Journal Entries in Accounting: Complete Guide with 100+ Examples
Master journal entries with this comprehensive guide. Learn debits and credits, golden rules, and practice 100+ examples covering all common business transactions in India.
The Art of Double Entry
Meera started a catering business. After three months, she had no idea where her money went. Her books showed random numbers that didn’t make sense.
Her accountant friend asked, “Did you make journal entries?”
“I just wrote down cash in and cash out,” Meera replied.
“That’s single entry. For real accounting, every transaction needs two entries - one debit and one credit. They must always balance.”
This is double-entry bookkeeping - the foundation of modern accounting invented over 500 years ago, still used by every business today.
What is a Journal Entry?
Definition
A journal entry is a record of a business transaction showing the accounts affected, whether they are debited or credited, and the amounts involved.
Structure
| Date | Particulars | L.F. | Debit (₹) | Credit (₹) |
|---|---|---|---|---|
| 01-04-2024 | Cash A/c Dr. | 50,000 | ||
| To Capital A/c | 50,000 | |||
| (Being capital introduced) |
The Golden Rule
Every debit has a corresponding credit of equal amount.
Total Debits = Total Credits (Always!)
Understanding Debit and Credit
Account Types and Rules
| Account Type | Debit | Credit |
|---|---|---|
| Assets | Increase | Decrease |
| Expenses | Increase | Decrease |
| Liabilities | Decrease | Increase |
| Income/Revenue | Decrease | Increase |
| Capital/Equity | Decrease | Increase |
Memory Trick: DEALER
| Letter | Account Type | Debit | Credit |
|---|---|---|---|
| D | Dividends | ↑ | ↓ |
| E | Expenses | ↑ | ↓ |
| A | Assets | ↑ | ↓ |
| L | Liabilities | ↓ | ↑ |
| E | Equity | ↓ | ↑ |
| R | Revenue | ↓ | ↑ |
Traditional Golden Rules
| Account Type | Debit | Credit |
|---|---|---|
| Personal A/c | The receiver | The giver |
| Real A/c | What comes in | What goes out |
| Nominal A/c | All expenses/losses | All incomes/gains |
Basic Journal Entries
1. Capital Introduction
Owner invests ₹5,00,000 cash to start business
Cash A/c Dr. 5,00,000
To Capital A/c 5,00,000
(Being capital introduced by owner)
2. Capital in Other Forms
Owner contributes furniture worth ₹50,000 and stock worth ₹1,00,000
Furniture A/c Dr. 50,000
Stock A/c Dr. 1,00,000
To Capital A/c 1,50,000
(Being assets contributed as capital)
3. Opening Entry
Starting business with assets and liabilities
Cash A/c Dr. 1,00,000
Debtors A/c Dr. 50,000
Stock A/c Dr. 2,00,000
Furniture A/c Dr. 30,000
To Creditors A/c 60,000
To Capital A/c 3,20,000
(Being opening balances brought forward)
Purchase Entries
4. Cash Purchase
Purchased goods for ₹30,000 in cash
Purchases A/c Dr. 30,000
To Cash A/c 30,000
(Being goods purchased for cash)
5. Credit Purchase
Purchased goods worth ₹50,000 from Sharma Traders on credit
Purchases A/c Dr. 50,000
To Sharma Traders A/c 50,000
(Being goods purchased on credit)
6. Purchase with GST (Intra-state)
Purchased goods ₹1,00,000 + GST 18% from local supplier
Purchases A/c Dr. 1,00,000
Input CGST A/c Dr. 9,000
Input SGST A/c Dr. 9,000
To Supplier A/c 1,18,000
(Being goods purchased with GST)
7. Purchase with GST (Inter-state)
