Journal is the primary book of accounts in which we originally record transactions in chronological order. It is a book of original entry because we first enter a transaction in the Journal from where we then post it to the ledger. Ledger is a book or register which contains, in a summarized and classified form, a permanent record of all transactions. It is the most important book of accounts since we draw the trial balance from it. Learn transfer entries here.
Types of Entries
There are the following types of entries in accounting :
- Opening entries
- Transfer entries
- Adjustment entries
- Closing entries
Sometimes it is necessary to transfer an amount or balance of one account to some other account. We do this by means of a transfer journal entry in the Journal Proper.
We use a Transfer Journal Entry to allocate an expense or revenue from one account to another. It is used to transfer funds between object codes within an account or sponsored project.
Browse more Topics under Special Entries
Transfers journal entries shall include a description of the items and an explanation of why the transfer is necessary.
- Amount withdrawn from Capital
|To Drawings A/c||xxx|
|( Being amount is withdrawn from capital)|
- Amount withdrawn from the bank
|To Bank A/c||xxx|
|( Being amount withdrawn from the bank)|
Learn more about Closing Entries here in detail.
- Cash deposited at the bank
|To Cash A/c||xxx|
|( Being deposit of cash at the bank)|
- Amount received for petty cash
|xx||Petty Cash A/c||Dr.||xxx|
|To Cash A/c||xxx|
|( Being amount received for petty cash)|
Solved Example For You
Following Balances appear in the books of Rajesh as on 31st March 2017. Pass the necessary journal entry for 2017-18:
Credit balances: Capital – ₹ 300,000; Bills Payable – ₹ 50,000; Creditors – ₹ 100,000
Debit balances : Furniture – ₹ 40,000; Machinery – ₹ 180,000; Debtors – ₹ 120,000; B/R – ₹ 90,000; Cash – ₹ 20,000
- An amount of ₹ 20,000 has been withdrawn from the capital a/c on 20th May 2017.
- Cash deposited at the bank for ₹ 5,000 on 17th July 2017.
- Bought goods from Mahesh for cash for ₹ 10,000 on 18th July 2017.
- Sold goods worth ₹ 5,000 for cash for ₹ 10,000 on 21st July 2017.
- Purchased stationery for cash on 20th August 2017 of ₹ 1,200.
- On 5th September 2017 withdrew from the bank for personal use an amount of ₹ 1,500.
- Paid rent for ₹ 2,000 on 15th October 2017.
- Goods worth ₹ 500 given as charity on 25th November 2017.
IN THE BOOKS OF RAJESH
|Date||Particulars||Amount (Dr)||Amount (Cr)|
|Apr 1||Furniture A/c||Dr.||40,000|
|Bills Receivable A/c||Dr.||90,000|
|To Capital A/c||300,000|
|To Bills Payable A/c||50,000|
|To Creditors A/c||100,000|
|( Being opening entry )|
|May 20||Capital A/c||Dr.||20,000|
|To Drawings A/c||20,000|
|( Being amount withdrawn from capital)|
|July 17||Bank A/c||Dr.||5,000|
|To Cash A/c||5,000|
|( Being deposit of cash at the bank )|
|July 18||Purchase A/c||Dr.||10,000|
|To Cash A/c||10,000|
|( Being purchase of goods for cash )|
|July 21||Cash A/c||Dr.||10,000|
|To Sales A/c||10,000|
|( Being sale of goods for cash )|
|Aug 20||Stationery A/c||Dr.||1,200|
|To Cash A/c||1,200|
|( Being purchase of stationary for cash)|
|Sept 5||Drawings A/c||Dr.||1,500|
|To Bank A/c||1,500|
|( Being cash withdrawn from bank for personal use)|
|Oct 15||Rent A/c||Dr.||2,000|
|To Cash A/c||2,000|
|( Being payment for rent )|
|Nov 25||Charity A/c||Dr.||500|
|To Purchase A/c||500|
|( Being distribution of goods as charity )|