Journalising Transactions (Journal Entries)

1. Introduction (Concept Samjhein)

Every business performs transactions such as purchasing goods, selling products, paying salaries, receiving money from customers, paying rent, and many more.

Before these transactions are recorded in books of accounts, they must be analyzed and converted into proper accounting entries. This process is called Journalising.

In traditional accounting, transactions are first recorded in the Journal Book.

In TallyPrime, journalising is done automatically when voucher entries are passed, but understanding journal entries is extremely important because:

Learning Objectives

After studying this chapter, students will be able to:

Kya Hai Journalising?

Journalising is the process of recording business transactions in chronological order using Debit and Credit rules.

A journal entry shows:

Definition

A Journal is known as the:

"Book of Original Entry"

because every transaction is first recorded here before posting to ledger accounts.

Format of Journal Entry

Date Particulars L.F. Debit Amount Credit Amount
xx Account Dr. xxx
To Account xxx
(Narration)

Steps in Journalising

For every transaction:

Step 1

Identify the accounts involved.

Step 2

Determine the type of account.

Step 3

Apply Golden Rule.

Step 4

Determine Debit and Credit.

Step 5

Pass Journal Entry.

Relation Between Journalising and TallyPrime

Voucher Journalising Required
Payment Voucher Yes
Receipt Voucher Yes
Contra Voucher Yes
Journal Voucher Yes
Purchase Voucher Yes
Sales Voucher Yes

TallyPrime automatically posts entries, but users must understand journalisation to enter vouchers correctly.

Example 1 – Started Business with Cash

Mr. Raj starts a business with ₹1,00,000 cash.

Analysis

Accounts involved:

  1. Cash A/c
  2. Capital A/c

Types

Cash → Real Account

Capital → Personal Account

Golden Rule

Real Account:

Debit What Comes In

Cash comes into business.

Personal Account:

Credit the Giver

Owner gives capital.

Journal Entry

Cash A/c Dr.              ₹1,00,000
     To Capital A/c              ₹1,00,000

(Being capital introduced into business)

Real-Life Use Case

A shop owner deposits personal savings into the business bank account.

This transaction occurs when:

Example 2 – Purchased Furniture for Cash

Furniture purchased for ₹20,000 cash.

Accounts

Types

Furniture → Real Account

Cash → Real Account

Rule

Furniture comes in → Debit

Cash goes out → Credit

Journal Entry

Furniture A/c Dr.         ₹20,000
      To Cash A/c                ₹20,000

(Being furniture purchased for cash)

Real-Life Use Case

Office purchases:

Example 3 – Purchased Goods on Credit

Goods purchased from Ramesh ₹50,000.

Accounts

Types

Purchase → Nominal

Ramesh → Personal

Rule

Expense/Purchase → Debit

Creditor (giver) → Credit

Journal Entry

Purchase A/c Dr.          ₹50,000
      To Ramesh A/c             ₹50,000

(Being goods purchased on credit)

Business Practice

Most wholesalers purchase goods on credit and pay suppliers later.

Examples:

Example 4 – Sold Goods for Cash

Goods sold for ₹30,000 cash.

Accounts

Rule

Cash received → Debit

Sales income → Credit

Journal Entry

Cash A/c Dr.              ₹30,000
      To Sales A/c               ₹30,000

(Being goods sold for cash)

Real-Life Use Case

A customer walks into a retail shop and purchases products by paying cash.

Examples:

Example 5 – Sold Goods on Credit

Sold goods to Amit ₹25,000.

Accounts

Rule

Customer becomes debtor → Debit

Sales income → Credit

Journal Entry

Amit A/c Dr.              ₹25,000
      To Sales A/c               ₹25,000

(Being goods sold on credit)

Practical Business Example

Many businesses provide credit to regular customers.

Example 6 – Paid Salary

Salary paid ₹15,000.

Accounts

Types

Salary → Nominal

Cash → Real

Rule

Expense incurred → Debit

Cash paid → Credit

Journal Entry

Salary A/c Dr.            ₹15,000
      To Cash A/c                ₹15,000

(Being salary paid)

Real-Life Use Case

Monthly staff salary payments:

Example 7 – Paid Rent

Office rent paid ₹10,000.

Journal Entry

Rent A/c Dr.              ₹10,000
      To Cash A/c                ₹10,000

(Being office rent paid)

Reason

Rent is an expense.

Expenses are debited.

