Journal Entry Examples

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Example # 1:

Following transactions are related to Saifullah Naseem business. You are required to pass Journal Entries.

June 1, 2016. Mr. Saifullah started business with Cash Rs. 10,000 and Furniture Rs. 2,000.

Date		Account Title and Explanations	Ref	Amount (Rs)
Date		Account Title and Explanations	Ref	Debit	Credit
2016
June	1	Cash		10,000
		Furniture		2,000
		Owner’s Equity			12,000
		(Started business with cash and furniture)

June 5. Purchased merchandise/goods on credit Rs. 5,000 from Ali Store.

Date		Account Title and Explanations	Ref	Amount (Rs)
Date		Account Title and Explanations	Ref	Debit	Credit
2016
June	5	Purchases		5,000
		Account Payable _ Ali Store			5,000
		(Purchases goods on credit)

June 7. Sold goods/ merchandise on credit Rs. 6,000 to Ahmed Brothers.

Date		Account Title and Explanations	Ref	Amount (Rs)
Date		Account Title and Explanations	Ref	Debit	Credit
2016
June	7	Account Receivable _ Ahmed Brothers		6,000
		Sales			6,000
		(Sales on account)

June 15. Payment of creditors in full settlement of account Rs. 4,900 of June 5^th transaction.

Date		Account Title and Explanations	Ref	Amount (Rs)
Date		Account Title and Explanations	Ref	Debit	Credit
2016
June	15	Account Payable_ Ali Store		5,000
		Cash			4,900
		Discount			100
		(Reduced liability of Ali Store and received discount)

June 20. Received from debtors in full settlement of account Rs. 5,800 of June 7^th transaction.

Date		Account Title and Explanations	Ref	Amount (Rs)
Date		Account Title and Explanations	Ref	Debit	Credit
2016
June	20	Cash		5,800
		Discount		200
		Account Receivable _ Ahmed Brothers			6,000
		(Account receivable realized and discount allowed recorded)

June 25. Rs. 500 was privately used by Saifullah.

Date		Account Title and Explanations	Ref	Amount (Rs)
Date		Account Title and Explanations	Ref	Debit	Credit
2016
June	25	Drawing		500
		Cash			500
		(Cash withdrawal by owner)

June 27. Purchase furniture of worth Rs. 60,000, having 10% trade discount.

Date		Account Title and Explanations	Ref	Amount (Rs)
Date		Account Title and Explanations	Ref	Debit	Credit
2016
June	27	Purchase		54,000
		Cash			54,000
		(Cash purchases and trade discount )

June 28. Paid Salaries Rs. 1,500.

Date		Account Title and Explanations	Ref	Amount (Rs)
Date		Account Title and Explanations	Ref	Debit	Credit
2016
June	28	Salaries		1,500
		Cash			1,500
		(Expense paid)

Cases When Purchases are Credit?

Example # 2:

There are five cases when purchases are recorded as credited

Case # 1 Goods Lost by Fire of Rs. 400.

Date	Account Title and Explanations	Ref	Amount (Rs)
Date	Account Title and Explanations	Ref	Debit	Credit

	Lost by Fire		400
	Purchases			400

Case # 2 Goods Lost by Theft of Rs. 500.

Date	Account Title and Explanations	Ref	Amount (Rs)
Date	Account Title and Explanations	Ref	Debit	Credit

	Lost by Theft		500
	Purchases			500

Case # 3 Goods distributed as Charity of Rs. 600.

Date	Account Title and Explanations	Ref	Amount (Rs)
Date	Account Title and Explanations	Ref	Debit	Credit

	Charity		600
	Purchases			600

Case # 4 Goods distributed as Free Sample of Rs. 700.

Date	Account Title and Explanations	Ref	Amount (Rs)
Date	Account Title and Explanations	Ref	Debit	Credit

	Free Sample		700
	Purchases			700

Case # 5 Goods withdrawal by Owner of Rs. 800.

Date	Account Title and Explanations	Ref	Amount (Rs)
Date	Account Title and Explanations	Ref	Debit	Credit

	Drawing		800
	Purchases			800

Example # 3:

In the table below, indicate the accounts that would be debited and credited for each of the transactions?

Provide services to customers on account.
Purchase land by paying cash.
Purchase an insurance policy that will provide coverage for a two-year period.
Acquire cash by issuing common stock.
Receive payment from a customer for services that will be provided over the next six months.
Cash deposited into bank.
Purchased goods by cheque.
Drew cash from bank for office use.
Purchased goods from Miss Noreen.
Cash sales made.
Paid cash to Miss Noreen.
Recognize expense for amount of office supplies already in stock, that had been used during the period.
Discount Received by cash.
Drew cash from bank for personal use of proprietor.
Received cash from credit customer.
Paid rent by cash.
Furniture lost by fire.

Solution:

*S.no*	*Account Debited*	*Account Credited*
1	Account Receivable	Service Revenue
2	Land	Cash
3	Prepaid Insurance	Cash
4	Cash	Common stock
5	Cash	Unearned Services
6	Bank	Cash
7	Purchases	Bank
8	Cash	Bank
9	Purchases	Account Payable_ Miss Noreen
10	Cash	Sales
11	Account Payable_ Miss Noreen	Cash
12	Supplies Expense	Supplies
13	Cash	Discount
14	Drawing	Bank
15	Cash	Account Receivable
16	Rent	Cash
17	Lost by Fire	Furniture

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References

Mukharji, A., & Hanif, M. (2003). Financial Accounting (Vol. 1). New Delhi: Tata McGraw-Hill Publishing Co.

Narayanswami, R. (2008). Financial Accounting: A Managerial Perspective. (3rd, Ed.) New Delhi: Prentice Hall of India.

Ramchandran, N., & Kakani, R. K. (2007). Financial Accounting for Management. (2nd, Ed.) New Delhi: Tata McGraw Hill.

6 Comments

Tsehay Barega on December 8, 2022 at 10:41 am

Great job pls do for me an assignment if possible .
Reply
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Reply
Alexander Sebastion on April 9, 2020 at 8:41 am

It was helpful. Keep on posting!
Reply
frolep rotrem on March 13, 2020 at 4:14 pm

Keep working ,great job!
Reply
Million on February 10, 2019 at 7:28 am

Comment
here is my case
1. discovered that the balance of the cash account and the accounts payable account as of April 1 were overstated by Ru. 200. A payment as of that amount to a creditor in March had not been recorded. Journalize the Ru. 200 payment as of April 20
Reply
Monika on January 15, 2019 at 5:17 am

mohan and sons started a computer company by investing rs 100000 in cash and furniture worth rs 50000 ,machine rs 100000,stock rs 40000, goodwill rs 40000 and building 100000
Reply