journal entry assignment examples

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Basics of journal entries, related webinar.

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How to Write a Journal Entry

Last Updated: August 15, 2024 Fact Checked

This article was co-authored by Nicolette Tura, MA and by wikiHow staff writer, Danielle Blinka, MA, MPA . Nicolette Tura is an Empowerment Coach based in the San Francisco Bay Area. Through her work, Nicolette helps high achievers discover their true potential and grow personally. She recently founded the non-profit Celestial Wellness Network and started a musical project, The Feather and Stone. With over ten years of experience in nonprofit leadership and running her own wellness business, Nicolette combines her background in psychology, mindfulness, and psychophysiology to create profound change. Nicolette has hands-on experience as a Therapy Associate, and has worked with patients recovering from neurological disorders. She offers one-on-one coaching tailored to each client's needs, with options for short-term, transformative engagements. Her personalized coaching sessions help individuals break free from self-limiting beliefs and achieve their goals. She completed a 500-hour Registered Yoga Teacher certification and is a NASM Certified Corrective Exercise Specialist. She holds a BA in Sociology from the University of California, Berkeley, and a Master’s degree is Sociology from San Jose State University. There are 16 references cited in this article, which can be found at the bottom of the page. This article has been fact-checked, ensuring the accuracy of any cited facts and confirming the authority of its sources. This article has been viewed 2,895,428 times.

Keeping a journal allows you to record what’s happening in your life and to work through your thoughts and feelings. Sometimes, you might write a journal for school to help you deepen your understanding of what you’re studying. Fortunately, writing a journal entry is a simple process. First, choose a topic to write about, like what's happening in your life. Then, write an opening for your entry and express your thoughts.

Choosing a Topic

• This is a great way to help you document things you want to remember.
• For instance, you might write about something funny that happened at lunch, scoring the winning goal in a soccer game, or a fight you had with your friend. The events can be positive or negative.

• Let’s say you’re feeling sad because you’re going through a breakup. You could write about how you feel and what you’ll miss about the relationship. This will help you release your feelings so you can start to feel better .

• Write about what you’d like to do this weekend.
• Discuss a place you’d like to visit.
• Pretend that you found a fantasy creature.
• Write about something you want to change.
• Write from the perspective of your favourite book or movie character.

• A summary of a reading or lecture.
• Your analysis of the course material.
• Connections between topics you’ve studied.
• Personal connections you made with the coursework.
• Questions you have about the text or lecture.

Tip: Keep a journal for school focused on studying and analyzing your course material. For instance, you might summarize your coursework, record your reflections on it, and write down questions you have. Leave out how you feel about what you’re reading or studying.

Opening Your Journal Entry

• Your instructor has assigned journaling to help you deepen your understanding of your coursework and to improve your writing skills . Following their instructions will help you best achieve these goals.

• For instance, you might write, “July 24, 2019,” “07-24-19,” or “24 July 2019.”

• For instance, you might write “Good Beans Coffee House,” “School,” “Paris,” or “My bedroom” for your location. For the time, you could write the actual time, such as “12:25 p.m.,” or the time of day, like “Early morning.”

Tip: You usually don’t include a salutation when you’re writing a journal for school.

Expressing Yourself in a Personal Journal

• If mistakes really bother you, it’s okay to go back and correct them after you finish writing your journal entry.

• Turn a memory into a story.
• Record what you dreamed last night.
• Write a list, such as what you did that day or what you’re grateful for.
• Doodle or paste pictures into your journal.
• Record song lyrics or quotes that mean something to you.
• Write your own lyrics or a poem.
• Write in stream of consciousness.

• For instance, you’d write, “I went to lunch with Sari today,” not “Amy had lunch with Sari today.”

• For instance, let’s say you’re on vacation at the beach. You might include details like, “sea spray hitting my face,” “the smell of burning wood from bonfires on the beach,” “the taste of salt on my lips,” “the sun glinting off the surface of the water,” and “the shouts from other beach goers having fun.”

• With journaling, it’s more important to write often than to write a lot.

Drafting an Academic Journal Entry

• If you’re telling a story, try to follow a narrative structure to give it a beginning, middle, and end.
• Read over your journal entry before your submit it to check that it makes sense.

• For handwritten journals, your instructor may require that you simply fill up a page. Make sure you know the exact requirements so you can do your assignment correctly.
• If you’re struggling to think of something to write, make a mind map about the topic to help you brainstorm some new ideas.

• If you’re struggling with your grammar, visit your school’s writing center or ask your instructor about tutoring options. Additionally, you can find online programs that help you with grammar.

• This is especially important if you’re keeping your journal as a graded assignment.
• If you’re typing your journal entries in an online portal, there may be a spellcheck tool you can use. However, you should still proofread the entry to look for other errors.

Journal Entry Template

Community Q&A

Reader Videos

• It’s best to write regularly so that journaling becomes a habit. To help you remember, write in your journal at the same time everyday. [19] X Research source Thanks Helpful 0 Not Helpful 0
• You can write about anything you want, so don’t feel like you can only write about how you feel. You might instead prefer to write about your daily accomplishments or what you enjoyed that day. Thanks Helpful 27 Not Helpful 5
• While you can use a paper journal, there are journaling apps and websites you can try. Additionally, it’s okay to use a word processor like Google Docs or Microsoft Word for journaling. Thanks Helpful 18 Not Helpful 9

• Since your journal is private, prevent people from reading it by keeping it in a safe place. If it’s a digital journal, you might even password protect it. Thanks Helpful 27 Not Helpful 4

You Might Also Like

• ↑ https://libguides.usc.edu/writingguide/title
• ↑ Nicolette Tura, MA. Empowerment Coach. Expert Interview. 23 January 2020.
• ↑ https://positivepsychology.com/benefits-of-journaling/
• ↑ https://www.readingrockets.org/article/journal-writing
• ↑ https://www.hamilton.edu/academics/centers/writing/writing-resources/journal-writing
• ↑ https://writing.wisc.edu/handbook/assignments/writing-an-abstract-for-your-research-paper/
• ↑ https://www.niu.edu/citl/resources/guides/instructional-guide/reflective-journals-and-learning-logs.shtml
• ↑ https://psychcentral.com/blog/ready-set-journal-64-journaling-prompts-for-self-discovery
• ↑ https://psychcentral.com/lib/the-health-benefits-of-journaling
• ↑ https://www.bates.edu/biology/files/2010/06/How-to-Write-Guide-v10-2014.pdf
• ↑ https://files.eric.ed.gov/fulltext/EJ1081806.pdf
• ↑ https://writing.wisc.edu/handbook/style/connectingideas/
• ↑ https://positivepsychology.com/writing-therapy/
• ↑ https://apastyle.apa.org/style-grammar-guidelines/capitalization
• ↑ https://libguides.usc.edu/writingguide/proofreading
• ↑ https://www.psychologytoday.com/us/blog/modern-minds/202301/10-good-reasons-to-keep-a-journal

