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Learn How to Record Accounting Journal Entries

Basic Accounting Journal Entries - Even if you use a computerized accounting system, you should know the basic accounting concepts of accounting journal entries.

I will take you through the accounting cycle of double entry accounting entries.

Each of your financial transactions will initially be recorded in a record called a journal, a book of original entry, used to record accounting/bookkeeping entries in order by date.

The title of the account to be debited is listed first, followed by the amountt to be debited. The title of the account to be credited is listed below and to the right of the debit, followed by the amount to be credited. Optional:You can also add a short description of the transaction if you want to.

This process is called journalizing. This form of recording a transaction is called a journal entry. Some accounting journal entries involve more than two accounts as in one of my examples example in the table below.

Journal Entry Examples:

Consider the following example to illustrate the accounting cycle of double entry accounting journal entries:

Accounting journal entries

Jane opens a jewelry repair store. She invests $25,000 into her new business. She also leases store space, purchases an initial inventory of jewelry and watch parts, and begins operations.

Here are some examples of her journal entries for the first month:

Date	Account Names & Explanation	Debit	Credit
3/1	Cash	25000
	Capital		25000
	Owner contributes $25000 in cash to capitalize the business.

3/5	Lease Expense	1700
	Cash		1700
	Paid first month's store lease of $1700.

3/10	Jewerly Parts	3800
	Accounts Payable		3800
	Purchased $3800 in jewelry repair parts on account, payable in 30 days.

3/15	Cash	1250
	Revenue		1250
	Sales of $1250

3/15	Expenses	350
	Jewelry Parts		350
	$250 in jewelry repair parts were used.


3/28	Accounts Payable	3800
	Cash		3800
	Paid $3800 to suppliers for parts purchased earlier in the month.

3/30	Office Supplies	125
	Office Furniture	225
	Cash		350
	Purchased office supplies and filing cabinet from Oliver’s Office Supplies.

Notice how each transaction is balanced. Everything entered on the left hand (debit) side equals the (credit side) right hand side. That’s what double entry bookkeeping is all about—transactions must balance. It’s kind of like what you learned in basic algebra classes–if you can remember back that far – what you did to one side of the equation you had to do to the other side.

Most of the above transactions were entered as simple accounting journal entries with each one debiting one account and crediting another.

The entry for 3/30 is a compound accounting journal entry. It debited two separate accounts (office supplies and office furniture and credited one account (cash). It could have been entered as two simple journal entries; however, the compound form is more efficient.

No account numbers were used in the above examples. In real life, account numbers and codes are often utilized for references and are found in your chart of accounts.

Next step in the accounting cycle: posting to the accounting ledger.

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