Page 48 - ISCDEBK-XI

Journal 7.3

• Journal entry may be (i) Simple Journal Entry or (ii) Compound Journal Entry.
(i) Simple Journal Entry is a Journal entry in which one account is debited and another account is credited.
(ii) Compound Journal Entry is a Journal entry, which involves more than two accounts. It means it is an
entry in which more than one account is debited or credited.
• Opening Entry. In case of an existing business, assets and liabilities appearing in the previous year’s Balance
Sheet will have to be brought forward to the current year. This is done by means of a Journal entry termed
as ‘Opening Entry’.
Steps in Journalising
Step 1. Identify the accounts involved in the transaction.
Step 2. Determine the nature of accounts, e.g., Real, Nominal or Personal.
Step 3. Apply the rule for ‘Debit’ and ‘Credit’.
Step 4. Draw ruling of a Journal and record the transaction.
Advantages of a Journal
1. It reduces the possibility of errors.
2. It provides an explanation to an entry by way of narration.
3. It provides a chronological record of transactions.

Solved Questions

Illustration 1.
Record the following transactions in Journal:
2022 `
Jan. 1 Paid to Mohan ` 9,500 in full settlement of his account of ` 10,000
Jan. 5 Received from Ram ` 12,000 in cash and allowed him discount 100
Jan. 7 Paid Salaries 5,000
Jan. 7 Paid Rent 3,000
Jan. 7 Paid Wages 1,000
Jan. 10 Purchased goods for ` 20,000 from Shyam Lal out of which goods of ` 12,000
were on credit.
Jan. 15 Sold goods to Rakesh for ` 2,000. He paid ` 1,000 immediately.

Solution: JOURNAL
Date Particulars L.F. Dr. (`) Cr. (`)
2022
Jan. 1 Mohan ...Dr. 10,000
To Cash A/c 9,500
To Discount Received A/c 500
(Being the payment to Mohan in full settlement of his account)
Jan. 5 Cash A/c ...Dr. 12,000
Discount Allowed A/c ...Dr. 100
To Ram 12,100
(Being the receipt of money from Ram and the discount allowed to him)
Jan. 7 Salaries A/c ...Dr. 5,000
Rent A/c ...Dr. 3,000
Wages A/c ...Dr. 1,000
To Cash A/c 9,000
(Being the payment of salaries, rent and wages)