Journal – Rules, Format & Examples

The journal is where EVERY business transaction is first recorded. Think of it as the diary of your business - chronological, detailed, and honest.

What is a Journal?

Definition: A book where transactions are recorded in chronological order (date-wise) as they occur.

Also called:

• Book of Original Entry
• Book of Prime Entry
• Day Book

Why "Journal"?: French word "jour" = day (daily record)

Format of Journal

Date	Particulars	L.F.	Debit (₹)	Credit (₹)
2024 Apr 01	Cash A/c ....Dr. To Capital A/c (Being capital introduced)	1 5	50,000	50,000

Column Explanation:

Column	Purpose
Date	Day, month, year of transaction
Particulars	Account names + narration
L.F.	Ledger Folio (page number where posted)
Debit	Amount debited
Credit	Amount credited

Rules for Journal Entries

1. Debit account is written first

• Written with "Dr." suffix
• Amount in Debit column

2. Credit account written below

• Written with "To" prefix
• Amount in Credit column

3. Narration is compulsory

• In brackets below entry
• Explains nature of transaction
• Starts with "Being..."

4. Date sequence

• Year written once at top
• Month changed when it changes
• Day written for each entry

Types of Journal Entries

Simple Entry

One debit + One credit

Example: Paid rent ₹5,000 cash

Particulars	Debit	Credit
Rent A/c ....Dr.	5,000
To Cash A/c		5,000
(Being rent paid for April)

Compound Entry

Multiple debits and/or multiple credits (but total debit = total credit)

Example: Purchased furniture ₹10,000 and machinery ₹20,000 for cash

Particulars	Debit	Credit
Furniture A/c ....Dr.	10,000
Machinery A/c ....Dr.	20,000
To Cash A/c		30,000
(Being assets purchased for cash)

30+ Transaction Examples with Journal Entries

1. Starting a Business

Transaction: Ram started business with cash ₹1,00,000

Particulars	Debit	Credit
Cash A/c ....Dr.	1,00,000
To Capital A/c		1,00,000
(Being capital introduced)

2. Purchased Goods for Cash

Transaction: Purchased goods ₹20,000 cash

Particulars	Debit	Credit
Purchases A/c ....Dr.	20,000
To Cash A/c		20,000
(Being goods purchased for cash)

3. Purchased Goods on Credit

Transaction: Purchased goods ₹15,000 from Mohan on credit

Particulars	Debit	Credit
Purchases A/c ....Dr.	15,000
To Mohan A/c		15,000
(Being goods purchased on credit from Mohan)

4. Sold Goods for Cash

Transaction: Sold goods for ₹30,000 cash

Particulars	Debit	Credit
Cash A/c ....Dr.	30,000
To Sales A/c		30,000
(Being goods sold for cash)

5. Sold Goods on Credit

Transaction: Sold goods to Ramesh ₹25,000 on credit

Particulars	Debit	Credit
Ramesh A/c ....Dr.	25,000
To Sales A/c		25,000
(Being goods sold to Ramesh on credit)

6. Paid Salary

Transaction: Paid salary to employees ₹15,000

Particulars	Debit	Credit
Salary A/c ....Dr.	15,000
To Cash A/c		15,000
(Being salary paid for April)

7. Paid Rent

Transaction: Paid rent ₹8,000

Particulars	Debit	Credit
Rent A/c ....Dr.	8,000
To Cash A/c		8,000
(Being rent paid)

8. Received Cash from Debtor

Transaction: Received ₹20,000 from Ramesh

Particulars	Debit	Credit
Cash A/c ....Dr.	20,000
To Ramesh A/c		20,000
(Being cash received from Ramesh)

9. Paid to Creditor

Transaction: Paid ₹10,000 to Mohan

Particulars	Debit	Credit
Mohan A/c ....Dr.	10,000
To Cash A/c		10,000
(Being payment made to Mohan)

10. Purchased Furniture

Transaction: Purchased furniture ₹25,000 cash

Particulars	Debit	Credit
Furniture A/c ....Dr.	25,000
To Cash A/c		25,000
(Being furniture purchased)

11. Drawings (Owner Withdrawal)

Transaction: Ram withdrew ₹5,000 for personal use

Particulars	Debit	Credit
Drawings A/c ....Dr.	5,000
To Cash A/c		5,000
(Being cash withdrawn for personal use)

12. Goods Returned by Customer (Sales Return)

Transaction: Ramesh returned goods worth ₹2,000

Particulars	Debit	Credit
Sales Returns A/c ....Dr.	2,000
To Ramesh A/c		2,000
(Being goods returned by Ramesh)

13. Goods Returned to Supplier (Purchase Return)

Transaction: Returned defective goods ₹3,000 to Mohan

Particulars	Debit	Credit
Mohan A/c ....Dr.	3,000
To Purchases Returns A/c		3,000
(Being goods returned to Mohan)

14. Bank Deposit

Transaction: Deposited ₹40,000 cash in bank

Particulars	Debit	Credit
Bank A/c ....Dr.	40,000
To Cash A/c		40,000
(Being cash deposited in bank)

15. Bank Withdrawal

Transaction: Withdrew ₹10,000 from bank

Particulars	Debit	Credit
Cash A/c ....Dr.	10,000
To Bank A/c		10,000
(Being cash withdrawn from bank)

Common Mistakes to Avoid

Mistake	Correct Approach
❌ Writing credit account first	✅ Always debit account first
❌ No narration	✅ Always write narration
❌ Wrong golden rules	✅ Revise account types
❌ Unequal debit-credit	✅ Always balance both sides
❌ Recording non-monetary events	✅ Only record measurable transactions

What NOT to Record in Journal

• Manager appointed (no money involved)
• Agreement signed (no transaction yet)
• Goods damaged by fire but not insured (no monetary measurement)

Quiz

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💡 Final Wisdom: "The journal is your accounting foundation. Master journal entries, and ledgers, trial balance, everything else becomes easy. Practice 10 entries daily for a week - you'll become a pro!"