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How to Make Journal Entries Using the Double Entry System
- 1. How to Make Journal Entries Using
the Double Entry System
- 2. The Accounting Equation:
Assets = Liabilities + Owner’s Equity
When making general ledger entries, it is essential to remember that
both debit and credits have to match for accurate record keeping.
Businesses will have a list of monthly transactions completed, and
these transactions must be recorded using the appropriate account
types in order to create accurate financial statements. The following
is a demonstration of how general ledger entries are recorded.
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- 3. List of Business Transactions
On April 1, 2014, John Collins established a catering company, Collins Catering. During the month, John completed the following transactions
related to the business:
April 1. John transferred cash from a personal bank account to an account used for the business, $19,500.
2. Paid rent for period of April 5 to the end of the month, $2,550.
4. Purchased a used catering truck for $17,575, paying $9,865 cash and giving a note payable for the remainder.
5. Purchased supplies for cash, $2,200.
10. Received cash for job complete, $15,650.
15. Paid annual premiums on property and casualty insurance, $2,985.
16. Recorded jobs completed on account and sent invoices to customers, $7,950.
25. Received cash from customers on account, $4,250.
30. Paid wages of employees, $3,700.
30. Withdrew cash for personal use, $2,550.
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- 4. April 1. John transferred cash from a personal bank account to an account used for the business, $19,500.
There are two accounts that would be affected by this business transaction: Cash and Capital. The entry
would be recorded in the general ledger as:
Journal
Date Description Debit Credit
April 1. Cash………………………….. 19,500
John Collins, Capital……... 19,500
Journaling Using the Double-Entry Method of Accounting
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- 5. April 2. John paid rent for period of April 5 to the end of the month, $2,550.
There are two accounts that would be affected by this business transaction: Rent Expense and Cash.
The entry would be recorded in the general ledger as:
Journal
Date Description Debit Credit
April 2. Rent Expense………………….. 2,550
Cash……………………… 2,550
Journaling Using the Double-Entry Method of Accounting
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- 6. April 4. John purchased a used catering truck for $17,575, paying $9,865 cash and giving a note payable
for the remainder.
There are three accounts that would be affected by this business transaction: Truck, Cash, and Notes
Payable. The entry would be recorded in the general ledger as:
Journal
Date Description Debit Credit
April 4. Truck………………………….. 17,575
Cash……………….……... 9,865
Notes Payable……………. 7,710
Journaling Using the Double-Entry Method of Accounting
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- 7. April 5. John purchased supplies for cash, $2,200.
There are two accounts that would be affected by this business transaction: Supplies and Cash. The entry
would be recorded in the general ledger as:
Journal
Date Description Debit Credit
April 5. Supplies……………………….. 2,200
Cash……………….……... 2,200
Journaling Using the Double-Entry Method of Accounting
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- 8. April 10. John received cash for job complete, $15,650.
There are two accounts that would be affected by this business transaction: Cash and Fees Earned. The
entry would be recorded in the general ledger as:
Journal
Date Description Debit Credit
April 10. Cash..………………………….. 15,650
Fees Earned….…….……... 15,650
Journaling Using the Double-Entry Method of Accounting
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- 9. April 15. John paid annual premiums on property and casualty insurance, $2,985.
There are two accounts that would be affected by this business transaction: Prepaid Insurance and Cash.
The entry would be recorded in the general ledger as:
Journal
Date Description Debit Credit
April 15. Prepaid Insurance.…………….. 2,985
Cash……………….……... 2,985
Journaling Using the Double-Entry Method of Accounting
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- 10. April 16. John recorded jobs completed on account and sent invoices to customers, $7,950.
There are two accounts that would be affected by this business transaction: Accounts Receivable and Fees
Earned. The entry would be recorded in the general ledger as:
Journal
Date Description Debit Credit
April 16. Accounts Receivable………….. 7,950
Fees Earned……….……... 7,950
Journaling Using the Double-Entry Method of Accounting
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- 11. April 25. John received cash from customers on account, $4,250.
There are two accounts that would be affected by this business transaction: Cash and Accounts
Receivable. The entry would be recorded in the general ledger as:
Journal
Date Description Debit Credit
April 25. Cash………………………….. 4,250
Accounts Receivable...…... 4,250
Journaling Using the Double-Entry Method of Accounting
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- 12. April 30. John paid wages of employees, $3,700.
There are two accounts that would be affected by this business transaction: Wages Expense and Cash. The
entry would be recorded in the general ledger as:
Journal
Date Description Debit Credit
April 30. Wages Expense……………….. 3,700
Cash……………….……... 3,700
Journaling Using the Double-Entry Method of Accounting
© 2014 UniversityNow. All Rights Reserved.
- 13. April 30. John withdrew cash for personal use, $2,550.
There are two accounts that would be affected by this business transaction: John Collins, Drawing and
Cash. The entry would be recorded in the general ledger as:
Journal
Date Description Debit Credit
April 30. John Collins, Drawing………….. 2,550
Cash……………….……... 2,550
Journaling Using the Double-Entry Method of Accounting
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