Journal Entries

YouTube video

1 Introduction

We mentioned in the last chapter that one of the books of prime entry is known as the journal, and is used to list unusual transactions.

A journal entry is an entry in this book. However, it is also used in the examination to refer to any entry that is written down in words (as opposed to actually entered in t-accounts).

In this chapter we will explain how journal entries are written in the examination.

2 The format of journal entries

A journal entry is the name given to an entry that is written in words

The format is always as follows:

write the debit entry first, followed by the credit entry on the next line.
write below the entry a brief description of why the entry is to be made. This is known as the narrative.

The business purchases goods for resale from Mike for $2,500 on credit.

You are required to write down the journal entry for this transaction.

DR Purchases 2,500

CR Payables 2,500

being the purchase of goods on credit

Answer the questions one at a time. Your progress is saved so you can leave and come back.

Open chapter practice