let's start with the basics. Journal entries are records of financial transactions in accounting. Each entry consists of a debit and a credit. Here are some common basic journal entries:
1. Capital Introduction
When the owner invests money into the business.
Entry:
Account: Cash (or Bank) Account Debit ₹100,000
To Capital Account Credit ₹100,000
(Being capital introduced by the owner)
2. Purchase of Goods
When goods are purchased for cash.
Entry:
Account: Purchases Account Debit ₹50,000
To Cash Account Credit ₹50,000
(Being goods purchased for cash)
3. Sales of Goods
When goods are sold for cash.
Entry:
Account: Cash Account Debit ₹70,000
To Sales Account Credit ₹70,000
(Being goods sold for cash)
4. Payment of Expenses
When expenses like rent are paid.
Entry:
Account: Rent Expense Account Debit ₹10,000
To Cash Account Credit ₹10,000
(Being rent paid in cash)
5. Purchase of Equipment
When equipment is purchased for cash.
Entry:
Account: Equipment Account Debit ₹25,000
To Cash Account Credit ₹25,000
(Being equipment purchased for cash)
6. Receipt of Income
When income like commission is received.
Entry:
Account: Cash Account Debit ₹15,000
To Commission Income Account Credit ₹15,000
(Being commission received in cash)
7. Payment of Salaries
When salaries are paid to employees.
Entry:
Account: Salaries Expense Account Debit ₹20,000
To Cash Account Credit ₹20,000
(Being salaries paid in cash)
8. Drawings by Owner
When the owner withdraws money for personal use.
Entry:
Account: Drawings Account Debit ₹5,000
To Cash Account Credit ₹5,000
(Being money withdrawn by the owner for personal use)
9. Loan Taken
When a loan is taken from a bank.
Entry:
Account: Cash (or Bank) Account Debit ₹200,000
To Loan Account Credit ₹200,000
(Being loan taken from the bank)
10. Repayment of Loan
When the loan is repaid.
Entry:
Account: Loan Account Debit ₹50,000
To Cash (or Bank) Account Credit ₹50,000
(Being loan repaid to the bank)