About This Article

To write a journal entry, first find a quiet, comfortable spot where you won’t be disturbed. Take a moment to brainstorm what you want to write about. You can journal about anything, like your day, your dreams, work, school, friends, or an upcoming project. If you’re not sure, choose a writing prompt for your entry, like “What was your earliest childhood memory?” or “What is your biggest secret?” Open to a new page in your journal and write the date at the top. Then, start writing. Let your thoughts flow and don’t edit yourself. Write whatever comes to mind. It’s okay to be honest since nobody else will be reading what you write. Draw pictures if specific images come to mind while you’re writing. Try to journal for somewhere between 5 and 20 minutes every day. The more you journal, the easier it will become! Keep reading to learn how to write a journal entry for school! Did this summary help you? Yes No

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• References +
• 1 Analyzing business transactions
• 2 Rules of debit and credit
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• 4 Journal entries
• 5 More journal entry examples
• 6 Posting to the ledger
• 7 Trial balance
• 8 Correcting entries

Journal entries: More examples

For additional practice in preparing journal entries, here are some more examples of business transactions along with explanations on how their journal entries are prepared.

A Few Things Before We Start

The transactions in this lesson pertain to Gray Electronic Repair Services, our imaginary small sole proprietorship business.

For account titles, we will be using the chart of accounts presented in an earlier lesson.

All transactions are assumed and simplified for illustration purposes.

Note: We will also be using this set of transactions and journal entries in later lessons when we discuss the other steps of the accounting process.

Alright! Let's start.

Transaction #1: On December 1, 2021, Mr. Donald Gray started Gray Electronic Repair Services by investing $10,000. The journal entry should increase the company's Cash, and increase (establish) the capital account of Mr. Gray; hence:

Transaction #2: On December 5, Gray Electronic Repair Services paid registration and licensing fees for the business, $370.

First, we will debit the expense (to increase an expense, you debit it); and then, credit Cash to record the decrease in cash as a result of the payment.

Transaction #3: On December 6, the company acquired tables, chairs, shelves, and other fixtures for a total of $3,000. The entire amount was paid in cash.

There is an increase in an asset account (Furniture and Fixtures) in exchange for a decrease in another asset (Cash).

Transaction #4: On December 7, the company acquired service equipment for $16,000. The company paid a 50% down payment and the balance will be paid after 60 days.

This will result in a compound journal entry. There is an increase in an asset account ( debit Service Equipment, $16,000), a decrease in another asset ( credit Cash, $8,000, the amount paid), and an increase in a liability account ( credit Accounts Payable, $8,000, the balance to be paid after 60 days).

Transaction #5: Also on December 7, Gray Electronic Repair Services purchased service supplies on account amounting to $1,500.

The company received supplies thus we will record a debit to increase supplies. By the terms "on account", it means that the amount has not yet been paid; and so, it is recorded as a liability of the company.

Transaction #6: On December 9, the company received $1,900 for services rendered. We will then record an increase in cash (debit the cash account) and increase in income (credit the income account).

Transaction #7: On December 12, the company rendered services on account, $4,250.00. As per agreement with the customer, the amount is to be collected after 10 days. Under the accrual basis of accounting , income is recorded when earned.

In this transaction, the services have been fully rendered (meaning, we made an income; we just haven't collected it yet.) Hence, we record an increase in income and an increase in a receivable account.

Transaction #8: On December 14, Mr. Gray invested an additional $3,200.00 into the business. The entry would be similar to what we did in transaction #1, i.e. increase cash and increase the capital account of the owner.

Transaction #9: Rendered services to a big corporation on December 15. As per agreement, the $3,400 amount due will be collected after 30 days.

Transaction #10: On December 22, the company collected from the customer in transaction #7. We will record an increase in cash by debiting it. Then, we will credit accounts receivable to decrease it. We are reducing the receivable since it has already been collected.

Actually, we simply transferred the amount from receivable to cash in the above entry.

Transaction #11: On December 23, the company paid some of its liability in transaction #5 by issuing a check. The company paid $500 of the $1,500 payable.

To record this transaction, we will debit Accounts Payable for $500 to decrease it by the said amount. Then, we will credit cash to decrease it as a result of the payment. The entry would be:

Accounts payable would now have a credit balance of $1,000 ($1,500 initial credit in transaction #5 less $500 debit in the above transaction).

Transaction #12: On December 25, the owner withdrew cash due to an emergency need. Mr. Gray withdrew $7,000 from the company.

We will decrease Cash since the company paid Mr. Gray $7,000. And, we will record withdrawals by debiting the withdrawal account – Mr. Gray, Drawings .

Transaction # 13: On December 29, the company paid rent for December, $ 1,500. Again, we will record the expense by debiting it and decrease cash by crediting it.

Transaction #14: On December 30, the company acquired a $12,000 short-term bank loan; the entire amount plus a 10% interest is payable after 1 year.

Again, the company received cash so we increase it by debiting Cash. The company now has a liability. We will record it by crediting the liability account – Loans Payable .

Transaction #15: On December 31, the company paid salaries to its employees, $3,500.

For this transaction, we will record/increase the expense account by debiting it and decrease cash by crediting it. ( Note: This is a simplified entry to present the payment of salaries. In actual practice, different payroll accounting methods are applied. )

There you have it. You should be getting the hang of it by now. If not, then you can always go back to the examples above. Remember that accounting skills require mastery of concepts and practice.

We've gone through 15 journal entry examples and explained how each are prepared to help you learn the art of recording. By now you'd feel more confident in preparing journal entries. Feel free to refer back to the examples above should you encounter similar transactions.

