Top 10 Examples of Journal Entry
Example of jounal entry includes the purchase of machinery by the country where 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 type of journal entries used by the business enterprises in their day to day financial transactions. Passing the journal entries is very much required as they allow the business organization to sort their transactions into manageable data. It is the summary of debits and credits of financial transactions with a note of which accounts these financial transactions will affect maintained in the chronological order.
Example #1 – Revenue
Sales Journal Entry:
When sales are made 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 made. 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 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.
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.
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Journal Entry for Depreciation:
For depreciation expense, depreciation expense is debited, and the accumulated depreciation account is credited.
Petty Cash Journal Entry:
To establish a petty cash fund, petty cash is debited, and the cash account is credited.
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.
Journal Entry for Prepaid Expense Adjustment:
In this case, the expense account debits, and the prepaid expense account credits.
Purchased Inventory Journal Entry:
If the inventory 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 – Liability Accounting
Example #5 – 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:
Example #7 – Practical
Pen World Ltd. has the following transactions during the month of Feb-2019. Pass the necessary Journal Entry.
On Feb 4, 2019, Purchased material worth $50,000;
On Feb 10, 2019, Sold Pens worth $80,000
On Feb 28, 2019, Incurred Expenses worth $5,000
On Feb 28, 2019, Purchased furniture worth $7,000
Example #8 – Practical
The following are the transactions of Fun Ltd. Record the transaction in Journal.
Example #9 – Practical
Small Finance International Ltd was incorporated in April 2019 with the capital initially of 10,000 common stock of $ 10 each. During the first month of its operating company had the following transactions. Record the journal entries of all the transactions.
Example #10 – Practical
Different purchases related transactions in Company Material Ltd. are given below. Record the journal entry for each transaction.
On 05- Mar- 19 goods purchased worth $5,000
On 07-Mar-19 Goods worth $500 lost by fire;
On 10-Mar-19 Goods worth $900 lost by theft;
On 15-Mar-19 Goods worth $700 distributed as a charity;
On 20-Mar-19 Goods worth $600 owner withdrew.
The business enterprise benefits, in many ways, by passing journal entries. Firstly it can get at one place the entire 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 in mitigating the reason for the errors being the debit and credit of individual as well as total transactions can be easily compared. Moreover, any entry which is not going into any books, maintained by the company, record in the journal.
Journal Entry Examples Video
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 –