Module 3 - JOURNAL
Module 3 - Lesson
LEARNING OBJECTIVES
To Understand the Definition of Journal
To explain the rules of double entry and their significance in accounts
To identify the steps in Journalizing.
To Follow meaning of Journal and recording in Journal
INTRODUCTION
Meaning
Journal is a book of primary entry or a book or original entry in which
transactions are first recorded in a chronological order, i,e.,, in the order or
sequence they are entered. Transactions are recorded in the Journal book from
the accounting voucher that are prepared on the basis of source documents,
i.e., cash memo, invoices, purchase bills, etc.
All financial transactions can be recorded in a simple Journal Alternatively, in
may maintain separate Journal to record particular type of transaction, e.g.,
credit purchases may be recorded in Purchases Return Journal, and so on.
These separate Journals called Special Journals or Special Purpose
Books and often called as Subsidiary Books.
DEFINITIONS
“The basic books of accounting is called Journal. Precisely it is the books or
prime entry which means---Day Book. Trader records his total daily transactions
in it. The process or recording the transactions into Journal is
called Journalising”.
FORMAT OF A JOURNAL
Format of a Journal: Journal is divided into five columns.
These are: Date, Particulars, Ledger Folio (L.F.) Debit Amount and Credit
Amount. The format of a Journal is a follows:
(L.F. stands for Ledger Folio)
1. Date: In this column, the transaction date is written.
2. Particulars: According to Dual Aspect Concept of accounting, both the
aspects of a transaction are recorded, i,e., at least two accounts are affected by
a transaction. The name of account to be debited is written first followed by the
word ‘Dr.” written close to the Right-hand margin line, while the name of the
account to be credited is written in the next line preceded by the word “To”, a
little to the right.
3. Narration: A brief description of the transaction is also written after the
entry.
4. Ledger Folio (L.F.): In this column the number of ledger page is written to
which the debit and credit aspect of the transaction is posted. For example, the
proprietor invests further capital of Rs 5,00,000 and Capital Account is
maintained at ledger page 53,against the entry” To Capital A/c’ in the
L.F. .Column 53 is written which shows that credit aspect of the transaction is
posted to ledger page’53.
5. Debit Amount: In this column, the amount debited is written.
6. Credit Amount;In this column, the amount credited is written.
Steps in Journalising
Steps involved in Journalising are:
Step 1: Determine the accounts that are affected by a transaction.
Step 2: Determine the nature of the accounts affected.
Step 3: Determine the accounts to be debited and credited by applying the
rules of debit and credit.
Let us, at this point, recapitulate the rules of debit and credit.
Step 4: Determine the amount by which the accounts are to be debited and
credited.
Step 5. Record the date and month or the transaction in the ‘Data” column and
the year at the top.
Step 6: Record in the “Particulars” column the account to be debited. Along
with the name of the account, abbreviation Dr.” is written in the same line
against the name of the account. Write the amount to be debited in the ‘Debit
Amount” column.
Step 7. Record in the ‘Particulars” column the account to be credited. Name of
the account to be credited is written in the next line preceded by the word “To”.
The word “To’ is written towards the right after leaving a few spaces. Write the
amount to be credited in the ‘Credit Amount’ column.
Step 8. Record brief description of the transaction starting from the next line in
the ‘Particulars” column. This brief description of the transaction is
called narration.
Step 9. Draw a line across the ‘Particulars’ column to separate on Journal entry
from the other.
Module 3 - Lesson
PROBLEMS
1.The following are the transactions of Mr. Kumar during the month of
July 2011 on the following dates:
01. Capital introduced by Mr. Kumar Rs.10,000.
02. Furniture purchased for cash Rs.500.
07. Purchased goods for cash Rs.3000
11. Sold goods to Raman for cash Rs.1500
15.Paid electricity charges Rs.150
Journalise the above transactions in the books of Mr.Kumar.
Solution:
Journal Entries in the books of Mr. Kumar
PROBLEMS
2. Mr.Kiran gives the following information. You are required to
journalise them in his books.
March 2000
1 Commenced business with a cash 2,60,000
3 Opened an account with a bank and deposited.25,000
8 Purchased goods for cash 50,000
10 Purchased furniture for cash 1,500
13 Sold goods for cash 12,000
15 Sold goods to Kumar 8,000
Solution:
In the books of Mr. Kiran
3. Mr. Narayanan, running a business, gives the following transactions
during the month of February 2011 on the following dates:
10 Cash invested into business Rs1,45,000
18 Sold goods to Ganesh Rs. 14000
20 Purchased goods from Daniel Rs.33,000
23 Ganesh settled his account Rs. 13,500
26 Paid to Daniel Rs.32,000 and settled the account
Journalise the above transactions.
Solution:
In the books of Mr. Narayanan
LEARNING OUTCOMES
Understanding the definition of Journal
Rules of double entry and its significance
Following the steps in Journal
Recording the business transactions in Journal