More under Analyzing, Recording, and Classifying Business Transactions

• 1 Analyzing Business Transactions
• 2 Rules of Debit and Credit
• 3 Chart of Accounts
• 4 Journal Entries
• 5 More Journal Entry Examples
• 6 Accounting Ledger
• 7 Trial Balance
• 8 Correcting Entries

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Basic Journal Assignment Example

Here is an example of a basic journal assignment:

Short writing assignments for a personal journal will be required for all readings. Additional assignments will be given frequently in class and for homework throughout the semester. In addition, it must be kept up to date. You may be asked to read journal entries for the class. Consequently, your journal must be brought to every class. Journal writings will not be graded for quality as a paper would be. If you have completed all assigned journal entries in a sincere manner, you will receive full credit for the journal in your final grade. That credit will be lessened only if you are lacking certain journal entries, or your entries are unacceptably brief or intentionally do not address the topic. The journal will not be judged negatively for unintentional errors in writing or punctuation. In other words, the journal is one place where a better writer will not necessarily get a better grade. The journal rewards effort and participation. It provides an opportunity to succeed no matter where you are starting from if you sincerely dedicate yourself.

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Journal Entries

Home › Examples › Journal Entries › Journal Entries

Journal entries are a key component as well as the first step in the accounting cycle. Each business transaction is analyzed for the economic impact on the asset, liability, and equity accounts before being recorded in the accounting system with a journal entry. Since every single business transaction is recorded or journalized throughout the year, there are tons of different journal entries. Most journal entries are recorded in  general journal , but specific journal entries like credit sales of inventory are recorded in separate journals like the  sales journal .

I know how difficult it can be to memorize how each business transaction is recorded. That’s why I’ve made this extensive list of journal entry examples. Each example deals with a common business transaction, so you can use this as a reference for how to journalize transactions in the future.

I also show you how to record the journal entry as well as explain the economic impact of each transaction on the  accounting equation . Most of these journal entry examples are also in parts of the  accounting course . Check out this list of journal entries. If you don’t see what you are looking for, use the search bar on the right to find an example.

• Journal Entry Format
• Sales Journal Entry
• Depreciation Journal Entry
• Accumulated Depreciation Journal Entry
• Accrued Expense Journal Entry
• Payroll Journal Entry

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Answered By: Paul Lai Last Updated: Jul 17, 2023     Views: 44719

Journal entries are often, though not always, meant to be reflective. To write a strong journal entry, take the following steps:

1. Read the prompt carefully.

What is the required mode of reflection? Are you supposed to be comparing ideas? Asking a question? Presenting information? Highlighting thoughts? Be sure to follow the instructions given.

2. Consider requirements.

How many words should the journal entry be? What is the due date and time? What should the format look like? Follow your instructor's guidelines. If no specific formatting is indicated, follow general  APA guidelines , or  use a template .

3. Reflect.

After reading the required material, reflect on specific elements, examples, or experiences you would like to include in your journal entry. Use other prewriting techniques to get your ideas flowing. If you get stuck, see the Writing Center’s  tips on avoiding writer’s block .

4.   Outline.

Create a thesis (even if it is only a miniature) to give your readers an area of focus. Then outline the points that you will cover. Be sure to include a brief introduction and conclusion (one sentence for each is often sufficient). Even journal entries can benefit from outlining, so  view some outlining strategies  to get started.

5.   Draft.

Go ahead and get started! Use your outline as a starting point, and review the Writing Center's  resources on using scholarly tone  as you write. Give credit to outside sources if you use them. See  an explanation of how to cite  if you are not sure how to best give credit to your sources.

Additional Resources:

• See the Writing Center's  tips for how to write other common course assignments.  
• View the archived and recorded webinar, "What About Me? Using Personal Experience in Academic Writing."

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Journal Entry Examples (Easy-to-Understand)

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Introduction

Journal entries act as the building blocks of financial accounting, providing a chronological record of all transactions made by a business. They enable companies to keep track of all financial transactions and ensure that the accounts are balanced.

Whether you’re a seasoned accountant or a small business owner acquiring accounting acumen, comprehending the mechanics of journal entries paves the way for coherent, accurate, and insightful financial recording and reporting, thereby contributing to the overall financial health and sustainability of the business.

This article will delve into the essentials of journal entries, discussing their purpose, their components, and how they are crafted, offering easy-to-understand examples along the way.

1. What Is a Journal Entry in Accounting?

The heartbeat of financial accounting is encapsulated in journal entries, ensuring every financial transaction is recorded systematically. A journal entry in accounting refers to the logging of transactions into accounting journal items.

The entry has a left-hand side (debit) and a right-hand side (credit) to maintain the accounting equation balance, which is:

Assets = Liabilities + Equity

These entries provide a comprehensive chronological record, itemizing the date of a transaction, the accounts affected, the amounts, and a brief description.

If a business takes a loan of $5,000 from a bank:

• Debit: Cash $5,000
• Credit: Loans Payable $5,000

2. What Are Debits and Credits?

Debits and Credits are the terminologies that guide the directionality of journal entries, with debits indicating an increase in assets or expenses and a decrease in liabilities or equity. Conversely, credits signify an increase in liabilities or equity and a decrease in assets or expenses. It’s pivotal to remember:

• Increases an asset or expense account.
• Decreases a liability or equity account.
• Increases a liability or equity account.
• Decreases an asset or expense account.

Every journal entry must have at least one debit and one credit entry, ensuring the accounting equation stays balanced.

What Is the Purpose of A Journal Entry?

Journal entries are indispensable to maintaining financial coherence and enabling accurate financial reporting.

The primary purposes include:

• Recording Transactions : Every financial transaction is systematically logged, ensuring no event goes unnoticed.
• Tracking Activity : Journal entries provide a chronological record of all economic events impacting a business.
• Facilitating Audit Trails : They enable auditors to trace any discrepancies or anomalies back to their origin, ensuring financial integrity.
• Preparing Financial Statements : By ensuring accurate and consistent record-keeping, journal entries directly inform the generation of the income statement, balance sheet, and cash flow statement.

What Is Included in a Journal Entry?

