Examples of Journal entries in a simplified way - 3

16,Charged Manohar Rs. 50 commission for service rendered to him

Account to be debited            Manohar's A/c.(Personal A/c - Debit the receiver of benefit)

Account to be credited           Commission A/c(Nominal A/c-Credit Incomes and gains)

Reason - 

(a)Manohar is the receiver of benefit, i.e., service.

(b)Commission earned is an income.

17,Charlie agreed to pay interest of Rs.100 on the amount advanced to him

Account to be debited            Charlies Loan A/c.(Personal A/c - Debit the receiver of benefit)

Account to be credited           Interest on Loan A/c(Nominal A/c-Credit Incomes and gains)

Reason - 

(a)Charlie is the receiver of benefit, i.e., the period of credit.

(b)Interest on loan advanced is an income.

18. Received loan from Shankar Rs.1000.

Account to be debited            Cash A/c.(Real A/c - Debit what comes in)

Account to be credited           Shankar's Loan A/c(Personal A/c-Credit the giver of benefit)

Reason - 

(a)Cash comes in.

(b)Shankar is the giver of benefit i.e., loan.

19.Office furniture stolen Rs.50.

Account to be debited            Loss by theft A/c.(Nominal A/c - Debit losses and expenses)

Account to be credited           Furniture  A/c(Real A/c-Credit what goes out)

Reason - 

(a)Furniture stolen is a loss

(b)When furniture is stolen, furniture goes out.

20.Paid Income tax Rs.500

Account to be debited            Drawings A/c*.(Personal A/c - Debit the receiver of benefit)

Account to be credited           Cash A/c(Real A/c-Credit what goes out)

Reason - 

(a)When income-tax, i.e., the personal expense of the owner, is paid by the business, the owner is the receiver of benefit.

(b)Cash goes out.

***Income tax paid should be taken as the personal expense of the owner, i.e., as drawings.

21.Paid Life Insurance Premium Rs. 300

Account to be debited            Drawings A/c*.(Personal A/c - Debit the receiver of benefit)

Account to be credited           Cash A/c(Real A/c-Credit what goes out)

Reason - 

(a)When life insurance premium i.e., the personal expense of the owner, is paid by the business, the owner is the receiver of benefit. 

(b)Cash goes out.


***Life insurance pais should be taken as the personal expense of the owner, i.e., as drawings.

22.Allowed discount to Karunakar Rs. 20

Account to be debited            Discount Allowed A/c (Nominal A/c - Debit losses and expenses)

Account to be credited           Karunakar's A/c(Personal A/c-Credit the giver of benefit)

Reason - 

(a)Discount allowed is an expense.

(b)Discount is allowed to Karunakar for his prompt payment. So, Karunakar is the giver of benefit.

23. Discount Received from Gangadhar Rs.10.

Account to be debited            Gangadhar A/c (Personal A/c - Debit the receiver of benefit)

Account to be credited           Discount Received A/c(Nominal A/c-Credit Incomes and gains)

Reason - 

(a)Discount is given by Gangadhar for prompt payment made to him. So Gangadhar is the receiver of benefit.

(b)Discount received is an income.

24.Bank charges Rs. 30

Account to be debited            Bank charges A/c (Nominal A/c - Debit expenses and losses)

Account to be credited           Bank A/c(Personal A/c-Credit the giver of benefit)

Reason - 

(a)Bank charges are an expense.

(b)Bank charges are charged by the bank for the service rendered to the business. So, Bank is the giver of benefit i.e., banking service.

25.Railways freight paid on machinery purchased Rs. 100

Account to be debited           Machinery A/c*** (Real A/c - Debit what comes in)

Account to be credited          Cash A/c(Real A/c-Credit what goes out)

Reason - 

(a)Machinery comes in

(b)Cash goes out.

***Railway freight paid on machinery purchases should be tr eated as a part of cost of machinery purchased.


26.Till takings for the month Rs.1000

Account to be debited          Cash A/c (Real A/c - Debit what comes in)

Account to be credited         Sales A/c(Real A/c-Credit what goes out or
                                                             Nominal A/c-incomes and gains)

Reason - 

(a)Cash comes in.

(b)Goods go out on sale or goods sold are income for the business.

Examples of Journal entries in a simplified way - 2

6,Bought Stamps Rs.10

Account to be debited            Postage A/c.(Nominal A/c - Debit losses and expenses)

Account to be credited           Cash A/c(Real A/c-Credit What goes out)

Reason - 

(a)Postage is an expense.. 

(b)Cash goes out. 

7.Withdrew cash from business for personal use Rs. 100

Account to be debited            Drawings A/c (Personal A/c - Debit the receiver of benefit)

Account to be credited           Cash A/c   (Real A/c-Credit What goes out)

Reason - 

(a)Proprietor is the receiver of benefit, when he withdraws cash from business for his personal use. 

