{"id":428,"date":"2025-02-20T10:44:00","date_gmt":"2025-02-20T10:44:00","guid":{"rendered":"https:\/\/www.experlu.co.uk\/dictionary\/?p=428"},"modified":"2025-03-25T11:07:19","modified_gmt":"2025-03-25T11:07:19","slug":"journal-entry","status":"publish","type":"post","link":"https:\/\/www.experlu.co.uk\/dictionary\/journal-entry\/","title":{"rendered":"Journal Entry"},"content":{"rendered":"\n

What is a Journal Entry? <\/h2>\n\n\n\n

Journal entries form the building block of the\u00a0double-entry bookkeeping\u00a0system.\u00a0Under the\u00a0double-entry\u00a0bookkeeping\u00a0system,\u00a0at least two accounts<\/a><\/strong>\u00a0are used\u00a0to record any\u00a0single\u00a0transaction. For example, when a company buys cash supplies, the transaction will appear for supplies and the cash account.\u00a0<\/p>\n\n\n\n

Components of a Journal entry <\/h2>\n\n\n\n

\u25cf The transaction date 
\u25cf The names of the impacted accounts plus the account number (if relevant) 
\u25cf Credits and debits must always be equal 
\u25cf A reference number that acts as a specific transaction identifier 
\u25cf A transaction summary or description <\/p>\n\n\n\n

Format of writing a Journal entry<\/h2>\n\n\n\n

The following is the general format of a journal entry: <\/p>\n\n\n\n

                Type<\/strong> <\/span><\/td>                Debit<\/span><\/strong> <\/td>                 Credit<\/strong> <\/span><\/td><\/tr>
Account number and name  <\/td>                \u00a3xxxx <\/td> <\/td><\/tr>
Account number and name  <\/td> <\/td>               \u00a3xxxx <\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n

The amount in the debit column should always be equal to the amount in the credit column. In a nutshell, for every debit, there must be identical and corresponding Credit.<\/p>\n\n\n\n

Example<\/strong><\/p>\n\n\n\n

On 31 December 2020, you sold \u00a32,000 worth of laptops to Ms Lisa on cash basis. Following will be the journal entry <\/p>\n\n\n\n

Journal Number D1246<\/em> <\/td><\/em> <\/td><\/em> <\/td><\/em> <\/td><\/em> <\/td><\/tr>
Date<\/strong> <\/td>Account<\/strong> <\/span><\/td>Reference<\/strong> <\/span><\/td>Debit<\/strong> <\/span><\/td>Credit<\/strong> <\/span><\/td><\/tr>
31 December 2020 <\/td>Cash <\/td>D1220 <\/td>            \u00a32,000 <\/td> <\/td><\/tr>
Sales <\/td>D1220 <\/td> <\/td>               \u00a32,000 <\/td><\/tr>
Sale of laptops to Ms Lisa on 30 days credit. <\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n


Types of Journal entry <\/h2>\n\n\n\n

1. Adjusting entry<\/h3>\n\n\n\n

\u00a0Adjusting\u00a0entries\u00a0are\u00a0usually\u00a0recorded towards the end of the accounting period<\/strong><\/a> to bring the financial statements in line with the accounting system. Usually, these entries aim to report accrued expenditures, accrued revenue, prepaid expenses and unearned income.\u00a0<\/p>\n\n\n\n

2. Compound entry<\/h3>\n\n\n\n

 When there are more than two entry lines in a journal, it is known as a compound entry. It also helps to document multiple transactions at once or enter specifics of complicated transactions, such as payroll, which requires various deductions and PAYE, NIC obligations.<\/p>\n\n\n\n

3. Reversing entry <\/h3>\n\n\n\n

Reversing journal entries are recorded at the beginning of the accounting period to change or cancel entries made in the previous period that is no longer needed. Such as compensation accrual, which is offset by actual expenditure on the payroll. <\/p>\n","protected":false},"excerpt":{"rendered":"

What is a Journal Entry?  Journal entries form the building block of the\u00a0double-entry bookkeeping\u00a0system.\u00a0Under the\u00a0double-entry\u00a0bookkeeping\u00a0system,\u00a0at least two accounts\u00a0are used\u00a0to record any\u00a0single\u00a0transaction. For example, when a company buys cash supplies, the transaction will appear for supplies and the cash account.\u00a0 Components of a Journal entry  \u25cf The transaction date \u25cf The names of the impacted accounts plus the account number […]<\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1],"tags":[52],"class_list":["post-428","post","type-post","status-publish","format-standard","hentry","category-uncategorized","tag-journal-entry"],"yoast_head":"\nWhat is journal entry?<\/title>\n<meta name=\"description\" content=\"Journal entries form the building block of the double-entry bookkeeping system. 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