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Journal Entry Examples: Learning

Accounting the Easy Way
MARCH 14, 2014 BY NATASHA QUINONEZ

If you are an accounting student, you

do not need to be told just how difficult accounting can be. Accountants
analyze business transactions and record them in journal entries using
debit-credit rules as a guide. Usually, an accountant will use specialized
journals for numerous journal entries of the same type like cash journals,
sales journals, and purchases journals. Large businesses usually use
specialized journals. Smaller businesses tend to only use a general journal
that includes all transactions. Recording journal entries is only the first step
in the accounting cycle.

If you are interested in learning accounting, try an introduction

to financial accounting. Here are journal entry examples to help you
better understand journal entries.

First Example
The company started business on June 6, 2013. The business was started
with $300,000. The transactions they engaged in during their first month
of business are below:
Date
June 8
June 9
June 10
June 16
June 16
June 20
June 21
June 21
June 22
June 27
June 28
June 28
June 28

Transaction
An amount of $50,000 was paid for six months of rent.
Equipment costing $100,000 was purchased using $40,000 cash. The remaining amoun
of $60,000 is a one year note with an interest rate of 3.4%
Office supplies were purchased totaling $25,000 on account.
Received $39,400 in cash for services rendered to customers.
Paid the account for office supplies purchased June 10.
$63,900 worth of services were given to customers. Received cash amount of $43,700.
Customers promised to pay remaining amount of $20,200.
Paid employees wages for June 8-June 21. Wages totaled $23,500.
Received $20,200 in cash for services rendered to customers on June 20.
Received $6,300 in cash as advanced payment from customers.
Office supplies were purchased totaling $3,500 on account.
Electricity bill received totaling $1,850.
Phone bill received totaling $2,650.
Miscellaneous expenses totaled $4,320.

These events would then be recorded into the accounting journal. The table
below records the journal entries for the events above.
Date
June 6
June 8
June 9
June 10
June 16
June 16
June 20
June 21
June 21

Account
Cash
Prepaid rent
Cash
Equipment
Cash
Notes Payable
Office Supplies
Accounts Payable
Cash
Service Revenue
Accounts Payable
Cash
Cash
Accounts Receivable
Service Revenue
Wages Expense
Cash
Cash

Debit
300,000
50,000

Credit
50,000

100,000
40,000
60,000
25,000
25,000
39,400
39,400
25,000
25,000
43,700
20,200
63,900
23,500
23,500
20,200

Accounts Receivable
Cash
Unearned Revenue
Office Supplies
Accounts Payable
Electricity Expense
Utilities Payable
Telephone Expense
Utilities Payable
Miscellaneous Expense
Cash

June 22
June 27
June 28
June 28
June 28

20,200
6,300
6,300
3,500
3,500
1,850
1,850
2,650
2,650
4,320
4,320

The journal is then posted to the ledger accounts at the end of the period.
Larger businesses separate their ledgers into different books, one being the
general ledger and the other being a subsidiary ledger. The general ledger
will include the main accounts and the following categories: assets,
liabilities, owners equity, revenue, expense, gains, and losses. The
subsidiary ledger includes detailed records of some accounts in the general
ledger, the three main subsidiary ledgers being accounts receivable,
inventory, and accounts payable. When recording the transactions, it is
important to know how to record the debits and credits. When working
with assets and expenses, an increase is recorded in debit, and a decrease is
recorded in credit. When working with liabilities, equities, and revenues, a
decrease is recorded in debit, and an increase is recorded in credit.
You can learn more about bookkeeping with an online course.

Second Example
This company was incorporated on March 1, 2013 with a starting of
$1,500,000 and 10,000 common stock shares at $50 par value. These are
the companys transactions for the first month:
Date
March 3
March 4
March 6
March 7
March 7
March 9
March 12
March 13
March 14
March 14
March 20
March 21

Transaction
$300,000 were paid as advanced rent for six months.
Office supplies were purchased on account totaling $35,000.
Services were provided to customers, and the company received $54,000 in cash.
The accounts payable for office supplies purchased on March 4 was paid.
$200,000 in cash was used to purchase equipment costing $560,000. The remaining
$360,000 became a one year note payable with interest rate of 4%.
Office supplies were purchased on account totaling $13,500.
Services were provided to customers, and the company received $43,500 in cash.
The accounts payable for office supplies purchased on March 9 was paid.
Employees were paid wages for March 3-March 14 totaling $356,000.
Services were provided to customers totaling $256,720. Customers paid $143,650 with
a promise to pay $113,070 remaining balance in the future.
Office supplies were purchased on account totaling $5,400.
Customers paid $100,000 toward the $113,070 remaining balance for services rendered

March 23
March 25
March 27
March 28
March 28
March 28
March 31

March 14.
The accounts payable for office supplies purchased on March 20 was paid.
Customers paid $13,070 for services rendered March 14.
Customers paid $23,000 in advance for services to be received.
Employees were paid wages for the final weeks of March, totaling $453,600.
Electricity bill was received totaling $6,750.
Phone bill was received totaling $8,754.
Miscellaneous expenses for the month were totaled at $15,450.