Purchased goods ₹1,00,000 + IGST 18% from Mumbai
Purchases A/c Dr. 1,00,000
Input IGST A/c Dr. 18,000
To Supplier A/c 1,18,000
(Being interstate purchase with IGST)
8. Purchase Return
Returned goods worth ₹10,000 to supplier
Supplier A/c Dr. 10,000
To Purchase Return A/c 10,000
(Being goods returned to supplier)
9. Purchase Return with GST
Returned goods worth ₹10,000 + GST 18%
Supplier A/c Dr. 11,800
To Purchase Return A/c 10,000
To Input CGST A/c 900
To Input SGST A/c 900
(Being goods returned, GST reversed)
Sales Entries
10. Cash Sale
Sold goods for ₹40,000 cash
Cash A/c Dr. 40,000
To Sales A/c 40,000
(Being goods sold for cash)
11. Credit Sale
Sold goods worth ₹75,000 to Verma & Co. on credit
Verma & Co. A/c Dr. 75,000
To Sales A/c 75,000
(Being goods sold on credit)
12. Sale with GST (Intra-state)
Sold goods ₹2,00,000 + GST 18% locally
Customer A/c Dr. 2,36,000
To Sales A/c 2,00,000
To Output CGST A/c 18,000
To Output SGST A/c 18,000
(Being goods sold with GST)
13. Sale with GST (Inter-state)
Sold goods ₹2,00,000 + IGST 18% to Chennai
Customer A/c Dr. 2,36,000
To Sales A/c 2,00,000
To Output IGST A/c 36,000
(Being interstate sale with IGST)
14. Sales Return
Goods worth ₹15,000 returned by customer
Sales Return A/c Dr. 15,000
To Customer A/c 15,000
(Being goods returned by customer)
15. Sales Return with GST
Goods worth ₹15,000 + GST returned
Sales Return A/c Dr. 15,000
Output CGST A/c Dr. 1,350
Output SGST A/c Dr. 1,350
To Customer A/c 17,700
(Being sales return, GST adjusted)
Expense Entries
16. Rent Paid
Paid office rent ₹25,000 by cheque
Rent Expense A/c Dr. 25,000
To Bank A/c 25,000
(Being rent paid for the month)
17. Rent with TDS
Paid rent ₹50,000, TDS @ 10%
Rent Expense A/c Dr. 50,000
To Landlord A/c 45,000
To TDS Payable A/c 5,000
(Being rent paid with TDS deducted)
18. Salary Payment
Paid salaries ₹3,00,000 by bank transfer
Salary Expense A/c Dr. 3,00,000
To Bank A/c 3,00,000
(Being salaries paid)
19. Salary with Deductions
Salary ₹50,000, PF ₹6,000 (employee), TDS ₹4,000
Salary Expense A/c Dr. 50,000
To PF Payable A/c 6,000
To TDS Payable (192) A/c 4,000
To Bank A/c 40,000
(Being salary paid with deductions)
20. Electricity Bill
Paid electricity bill ₹8,000
Electricity Expense A/c Dr. 8,000
To Cash A/c 8,000
(Being electricity charges paid)
21. Telephone Bill
Paid phone bill ₹2,500
Telephone Expense A/c Dr. 2,500
To Cash A/c 2,500
(Being telephone charges paid)
22. Professional Fees
Paid CA fees ₹30,000, TDS @ 10%
Professional Fees A/c Dr. 30,000
To CA A/c 27,000
To TDS Payable (194J) A/c 3,000
(Being professional fees with TDS)
23. Advertisement
Paid for newspaper advertisement ₹15,000
Advertisement Expense A/c Dr. 15,000
To Bank A/c 15,000
(Being advertisement charges paid)
24. Travel Expenses
Reimbursed employee travel ₹12,000
Travel Expense A/c Dr. 12,000
To Cash A/c 12,000
(Being travel expenses reimbursed)
25. Insurance Premium
Paid annual insurance premium ₹36,000
Prepaid Insurance A/c Dr. 36,000
To Bank A/c 36,000
(Being insurance premium paid)
Monthly adjustment:
Insurance Expense A/c Dr. 3,000
To Prepaid Insurance A/c 3,000
(Being monthly insurance expense)
Fixed Asset Entries
26. Purchase of Machinery
Bought machinery ₹5,00,000 + GST 18%
Machinery A/c Dr. 5,00,000
