Journal Entry Examples

Updated on January 3, 2024
Article byWallstreetmojo Team
Edited byAshish Kumar Srivastav
Reviewed byDheeraj Vaidya, CFA, FRM

Top 10 Examples of Journal Entry

An example of a journal entry includes the purchase of machinery by the country where the machinery account will be debited, and the cash account will be credited.

The following journal entry examples in accounting provide an understanding of the most common journal entries used by business enterprises in their day-to-day financial transactions. It is the summary of debits and credits of financial transactions with a note of which accounts these financial transactions will affect, maintained in chronological order. Passing the journal entries is very much required as they allow the business organization to sort their transactions into manageable data.

Example #1 – Revenue

Sales Journal Entry:

When sales are made on credit, the journal entry for accounts receivableJournal Entry For Accounts ReceivableAccount receivable is the amount the company owes from the customer for selling its goods or services. The journal entry to record such credit sales of goods and services is passed by debiting the accounts receivable account with the corresponding credit to the sales account.read more is debited, and the sales account is credited.

Journal Example 1

If cash sales happen, then the cash account is debited.

Accounting for Financial Analyst (16+ Hours Video Series)

–>> p.s. – Want to take your financial analysis to the next level? Consider our “Accounting for Financial Analyst” course, featuring in-depth case studies of McDonald’s and Colgate, and over 16 hours of video tutorials. Sharpen your skills and gain valuable insights to make smarter investment decisions.

Allowance for Doubtful Accounts Entry:

At times customers are unable to pay. For such scenarios, setting up or adjustment for bad debt expensesBad Debt ExpensesBad Debts can be described as unforeseen loss incurred by a business organization on account of non-fulfillment of agreed terms and conditions on account of sale of goods or services or repayment of any loan or other obligation.read more is made. Bad debt expense is debited for such entry, and allowance for doubtful accountsAllowance For Doubtful AccountsAllowance for doubtful accounts primarily means creating an allowance for the estimated part that may be uncollectible and may become bad debt and is shown as a contra asset account that reduces the gross receivables on the balance sheet to reflect the net amount expected to be paid.read more is credited.

Allowance for Doubtful Accounts 1.1

If such provisions are found, the doubtful accounts are debited, and theAccounts receivables is the money owed to a business by clients for which the business has given services or delivered a product but has not yet collected payment. They are categorized as current assets on the balance sheet as the payments expected within a year. read more account receivableAccount ReceivableAccounts receivables is the money owed to a business by clients for which the business has given services or delivered a product but has not yet collected payment. They are categorized as current assets on the balance sheet as the payments expected within a year. read more is credited.

Journal Entry Examples Video Explanation


Example #2 – Expense

Journal Entry for Accounts Payable:

In this case, the related asset or expense account is debited, and the journal entry for the payable accountJournal Entry For The Payable AccountAccounts Payable Journal Entries refers to the amount payable accounting entries to the creditors of the company for the purchase of goods or services and are reported under the head current liabilities on the balance sheet and this account debited whenever any payment is been made.read more is credited.

Journal Example 2

When payment is to account payable, accounts payable is debited, and the cash account is credited.

Account payable 2.1

Journal Entry for Payroll:

In the case of payroll expenses, the wages expense, these accounts are debited, and the cash account is credited.

Journal Example 2.2

Journal Entry for Accrued Expense:

In this case, the applicable expense is debited, and accrued expenseAccrued ExpenseAn accrued expense is the expenses which is incurred by the company over one accounting period but not paid in the same accounting period. In the books of accounts it is recorded in a way that the expense account is debited and the accrued expense account is credited.read more is credited.

Journal Entry for Depreciation:

For depreciation expense, depreciation expense is debited, and the accumulated depreciationAccumulated DepreciationThe accumulated depreciation of an asset is the amount of cumulative depreciation charged on the asset from its purchase date until the reporting date. It is a contra-account, the difference between the asset's purchase price and its carrying value on the balance sheet.read more account is credited.

Depreciation Expense 2.3

Petty Cash Journal Entry:

To establish a petty cashPetty CashPetty cash means the small amount that is allocated for the purpose of day to day operations. It is unreasonable to issue a check for such small expenses and for managing the same custodians are appointed by the company.read more fund, petty cash is debited, and the cash account is credited.

Journal Example 2.4

Example #3 – Asset

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.

Cash Reconciliation 3

Journal Entry for Prepaid Expense Adjustment:

In this case, the expense account debits and thePrepaid expenses refer to advance payments made by a firm whose benefits are acquired in the future. Payment for the goods is made in the current accounting period, but the delivery is received in the upcoming accounting period.read more prepaid expense accountPrepaid Expense AccountPrepaid expenses refer to advance payments made by a firm whose benefits are acquired in the future. Payment for the goods is made in the current accounting period, but the delivery is received in the upcoming accounting period.read more credits.

Purchased Inventory Journal Entry:

If the inventory purchased is worth $90000, $10000 in cash, and $80000 on the account;

Journal Example 3.1

Journal Entry for the Fixed Asset:

When a fixed asset is added, the applicable fixed asset account is debited, and accounts payableAccounts PayableAccounts payable is the amount due by a business to its suppliers or vendors for the purchase of products or services. It is categorized as current liabilities on the balance sheet and must be satisfied within an accounting period.read more is credited.

