Accounting: Basic Journal Entries

Accounting: Basic Journal Entries

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The journal is the record of transactions in chronological order. In a journal entry, debits will always equal credits. Even if a journal entry includes more than two accounts, the total debits will equal the total credits.


Common Journal Entries

  • Issuing of common stock in exchange for cash: Debit to Cash, credit to Common Stock

  • Purchase of land on account: Debit to Land, credit to Accounts Payable

  • Purchase of office equipment for cash: Debit to Office Equipment, credit to Cash

  • Cash is collected for services provided: Debit to Cash, credit to Service Revenue

  • Service revenue is earned on account: Debit to Accounts Receivable, credit to Service Revenue

  • Rent is paid with cash: Debit to Rent Expense, credit to Cash

  • Cash payment of an outstanding note: Debit to Notes Payable, credit to Cash

  • Collection of cash on account: Debit to Cash, credit to Accounts Receivable

  • Cash dividend is paid: Debit to Dividends, credit to Cash

  • Cash prepayment of two months' rent: Debit to Prepaid Rent, credit to Cash

  • Purchase of land with a note payable: Debit to Land, credit to Notes Payable

  • Water bill is received but not yet paid: Debit to Utilities Expense, credit to Accounts Payable

  • Cash is collected for services that have yet to be provided: Debit to Cash, credit to Unearned Revenue

The ledger lists all of the business accounts, any changes in those accounts, and the account balances. Moving accounting information from the journal to the ledger is called posting.


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