Journal

Definition of Journal

Journal is a day books in which bookkeeper records all the transaction first time . Transaction must be record in this book date wise and journal applies the rules of double entry system . 

Suppose Ram takes loan of Rs.100000 from his friend. Then what come in is cash and so cash account will be debited and His friend is giver of loan, so his friend’s loan account will be credited in journal.Journal entry will be passed in the journal of Ram
Cash Account Dr. 100000 /
To Friend’s loan Account / 100000
In other words journal is the book of primary entry . Whenever any transaction or event occurs it is recorded in the
first instance in the journal . There are various types of journal.

1. Purchase day book ? to record transactions relating to credit purchases.
2. Sales day book ? to record transactions relating to credit sales.
3. Purchase return book ? to record transactions relating to purchase returns.
4. Cash book ? to record cash , bank and discount transactions .
5. Journal Proper ? to record other transactions for which no specific journal is maintained .

All transaction are first recorded in the journal as and when they occur , the record is chronological , as otherwise it would be difficult to maintain the record in an orderly manner. The form of journal is given below :
Journal
_________________________________________________________________________
Date ? particular ? L.F. ? Dr. Amount ? Cr. Amount ?
________________________________________________________________________

The columns have been numbered only to make clear the following explanations but otherwise they are not numbered . The

following point should be noted :

1. In the first column the date of the transaction is entered , the year is written at the top , then month and in the narrow part of the column the particular is entered .
2. In the second column , the names of the accounts involved are written , first the account to be debited , with the word Dr. written towards the end of the column. In the next line , after leaving little space , the name of the account to be credited is written preceded by the word To ( the modern practice shows inclination towards omitting Dr and To . Then in the next line the explanation for the entry together with necessary details is given , this is called narration.
3. In the third column the number of the page in the ledger on which the account is written up is entered
4. In the fourth column , the amounts to be debited to the various accounts concerned is entered .
5.  In fifth column , the amount to be credited to the various account is entered .

Before one can journalise transactions , one must think on the basis of the rules given above , the effect of the transactions on assets , liabilities , expenses , gains etc. of the firm . In accordance with the effect , the accounts to be debited or credited will be determined . Then the entry will be made in the journal as indicated above .

How can make the journal entries
In the accounting education, making of journal is very important. Because without making journal entries, we can not calculate the result of business in the form of profit and loss account and balance sheet. So please care fully get the education of making journal.

Journal accepts the rules of double entry system. Rule for making journal
Every rule has two parts
•First rule for personal accounts

1. Who is receiver = Debit
2. Who is giver = Credit

•2nd Rule for real accounts

1. What comes in business = Debit
2. What goes from business = Credit

•3rd Rule for nominal accounts

1.All the expenses and losses = Debit
2.All the incomes and gains = Credit


•Practical example for making journal ?

Suppose Ram purchase goods of Rs. 10000 from Sham @ 10% trade discount on credit. After 15 days. Ram pays full settlement of all money with @ 10% cash discount.
Journal Entries in the books of Ram
Because goods comes in Ram’s business so Purchase account will debit with Rule 2nd and its first part
Because Sham is giver of goods so he is giver and account with his name will be credit with rule 1st and its second
part after this we will pass the journal entry
Purchase account Dr. 9000
To Sham Account 90000
•After 15 days will pass second journal entry in ram books
Sham Account ( He is the receiver ) Dr. 9000
To Cash Account ( it goes out of business ) 8100
To Discount Received ( It is the income of business 900