Fixed Asset 3.2

Purchased Equipment for $600,000 in Cash;

Journal Example 3.3

Fixed Asset De-Recognition Entry:

When a fixed assetA Fixed AssetFixed assets are assets that are held for the long term and are not expected to be converted into cash in a short period of time. Plant and machinery, land and buildings, furniture, computers, copyright, and vehicles are all examples.read more 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 – Liability Accounting

Accrued liabilities account is credited. If a debt is owed but not yet billed, accrued liabilityAccrued LiabilityAccrued liabilities refer to the obligations against expenses which the company incurs over one accounting period; however, it has not made any monetary payment for such expenses in the same accounting period. These expenses appear as liabilities in the corporate balance sheet.read more entry is to be made. In this case, the accrued expense is a debit to the expense accountExpense AccountExpense accounting is the accounting of business costs incurred to generate revenue. Accounting is done against the vouchers created at the time the expenses are incurred.read more.

Entry 4

Example #5 – Equity Accounting

Dividend Declaration:

When dividends are declaredDividends Are DeclaredDividend declared is that portion of profits earned that the company’s board of directors decides to pay off as dividends to the shareholders of such company in return to the investment done by the shareholders through the purchase of the company’s securities.read more, the retained earnings account is debited, and the dividends payableDividends PayableDividend payable is that portion of accumulated profits that is declared to be paid as dividend by the company's board of directors. Until the dividend declared is paid to the concerned shareholders, the amount is recorded as a dividend payable in the head current liability.read more account is credited.

Journal Example 5

Once dividendsDividendsDividends refer to the portion of business earnings paid to the shareholders as gratitude for investing in the company’s equity.read more are paid, this is a debit to the dividends payable account and a credit to the cash account.

Stock Re-Purchase:

When shares in a business are repurchased, debit treasury stockTreasury StockTreasury Stock is a stock repurchased by the issuance Company from its current shareholders that remains non-retired. Moreover, it is not considered while calculating the Company’s Earnings Per Share or dividends. read more, and credit cash.

Debt Raised from Bank Entry:

If the company borrowed $300,000 from the bank, the journal entry would look like this:

Entry 5.1

Example #6 – Transaction with Journal Entries

Let us see another example of accounting transactionsExample Of Accounting TransactionsAccounting Transactions are business activities which have a direct monetary effect on the finances of a Company. For example, Apple representing nearly $200 billion in cash & cash equivalents in its balance sheet is an accounting transaction. read more and their respective journal entries.

Journal Example 6

The journal entries for the above transactions are:

Entry 6.1

Example #7 – Practical

Pen World Ltd. has the following transactions during the month of Feb-2019. Pass the necessary Journal Entry.

Transaction 1:

On Feb 4, 2019, I Purchased material worth $50,000;

Journal Entry Example 1

Transaction 2:

On Feb 10, 2019, Sold Pens worth $80,000

Example 1.1

Transaction 3:

On Feb 28, 2019, Incurred Expenses worth $5,000

Journal Entry Example 1.2

Transaction 4:

On Feb 28, 2019, Purchased furniture worth $7,000

Journal Entry Example 1.3

Example #8 – Practical

The following are the transactions of Fun Ltd. Record the transaction in the Journal.

Example 2

Journal Entry:

Journal Entry Example 2.1

Example #9 – Practical

Small Finance International Ltd was incorporated in April 2019 with the capital initially of 10,000 common stocks of $ 10 each. During the first month of its operation the company had the following transactions. Record the journal entries of all the transactions.

Example 3

Journal Entry:

Journal Entry Example 3.1

Example #10 – Practical

Other purchases related to transactions in Company Material Ltd. are given below. Record the journal entry for each transaction.

Transaction 1:

On 05- Mar- 19 goods were purchased worth $5,000

Example 4

Transaction 2:

On 07-Mar-19, Goods worth $500 were lost by fire;

Journal Entry Example 4.1

Transaction 3:

On 10-Mar-19, Goods worth $900 were lost by theft;

Journal Entry Example 4.2

Transaction 4:

On 15-Mar-19, Goods worth $700 were distributed as a charity;

Example 4.3

Transaction 5:

On 20-Mar-19, Goods worth $600 owner withdrew.

Journal Entry Example 4.4


The business enterprise benefits, in many ways, by bypassing journal entries. Firstly it can get at one place the full effect of any transactions. Secondly, it provides records of transactions in chronological order helping and easing out to locate any transaction based on their date. Thirdly it helps mitigate the errors because the debit and credit of individuals and total transactions can be easily compared. Moreover, any entry which does not go into any books maintained by the company is recorded in the journal.

This article has been a guide to Journal Entry Examples. Here we discuss the top 4 examples of journal entries in accounting used by business enterprises. You can learn more about accounting from the following articles –

Reader Interactions


  1. Higiro Thierry says

    That’s a great job

  2. Priya says

    It was great examples and fresh entries I learned a lots of new entries kindly provide more entries for practice

  3. Alex F. Castrence says

    Nice! thanks for your effort. I helps to much to beginners like me.

  4. Samiullah Ibrahimi says

    Examples were so useful

  5. Carolyne Chisale says

    Thank you for the good examples i have really understand.

  6. Abdur Rehman says

    The examples were good and understandable recently I have taken admission in financial accounting thank you

    • Dheeraj Vaidya says

      Thanks for your kind words!

Leave a Reply

Your email address will not be published. Required fields are marked *