Passing the Journey Entry

Journal book systematically records business transaction on the basis of a source document in a chronological (day by day) order for the first time.Therefore, it is also called the books prime or original entry.

Standard Form of Journal : Performa of journals is as follows :

In the particulars column we record the name of the account to be debited with the abbreviation ‘Dr’. The account to be credit is written with the ward ‘To’ prefixed to it. In the next line explanation of the transaction is recorded which is known as narration. The L.F. column or the Ledger Folio Column is not used at the time of recording the transactions but is filled at the time of posting of journal entries into accounts in Ledger book. The process or recording of business transactions in the Journal Book on the basis of rules of double entry system is called journalizing. For example, if the proprietor introduces Rs. 1,50,000 as additional capital on 01.01.2006, the journal entry for this transaction would be

Example 1

For the following transactions show the effect of transaction on accounts concerned and journalise the transactions :

(i) Started business with a capital of Rs. 7,500.

(ii) Opened a bank account with State Bank of India for Rs. 2,000.

(iii) Paid Commission to X for Rs. 300.

(iv) Purchased goods from K & Co. for cash Rs. 1,000.

(v) Purchased goods from Mr. Z for Rs. 2,000.

(vi) Goods returned to Mr. Z for Rs. 500.

(vii) Paid to Mr. Z in full settlement of Rs. 1,400.

(viii) Received interest on investments for Rs. 400.

(ix) Paid rent to landlord Mr. Y for Rs. 500.

(x) Withdrew cash for household expenses amounted to Rs. 600.

(xi) Sold goods to Mr. L for cash Rs. 2,500.

(xii) Sold goods to Mr. D on credit for Rs. 1,000.

(xiii) Goods returned by Mr. D for Rs. 250.

(xiv) Received cash from Mr. D in full settlement for Rs. 700.

(xv) Paid carriage on goods purchased for Rs. 350.

(xvi) Paid carriage on goods sold for Rs. 800.

(xvii) Purchased furniture for office decoration for cash amounted to Rs.1000.

(xviii) Purchased furniture for re-sale for Rs. l,000.

(xix) Sold furniture out of those meant for re-sale Rs.1,500.

(xx) Paid rent out of personal cash for Rs. 400.

Solution