📘 Module A – Accounting foundations (Days 1–8) · Day 04
Day 4: Journal Entries with Solved Examples
⏱ 90 min📶 Beginner🎯 100% self-study
Day 4 / 30
✅ Today you will learn
- The journal format: date, particulars, L.F., debit, credit
- Writing narrations the professional way
- Simple vs compound entries
- Entries for returns, discounts, drawings and goods taken
- A complete month for Rohit Stationers
🏢 In the real world
Every voucher you will enter in TallyPrime is a journal entry in disguise: Payment (F5) is “Expense/Party Dr – Cash/Bank Cr”. Accountants who can write the journal mentally enter vouchers twice as fast and make fewer mistakes.
Journal format
The journal (book of original entry) records transactions in date order. Each entry shows the account debited (with “Dr.”), the account credited (starting with “To”), the amounts, and a narration starting with “Being…”.
| Date | Particulars | Dr (₹) | Cr (₹) |
|---|---|---|---|
| 01-04-2026 | Cash A/c Dr. | 2,00,000 | |
| To Capital A/c | 2,00,000 | ||
| (Being business started with cash) | |||
| Total | 2,00,000 | 2,00,000 |
Format of one journal entry
- L.F. (ledger folio) = page number of the ledger account, filled when posting.
- Debit line first, credit line indented with “To”.
- Narration explains the transaction in a few words – auditors read it.
Compound entries
When more than two accounts are involved, write one compound entry. Example: Gupta School owes ₹19,000 and pays ₹18,620 in cash in full settlement – the ₹380 difference is discount allowed (an expense).
| Date | Particulars | Dr (₹) | Cr (₹) |
|---|---|---|---|
| 18-04-2026 | Cash A/c Dr. | 18,620 | |
| Discount Allowed A/c Dr. | 380 | ||
| To Gupta School A/c | 19,000 | ||
| (Being cash received from Gupta School in full settlement, 2% discount allowed) | |||
| Total | 19,000 | 19,000 |
Compound entry – cash discount allowed
💼 Office practice – professional tipIn TallyPrime you can enter this as one Receipt voucher (F6) with two debit lines, or – common in practice – a receipt of ₹18,620 and a separate journal for the ₹380 discount. Both give the same ledgers; follow your firm’s policy.
Special entries students get wrong
| Situation | Correct entry | Common mistake |
|---|---|---|
| Goods taken by owner for personal use | Drawings Dr / Purchases Cr (at cost) | Crediting Sales |
| Goods returned to supplier | Supplier Dr / Purchase Returns Cr | Crediting Purchases directly |
| Goods returned by customer | Sales Returns Dr / Customer Cr | Debiting Sales directly |
| Goods given as free samples | Advertisement Dr / Purchases Cr | Ignoring it |
| Goods lost by fire (insured partly) | Loss by Fire Dr, Insurance Claim Dr / Purchases Cr | Only one debit |
| Cash deposited into bank | Bank Dr / Cash Cr (a contra entry) | Treating it as income |
Solved examples
Example 1: Rohit Stationers – full journal for April 2026
Seventeen transactions, including two compound entries (18 and 20 April). The generator that built this page checked that every entry and the column totals balance.
| Date | Particulars | Dr (₹) | Cr (₹) |
|---|---|---|---|
| 01-04-2026 | Cash A/c Dr. | 2,00,000 | |
| To Capital A/c | 2,00,000 | ||
| (Being business started with cash) | |||
| 02-04-2026 | SBI Bank A/c Dr. | 1,20,000 | |
| To Cash A/c | 1,20,000 | ||
| (Being cash deposited into SBI current account) | |||
| 03-04-2026 | Purchases A/c Dr. | 25,000 | |
| To Cash A/c | 25,000 | ||
| (Being goods purchased for cash) | |||
| 04-04-2026 | Purchases A/c Dr. | 40,000 | |
| To Sai Traders A/c | 40,000 | ||
| (Being goods purchased on credit from Sai Traders) | |||
| 05-04-2026 | Furniture A/c Dr. | 25,000 | |
| To SBI Bank A/c | 25,000 | ||
| (Being furniture purchased by cheque) | |||
| 07-04-2026 | Cash A/c Dr. | 18,000 | |
| To Sales A/c | 18,000 | ||
| (Being goods sold for cash) | |||
| 09-04-2026 | Gupta School A/c Dr. | 20,000 | |
| To Sales A/c | 20,000 | ||
| (Being goods sold on credit to Gupta School) | |||
| 10-04-2026 | Sai Traders A/c Dr. | 2,000 | |
| To Purchase Returns A/c | 2,000 | ||
| (Being damaged goods returned to Sai Traders) | |||
| 12-04-2026 | Sales Returns A/c Dr. | 1,000 | |
| To Gupta School A/c | 1,000 | ||
| (Being goods returned by Gupta School) | |||
| 15-04-2026 | Rent A/c Dr. | 6,000 | |
| To SBI Bank A/c | 6,000 | ||
| (Being shop rent for April paid by UPI) | |||
| 18-04-2026 | Cash A/c Dr. | 18,620 | |
| Discount Allowed A/c Dr. | 380 | ||
| To Gupta School A/c | 19,000 | ||
| (Being cash received from Gupta School in full settlement, 2% discount allowed) | |||
| 20-04-2026 | Sai Traders A/c Dr. | 38,000 | |
| To SBI Bank A/c | 37,500 | ||
| To Discount Received A/c | 500 | ||
| (Being cheque paid to Sai Traders in full settlement) | |||
| 22-04-2026 | Drawings A/c Dr. | 4,000 | |
| To Cash A/c | 4,000 | ||
| (Being cash withdrawn for personal use) | |||
| 25-04-2026 | Electricity A/c Dr. | 2,300 | |
| To Cash A/c | 2,300 | ||
| (Being electricity bill paid in cash) | |||
| 28-04-2026 | Drawings A/c Dr. | 1,500 | |
| To Purchases A/c | 1,500 | ||
| (Being goods taken by the proprietor for personal use) | |||
| 30-04-2026 | Salary A/c Dr. | 12,000 | |
| To SBI Bank A/c | 12,000 | ||
| (Being April salary paid by bank transfer) | |||
| 30-04-2026 | Cash A/c Dr. | 1,800 | |
| To Commission Received A/c | 1,800 | ||
| (Being commission received in cash) | |||
| Total | 5,35,600 | 5,35,600 |
Journal of Rohit Stationers for April 2026 (we will post these to ledgers on Day 5)
Practice exercises (unsolved – answer hidden)
Try each exercise on paper or in TallyPrime first, then open the answer to check.
