A journal is a record of transactions recorded in chronological order (in order by date). The general journal is often the main journal of a business — the place where transaction analysis (accounts, debit, credit) gets written down in full, in the order it happened, before anything else is done with it. Journalizing is the act of recording transactions in a journal.
The Standard Format
- Write the date of the transaction.
- Write the account to be debited on the first line, flush against the account-name column, with the dollar amount in the debit column.
- Write the account to be credited on the next line, indented, with the dollar amount in the credit column.
- Write a short explanation of the transaction underneath, so anyone reading the journal later understands why it was recorded.
- Leave a blank line before the next entry.
| Date | Account | Debit | Credit |
|---|---|---|---|
| Mar 5 | Cash | 850 | |
| Fees Earned | 850 | ||
| Performed repair services for cash. |
Compound Entries
A compound entry has more than one debit or more than one credit. This happens whenever a single transaction affects more than two accounts — for example, if part of a bill is paid in cash and part is put on account at the same time.
| Date | Account | Debit | Credit |
|---|---|---|---|
| May 2 | Equipment | 2,000 | |
| Cash | 800 | ||
| Accounts Payable | 1,200 | ||
| Purchased equipment, $800 cash and $1,200 on account. |
The Opening Entry
The opening entry records the assets, liabilities, and owner's equity in a journal when a business first begins operations. It is usually the very first entry in a brand-new business's journal, and it is very often a compound entry, since a business rarely starts with only one asset and no liabilities.
| Date | Account | Debit | Credit |
|---|---|---|---|
| Jan 1 | Cash | 10,000 | |
| Equipment | 6,000 | ||
| Truck | 9,000 | ||
| Bank Loan | 8,000 | ||
| J. Reyes, Capital | 17,000 | ||
| To record the opening of Trillium Bike Repair. |