Recording of Transaction

Journal Entries (Books of Original Entry)

Methods of Dr. and Cr.

1-      Account based method

      Personal Account (Natural &Artificial Person)

      Impersonal Account (a. Real Account                        b. Nominal Account)

2-      Assets and liabilities Based Method 

Types of Journal

Ø  General Journal

Ø  Compound Journal

Recording of Transaction

1-    Transaction Related to Establishment of Business

Whatever invest in business                           XX

Capital                                                                         XX

(To record business started with……………….)

2-      Transaction Related to Purchase

I)                    For Transaction Purchase

a-      Cash purchase

Purchase Dr.                                 XX

Cash Cr.                                                     XX

(To Record purchase made or cash)

b-      Credit Purchase

Purchase Dr.                                 XX

Accounts Payable                                      XX

(To record goods purchase on credit)

II)                  For non-transactional Purchase 

a-      Cash Purchase

………………Dr.                           XX

Cash                                                     XX

(To record …………..assets purchase or cash)

b-      Credit Purchase

…………..Dr.                              XX

Accounts Payable                                XX

(To record ………assets purchased as credit)

3-    Transaction Related to Sales  

I-                    For Transactional Sales

a-      Cash sale

Cash accounts Dr.                XX

Sales/services records                     XX

(To Record cash sales made)

b-      Credit Sale

Accounts Receivable            XX

Sales/ services revenue                   XX

(To record sales made or credit)

II-                  Non- Transactional Sale

a-      Cash Sales

Cash Dr.                               XX

……..Assets                                        XX

(To record ……assets sold on cash)

b-      Credit Sales

Accounts receivable Dr.       XX
…….Assets                                         XX

(To Record……assets sold on credit)

4-    Discount Related Transactions

I-Cash Discount

II-Trade Discount

For Cash Discount

a-      When discount received

Account Payable Dr.                        XX

Discount                                                       XX

(To record cash paid and discount received)

b-      When discount Provided

Discount Dr.                                     XX

Account Receivable                                     XX

(To record cash settlement of the account receivable )

5-      Interest on Capital and Interest on Drawing

a-      Interest on capital

Interest on capital Dr.                      XX

Capital                                                          XX

(To Record interest on capital adjusted)

b-      Interest on Drawing

Drawing Dr.                                     XX

Interest on Drawing                                     XX

(To Record interested on drawing adjusted)

6-    Notes Receivable Transactions

a-      When provided cash as loan

b-      When credit sale made

c-      From conversion of accounts payable

Note Records Dr.                             XX

Cash                                                             XX

(To Record notes receivable issue)