Example 8 – Received Commission

Commission received ₹5,000.

Accounts

Rule

Cash comes in → Debit

Income earned → Credit

Journal Entry

Cash A/c Dr.              ₹5,000
      To Commission A/c          ₹5,000

(Being commission received)

Example 9 – Received Cash from Debtor

Received ₹20,000 from Amit.

Accounts

Rule

Cash comes in → Debit

Debtor pays amount → Credit

Journal Entry

Cash A/c Dr.              ₹20,000
      To Amit A/c                ₹20,000

(Being amount received from Amit)

Real-Life Scenario

Customers clear outstanding dues through:

Example 10 – Paid Supplier

Paid ₹30,000 to Ramesh.

Accounts

Rule

Creditor settled → Debit

Cash paid → Credit

Journal Entry

Ramesh A/c Dr.            ₹30,000
      To Cash A/c                ₹30,000

(Being payment made to creditor)

Example 11 – Deposited Cash into Bank

Cash deposited into bank ₹40,000.

Accounts

Rule

Bank balance increases → Debit

Cash decreases → Credit

Journal Entry

Bank A/c Dr.             ₹40,000
      To Cash A/c               ₹40,000

(Being cash deposited into bank)

Example 12 – Withdrew Cash from Bank

Journal Entry

Cash A/c Dr.             ₹10,000
      To Bank A/c               ₹10,000

(Being cash withdrawn from bank)

Journal Entry for GST Purchase

Goods purchased: ₹50,000

GST @18% = ₹9,000

Total = ₹59,000

Entry

Purchase A/c Dr.         ₹50,000
Input CGST A/c Dr.        ₹4,500
Input SGST A/c Dr.        ₹4,500
      To Supplier A/c            ₹59,000

(Being goods purchased with GST)

Journal Entry for GST Sales

Goods sold: ₹30,000

GST @18% = ₹5,400

Total = ₹35,400

Entry

Customer A/c Dr.         ₹35,400
      To Sales A/c              ₹30,000
      To Output CGST A/c         ₹2,700
      To Output SGST A/c         ₹2,700

(Being goods sold with GST)

Common Transactions Used in TallyPrime

Transaction Voucher
Salary Paid Payment
Rent Paid Payment
Cash Received Receipt
Goods Purchased Purchase
Goods Sold Sales
Bank Deposit Contra
Bank Withdrawal Contra
Adjustment Entry Journal

Common Journalising Mistakes

1. Confusing Debtor and Creditor

Wrong:

Sales A/c Dr.

Correct:

Customer A/c Dr.
To Sales A/c

2. Debiting Income

Income should generally be credited.

Example:

Commission Received

Correct:

Cash A/c Dr.
To Commission A/c

3. Crediting Expenses

Expenses must be debited.

Wrong:

To Salary A/c

Correct:

Salary A/c Dr.
To Cash A/c

Shortcut Formula for Journalising

Ask three questions:

Question 1

What account is affected?

Question 2

Is it Personal, Real, or Nominal?

Question 3

Which Golden Rule applies?

Then pass the entry.

Journalising and Voucher Entry in TallyPrime

Suppose salary ₹15,000 is paid.

Journal Entry

Salary A/c Dr.      ₹15,000
      To Cash A/c         ₹15,000

In TallyPrime:

Gateway of Tally → Vouchers → Payment Voucher (F5)

Enter:

TallyPrime automatically records the journal entry in the background.

Practical Exercise for Students

Pass Journal Entries for:

  1. Started business with cash ₹2,00,000
  2. Purchased furniture ₹25,000 cash
  3. Purchased goods from Mohan ₹40,000 credit
  4. Sold goods to Suresh ₹30,000 credit
  5. Received cash from Suresh ₹15,000
  6. Paid salary ₹12,000
  7. Paid rent ₹8,000
  8. Deposited cash into bank ₹50,000
  9. Received commission ₹3,000
  10. Paid Mohan ₹20,000

Conclusion (Anas Sir Ki Summary)

Journalising is the backbone of accounting. Every voucher entered in TallyPrime ultimately follows journal entry principles. By understanding account types, Golden Rules of Accounting, and transaction analysis, students can confidently record business transactions, prepare accurate books of accounts, and use TallyPrime effectively in real-world business environments.

Key Rule to Remember:

Identify the Accounts → Apply Golden Rules → Decide Debit & Credit → Pass Journal Entry → Record Voucher in TallyPrime.