The Journal - Accounting- Lecture No.-3

Subject: Accounting 
Topic: The Journal - Lecture No. - 3 
Subject Code: HUM 4301
Teacher Name: SM Shahidul Islam 

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What is journal?

Journal is the date-wise record of all the transactions with details of the accounts debited and credited and the amount of each transaction. In a journal book, transactions are recorded in a chronological order. Moreover, Journal is the book in which transactions are recorded for the first time. It is also known as ‘Book of Original Record’ or ‘Book of Primary Entry’.

Business transactions of financial nature are classified into various categories of accounts such as assets, liabilities, capital, revenue and expenses. These are debited or credited according to the rules of debit and credit, applicable to the specific accounts. Every business transaction affects two accounts. Applying the principle of double entry one account is debited and the other account is credited. Every transaction can be recorded in journal. This process of recording transactions in the journal is’ known as ‘Journalising’. In small business houses generally, one Journal Book is maintained in which all the transactions are recorded. But in case of big business houses as the transactions are quite large in number, therefore journal is divided into various types of books called Special Journals in which transactions are recorded depending upon the nature of transaction i.e. all credit sales in Sales Book, all cash transactions in Cash Book and so on.

Format of Journal:

Every page of Journal has the following format. It is a columnar book. Each column is given a name written on its top. Format of journal is given below:

Date	Particulars	L.F	Debit amount	Credit amount

Rules of Debit and Credit:

The rules of debit and credit is shown below:

	Increase	Decrease
Assets	Debit	Credit
Liabilities	Credit	Debit
Income/Revenue	Credit	Debit
Expense	Debit	Credit
Equity/capital	Credit	Debit

Example:

Enter the following transactions in the Journal of Habib Co.

Date	Transactions	Amount (Taka)
July 1	July 1 Habib started business with cash	100000
July 3	Goods purchased for cash	15000
July 4	Furniture Purchased from Mr. Ripon	25000
July 6	Rent paid in cash	8000
July 9	Goods purchased on credit from Mr. Saiful	26000
July 15	Goods sold for cash	35000
July 17	Goods sold on credit to Mr. Rasel	25000
July 21	Salaries paid.	12000
July 25	Cash withdrawn for personal use	3000

Solution:

Before  making  the  journal  entries,  it  is  very  essential  to  determine  the  kind  of accounts to be debited or credited. Let’s try to do it.

Date	Transaction	Affected Accounts	Kind    of Accounts	Increase/ Decrease in accounts	Debited Accounts (Dr)	Credited Accounts (Cr)

On the basis of the above table, following entries can be made in the Journal

Journal of Habib Co.

Date	Particulars	L.F	Debit amount (Dr)	Credit Amount (Cr)