An accounting journal entry contains the following components:

• Date of the Transaction : Ensuring chronological order and period accuracy.
• Account Names/Numbers : Clearly identifying which accounts are impacted by the transaction.
• Debit and Credit Amounts : Indicating the financial value of the transaction, maintaining the equilibrium of the accounting equation.
• Description or Narrative : Offering a brief explanation of the transaction for clarity and context.

Consider a business takes out a loan of $10,000. The journal entry would be:

• Date: [Date of Transaction]
• Debit: Cash $10,000
• Credit: Loans Payable $10,000
• Description: To record the borrowing of a $10,000 loan.

The above entry ensures that the increase in the company’s cash (an asset, hence debited) is counterbalanced by recognizing a liability (loan payable, hence credited) of an equal amount, adhering to the accounting equation.

How Do You Write a Journal Entry?

Creating a journal entry, while systematically structured, is a straightforward process.

Here’s a simplified step-by-step guide:

• Identify Transactions: Recognize and authenticate the financial transaction to be recorded.
• Understand Accounts: Determine the accounts affected and whether they will be debited or credited.
• Journalizing: Record the entry in the journal, ensuring adherence to the debit and credit system.

Each entry should consist of:

• The date of the transaction.
• The accounts impacted.
• The amount to be debited and credited.
• A brief descriptive note.

Types of Journal Entries

Opening entries:.

These are the initial entries that establish the opening balances in the various ledger accounts.

Transfer Entries:

Facilitate the movement of amounts from one account to another, ensuring each transaction impacts the financial statements appropriately.

Closing Entries:

Made at the end of the accounting period to transfer the balances from the temporary accounts to the permanent accounts.

Adjusting Entries:

Made before preparing the financial statements, adjusting entries account for items that are not recorded in the accounting system at the period’s end.

Compound Entries:

Involve more than two accounts where there are multiple debits, multiple credits, or both.

Reversing Entries:

Made at the beginning of the new accounting period, reversing entries negate specific adjusting entries made in the previous period.

How Do I Prepare Journal Entries for My Business?

• Organize Transaction Information : Ensure all relevant transaction documents like invoices and receipts are gathered and verified.
• Analyze Transactions : Identify which accounts are affected and determine the amount involved.
• Apply the Accounting Equation : Ensure Assets = Liabilities + Equity after the transaction.
• Apply Debit and Credit Rules : Ascertain which account to debit and which to credit.
• Record the Entry : Input the entry into the accounting journal, providing all pertinent details.
• Review : Periodically review the journal entries to ensure accuracy and consistency in financial recording.

Examples of Common Journals

General Journal: This is the primary journal where all kinds of business transactions are recorded. From purchases to sales, various activities find a place in the general journal, making it a comprehensive record of the financial activities of a business.

Special Journal: Tailored for recording specific types of transactions in a dedicated journal, special journals streamline the recording process by categorizing similar transactions.

Some of the prominent special journals include:

• Sales Journal: Records all credit sales transactions.
• Purchase Journal: Records all credit purchase transactions.
• Cash Receipts Journal: Catalogues all cash inflows.
• Cash Payments Journal: Logs all cash outflows.

By segregating transactions according to their nature and grouping them into designated journals, the special journals facilitate focused and organized record-keeping.

How to Track Journal Entries

Tracking journal entries is crucial to maintain the accuracy and reliability of financial data.

Here are some strategies:

• Utilize Accounting Software : Employ modern accounting software that allows for easy data entry, tracking, and reporting.
• Regular Audits : Schedule periodic internal audits to scrutinize the entries for accuracy and completeness.
• Assign Reference Numbers : Ensure each journal entry has a unique reference number, aiding in quick retrieval and verification.
• Ensure Proper Documentation : Maintain thorough documentation for each transaction to validate the corresponding journal entries.

Examples of Journal Entries

Example 1: purchasing inventory on credit.

• Date: [Date]
• Debit: Inventory $5,000
• Credit: Accounts Payable $5,000
• Description: Recorded inventory purchase on credit.

Example 2: Recording Depreciation

• Debit: Depreciation Expense $1,000
• Credit: Accumulated Depreciation $1,000
• Description: To record monthly depreciation on machinery.

Example 3: Service Revenue Earned and Received in Cash

• Debit: Cash $2,000
• Credit: Service Revenue $2,000
• Description: Cash received for services rendered.

Frequently Asked Questions:FAQs

• How are adjusting journal entries different from regular journal entries?

Adjusting journal entries are made at the end of an accounting period to align the account balances with the accrual accounting. In contrast, regular entries are made as and when transactions occur.

• Why are journal entries important in accounting?

Journal entries provide a chronological record of all financial transactions, ensuring that the impact on the financial statements is accurately reflected, and facilitating compliance and audit trails.

• How do you record depreciation in a journal entry?

Depreciation is recorded by debiting the Depreciation Expense account and crediting the Accumulated Depreciation account, reflecting the reduction in value of an asset over its useful life.

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Understanding and accurately crafting journal entries is pivotal in encapsulating the financial essence of all business activities. By ensuring consistency, reliability, and accuracy in journalizing, a firm safeguards its financial integrity and lays a robust foundation for transparent and insightful financial reporting.

Journal entries stand at the core of financial accounting, ensuring every transaction is accurately chronicled, and the financial position of an entity is transparently depicted. Through systematic recording, tracking, and analysis of journal entries, businesses not only ensure compliance with statutory requirements but also carve a path toward informed strategic decision-making.

Equipped with the knowledge and examples provided, businesses, especially small and burgeoning entities, can navigate through the intricacies of journalizing with augmented confidence and precision, fostering a robust financial management ecosystem.

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Module 1: Success Skills

Assignment: critical thinking journal entry.

• Visit the Quia Critical Thinking Quiz page and click on Start Now (you don’t need to enter your name). Select the best answer for each question, and then click on Submit Answers. A score of 70 percent or better on this quiz is considering passing.
• Write a 200–400 word reflection on this activity.  Based on the content of the questions, do you feel you use good critical thinking strategies in college? In what ways might you improve as a critical thinker?

Worked Example

Journal entry assignments tend to be more flexible than other types of writing assignments in college, and as a result they can be tailored to your own experiences as long as they answer the primary questions asked in the assignment.

One model of a successful entry about this topic can be found below. Feel free to include your own experiences and examples from real life as they pertain to the issue at hand.

