.
Example #4 – Journal Entries for Liability Accounting
If a debt is owned but not yet billed, accrued liability entry is to be made. In this case, the accrued expense is a debit to the expense account. Accrued liabilities account is credited.
Example #5 – Journal Entries for Equity Accounting
Once dividends are paid, this is a debit to the dividends payable account and a credit to the cash account.
Debt Raised from Bank Entry:
If the company borrowed $300,000 from the bank, the journal entry would look like:
Example #6 – Transaction with Journal Entries
Let us see another example of accounting transactions and their respective journal entries.
The journal entries for the above transactions are:
We can conclude that companies’ financial statements would be inaccurate and a complete mess without proper journal entries. Whenever a transaction occurs in a company, two accounts are affected. One of them is credited and other is debited.
In the absence of accurate journal entries, companies may be assumed to be having more debt or less debt or as more profitable or less profitable than reality. Negative consequences can be drawn from false, misleading information. As a result, companies and investors can end up making bad decisions. We usually debit assets, expenses, drawings and credit liabilities, revenue, owner’s Equity.
This has been a guide to Journal Entries Examples in Accounting. Here we discuss Top 6 practical examples of journal entries along with detailed explanations. You may learn more about accounting from the following articles –