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JOURNAL
Journal is a book of original entry in which the transactions are recorded
first of all, as and when they take place.
“The Journal as originally used, is a book of prime entry in which
transactions are copied in order of date from a memorandum or waste
book. The entries as they copied are classified into debits and credits, so as
to facilitates their being correctly posted, afterwards in the ledger”
Thus Journal provides a date wise record of all the transactions with details
of the account debited and credited, and the amount of each transaction.
Prior to recording in Journal, the transactions may also be recorded in a
rough book called ‘Waste book’ or ‘Memorandum book’. Maintenance of
waste book is not necessary but where the number of every day transaction
is so large that it is not possible for a businessman to remember all of them,
the use of waste book may prove helpful. Later on with the help of waste
book recording is made in Journal.
Proforma of Journal
2
Date Particulars
Ledger
Folio
Amount
Dr.(in Rs.)
Amount
Cr.(in Rs.)
Example 1:
Enter the following transactions in the Journal of Siya Ram:
1994 Rs.
June 1 Siya Ram started business with cash 50, 000
2 Purchased goods for cash 20, 000
4 Purchased goods from Subhash
5 Purchased furniture for cash
7 Sold goods for cash
9 Sold goods to Mahesh
Opening Entry Every firm starts its new books in the beginning of each year. Since the closing balances of last year have to be carried forward to the next year, the first entry in each year’s journal will be recorded the previous year’s closing balances of all assets and liabilities. As it is the first entry, is called the opening entry. In this entry the accounts of all assets are debited because assets always show debit balances and the accounts of liabilities and capital are credited because they always show credit balances. In case the total of liabilities exceeds the total of assets, the difference will be treated as the amount of Goodwill and the same will be debited in the opening entry. Bad Debts When the goods are sold to customer on credit, and if the amount becomes irrecoverable due to his insolvency or for some other reason, the amount not recovered is called bad- debts. For recording it, bad debts account is debited and the customer’s account is credited. Bad Debts Recovered Cash A/c Dr. 1, 000 To Bad Debts Recovered A/c 1, 000
Outstanding Expenses
Salary A/c (or any other expense A/c) Dr. 1, 000 To Outstanding Salary A/c 1, 000
Prepaid Expenses
Insurance Premium (or any other expense A/c) Dr. 1, 200 To Cash A/c 1, 200
Depreciation
Depreciation A/c Dr. 200 To Assets A/c 200
Interest on Capital
Interest on Capital A/c Dr. 500 To Capital A/c 500
Expenditure on Installation of Machinery:
Machinery A/c Dr. 10, 000 To Cash A/c 10, 00
Example 2: Journalize the following: 1999 March 1 Ganesh invested Rs. 2, 00, 000 in business of general stores March 2 Paid into current account Rs. 1, 20, 000 March 4 Purchased goods for Rs. 60, 000 and paid Rs. 2, 000 for carriage of goods March 6 Purchased goods for Rs. 1, 00, 000 on credit from Raghunath and paid Rs. 1,200 on carriage of these goods March 10 Purchase machinery for Rs. 10, 000 and spent Rs. 100 on its carriage. March 12 Received an order of goods for Rs. 1,25, 000 from Sunil March 13 Payment made to Raghunath by cheque after getting 10% discount for prompt payment March 15 Sunil’s order was executed and cartage Rs. 3, 000 was paid in this connection. March 16 Additional cash introduced by the proprietor Rs. 50, 000. March 17 Spent Rs. 25, 000 for show-case. March 20 Purchased goods from Ravi for Rs. 12, 000 and payment made by cheque. March 22 Sold 1/5th^ of above goods at a profit of 33^1/3 % on cost. March 28 Bank charges for its services Rs. 200.
