What is journal entry? Mention its features and rules for entry? Pass the journal entries:
ABC traders started a business with a capital of Rs. 1,00,000 on April 10, 2021. April 19, 2021 - Purchased furniture worth Rs. 75,000.
April 24, 2021 - Purchased goods on credit from XYZ traders worth Rs. 1,00,000.
April 30, 2021 - Rent paid Rs. 50,000.
May 2, 2021 - Goods sold for Rs.20,000 at 10% discount.
•
• May 15, 2021 - Cash deposited Rs. 50,000 into the bank
A journal entry is a record of a business transaction in a chronological order. It includes the date of the transaction, the accounts involved, and the amount of money exchanged. The main features of a journal entry are:
1. It is the first step in the accounting process.
2. It is a chronological record of all transactions.
3. It helps in maintaining accurate financial records.
4. It provides a trail of documentation for auditing purposes.
Rules for journal entry:
1. Every transaction should have a dual aspect - debit and credit.
2. The total debit amount should equal the total credit amount.
3. The format of a journal entry is Date, Particulars, L.F. (Ledger Folio), Debit amount, and Credit amount.
Now, let's pass the journal entries:
April 10, 2021:
Cash A/c Dr. 1,00,000
To Capital A/c 1,00,000
April 19, 2021:
Furniture A/c Dr. 75,000
To Cash A/c 75,000
April 24, 2021:
Purchases A/c Dr. 1,00,000
To XYZ Traders A/c 1,00,000
April 30, 2021:
Rent A/c Dr. 50,000
To Cash A/c 50,000
May 2, 2021:
Cash A/c Dr. 18,000
Discount Allowed A/c Dr. 2,000
To Sales A/c 20,000
May 15, 2021:
Bank A/c Dr. 50,000
To Cash A/c 50,000