Critical Thinking Journal Entry by Sandy Brown The thing I like about critical thinking is that is applies to everything. If you get better at using critical thinking in school, that means other things in life get easier, as well (at least that’s what I hope is true). I didn’t do so great on the critical thinking quiz. I got a 50% the first time, but I think I would have done better if I had understood the questions more clearly. Question #9, the one about having autonomy, I got wrong because I thought it was saying it was important, rather than it wasn’t. Now that I think about it, I guess that’s an example of where I could be a better critical thinker—I could take the time to read these questions more closely, and be sure that my answer makes sense to what the question actually asks, rather than what I think it asks. I was happy with parts of this, though. There were a couple of questions about fair-mindedness, and I got both those right, even though I didn’t remember seeing the words “fair-mindedness” in the textbook. That phrase makes a lot more sense to me than “first order” and “second order” thinking. For me, I think that I’m a better thinker when I’m not in a rush. I tend to panic when I take tests, and then I answer questions too quickly. For things that don’t have a timer, like homework or out-of-class assignments, I tend to do a lot better because I can take as long as I need to figure out what exactly I’m supposed to do. So I guess one way to improve my critical thinking skills would be to practice going slower for timed tests, and giving myself time to check my answers before turning something in. I don’t want to make mistakes like the one I did on this quiz, when it counts against my actual grade.

• Try It: Critical Thinking. Authored by : Linda Bruce. Provided by : Lumen Learning. Located at : https://courses.candelalearning.com/lumencollegesuccess/chapter/critical-thinking-skills/ . License : CC BY: Attribution
• Revision and Adaptation. Provided by : Lumen Learning. License : CC BY: Attribution

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Journal Entry Examples

Published on :

21 Aug, 2024

Blog Author :

Wallstreetmojo Team

Edited by :

Ashish Kumar Srivastav

Reviewed by :

Dheeraj Vaidya

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.

Table of contents

Example #1 - revenue, journal entry examples video explanation, example #2 - expense, example #3 - asset, example #4 - liability accounting, example #5 - equity accounting, example #6 - transaction with journal entries, example #7 - practical, example #8 - practical, example #9 - practical, example #10 - practical, recommended articles, sales journal entry:.

When sales are made on credit, the journal entry for accounts receivable is debited, and the 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 expenses is made. Bad debt expense is debited for such entry, and allowance for doubtful accounts is credited.

If such provisions are found, the doubtful accounts are debited, and the account receivable is credited.

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 the 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:

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.

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 is 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.

Accrued liabilities account is credited. If a debt is owed but not yet billed, accrued liability entry is to be made. In this case, the accrued expense is a debit to the expense account .

Dividend Declaration:

When dividends are declared , the retained earnings account is debited, and the dividends payable account is credited.

Once dividends 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 stock , and credit cash.

Debt Raised from Bank Entry:

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

Let us see another example of accounting transactions and their respective journal entries.

The journal entries for the above transactions are:

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;

Transaction 2:

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

Transaction 3:

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

Transaction 4:

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

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

Journal Entry:

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.

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

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

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

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

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

Transaction 5:

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

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 –

• Correcting Entry
• Adjusting Journal Entries
• Compound Journal Entry
• Journal Entry for Depreciation
• Journal Entry for Purchase Return 

Examples of General Journals

In the previous lesson, we learned about the general journal and how to capture economic events . Let’s try an easy example using this simple system. Some transactions are routine and happen very frequently. It helps to know these, because they represent 99% of the total journal entries a company will make. All companies earn some sort of revenue, so let’s look at a sale transaction:

March 20, the company made a cash sale for $100.

• Is Cash used in this transaction? Yes.
• Was Cash received or paid? Received. [Increase = Debit Column]

Enter the Cash portion of the journal entry.

The date always starts a journal entry. Enter the month once on a page, and put the day in front of each journal entry on the page, even if they are all on the same date. The day indicates the beginning of a new journal entry. You should also leave one or two blank lines between journal entries on a page.

3. Enter the balancing dollar amount in the opposite column from Cash.

Almost done….

4) Refer to the information given, check the Chart of Accounts, tighten your thinking bolts and select the correct account for the second part. This is a sale, so we will use Sales Revenue for the Credit side of the journal entry.

The journal entry is in balance, and is complete. The textbook will show that a memorandum can be entered on the line below the journal entry. This should be additional information that is not contained in the journal entry itself; information that will be useful when trying to reconstruct events at a later date.

Another example. April 1, the company paid rent $500.

• Was Cash received or paid? Paid. [Decrease = Credit Column]
• Enter the Cash portion of the journal entry
• Enter the balancing dollar amount in the opposite column as Cash.

Note that it is customary to enter the debit part first , and the credit entry second. The credit entry account title is indented, to help set it off from the debit account titles. These practices are used to make the journal entry easier to read, and reduce errors in posting.

4) Refer to the information given, check the Chart of Accounts, tighten your thinking bolts and select the correct account for the second part. This is an example of paying an expense, in this case Rent Expense.

Another example…without cash. April 20, the company opens a charge account at Office Emporium. They buy a $1000 computer, and say “charge it!”

• Is Cash used in this transaction? No. [We will use the substitution method]
• If Cash were used…Would it be received or paid? Paid. [Decrease = Credit Column]
• Enter the “cash” portion of the journal entry. Pencil “cash” in lightly, you will replace it later with the correct account title
• Enter the balancing dollar amount in the opposite column.

Notice that I have roughed in the structure of the journal entry, but the actual accounts have not been entered yet.

4) Refer to the information given, check the Chart of Accounts, tighten your thinking bolts and select the correct account for the second part. This is an example of buying equipment, in this case we will use the account Office Equipment.

5) Refer to the Chart of Accounts and replace “cash” with the appropriate account, which will usually end with “Payable” or “Receivable” such as Accounts Payable, Interest Receivable, etc.

In this case we will use Accounts Payable, one of the most frequently used accounts. Accounts Payable is used to refer to most of the common, day-to-day debts and current liabilities that a company incurs. It is short-term debt, meant to be paid soon, like the phone bill, utility bill, etc.

