Journal Proper and Balancing the Accounts

The system of accounts provides an elaborate and systematic manner to finalize the books of finance of an entity. Another component of the accounting system is journal proper. Let us understand what a journal proper is and how it helps in the final balancing of accounts.

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Journal Proper

A Journal proper in the accounting system is a book of original entry in which all type of miscellaneous credit transactions, which usually do not fit in any other books are recorded. This is why it is also called miscellaneous journal. The form and procedure for maintaining this journal are the same that of the simple journal.

Usually, the transactions which are recorded in the journal proper are as follows:

Opening Entries

These entries include entries for opening a new business. For example, a business is opened with Cash Rs 100, debtors Rs 200, stock Rs 300 bank loan Rs 400 and capital Rs 200, the entry passed would be:

Date	Particulars		Debit	Credit
1st April	Cash A/c	Dr	100
	Debtors A/c	Dr	200
	Stock A/c	Dr	300
	To Loan A/c			400
	To Capital A/c			200

Closing Entries

At the end of the year, certain closing entries will be required to transfer the balance of all the income and expenses accounts to trading and profit and loss account. For example on 31st December the balance in expenses accounts are Salary Rs 500, rent Rs 200, Stationary Rs 50, legal charges Rs 100, and income accounts are commission received Rs 50.The entry would be passed as:

Date	Particulars		Debit	Credit
31st March	Profit & Loss A/c	Dr	850
	To Salary A/c			500
	To Rent			200
	To Stationary			50
	To Legal Charges A/c			100

 

Date	Particulars		Debit	Credit
31st March	Commission Received A/c	Dr	50
	To Profit & Loss A/c			50

Transfer Entries

When accounts are transferred from one account to another fora combination of allied items, it is necessary to pass transfer entry. Such Entries are passed in the Journal proper for the sake of record keeping.

Adjustment Entries

Modification of the accounts at the end of an accounting period is called adjustments. If there are any events affecting the related period of accounts but left out of the books, the same should be incorporated in the books before the preparation of the final accounts. This is done by means of adjusting entries through the journal proper.

Examples include the adjustment for transactions such as Rent Outstanding, or Prepaid Expenses, Commision Received in advance etc

Rectification Entries

When an error is detected in the books, the same is rectified through an entry in the journal proper, thus is called rectification entry. So when an error occurs in the original entry or its subsequent posting in the journal, we will pass the rectification entry in the journal proper.

Entries that do not have a Special Journal

The entries for which there is no special journal such as the distribution of goods as free samples, and goods destroyed by fire. Some entries of rare transactions are also included in the journal proper. These entries do not occur in the business on a regular basis and so do not have a separate account.

Solved Question for You

Question: Give examples of transfer entries and adjusting entries.

Answer – An example of a transfer entry is when a proprietor makes a drawing. In such case, entry passed is:

Date	Particulars		Debit	Credit
21st March	Capital A/c	Dr	50,000
	To DrawingsA/c			50,000

An example of an adjusting entry is rent outstanding. It will be depicted as follows:

Date	Particulars		Debit	Credit
31st March	Rent A/c	Dr	8500
	To Rent Outstanding A/c			8500