Basic journal entries are the fundamental building blocks of accounting and involve recording the financial transactions of a business. Here are some common types of basic journal entries with examples:
1. Sales on Credit
When recording a sale on credit:
- Debit Accounts Receivable
- Credit Sales
Example:
Date Particulars Debit (₹) Credit (₹) ------------------------------------------------------------------------ 2024-06-06 Accounts Receivable A/c 50,000 To Sales A/c 50,000 (Being goods sold on credit)
2. Cash Sales
When recording a sale for cash:
- Debit Cash
- Credit Sales
Example:
Date Particulars Debit (₹) Credit (₹) ------------------------------------------------------------------------ 2024-06-06 Cash A/c 50,000 To Sales A/c 50,000 (Being goods sold for cash)
3. Purchases on Credit
When recording a purchase on credit:
- Debit Purchases or Inventory
- Credit Accounts Payable
Example:
Date Particulars Debit (₹) Credit (₹) ------------------------------------------------------------------------ 2024-06-06 Purchases A/c 30,000 To Accounts Payable A/c 30,000 (Being goods purchased on credit)
4. Cash Purchases
When recording a purchase for cash:
- Debit Purchases or Inventory
- Credit Cash
Example:
Date Particulars Debit (₹) Credit (₹) ------------------------------------------------------------------------ 2024-06-06 Purchases A/c 30,000 To Cash A/c 30,000 (Being goods purchased for cash)
5. Payment to Creditors
When recording the payment to a supplier:
- Debit Accounts Payable
- Credit Cash or Bank
Example:
Date Particulars Debit (₹) Credit (₹) ------------------------------------------------------------------------ 2024-06-15 Accounts Payable A/c 30,000 To Bank A/c 30,000 (Being payment made to supplier)
6. Receipt from Debtors
When recording the receipt of payment from a customer:
- Debit Cash or Bank
- Credit Accounts Receivable
Example:
Date Particulars Debit (₹) Credit (₹) ------------------------------------------------------------------------ 2024-06-15 Bank A/c 50,000 To Accounts Receivable A/c 50,000 (Being payment received from customer)
7. Expense Incurred
When recording an expense incurred:
- Debit Expense Account
- Credit Cash or Bank
Example:
Date Particulars Debit (₹) Credit (₹) ------------------------------------------------------------------------ 2024-06-06 Rent Expense A/c 5,000 To Cash A/c 5,000 (Being rent paid for the month)
8. Income Earned
When recording income earned:
- Debit Cash or Bank
- Credit Income Account
Example:
Date Particulars Debit (₹) Credit (₹) ------------------------------------------------------------------------ 2024-06-06 Bank A/c 8,000 To Interest Income A/c 8,000 (Being interest income received)
9. Depreciation
When recording depreciation on an asset:
- Debit Depreciation Expense
- Credit Accumulated Depreciation or Asset
Example:
Date Particulars Debit (₹) Credit (₹) ------------------------------------------------------------------------ 2024-06-30 Depreciation Expense A/c 2,000 To Accumulated Depreciation or Asset A/c 2,000 (Being depreciation recorded for the month)
10. Owner's Equity Contribution
When the owner invests cash into the business:
- Debit Cash
- Credit Owner's Capital
Example:
Date Particulars Debit (₹) Credit (₹) ------------------------------------------------------------------------ 2024-06-01 Cash A/c 100,000 To Owner's Capital A/c 100,000 (Being owner's investment in the business)
These entries form the foundation of the accounting records and are essential for accurate financial reporting and analysis.