As in the example above, these transactions are then recorded into the
accounting journal. Below is the table that records the accounting journal
for March 2013.
Date
March 1
March 3
March 4
March 6
March 7
March 7
March 9
March 12
March 13
March 14
March 14
March 20
March 21
March 23
March 25
March 27
March 28

Account
Cash
Common Stock
Prepaid Rent
Cash
Office Supplies
Accounts Payable
Cash
Service Revenue
Accounts Payable
Cash
Equipment
Cash
Notes Payable
Office Supplies
Accounts Payable
Cash
Services Revenue
Accounts Payable
Cash
Wages Expense
Cash
Cash
Accounts Receivable
Services Revenue
Office Supplies
Accounts Payable
Cash
Accounts Receivable
Accounts Payable
Cash
Cash
Accounts Receivable
Cash
Unearned Revenue
Wages Expense
Cash

Debit
1,500,000

Credit
500,000

300,000
300,000
35,000
35,000
54,000
54,000
35,000
35,000
560,000
200,000
360,000
13,500
13,500
43,500
43,500
13,500
13,500
356,000
356,000
143,650
113,070
256,720
5,400
5,400
100,000
100,000
5,400
5,400
13,070
13,070
23,000
23,000
453,600
453,600

March 28
March 28
March 31

Electricity Expense
Utilities Payable
Phone Expense
Utilities Payable
Miscellaneous Expense
Cash

6,750
6,750
8,754
8,754
15,450
15,450

You can see why a larger company might have multiple journals instead of
one general journal. This was only a short list of transactions that could
occur in a large business, but there are usually many more. Looking at a
table like this with sales and purchases mixed together could get confusing
when there is so much of it going on. It is easier for accountants to record
sales and purchases separately so they do not end up mixed.

Third Example
For this last example, transactions will be recorded in three separate tables
to represent four separate journals purchases journal, sales journal, cash
receipts journal, and cash disbursements journal. This example should give
you a greater understanding of the debit-credit rules.
This company was incorporated January 1, 2014. They started out with a
cash value of $2,350,000, and they have 25,000 stock at $200 par value.
These are their transactions for the first month:
Date
January 2
January 3
January 3
January 4
January 5
January 6
January 7
January 8
January 9
January 10
January 11
January 12
January 13
January 14
Janaury 15
January 16

Transaction
Rent was paid in advance for a full year totaling $750,000.
Equipment costing $830,000 was purchased. $310,000 was paid in cash, and the
remaining amount of $520,000 was a one year note payable with an interest rate of
4.6%.
Office supplies were purchased on account totaling $340,000.
Services were provided to customers, and the company received $570,000 in cash.
Sales were made, and the company received $350,000 in cash.
The accounts payable for office supplies purchased on January 3 was paid.
Sales were made totaling $475,000. Customers paid $235,000 in cash and promised to
pay the remaining $240,000 in the future.
Services were provided to customers totaling $654,000. Customers paid $300,000 in
cash and promised to pay the remaining $354,000 in the future.
Office supplies were purchased on account totaling $115,000.
Customers paid $25,000 for sales made on January 7 leaving a balance of $215,000.
Employees were paid wages totaling $457,000 for the first two weeks of January 2014.
The accounts payable for office supplies purchased on January 9 was paid.
Customers paid $65,000 for services rendered on January 8 leaving a balance of
$289,000.
The company paid $35,000 to the note payable for equipment purchased January 3
leaving a balance of $485,000.
Customers paid $53,000 for sales made on January 7 leaving a balance of $162,000.
Customers paid $43,000 for services rendered on January 8 leaving a balance of

January 17
January 18
January 19
January 20
January 21
January 22
January 23
January 24
January 25
January 26
January 27
January 28
January 29
January 30
January 31
January 31
January 31
January 31

