JOURNAL

Principles of Accounting & Financial Management Accounting cycles

JOURNAL

Journal is a book of accounts in which all day to day business transactions are recorded in a chronological order i.e. in the order of their occurrence. Transactions when recorded in a Journal are known as entries.
It is the book in which transactions are recorded for the first time. Journal is also known as ‘Book of Original Record’ or ‘Book of Primary Entry’.
Business transactions of financial nature are classified into various categories of accounts such as assets, liabilities, capital, revenue and expenses.
Every transaction can be recorded in journal. This process of recording transactions in the journal is’ known as ‘Journalising’.

DATE	PARTICULAR	L.F	DEBIT	CREDIT
(1)	(2)	(3)	(4)	(5)

Date

Particular

l.f

Debit

Credit

A/C Dr To

(Narration)

XXX

1. Siya Ram started its business with cash Rs. 50,000

Simple Journal entry

Compound journal entry

If an entry contains more than one debit or credit or both, that entry is known as a compound journal entry.
If an entry contains more than one debit or credit or both, that entry is known as a compound journal entry. Actually, a compound journal entry is a combination of two or more simple journal entries.

Thus, a compound journal entry can be made in the following three ways:

1. Bad debt

When a debtor fails to pay the full amount due to him, the unpaid amount is known as bad debt.

Dinesh was declared involvement & a payment of Rs. 60 paisa, in a rupee loan given to Dinesh 10,000.

Bad debt =[10,000×60/100] = ????. 6,000

2. Discount Allowed and Received

To encourage a customer to pay the amount due before due date, discount is allowed. This is called cash discount.
Trade discount is allowed by the wholesaler to retailer on List Price and is not recorded in the books of accounts.
Bought goods for cash of L.P. Rs. 50,000 at 20% T.D. and 5% cash discount