These are all examples of simple journal entries. There is one debit and one credit. Some transactions might involve more then two accounts, and we would use three or more lines to write those entries. These are called compound journal entries (or complex journal entries). There is no limit to the number of debit or credit accounts that can be included in a journal entry. All necessary accounts will be used. The journal entry will balance , regardless of the number of accounts used.

Let’s try an example of a compound journal entry. June 5, the company buys building and land for $100,000. They make a down payment of $20,000 and sign a mortgage note with their bank for the balance. An appraisal shows the land alone has a value of $10,000.

• Is Cash used in this transaction? Yes & No. [We will use the substitution method along with Cash]
• Enter the Cash portion of the journal entry. We will use Notes Payable to enter the $80,000 we borrowed from the bank, on its own line, but on the same side as Cash – the Credit side in this case.

3) Enter the balancing dollar amount in the opposite column.

4) Refer to the information given, check the Chart of Accounts, tighten your thinking bolts and select the correct account for the second part. I left 2 blank lines above, because I knew we had both land and a building, which must be entered separately.

In this example I have totaled the columns to show that the journal entry is in balance. In real accounting systems a total is only drawn at the bottom of the page, not after each journal entry.

Here’s another example of a compound journal entry. This one also shows how to record the issue of common stock, a very important journal entry to know. On May 1, Bill, Bob and Quinn create a new corporation, BBQ, Inc. They raise capital in the company by selling 10,000 shares of Common Stock for $5 per share. The common stock has a Par value of $1 per share.

• Is Cash used in this transaction? Yes. The organizers are raising initial capital to start a new company. If the stock were sold on a stock exchange this would be referred to as an IPO (Initial Public Offering).
• If Cash were used…Would it be received or paid? Received. [Increase = Debit Column]
• Enter the Cash portion of the journal entry. They sold 10,000 shares of stock at $5 per share, so they have raised 10,000 x $5 = $50,000.

4) Refer to the information given, check the Chart of Accounts, tighten your thinking bolts and select the correct account for the second part. Common stock is recorded as a credit to the Common Stock account. It is recorded at Par value, in this case $1 per share. So 10,000 x $1 = $10,000.

The journal entry is out of balance and we need to finish it up. Any excess raised by the sale of stock is credited to the Additional Paid-In Capital account.

This is a good example of an important journal entry every accountant and bookkeeper should know. We don’t use it very often, but it’s important to know how to make this type of journal entry.

A Word About Issuing Stock

Each state has slightly different laws regarding corporations. Most states permit Par value stock, and some have a Legal Capital rule, forcing corporations to maintain tangible capital equal to the Legal Capital. This is in place to protect stockholders. Some states permit No-Par stock.

States also allow Preferred stock, which pays a fixed dividend, similar to an interest-bearing investment. Preferred stock usually has a Par value, and is recorded as in the example above, except the Preferred Stock account is used. Some company’s maintain a separate account Additional Paid-In Capital on Preferred Stock, but Additional Paid-In Capital usually reverts to the Common stockholders, regardless of it’s source.

Posting to the Ledger

Journal entries must be posted to the Ledger accounts on a regular basis. In many computer based systems this is done automatically, when journal entries are made. In a manual system, and some computer systems, the journal entries are posted on a daily, weekly or monthly basis, called “batch posting.”

When you Post, you simply take each line from the journal entries, and transfer the amounts to the corresponding Ledger accounts. You have to be very careful to post all journal entries, get the dollar amounts right, and enter them in the correct column of the correct account. Needless to say, in a manual system errors do get made.

Posting is actually a routine and mechanical procedure.

Using T-Accounts

You may see examples of T-Accounts in accounting textbooks. A T-Account is just a simple way to represent a Ledger account. It’s handy for accounting students, because you can make quite a few T-Accounts on one page, and post journal entries quickly. This makes it easier to do homework assignments or analyze transactions.

Some homework assignments will only use a few accounts, and there will only be one or two entries to each account. You can make three T-Accounts across a page, and several rows down the page. The Cash account should be larger than the rest, since it will have quite a few entries in most assignments.

When you post to T-Accounts, make a large T and write the name of the account above it. Write the Debit entries on the left half of the T, and Credit entries on the right side of the T. You can draw a line underneath the entries, net all the entries together, and put the balance on the correct side of the T below the line.

The Income Statement

The Income Statement: Relates to a period of time . Revenue – the price of your goods and services Expenses – costs incurred in earning revenue Net Income – the excess of Revenue over Expenses, on the Income Statement Net Loss – the excess of Expenses over Revenue, on the Income Statement Net Income is synonymous with Net Profit. Debit and Credit Rules Revenues = Credit Entry Expenses = Debit Entry

All revenue and expense entries follow these simple rules. The opposite side entry is usually made only to correct an error in an earlier journal entry. This is true of all income statement accounts.

Many balance sheet accounts tend to increase and decrease on a regular basis. Cash, Inventory, Accounts Receivable, Supplies, Accounts Payable all change on a frequent basis. Income statement accounts only increase, and do so according the the rules above. It is really easy to remember this simple rule.

Example February 3, the company makes a credit sale of $250.

Example February 5, the company makes a cash sale of $250.

These two entries are almost identical. Notice that Sales Revenue is on the Credit side in both entries. Remember this and it will make all your journal entries easier. When you record a revenue you will put it on the Credit side.

Example February 1, the company pays rent, $500.

Example February 5, the company has an service company clean their office every week. The fee is $100 each week, and the bill is paid at the end of the month. This is the first time the office has been cleaned this month.

These are both examples of an Expense entry. The expense part is always in the Debit column. You will list it first, and then either Cash or Accounts Payable. An entry to record Payroll Expense would credit Wages Payable. An entry to record Interest Expense would credit Interest Payable. These are special payable accounts. Most common business expenses will credit Accounts Payable or occasionally Cash.

When to record Revenue

Realization Principle – at the time goods are sold or services are rendered.

When to Record Expenses

Matching Principle – offsetting expenses against revenues in the appropriate time period. For instance, the bill for June’s long distance phone calls is paid in July. The long distance expense should show up on the June income statement.

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Journal Entries Explained - Full Guide With Examples

Creating a journal entry is the process of recording and tracking any transaction that your business conducts. Journal entries help transform business transactions into useful data.

Want to learn how to correctly write journal entries for your business? You’ve come to the right place!

