Journal is the book of original entry in which the transactions are entered for the first time from the source documents, in the form of journal entries, after which the entries are transferred to the ledger, the principal book of entry.

The process of recording transactions in journal is called Journalising.

The process of transferring journal entry to individual accounts in the ledger is called Posting.

How to prepare Journal?

The format of Journal is shown as under:

Date Particulars L.F. Debit ( ₹) Credit ( ₹)


Name of the acct. to be debited                       Dr.

To Name of the acct. to be credited                       (Narration)



Date: The first column in a journal is Date on which the transaction took place.

Particulars: The name of the account to be debited is written on the first line beginning from the left hand corner and the word ‘Dr.’ is written at the end of the column. The name of the account to be credited is written on the second line leaving margin on the left side with a prefix ‘To’.

Narration: A brief description of the transaction is given below these account names.

Line: After writing the narration a line is drawn in the Particulars column, indicating the end of recording the specific journal entry.

Ledger Folio: L.F. records the page number of the ledger book on which relevant account appears. This column is filled up at the time of posting.

Debit Amount: It is the amount against the account to be debited.

Credit Amount: It is the amount against the account to be credited.

At the end of each page of the journal book, the amount columns are totaled and carried forward (c/f to the next page where such amounts are recorded as brought forward (b/f) balances.


If Building worth ₹25,000 is purchased on July2, 2012, payment made by ₹ 25,000 cheque, Journal entry is to be recorded as under:

Date Particulars L.F. Debit (₹) Credit (₹)


Building A/c                                              Dr.

To Bank A/c

(Purchase of Building on cash basis)

25,000 25,000


Journal Entry can be of two types:

  1. Simple Journal Entry: It involves only two accounts. (as above)
  2. Compound Journal Entry:It involves multiple accounts as there are more than one account to be debited or credited. (As below)
Date Particulars L.F. Debit (₹) Credit (₹)
 Cash A/c                                                    Dr.
Furniture A/c                                             Dr.

To Capital A/c
(Started business with cash and furniture)





It may be noted that both the amount columns are totaled at the end of every page of the Journal.

No. Transaction Debit A/c
1. Started business with cash. Cash A/c                                              Dr.

To Capital A/c
2. Started business with cash, bank balance. Cash A/c                                             Dr.

Bank A/c                                            Dr.

To Capital A/c
3. Borrowed loan from State Bank of India. Bank A/c                                           Dr.

To SBI’s loan A/c
4. Borrowed loan from a friend. Bank A/c                                          Dr.

To Friend’s loan A/c
5. Purchased machinery for cash. Machinery A/c                                Dr.

To Cash A/c
6. Purchased machinery for cash, payment made by cheque. Machinery A/c                               Dr.

To Bank A/c
7. Purchased furniture, payment made by accepting a bill of   exchange Furniture A/c                                 Dr.

To Bills Payable A/c
8. Purchased goods, 50% payment made by cheque. Purchases A/c                                Dr.

To Bank A/c,

To Creditors A/c
9. Goods purchased on credit, now returned. Creditors A/c                                    Dr.

To Purchases Return A/c
10. Sold goods for cash. Cash A/c                                           Dr.

To Sales A/c
11. Sold goods on credit. Debtors A/c                                     Dr.

To Sales A/c
12. Sold goods, 50% payment received in cash. Cash A/c                                           Dr.

Debtors A/c                                     Dr.

To Sales A/c
13. Payment of an installment of State bank of India’s loan. SBI’s loan A/c                                Dr.

To Bank A/c
14. Bills Receivable received from a debtor. Bills Receivable A/c                    Dr.

To Debtors A/c
15. Deposited into Canara bank. Canara Bank A/c                         Dr.

To Cash A/c
16. Withdrew from bank for office use. Cash A/c                                        Dr.

To Bank A/c
17. Withdrew from bank for domestic use. Drawings A/c                                Dr.

To Bank A/c
18. Payment of wages, rent by cheque. Wages A/c                                     Dr.

Rent A/c                                        Dr.

To Bank A/c
19. Returned to friend, loan borrowed from him, by cheque. Friend’s loan A/c                         Dr.

To Bank A/c
20. Bad Debts. Bad Debts A/c                              Dr.

To Debtors A/c
21. Cash received from Mahesh for commission. Cash A/c                                         Dr.

To Commission A/c
22. Received rent. Cash A/c                                          Dr.

To Rent A/c
23. Goods returned by our customers. Sales Return A/c                            Dr.

To Debtors A/c
24. Collection of cash from debtors after discount. Cash A/c                                          Dr.

Discount Allowed A/c                  Dr.

To Debtors A/c
25. Payment to creditors after discount. Creditors A/c                                Dr.

To Cash A/c

To Discount received A/c
26. Depreciation on asset. Depreciation A/c                          Dr.

To Asset A/c
27. Appreciation to asset. Asset A/c                                        Dr.

To Appreciation A/c
28. Interest on Loan. Interest on Loan A/c                    Dr.

To Loan A/c
29. Interest on bank deposit. Bank A/c                                         Dr.

To Interest A/c
30. Outstanding expenses. Expenses A/c                                Dr.

To Outstanding expenses A/c
31. Expenses paid in advance (when these are paid). Prepaid expenses A/c                 Dr.

To Cash A/c
32. Accrued Income. Accrued Income A/c                   Dr.

To Income A/c
33. Income received in advance. (when it is received). Cash A/c                                         Dr.

To Income received in advance A/c
34. Withdrew goods for personal use. Drawings A/c                                 Dr.

To Purchases A/c
35. Goods given as charity. Charity A/c                                    Dr.

To Purchases A/c
36. Prepaid Expenses. Prepaid Expenses A/c                Dr.

To Expenses A/c
37. Interest On Capital. Interest On Capital                    Dr.

To Capital A/c
38. Interest on Drawings. Drawings A/c                              Dr.

To Interest on Drawings A/c
39. Loss By Fire(Theft) Loss by Fire(Theft)  A/c            Dr.

To Purchases A/c
 40.  Received a Cheque from Angad, directly deposited into bank. Bank A/c                                       Dr.

To Angad  A/c

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