How do you write a journal entry example?

Related CoursesAccountants GuidebookBookkeeper Education BundleBookkeeping GuidebookWhat is the Format for a Journal Entry?A journal entry is used to record the debit and credit si

How do you write a journal entry example?

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What is the Format for a Journal Entry?

A journal entry is used to record the debit and credit sides of a transaction in the accounting records. It is used in a double-entry accounting system, where both a debit and a credit are needed to complete each entry. The essential elements of the journal entry format are as follows:

  • A header line may include a journal entry number and entry date. The number is used to index the journal entry, so that it can be properly stored and retrieved from storage.
  • The first column includes the account number and account name into which the entry is recorded. This field is indented if it is for the account being credited.
  • The second column contains the debit amount to be entered.
  • The third column contains the credit amount to be entered.
  • A footer line may also include a brief description of the reason for the entry. An entry in the footer line is highly recommended, since there are so many journal entries that it is easy to forget why each entry was made.

The structural rules of a journal entry are that there must be a minimum of two line items in the entry, and that the total amount entered in the debit column equals the total amount entered in the credit column.

Types of Journal Entries

When a journal entry has just two line items (the minimum), it is called a simple journal entry. When it has many lines, it is referred to as a complex journal entry. When it is used to record the beginning balances in an entitys accounting records for a new accounting period, it is known as an opening entry. Conversely, when an entry is used to transfer ending revenue and expense account balances to retained earnings at the end of an accounting period, it is called a closing entry. When it is used to adjust the reported amounts in the financial statements, it is known as an adjusting entry.

Example of a Journal Entry Format

Based on the preceding formatting rules, the basic journal entry format is as follows:

Debit

Credit

Account name / number

$xx,xxx

Account name / number

$xx,xxx

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