Chapter 2.

Journal entries
• JOURNAL ENTRY:
- Recording a transaction in a Journal is called Journal Entry or Journalizing.

• LEDGER ENTRY:
• Recording a transaction from, Journal to the concerned account ·in
Ledger is called
• Ledger Entry. It is also known as Ledger posting.
 Chapter 2. Journal entries

• NARRATION:
• A short explanation of each transaction is written under each entry
which is called Narration. The subject matter of the transaction can
be ascertained through narration. Besides this, if there is any mistake
in determining debit or credit aspect of a transaction, it can be easily
detected from narration.
• "A Journal entry is not complete without narration".
 Chapter 2. Journal entries
• CHARACTERISTICS:
• Journal has the following features:
1. Journal is the first successful step of the Double Entry system . A transaction is
recorded first of all in the journal. So, Journal is called the book of Original
Entry.
2. A transaction is recorded on the same day it takes place. So, Journal is also called a Day Book.
3. Transactions are recorded chronologically. So, Journal is called Chronological Book.
4. For each transaction the names of the two concerned accounts indicating which is debited and
which is credited, are clearly written in two consecutive lines. This makes ledger-posting easy.
That is why Journal is called "Assistant to Ledger" or "Subsidiary Book".
5. Narration is written below each entry.
6. The amount is written in the last two columns - debit amount in Debit column and credit
amount in Credit column.
 Chapter 2. Journal entries
ADVANTAGES: .
The following ng are the advantages of ,Journal:
• Each transaction is recorded as soon as it takes place. So there is no possibility of
any transaction being omitted from the books of account. '
• Since the transactions are kept recorded in Journal chronologically with
narration. it can be easily ascertained when and why a transaction has taken
place.·
• For each and every transaction which of the two concerned accounts will
be debited and which account credited , are clearly written in Journal. So, there is
no possibility of commuting any mistake in writing the Ledger.
• Since all the details of transactions are recorded in Journals , it is not
necessary to repeat them in Ledger. As a result Ledger is kept tidy and brief.
• Journal shows the complete story of a transaction in one entry.
• Any mistake in Ledger can be easily detected with the help of ,Journal.
ILLUSTRATION NO. 1 Jour nalise the follow;ing transactions:

• 1992 DJF.
• Feb. 3 X commenced business with a capital of 500 000
• 5 Purchased goods Cash 200 000
• 7 Purchased goods on credit from Mirgan & Co. 100 000
• 10 Purchased furniture by cash 80 000
• 11 Sold goods by cash 130 000
• 15 Sold goods on credit to Danbio 75 000
• 20 Paid salaries by cash 32 000
• 25 Received commission 25 000
• 26 Returned goods to Mirgan & Co. 20 000
• 27 Returned goods by Danbio 15 000
• 28 Received from Danbio 50 000
Paid to Mirgan and Co 60 000
X withdrew from business 30 000
ILLUSTRATION NO. 1 Jour nalise the follow;ing transactions:

• 2019 DJF.
Jan. 5 Mr. Y commenced business with a capital of 1500 000
• 2 deposited cash into bank 800 000
• 3 Purchased goods for Cash 300 000
• 5 Sold goods for cash and 10 % dicount allowed 100 000
• 7 Purchased goods on credit from ets Ahmed. 100 000
• 10 Purchased machines by cash 80 000
• 11 Sold goods by cash 130 000
• 16 Paid ets Ahmed and 20 % received 100 000
• 21 Paid salaries by cash 70 000
• 25 paid telephone bill 25 000