Input CGST A/c Dr. 45,000
Input SGST A/c Dr. 45,000
To Supplier A/c 5,90,000
(Being machinery purchased)
27. Purchase of Computer
Bought computer ₹80,000 + GST 18%
Computer A/c Dr. 80,000
Input CGST A/c Dr. 7,200
Input SGST A/c Dr. 7,200
To Bank A/c 94,400
(Being computer purchased)
28. Purchase of Furniture
Bought office furniture ₹1,20,000
Furniture A/c Dr. 1,20,000
To Bank A/c 1,20,000
(Being furniture purchased)
29. Purchase of Vehicle
Bought delivery van ₹8,00,000
Vehicle A/c Dr. 8,00,000
To Bank A/c 8,00,000
(Being vehicle purchased)
30. Installation Costs
Paid ₹15,000 for machinery installation
Machinery A/c Dr. 15,000
To Cash A/c 15,000
(Being installation cost capitalized)
Depreciation Entries
31. Annual Depreciation
Depreciation on machinery ₹50,000
Depreciation Expense A/c Dr. 50,000
To Accumulated Depreciation A/c 50,000
(Being annual depreciation)
32. Depreciation (Multiple Assets)
Depreciation Expense A/c Dr. 1,20,000
To Accum. Dep. - Machinery A/c 50,000
To Accum. Dep. - Furniture A/c 25,000
To Accum. Dep. - Computer A/c 30,000
To Accum. Dep. - Vehicle A/c 15,000
(Being depreciation on all assets)
Sale of Assets
33. Sale at Book Value
Sold old machinery (Cost ₹1,00,000, Acc.Dep ₹60,000) for ₹40,000
Bank A/c Dr. 40,000
Accumulated Depreciation A/c Dr. 60,000
To Machinery A/c 1,00,000
(Being machinery sold at book value)
34. Sale at Profit
Sold machinery (Cost ₹1,00,000, Acc.Dep ₹60,000) for ₹50,000
Bank A/c Dr. 50,000
Accumulated Depreciation A/c Dr. 60,000
To Machinery A/c 1,00,000
To Profit on Sale of Asset A/c 10,000
(Being machinery sold at profit)
35. Sale at Loss
Sold machinery (Cost ₹1,00,000, Acc.Dep ₹60,000) for ₹30,000
Bank A/c Dr. 30,000
Accumulated Depreciation A/c Dr. 60,000
Loss on Sale of Asset A/c Dr. 10,000
To Machinery A/c 1,00,000
(Being machinery sold at loss)
Banking Entries
36. Cash Deposited
Deposited ₹1,00,000 cash into bank
Bank A/c Dr. 1,00,000
To Cash A/c 1,00,000
(Being cash deposited in bank)
37. Cash Withdrawn
Withdrew ₹50,000 from bank
Cash A/c Dr. 50,000
To Bank A/c 50,000
(Being cash withdrawn from bank)
38. Bank Charges
Bank deducted service charges ₹500
Bank Charges A/c Dr. 500
To Bank A/c 500
(Being bank charges debited)
39. Interest on FD
Received FD interest ₹25,000, TDS ₹2,500
Bank A/c Dr. 22,500
TDS Receivable A/c Dr. 2,500
To Interest Income A/c 25,000
(Being interest received, TDS deducted by bank)
40. Cheque Bounced
Customer cheque of ₹30,000 bounced
Customer A/c Dr. 30,000
To Bank A/c 30,000
(Being cheque bounced, debt restored)
Loan Entries
41. Loan Taken
Took bank loan of ₹10,00,000
Bank A/c Dr. 10,00,000
To Bank Loan A/c 10,00,000
(Being loan taken from bank)
42. EMI Payment
Paid EMI ₹50,000 (Principal ₹35,000, Interest ₹15,000)
Bank Loan A/c Dr. 35,000
Interest Expense A/c Dr. 15,000
To Bank A/c 50,000
(Being EMI paid)
43. Loan Processing Fee
Paid loan processing fee ₹25,000
Preliminary Expenses A/c Dr. 25,000
To Bank A/c 25,000
(Being loan processing fee paid)
Receipt Entries
44. Cash Received from Debtor
Received ₹40,000 from Sharma Traders
Cash A/c Dr. 40,000
To Sharma Traders A/c 40,000
(Being cash received from debtor)
45. Cheque Received
Received cheque ₹75,000 from customer
Bank A/c Dr. 75,000