(b)Cash goes out. 

8.Paid salary to manager Rs. 300

Account to be debited            Salaries A/c (Nominal A/c - Debit  losses and expenses)

Account to be credited           Cash A/c   (Real A/c-Credit What goes out)

Reason - 

(a)Salaries is an expense.

(b)Cash goes out. 

9.Paid rent to landlord to Rs. 200.

Account to be debited            Rent A/c (Nominal A/c - Debit  losses and expenses)

Account to be credited           Cash A/c   (Real A/c-Credit What goes out)

Reason - 

(a)Rent paid is an expense.

(b)Cash goes out. 

10.Received commission from George Rs. 50

Account to be debited            Cash A/c (Real A/c - Debit  what comes in)

Account to be credited           Commission A/c   (Nominal A/c-Credit Incomes and gains)

Reason - 

(a)Cash comes in 

(b)Commission received is an income.

11.Paid for repairing machinery Rs. 30

Account to be debited            Repairs A/c (Nominal A/c - Debit  losses and expenses)

Account to be credited           Cash A/c   (Real A/c-Credit What goes out)

Reason - 

(a)Repairs to machinery is an expense.

(b)Cash goes out.

12.Received cash from Raghav on account Rs. 400

Account to be debited            Cash A/c (Real A/c - Debit  What comes in)

Account to be credited           Raghav A/c   (Personal A/c-Credit the giver of benefit)

Reason - 

(a)Cash comes in 

(b)Raghav is the giver of benefit

13.Gave loan to Bhasker Rs.500.

Account to be debited            Bhasker's Loan A/c (Personal A/c - Debit  the receiver of benefit)

Account to be credited           Cash A/c   (Real A/c-Credit what goes out)

Reason - 

(a)Bhasker is the receiver of benefit, i.e., loan.

(b)Cash goes out.

14.Purchased goods from Raghu Rs. 300

Account to be debited            Purchases A/c (Real A/c - Debit what comes in 

                                                                  or Nominal A/c - Debit losses and expenses) 

Account to be credited           Raghu A/c   (Personal A/c-Credit the giver of benefit)

Reason - 

(a)Goods come in on purchase or goods purchased are an expense for the business.

(b)Raghu is the giver of benefit.

15.Opened a bank account with Rs. 600.

Account to be debited            Bank A/c (Personal A/c - Debit the receiver of benefit)                                                                 

Account to be credited           Cash A/c   (Nominal A/c-Credit what goes out)

Reason - 

(a)Bank is the receiver of benefit i.e., cash

(b)Cash goes out.

Examples of Journal entries in a simplified way

Journal entries explained in a simplified way.

1. X commenced business with cash. Rs. 5000.

2. Bought goods from Keshav for cash rs. 1,000.

3. Sold furniture to Raghav on credit Rs. 5,000.

4. Sold goods for cash Rs. 800.

5. Cash purchases Rs. 600.

1.X commenced business with cash. Rs. 5000.

Account to be debited            Cash A/c.(Real A/c - Debit what comes in)

Account to be credited           Capital A/c(Personal A/c-Credit the giver of benefit)

Reason - 

(a)Cash comes in. 

(b)Proprietor is the giver of benefit, when he gives cash to that business. 

2. Bought goods from Keshav for cash rs. 1,000. 

Account to be debited             Purchases A/c(Real A.c- Debit what comes in or Nominal A/c -   

                                                                      Debit losses and expenses)

Account to be credited            Cash A/c (Real A/c - Credit what goes out)

Reason - 

(a)Goods come in on purchase or goods purchases are expenses for the business 

(b)Cash goes out by.

3. Sold furniture to Raghav on credit Rs. 5,000. 

Account to be debited               Raghav's A/c(Personal A/c- Debit the receiver of benefit)

Account to be credited              Furniture A/c(Real A/c- Credit what goes out)

Reason - 

(a).Raghav is the receiver of benefit.

(b).Furniture goes out.

4. Sold goods for cash Rs. 800. 

Account to be debited                 Cash A/c (Real A/c - Debit what comes in)

Account to be credited                Sales A/c (Real A/c - Credit what goes out or Nominal A/c - Credit      

                                                   incomes and gains)

Reason - 

(a).Cash comes in.

(b).Goods go out on sale or goods sold are incomes for the business

5. Cash purchases Rs. 600. 

Account to be debited                   Purchases A/c (Real A/c - Debit what comes in or Nominal A/c -

                                                                              Debit losses and expenses)

Account to be credited                  Cash A/c (Real A/c - Credit what goes out)

Reason -

(a).Goods come in on purchase or goods purchases are expenses for the business.

(b).Cash goes out.

\Let us discuss on some more journal entries in the coming post :-)