Recording in the journal
The journal is the book of original entry. Each entry shows the date, the account debited, the account credited, the amounts and a short narration.
Five steps for every entry
- Read the transaction and name the accounts affected.
- Classify each account: asset, liability, capital, income, expense or drawings.
- Decide whether each account increases or decreases.
- Apply the rules: debit or credit, with equal amounts.
- Write the entry: date, debit account first, credit account below it, amounts, then a short narration.
Worked example: journal of Kamal Traders, April 2026 (Rs.)
| Date | Particulars | Debit | Credit |
|---|---|---|---|
| 1 Apr | Dr Cash | 800,000 | |
| Cr Capital (owner starts the business) | 800,000 | ||
| 3 Apr | Dr Bank | 600,000 | |
| Cr Cash (cash deposited in the bank) | 600,000 | ||
| 5 Apr | Dr Furniture | 120,000 | |
| Cr Bank (furniture bought by cheque) | 120,000 | ||
| 8 Apr | Dr Purchases | 250,000 | |
| Cr Lanka Wholesalers (goods bought on credit) | 250,000 | ||
| 12 Apr | Dr Ruwan Stores | 180,000 | |
| Cr Sales (goods sold on credit) | 180,000 | ||
| 15 Apr | Dr Cash | 95,000 | |
| Cr Sales (cash sales) | 95,000 | ||
| 20 Apr | Dr Lanka Wholesalers | 150,000 | |
| Cr Bank (supplier paid by cheque) | 150,000 | ||
| 25 Apr | Dr Bank | 100,000 | |
| Cr Ruwan Stores (cheque received) | 100,000 | ||
| 28 Apr | Dr Salaries | 45,000 | |
| Cr Cash (salaries paid) | 45,000 | ||
| 30 Apr | Dr Drawings | 20,000 | |
| Cr Cash (cash taken for personal use) | 20,000 | ||
| Totals | 2,360,000 | 2,360,000 |
Worked example: check the journal totals
Add the debit column of the Kamal Traders journal and confirm it equals the credit column.
- 800,000 + 600,000 = 1,400,000; + 120,000 = 1,520,000.
- + 250,000 = 1,770,000; + 180,000 = 1,950,000.
- + 95,000 = 2,045,000; + 150,000 = 2,195,000.
- + 100,000 = 2,295,000; + 45,000 = 2,340,000; + 20,000 = 2,360,000.
- Each entry has an equal credit, so the credit column also totals 2,360,000.
Debit total = credit total = Rs. 2,360,000.
Worked example: compound entries
(a) Kamal buys a delivery van for Rs. 3,500,000, paying Rs. 1,000,000 by cheque and the rest with a bank loan. (b) Ruwan Stores settles a debt of Rs. 80,000 by paying Rs. 78,000 in cash; Kamal allows the rest as discount. Journalise both.
- (a) Loan part: 3,500,000 − 1,000,000 = 2,500,000.
- (a) Dr Motor van 3,500,000; Cr Bank 1,000,000; Cr Bank loan 2,500,000. Check: 1,000,000 + 2,500,000 = 3,500,000.
- (b) Discount allowed: 80,000 − 78,000 = 2,000.
- (b) Dr Cash 78,000; Dr Discount allowed 2,000; Cr Ruwan Stores 80,000. Check: 78,000 + 2,000 = 80,000.
Each compound entry has more than one debit or credit, but its debits still equal its credits.
Books of prime entry
A Sri Lankan wholesaler in Pettah that sells on credit to village shops keeps a sales day book of each day's invoices and posts the totals to the ledger. Accounting software does the same journalising automatically from each invoice.
Short answer: “What is a compound journal entry?” An entry with more than one debit or more than one credit, e.g. a van bought partly by cheque and partly with a loan.
Structured question: “Journalise the following transactions in the books of Kamal Traders.” Write each entry with date, Dr account, Cr account, equal amounts and a short narration; total both columns.
Essay: “Explain the double-entry system and the books of prime entry used by a trading business.” Explain double entry and the rules, then describe each day book, the cash book and the general journal with one example entry each.
Journal entry order D-D-C-A-N: Date, Debit account, Credit account, Amounts, Narration.