What Is a Journal Entry?

Journal entries are records of financial transactions flowing in and out of your business. These transactions all get recorded in the company book, called the general journal .

Journal entries are the very first step in the accounting cycle . The main thing you need to know about journal entries in accounting is that they all follow the double-accounting method.

What this means is that for every recorded transaction, two accounts are affected - and as a result, there is always a debit entry and a credit entry.

Before diving into the nits and grits of double-entry bookkeeping and writing journal entries, you should understand why journal entries are so important for a business.

Why Are Journal Entries So Important?

Well, for starters, maintaining organized records of your transactions helps keep your company information organized . Accountants record data chronologically based on a specific format. This way they can easily find information and keep an eye out for any possible accounting errors .

Secondly, journal entries are the first step in the recording process. So you’ll eventually need them to prepare other financial statements . The income statement, cash flow, balance sheet, all of them are based on the initial recordings of journal entries.

Lastly, performance measurement . Auditors use financial reports to analyze how transactions are impacting the business.

What Is Double-Entry Bookkeeping?

As we said above, in every transaction, at least two accounts will change, where one is debited and the other one credited. This is known in accounting as double-entry bookkeeping .

Double-entry bookkeeping isn’t as complicated as it might sound. To understand the concept, think about any purchase you’ve ever made.

Money in exchange for a product, right? In accounting language, this is a transaction that simultaneously affects two accounts . The cash account, which decreases since you’re paying, and the equipment account, which increases from buying the product.

So in simple terms, in the business world, money doesn’t simply appear or disappear. If it goes into one account, it has to get out of another. That’s why it’s called “double-entry”.

This is where the concepts of debit and credit come to play.

First, let’s get some common misconceptions out of the way.

Debit and credit are neither good nor bad . And no, they’re not the same as adding or subtracting .

They are just words that show the double-sided nature of financial transactions .

In brief: debit is money that flows into an account , whereas credit is money that flows out of an account .

Here’s all you need to remember:

• A credit is always on the right side of a journal entry . It increases the owner's equity, liabilities, and revenue when credited. It decreases them when debited.
• A debit, on the other hand, is always on the left side of a journal entry . It increases assets and expenses when debited. It decreases them when credited.
• At the end of the journal entry, the credit and debit balance should be equal to each other . If they don’t, double-check because you’ve probably made a mistake.

Does it all still sound a bit confusing? Don’t worry! We’ve made a cheat sheet so you can easily remember.

Ready to solve an example? Let’s take a simple one and explain the process step-by-step.

Double-Entry Bookkeeping Example

Let’s say the owner of an advertising company decides to invest $10,000 cash in his business.

There are three main steps you have to follow to make the perfect journal entry:

First, figure out which accounts are affected . In this transaction, they are the assets account and the owner’s equity account.

Now, determine which items have been increased or decreased , and by how much .

Since the owner is making an investment , both of the accounts will increase by $10.000. The asset account will have $10.000 more in cash, whereas the Owner’s Equity account $10.000 more in Capital.

Lastly, we have to translate the changes into debits and credits . We learned that debits increase assets, so cash will be debited for $10,000. On the other hand, the opposite will happen to the owner’s equity. Capital will be credited for $10,000.

After this point, the hardest work is done. All there’s left to do now is neatly document the transaction.

Here’s how you do it ...

What Is Included in a Journal Entry?

To make a complete journal entry you need the following elements:

• A reference number or also known as the journal entry number , which is unique for every transaction.
• The date of the journal entry .
• The account column , where you put the names of the accounts that have changed .
• Two separate columns for debit and credit . Here you will put the amounts that will be credited and debited. Again, it’s important to remember that they must be equal in the end. If you’re using accounting software, it won’t let you post the journal entry unless the amounts match. However, if you’re using manual apps like Sheets or Excel, always triple check the balance.
• Lastly, the journal entry explanation . This needs to be a brief but accurate description of the journal entry. You may need to refer back to it in the future, so be as clear as possible.

This is what the previous transaction would look like in a Journal:

What are the Most Common Types of Journals?

Businesses are diverse - in size, service, ownership. That’s why there are different types of journals, based on the company you run. Mainly, however, we divide them into two categories: general and special .

We briefly mentioned the general journal in the beginning. To recap, the general journal is the company book in which accountants post (or summarize) all journal entries.

While small businesses and startups might not have difficulty fitting all of their entries in the general journal, that’s not always the case.

For big industries like trading or manufacturing, other journals, called special journals are necessary. Their purpose is to group and record transactions of a specific type. These types depend on the nature of the business. Usually, though, special journals record the most recurring transactions within a company.

Here’s a list of the most frequent types of special journals utilized by companies:

• Sales - income you earn from sales.
• Sales Return - loss of income from sales you’ve refunded
• Accounts Receivable - cash owed to the company
• Accounts Payable - cash the company owes
• Cash Receipts - cash you’ve gained
• Purchases - payments you’ve done
• Equity - owner’s investment
• Payroll - payroll transactions such as gross wages, or withheld taxes

Most Common Journal Entries for a Small Business

Some of the most common types of journal entries that a small business will make are the following:

All examples assume tax is applied on sales and purchase. If no tax, then it can be removed as the value will be zero.

Journal Entry for Sales of Services

Journal Entry for Sales Invoice - Goods/Inventory

Journal Entry for Cash Sales

Journal Entry for Receiving Payment for Invoice

Journal Entry for Purchase of Goods

Journal Entry for Purchase of Services

Journal Entry for Making Payments for Purchases

Journal Entry for Only Fulfilling Orders (transfer of goods/inventory out of the system)

Journal Entry for Only Receiving Goods (transfer of goods/inventory into the system)

As you might’ve guessed, a journal entry for sales of goods, is created whenever your business sells some manufactured goods. Since these are self-descriptive enough, let’s move on to some more complex accounting journal entries.

What Are the Different Types of Journal Entries?

There are three other main types of journal entries in accounting:

Compound Entries

When transactions affect more than two accounts , we make compound entries . These are common when the recordings are related in nature or happen during the same day.

Remember: debits and credits must always be equal. The principle stays the same, there are just more accounts that change.

Let’s check out an example.

XYZ company decides to buy new computer software for $1,000. They pay $500 in cash right away and agree to pay the remaining $500 later.

