Sample Journal Entries

I. Revenue Journal Entries IV. Asset Journal Entries

a. Sales entry a. Bank reconciliation entry

a.1 goods or services are sold on credit a.1 recognize bank fees/charges
dr accounts receivable dr bank charges
cr sales cr bank account
a.2 goods or services are sold on cash a.2 recognize interest earned
dr bank/cash dr bank account
cr sales cr other income/interest income
a.3 deduct checks purchased
b. Allowance for doubtful accounts entry dr office supplies
b.1 setting up or adjusting a bad debt reserve cr bank account
dr bad debt expense
cr allowance for doubtful accounts b. Prepaid expense adjustment entry
b.2 when specific bad debts are identified b.1 recognize expense paid in advance for multiple future periods
dr allowance for doubtful accounts (e.g. insurance and rents)
cr accounts receivable dr prepaid expense (asset account)
cr cash/bank
c. Sales returns entry b.2 amortize prepaid expense or recognize prepaid expense as expense
c.1 when customer returned the goods dr applicable expense account
dr sales returns and allowances cr prepaid expense (asset account)
cr accounts receivable/cash/bank
-and- c. Fixed asset entry
dr inventory/purchases c.1 purchase of fixed asset
cr cost of sales dr fixed asset
cr accounts payable/cash/bank
II. Cost of Sales Journal Entries c.2 when removing fixed asset to records
dr accumulated depreciation
a. Purchases entry cr fixed asset
a.1 goods or services are purchased on credit dr/cr loss/gain on derecognition
dr purchases/inventory d. Investments entry
cr accounts payable d.1 purchase of investments
a.2 goods or services are purchased on cash dr investments accounts
dr purchases/inventory cr cash/bank
cr cash/bank d.2 recognize gain/loss on investment
dr/cr investments accounts
b. Cost of Sales entry dr/cr other income/other expense
b.1 goods or services are sold
dr cost of sales V. Liabilities Journal Entries
cr purchases/inventory
a. Credit Card reconciliation entry
c. Purchase returns entry a.1 recognize interest fees/charges
c.1 when the company returned purchased goods to supplier dr interest charges
dr accounts payable/cash/bank cr credit card account
cr purchase returns a.2 recognize credit card processing fees
dr merchant fees
III. Expense Journal Entries cr credit card account
a.3 credit card purchases
a. Basic expenses entry dr applicable expense account
a.1 payment to company's expenses cr credit card account
dr expenses like utilities, rent, insurance,supplies a.4 payment for credit card
cr accounts payable/cash/bank dr credit card account
cr cash/bank
b. Payroll entry
b.1 payment for employee payroll b. Accounts payable entry
dr payroll expense b.1 when recording payable
dr payroll tax accounts dr asset or expense to which a purchase relates
cr cash/bank cr accounts payable
b.2 when paying payable
c. Depreciation entry dr accounts payable
c.1 recognize deprecation cr cash/bank
dr depreciation expense
cr accumulated depreciation c. Accrued expense entry
c.1 to accrue an incurred expense
d. Petty cash entry dr applicable expense account
d.1 setup petty cash fund cr accrued expenses
dr petty cash fund
cr cash/bank d. Advances or Loans entry
d.2 petty cash is to be replenished d.1 company loan from owners/employees/supplies
dr expenses like utilities, rent, insurance,supplies dr cash/bank
cr cash/bank cr advances/loans from XXX
d.2 company loan from financial institutions/banks
VI. Equity Journal Entries dr cash/bank
cr loans payable
a. Dividend declaration entry d.3 recognize interest from loans
a.1 when establishing the existence of a liability to pay dividends dr prepaid interest
dr retained earnings cr interest payable
cr dividends payable d.4 recognize payment of loans and interest
a.2 when dividends are paid dr loans payable
dr dividends payable cr cash/bank
cr cash/bank -and-
b. Owner's pay entry dr interest payable
b.1 when owners pay for company expenses cr cash/bank
dr applicable expense account
cr owner's pay account
le future periods

id expense as expense
purchase relates