$246,000.
Office supplies were purchased on account for $75,000.
Customers paid $35,000 for services rendered on January 8 leaving a balance of
$211,000.
The company paid $75,000 for equipment purchased January 3 leaving a balance of
$410,000.
The accounts payable for office supplies purchased on January 17 was paid.
Customers paid $100,000 for sales made on January 7 leaving a balance of $62,000.
Sales were made, and the company received $235,000 in cash.
Customers paid $211,000 for services rendered on January 8.
Customers paid $65,000 in advance for services to be rendered.
Employees were paid wages totaling $545,000 for the third and fourth weeks of
January 2014.
Customers paid $62,000 for sales made on January 7.
Sales were made, and the company received $345,000 in cash.
Office supplies were purchased on account totaling $215,000.
The accounts payable for office supplies purchased on January 28 was paid.
Services were provided to customers, and the company received $765,000 in cash.
Dividends were paid totaling $1,000,000.
Electricity bill totaling $15,450 was received.
Phone bill totaling $17,850 was received.
Miscellaneous expenses for the month totaled to $650,000.

You can see that such a long list of transactions would be quite confusing if
kept in one single journal. Some companies use QuickBooks to keep track
of transactions and journals. If you are interested in using
QuickBooks, you might want to consider learning how to use it
with an online course. Below is the table representing the purchases
journal.
Purchases Journal
Date
Janaury 3
January 3
January 9
January 17
January 27

Account
Equipment
Notes Payable
Office Supplies
Accounts Payable
Office Supplies
Accounts Payable
Office Supplies
Accounts Payable
Office Supplies
Accounts Payable

Debit

Credit

830,000
520,000
340,000
340,000
115,000
115,000
75,000
75,000
215,000
215,000

It is obvious that a journal written as such is a lot easier to read than a

longer, larger general journal keeping track of everything. Notice that this
table only recorded purchases on account, not payments for the purchases
or cash payments for purchases.

Sales Journal
Date
January 7
January 8

Account
Accounts Receivable
Sales
Accounts Receivable
Service Revenue

Debit

Credit

240,000
240,000
354,000
354,000

Again, this journal does not record payments of sales or services purchased
by customers on credit, and it does not record sales or services paid with
cash. This only records the credit.
Cash Disbursements
Cash 457,000
Date
Janaury 2
January 3
January 6
January 11
January 12
January 14
January 19
January 20
January 25
January 29
January 31
January 31
January 31
January 31

Account
Prepaid Rent
Cash
Equipment
Cash
Accounts Payable
Cash
Wages Expense
Cash
Accounts Payable
Cash
Notes Payable
Cash
Notes Payable
Cash
Accounts Payable
Cash
Wages Expense
Cash
Accounts Payable
Cash
Dividends
Cash
Utilities Payable Electricity
Cash
Utilities Payable Phone
Cash
Miscellaneous Expenses
Cash

Debit

Credit

750,000
750,000
310,000
310,000
340,000
340,000
457,000
457,000
115,000
115,000
35,000
35,000
75,000
75,000
75,000
75,000
545,000
545,000
215,000
215,000
1,000,000
1,000,000
15,450
15,450
17,850
17,850
650,000
650,000

This journal records all payments that the company makes to any
responsibilities they may have including accounts payable recorded in the
purchases journal.

Cash Receipts
Date
January 4
January 5
January 7
January 8
January 10
January 13
January 15
January 16
January 18
January 21
January 22
January 23
January 24
January 26
January 27
January 30

Account
Debit
Cash
570,000
Service Revenue
Cash
350,000
Sales Revenue
Cash
235,000
Sales Revenue
Cash
300,000
Service Revenue
Cash
25,000
Accounts Receivable Sales
Cash
65,000
Accounts Receivable Service Revenue
Cash
53,000
Accounts Receivable Sales
Cash
43,000
Accounts Receivable Service Revenue
Cash
35,000
Accounts Receivable Service Revenue
Cash
100,000
Accounts Receivable Sales
Cash
235,000
Sales Revenue
Cash
211,000
Accounts Receivable Service Revenue
Cash
65,000
Unearned Revenue
Cash
62,000
Accounts Receivable Sales
Cash
345,000
Sales Revenue
Cash
765,000
Service Revenue

Credit
570,000
350,000
235,000
300,000
25,000
65,000
53,000
43,000
35,000
100,000
235,000
211,000
65,000
62,000
345,000
765,000

These are all payments made by customers with cash. This includes any
advanced payments, listed as unearned revenue.
Take an online accounting class for extra help with creating
journal entries.
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