Here are most commonly used Business Transaction Journal Entries. Recording business transactions accurately in the journal is essential for maintaining precise financial records. Below are some common business transactions and their corresponding journal entries.
1. Starting a Business with Cash
Example: ₹50,000 invested on 01-01-2024
Date
Account Title
Debit (INR)
Credit (INR)
Description
01-01-2024
Cash
50,000
Initial cash investment
01-01-2024
To Owner’s Capital
50,000
Owner’s capital contribution
2. Purchasing Inventory on Credit
Example: ₹20,000 on 02-01-2024
Date
Account Title
Debit (INR)
Credit (INR)
Description
02-01-2024
Purchase(Inventory)
20,000
Purchased inventory on credit
02-01-2024
To Accounts Payable
20,000
Amount payable
3. Selling Goods on Credit
Example: ₹30,000 on 03-01-2024
Date
Account Title
Debit (INR)
Credit (INR)
Description
03-01-2024
Party(Accounts Receivable)
30,000
Sold goods on credit
03-01-2024
To Sales Revenue
30,000
Revenue from sales
4. Cash Sales
Example: ₹10,000 on 04-01-2024
Date
Account Title
Debit (INR)
Credit (INR)
Description
04-01-2024
Cash
10,000
Cash received from sales
04-01-2024
To Sales Revenue
10,000
Revenue from cash sales
5. Paying Salaries
Example: ₹15,000 on 05-01-2024
Date
Account Title
Debit (INR)
Credit (INR)
Description
05-01-2024
Salaries Expense
15,000
Salaries paid
05-01-2024
To Cash
15,000
Paid in cash
6. Receiving Payment from Customer
Example: ₹30,000 on 06-01-2024
Date
Account Title
Debit (INR)
Credit (INR)
Description
06-01-2024
Cash
30,000
Payment received from customer
06-01-2024
To Party(Accounts Receivable)
30,000
Customer payment
7. Purchasing Equipment for Cash
Example: ₹25,000 on 07-01-2024
Date
Account Title
Debit (INR)
Credit (INR)
Description
07-01-2024
Equipment
25,000
Purchased equipment
07-01-2024
To Cash
25,000
Paid in cash
8. Recording Depreciation
Example: ₹2,000 on 08-01-2024
Date
Account Title
Debit (INR)
Credit (INR)
Description
08-01-2024
Depreciation Expense
2,000
Depreciation for the month
08-01-2024
To Asset(Accumulated Depreciation)
2,000
Depreciation recorded
9. Paying Utility Bills
Example: ₹3,000 on 09-01-2024
Date
Account Title
Debit (INR)
Credit (INR)
Description
09-01-2024
Utilities Expense
3,000
Utility bill for the month
09-01-2024
To Cash
3,000
Paid in cash
10. Paying Interest on Loan
*Example:* ₹2,500 on 10-01-2024
Date
Account Title
Debit (INR)
Credit (INR)
Description
10-01-2024
Interest Expense
2,500
Interest on loan
10-01-2024
To Cash
2,500
Paid in cash
11. Receiving Loan
*Example:* ₹1,00,000 on 11-01-2024
Date
Account Title
Debit (INR)
Credit (INR)
Description
11-01-2024
Cash
1,00,000
Loan received
11-01-2024
To Loan Payable
1,00,000
Loan liability
12. Paying Insurance Premium
*Example:* ₹5,000 on 12-01-2024
Date
Account Title
Debit (INR)
Credit (INR)
Description
12-01-2024
Prepaid Insurance
5,000
Insurance premium paid
12-01-2024
To Cash
5,000
Paid in cash
13. Recording Bad Debt
*Example:* ₹1,000 on 13-01-2024
Date
Account Title
Debit (INR)
Credit (INR)
Description
13-01-2024
Bad Debt Expense
1,000
Uncollectible account
13-01-2024
To Accounts Receivable
1,000
Written off bad debt
14. Payment of Dividend
*Example:* ₹5,000 on 14-01-2024
Date
Account Title
Debit (INR)
Credit (INR)
Description
14-01-2024
Dividends Payable
5,000
Dividend declared
14-01-2024
To Cash
5,000
Dividend paid
15. Rent Paid in Advance
*Example:* ₹10,000 on 15-01-2024
Date
Account Title
Debit (INR)
Credit (INR)
Description
15-01-2024
Prepaid Rent
10,000
Rent paid in advance
15-01-2024
To Cash
10,000
Paid in cash
Conclusion
These journal entries cover various common business transactions, ensuring that all financial activities are accurately recorded. Properly maintaining these records is crucial for generating accurate financial statements and managing the financial health of a business. For more insights and examples on different journal entries, continue following our blog!
