General journal entries in Accounting
The general journal is where
double entry bookkeeping entries are recorded by
debiting
one account and crediting
another account with the same amount. The amount debited and the amount credited
should always be equal, thereby ensuring the
accounting equation is maintained.
Depending on the business's
accounting information system,
specialized journals may be used in conjunction with the
general journal for record-keeping. In such case, use of the general journal may
be limited to non-routine and adjusting entries.
Format
A general journal entry includes:
-
The date of the transaction;
-
The title of account credited is indented several spaces
-
Titles of the accounts debited and credited;
-
The amount of each debit and credit; and,
-
An explanation of the transaction also known as a Narration.
Example
Acme, Inc carried out the following transactions in May
2009.
-
1 May: Received and paid telephone bill of $100 (cheque
#0001)
-
4 May: Performed consulting services for Example LLP on
credit, $350
-
6 May: Paid wages of $180
-
13 May: Example LLP paid for services performed on 4 May
in full.
-
19 May: Performed consulting services for cash, $120
-
25 May: Purchased a computer for $2000. Paid $500 cash
(cheque #0002), borrowed the remainder from the bank.
The above transactions may be journalized as follows:
|
Date
|
General ledger account title
|
Debit
|
Credit
|
|
May 01
|
Telephone expense
|
100
|
|
|
|
Cash
|
|
100
|
|
|
Paid telephone bill
|
|
|
|
04
|
Accounts receivable
|
350
|
|
|
|
Consulting services revenue
|
|
350
|
|
|
Performed consulting services for Example
LLP
|
|
|
|
06
|
Salary expense
|
180
|
|
|
|
Cash
|
|
180
|
|
|
Paid salaries for April 2009
|
|
|
|
13
|
Cash
|
350
|
|
|
|
Accounts receivable
|
|
350
|
|
|
Received payment from Example LLP for
services performed on 4 May
|
|
|
|
19
|
Cash
|
120
|
|
|
|
Consulting services revenue
|
|
120
|
|
|
Received cash for consulting services
performed
|
|
|
|
25
|
Computer
|
2000
|
|
|
|
Cash
|
|
500
|
|
|
Loan payable
|
|
1500
|
|
|
Purchased computer
|
|