A journal entry is an accounting record of a business financial transaction that takes place in an organization. The journal entry states the transaction date and the different accounts that are affected due to the transaction with the amounts.

Format of the General Entry :


Date Name of account being debited Amount
Name of account being credited Amount
Optional: short description of transaction


Example of the General Entry :

Consider the following example that illustrates the basic concept of general journal entries.
Mike Peddler opens a bicycle repair shop. He leases shop space, purchases an initial inventory of bike parts, and begins operations. Here are the general journal entries for the first month:


Account Names & Explanation Debit Credit
Cash 7500
Capital 7500

Owner contributes $7500 in cash
to capitalize the business.

Bike Parts 2500
Accounts Payable 2500
Purchased $2500 in bike parts
on account, payable in 30 days.

Expenses 1000
Cash 1000
Paid first month's shop rent of $1000.

Cash 400
Accounts Receivable 700
Revenue 1100

Repaired bikes for $1100; collected $400
cash; billed customers for the balance.

Expenses 275
Bike Parts 275
$275 in bike parts were used.

Cash 425
Accounts Receivable 425
Collected $425 from customer accounts.

Accounts Payable 500
Cash 500
Paid $500 to suppliers for parts
purchased earlier in the month.