To Customer A/c 75,000
(Being cheque received from customer)
46. Advance Received
Received advance ₹1,00,000 from customer
Bank A/c Dr. 1,00,000
To Advance from Customer A/c 1,00,000
(Being advance received)
When goods delivered:
Advance from Customer A/c Dr. 1,00,000
To Sales A/c 1,00,000
(Being advance adjusted against sale)
Payment Entries
47. Payment to Creditor
Paid ₹60,000 to supplier
Supplier A/c Dr. 60,000
To Bank A/c 60,000
(Being payment made to supplier)
48. Advance to Supplier
Paid advance ₹50,000 to supplier
Advance to Supplier A/c Dr. 50,000
To Bank A/c 50,000
(Being advance paid)
When goods received:
Purchases A/c Dr. 50,000
To Advance to Supplier A/c 50,000
(Being advance adjusted against purchase)
49. Discount Received
Paid ₹48,000 against ₹50,000 due, discount ₹2,000
Creditor A/c Dr. 50,000
To Bank A/c 48,000
To Discount Received A/c 2,000
(Being payment with discount)
50. Discount Allowed
Received ₹38,000 against ₹40,000 due, allowed ₹2,000 discount
Cash A/c Dr. 38,000
Discount Allowed A/c Dr. 2,000
To Debtor A/c 40,000
(Being collection with discount allowed)
Provisions and Adjustments
51. Provision for Bad Debts
Created provision for doubtful debts ₹20,000
Bad Debts Expense A/c Dr. 20,000
To Provision for Bad Debts A/c 20,000
(Being provision created)
52. Bad Debts Written Off
Wrote off ₹15,000 as bad debt
Bad Debts A/c Dr. 15,000
To Debtor A/c 15,000
(Being bad debt written off)
53. Bad Debt Recovered
Recovered ₹5,000 from previously written off debt
Cash A/c Dr. 5,000
To Bad Debts Recovered A/c 5,000
(Being bad debt recovered)
54. Outstanding Expenses
Salary ₹20,000 outstanding at year end
Salary Expense A/c Dr. 20,000
To Outstanding Salary A/c 20,000
(Being outstanding salary recorded)
55. Prepaid Expenses
Rent ₹30,000 paid for next quarter
Prepaid Rent A/c Dr. 30,000
To Bank A/c 30,000
(Being rent paid in advance)
56. Accrued Income
Interest ₹10,000 earned but not received
Accrued Interest A/c Dr. 10,000
To Interest Income A/c 10,000
(Being interest accrued)
57. Unearned Income
Received advance rent ₹60,000 for 6 months
Bank A/c Dr. 60,000
To Unearned Rent Income A/c 60,000
(Being advance rent received)
Monthly:
Unearned Rent Income A/c Dr. 10,000
To Rent Income A/c 10,000
(Being rent earned)
Capital and Drawings
58. Additional Capital
Owner introduced additional capital ₹2,00,000
Bank A/c Dr. 2,00,000
To Capital A/c 2,00,000
(Being additional capital introduced)
59. Drawings - Cash
Owner withdrew ₹30,000 for personal use
Drawings A/c Dr. 30,000
To Cash A/c 30,000
(Being cash withdrawn by owner)
60. Drawings - Goods
Owner took goods worth ₹10,000 for personal use
Drawings A/c Dr. 10,000
To Purchases A/c 10,000
(Being goods withdrawn by owner)
GST Entries
61. GST Payment
Paid GST liability ₹50,000
Output CGST A/c Dr. 25,000
Output SGST A/c Dr. 25,000
To Input CGST A/c 15,000
To Input SGST A/c 15,000
To Bank A/c 20,000
(Being GST liability paid)
62. Reverse Charge Mechanism
Paid ₹10,000 for legal services under RCM
Legal Expense A/c Dr. 10,000
Input CGST (RCM) A/c Dr. 900
Input SGST (RCM) A/c Dr. 900
To Lawyer A/c 10,000
To Output CGST (RCM) A/c 900
To Output SGST (RCM) A/c 900
(Being expense under RCM)
Year-End Entries
63. Closing Stock