The steps are the same as in the double-entry bookkeeping.

First, we figure out which accounts have changed and by how much. In this scenario, those are three:

• Asset account, which increases by $1,000 when buying the new computer software.
• Cash account, which decreases $500 in Cash from paying.
• Accounts payable account, which increases $500 from the remaining unpaid amount.

The next step is to translate them into debit and credit.

Assets increase when debited, so Equipment will be debited for $1,000. Expenses decrease when credited, so Cash will be credited for $500. Liabilities increase when credited, so Accounts Payable will also be credited for $500.

This is what the transaction would like in a Journal:

Adjusting Entries

Adjusting entries are used to update previously recorded journal entries . They ensure that those recordings line up to the correct accounting periods. This does not mean that those transactions are deleted or erased, though.  Adjusting entries are new transactions that keep the business’ finances up to date .

They are usually made at the end of an accounting period . The accounting period usually coincides with the business fiscal year.

There are four main types of adjusting entries:

• Prepaid expenses are payments in cash for assets that haven’t been used yet. Think of insurance. It protects a company from possible losses, like fire or theft, which haven’t happened yet.
• Unearned revenue is cash received before the product or service is provided. Take your yearly gym membership or Spotify subscription - you’re paying in advance for future service.
• Accrued revenue is money earned, but not collected. If you take a loan, the interest rate income from the loan will be recorded as an accrued revenue.
• Accrued expenses are expenses made, but not paid. An example would be not paying your workers their salary until the end of the month.

Let’s put all of this information into a concrete exercise.

On October 2nd, you sell to a client, a service worth $3,000. You receive the payment for the provided service, however, you forget to make a journal entry.

Then at the end of October, you compare the actual cash reserve with the cash reserve shown on the balance sheet.

Since the two sums will not match, it means that there is a missing transaction somewhere. At this point, you need to make a journal entry adjustment .

The journal entry on October 31st would look like this:

Reversing Entries

Reverse entries are the opposite of adjusting entries. When we say the opposite, we don’t mean that the adjusting entries get deleted. No amount previously recorded changes. Reverse entries only simplify financial reports , by canceling out the effect of the adjusting entries.

Since their goal is just to simplify, reverse entries are optional. Some accountants choose to make them, others don’t.

They’re usually done at the start of a new accounting period .

Because adjusting entries are made at the end of the period. So, for instance, if the period ends on December 31st, you would do the reverse the next day, on January 1st.

Now, you can’t reverse all types of adjusting entries: only accrued revenues and accrued expenses .

Let’s see how the previous accrued revenues example would look like reversed.

The adjusting entry in the last section was:

• Accounts receivable debited for $3000
• Service revenue credited for $3000

What reversing entries do is switch the places of the two. So now:

• Service revenue will be debited for $3000
• Accounts receivable will be credited for $3000

This is what the complete journal entry would look like:

How to Use Accounting Software to Document Your Journal Entries

Running your own company comes with many challenges . No business owner has time to write down all of their journal entries by hand.

That’s why most companies record their entries using accounting software.

You might be thinking - isn’t accounting software only for accountants?

Well, most are, but we at Deskera prioritize small business owners. We’ve spent over 10 years working with small business owners from 100+ different countries to create a cloud accounting software that fits any type of business.

Need to create invoices , manage inventory, create financial reports, track payments, manage dropshipping? You can do all of that with Deskera. Our program is specifically built for you, to easily manage and oversee the finances of your business.

Here’s how you can use Deskera Books to record journal entries. 1.  Go to Accounting > Journal Entry.

Here, you’ll be able to view, create, and manage all your journal entries. The main attributes displayed for every entry here are the journal entry number, the journal entry date, the journal entry type, and the related document number .

To view the details of each journal entry, you can press on the expand all records button. As you can see, the account name, debit amount, credit amount, and description will all appear .

2.   Next, to manually create a journal entry, press on the create button on the top right . You’ll notice two journal entry options: normal or fund transfer. Each option depends on the type of entry you’re making.

3.   Click JE - Normal . This will take you to the general journal page. The top half of the page contains the auto numbering format, currency, and journal date . There’s also an option that allows you to include the entry on the tax report . Then there’s the bottom half , where you can add the account, description, type, and amount .

4. Fill in all of these boxes with the appropriate information and press Save . Ta-da, you’ve created a journal entry!

What if you accidentally enter the wrong amounts? The software will notice and won’t save the journal entry . That’s what the “unbalanced account” on the bottom right of the page serves for. The exact off-balance amount will show.

Automate Journal Entry Creation Using Accounting Software

Businesses have moved on from the age of pen and paper for a reason. Using accounting software like Deskera will help you automate the entire journal entry creation process.

When your business creates an invoice , the corresponding journal entry is added automatically by the system in the respective ledger for Accounts Receivable, Sales, Sales Tax, etc...

Similarly, when a payment is processed, the bank and the accounts receivable are adjusted automatically by the accounting software.

Deskera , allows you to integrate your bank directly and track any expenses automatically. When you make an expense, the journal entry is automatically created, and it is mapped to the correct ledger account.

You can also create custom invoices using the provided templates, and send reminders to make sure you don’t miss out on any invoice payments .

To top it off, creating financial reports with Deskera is as easy as 1-2-3.

Still not sure? Well, luckily Deskera offers a completely free trial. You can sign up here and try out all 3 Deskera platforms - Books, Sales (CRM), & People (HRIS).

Key Takeaways

Hope our guide to journal entries was helpful!

For a quick recap let’s go through the main points we’ve covered:

• Journal entries record the financial transactions of a business . They’re the first step in the accounting cycle.
• Each transaction in a journal entry affects two accounts . One of them is debited, the other one credited. Simply put, debit is money flowing into a company, whereas credit is money flowing out.
• Never forget: debits and credit should always be equal in the end.
• To write a journal entry you need to figure out which accounts are affected, which items decrease or increase, and then translate the changes into debit and credit.
• A complete journal entry is made of 6 elements : a reference number, date, account section, debits, credits, and a journal explanation.
• You can record these journal entries into either a General Journal or a Special Journal .
• There are three main types of journal entries: compound, adjusting, and reversing .
• Use accounting software like Deskera to automate the process of creating journal entries, and save a ton of time!

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