🏋️ Practice – do it yourself
Task 1: Journalise for Neha Electricals (May 2026): 1 May capital ₹3,00,000 into bank; 3 May goods bought from Verma Distributors on credit ₹80,000; 6 May computer bought by NEFT ₹45,000; 9 May cash sales ₹35,000; 12 May goods sold to Kumar Hardware on credit ₹50,000; 15 May paid Verma Distributors by NEFT in full settlement, 2% discount received; 20 May wages paid in cash ₹7,000; 25 May Kumar Hardware paid by NEFT in full settlement, 2% discount allowed.
Show solution
| Date | Particulars | Dr (₹) | Cr (₹) |
|---|---|---|---|
| 01-05-2026 | Bank A/c Dr. | 3,00,000 | |
| To Capital A/c | 3,00,000 | ||
| (Being capital introduced in bank) | |||
| 03-05-2026 | Purchases A/c Dr. | 80,000 | |
| To Verma Distributors A/c | 80,000 | ||
| (Being goods purchased on credit) | |||
| 06-05-2026 | Computer A/c Dr. | 45,000 | |
| To Bank A/c | 45,000 | ||
| (Being computer purchased by NEFT) | |||
| 09-05-2026 | Cash A/c Dr. | 35,000 | |
| To Sales A/c | 35,000 | ||
| (Being cash sales) | |||
| 12-05-2026 | Kumar Hardware A/c Dr. | 50,000 | |
| To Sales A/c | 50,000 | ||
| (Being goods sold on credit) | |||
| 15-05-2026 | Verma Distributors A/c Dr. | 80,000 | |
| To Bank A/c | 78,400 | ||
| To Discount Received A/c | 1,600 | ||
| (Being payment in full settlement) | |||
| 20-05-2026 | Wages A/c Dr. | 7,000 | |
| To Cash A/c | 7,000 | ||
| (Being wages paid) | |||
| 25-05-2026 | Bank A/c Dr. | 49,000 | |
| Discount Allowed A/c Dr. | 1,000 | ||
| To Kumar Hardware A/c | 50,000 | ||
| (Being amount received in full settlement) | |||
| Total | 6,47,000 | 6,47,000 |
Task 2: Pass entries: (a) Goods worth ₹3,000 given as free samples. (b) Goods costing ₹20,000 destroyed by fire; insurance company admitted a claim of ₹15,000. (c) Owner took goods costing ₹2,500 for personal use.
Show solution
(a) Advertisement A/c Dr 3,000 / To Purchases A/c 3,000. (b) Insurance Claim A/c Dr 15,000; Loss by Fire A/c Dr 5,000 / To Purchases A/c 20,000. (c) Drawings A/c Dr 2,500 / To Purchases A/c 2,500.🏅 Job skills unlocked today
✔ Write journal entries with narration✔ Handle compound entries and discounts✔ Record returns, drawings and losses✔ Check that Dr total = Cr total
Quick quiz
🧠 Quick Quiz – test yourself
1. The narration of a journal entry usually starts with:
Narrations begin with “Being…”.
2. Goods taken by the proprietor are credited to:
Drawings Dr / Purchases Cr at cost.
3. A customer owing ₹10,000 pays ₹9,800 in full settlement. Discount allowed is:
Discount allowed is an expense → debit.
4. An entry with more than one debit or credit is a:
Compound entry.
Interview corner
💼 Interview Corner
What is a compound journal entry? Give an example.
An entry with more than one debit and/or credit. Example: Cash Dr 18,620 and Discount Allowed Dr 380 / To Debtor 19,000 when a customer settles with a cash discount.
Entry for goods distributed as free samples?
Advertisement (or Sales Promotion) A/c Dr / To Purchases A/c, at cost price.
Summary
- Journal = chronological record; Dr line first, credit with “To”, narration with “Being”.
- Use compound entries when more than two accounts are affected.
- Returns, drawings of goods and free samples use Purchases/Sales Returns accounts correctly.
- Total debits always equal total credits.
➡️ Next
Day 5: post this April journal into ledger accounts and balance them.
Frequently Asked Questions
Do we still write journals when using TallyPrime?
You enter vouchers instead, but each voucher is a journal entry. Knowing the journal helps you choose the right voucher and ledgers.
What is a contra entry?
An entry between cash and bank only, such as depositing cash into the bank or withdrawing cash for office use. In TallyPrime it is entered with the Contra voucher (F4).
Tally and TallyPrime are trademarks of Tally Solutions Pvt. Ltd. This is an independent course, not affiliated with or endorsed by Tally Solutions. All business names, GSTINs and figures in the examples are fictional samples.
