Transfer Entries

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 :

1. Opening entries
2. Transfer entries
3. Adjustment entries
4. Closing entries

Transfer 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

• Closing Entries
• Adjustment Entries

Transfers journal entries shall include a description of the items and an explanation of why the transfer is necessary.

Source: freepik.com

1. Amount withdrawn from Capital

xx	Capital A/c	Dr.	xxx
	To Drawings A/c			xxx
	( Being amount is withdrawn from capital)

 

2. Amount withdrawn from the bank

xx	Cash A/c	Dr.	xxx
	To Bank A/c			xxx
	( Being amount withdrawn from the bank)

Learn more about Closing Entries here in detail.

3. Cash deposited at the bank

xx	Bank A/c	Dr.	xxx
	To Cash A/c			xxx
	( Being deposit of cash at the bank)

 

4. 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

1. An amount of ₹ 20,000 has been withdrawn from the capital a/c on 20^th May 2017.
2. Cash deposited at the bank for ₹ 5,000 on 17^th July 2017.
3. Bought goods from Mahesh for cash for ₹ 10,000 on 18^th July 2017.
4. Sold goods worth ₹ 5,000 for cash for ₹ 10,000 on 21^st July 2017.
5. Purchased stationery for cash on 20^th August 2017 of ₹ 1,200.
6. On 5^th September 2017 withdrew from the bank for personal use an amount of ₹ 1,500.
7. Paid rent for ₹ 2,000 on 15^th October 2017.
8. Goods worth ₹ 500 given as charity on 25^th November 2017.

Ans:

IN THE BOOKS OF RAJESH

Journal Entries

Date	Particulars		Amount (Dr)	Amount (Cr)
Apr 1	Furniture A/c	Dr.	40,000
	Machinery A/c	Dr.	180,000
	Debtors A/c	Dr.	120,000
	Bills Receivable A/c	Dr.	90,000
	Cash A/c	Dr.	20,000
	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 )