Closing stock valued at ₹2,50,000
Closing Stock A/c Dr. 2,50,000
To Trading A/c 2,50,000
(Being closing stock transferred)
64. Transfer to Trading Account
Transferring purchases and sales
Trading A/c Dr. 15,00,000
To Purchases A/c 15,00,000
(Being purchases transferred)
Sales A/c Dr. 20,00,000
To Trading A/c 20,00,000
(Being sales transferred)
65. Transfer to P&L Account
Transferring expenses and incomes
Profit & Loss A/c Dr. 3,00,000
To Rent Expense A/c 1,00,000
To Salary Expense A/c 1,50,000
To Depreciation A/c 50,000
(Being expenses transferred)
Interest Income A/c Dr. 20,000
To Profit & Loss A/c 20,000
(Being income transferred)
66. Net Profit Transfer
Net profit ₹5,00,000 transferred to capital
Profit & Loss A/c Dr. 5,00,000
To Capital A/c 5,00,000
(Being net profit transferred)
Practical Tips
Quick Rules to Remember
| Transaction | Debit | Credit |
|---|---|---|
| Cash received | Cash | Source |
| Cash paid | Purpose | Cash |
| Asset bought | Asset | Cash/Creditor |
| Asset sold | Cash/Bank | Asset |
| Expense paid | Expense | Cash/Bank |
| Income received | Cash/Bank | Income |
| Goods purchased | Purchases | Cash/Supplier |
| Goods sold | Customer/Cash | Sales |
Common Mistakes to Avoid
- Wrong Side: Confusing debit and credit
- Missing Entry: Recording only one side
- Wrong Account: Using personal instead of real account
- Not Balancing: Unequal debits and credits
- Wrong Amount: Transposition or calculation errors
Disclaimer
This guide covers common journal entries in Indian accounting. Specific situations may require different treatments based on accounting standards (Ind AS/IGAAP), company policies, and regulatory requirements. Consult a qualified accountant for complex transactions.
Summary
Journal entries are the foundation of accounting:
- Every transaction: Two entries (debit and credit)
- Must balance: Total debits = Total credits
- Know the rules: Assets/Expenses debit increase, Liabilities/Income credit increase
- Narration: Brief explanation of transaction
- Practice: Regular practice builds mastery
Social Media Posts
LinkedIn: “500 years old. Still used by every business worldwide.
Double-entry bookkeeping: Every debit has a credit.
Simple rules: • Assets increase → Debit • Expenses increase → Debit • Liabilities increase → Credit • Income increase → Credit
Common mistake: Recording only one side.
Result: Books that never balance. Auditors who lose sleep.
Master journal entries = Master accounting. #Accounting #Bookkeeping”
Twitter/X: “Journal Entry Quick Reference:
Bought asset → Dr. Asset, Cr. Cash Sold goods → Dr. Cash/Customer, Cr. Sales Paid expense → Dr. Expense, Cr. Cash/Bank Received income → Dr. Cash/Bank, Cr. Income Depreciation → Dr. Depreciation, Cr. Accum. Dep
Rule: Total Debits = Total Credits
#AccountingBasics”
Instagram: “Can’t balance your books? 📚
Here’s the secret: EVERY transaction has 2 entries
EXAMPLE: Bought computer for ₹50,000 ✅ Computer A/c - Debit (asset ↑) ✅ Cash A/c - Credit (asset ↓)
EXAMPLE: Paid rent ₹20,000 ✅ Rent Expense - Debit (expense ↑) ✅ Bank A/c - Credit (asset ↓)
THE RULE: • Assets/Expenses → Debit increases • Liabilities/Income → Credit increases
If debits ≠ credits, something’s wrong!
#AccountingMadeSimple #JournalEntries”