The process of recording voucher details of a transaction in a Journal is called Journalizing and the record thus created is called a journal entry. Transactions are recorded in the Journal according to the type of accounts involved. For example, a journal entry can be made for a cash sale in the Cash Receipts Journal and not in the Sales Journal.
How to Journalize :
The transactions are recorded in the Journals based on the three basic rules for debit and credit. A Journal have five columns namely, Date, Particulars, Ledger Folio, Debit and Credit, followed by a brief explanation about the transaction known as the narration of the transaction. Each transaction has a dual aspect i.e. two heads of accounts will be formed by each transaction. Also, a voucher will be prepared for every transaction and these will be recorded on the debit and credit side. The account, which is debited, will be recorded in the debit column. The accounts, which is credited, will be recorded in the credit column of the Journal. For example, if cash is paid to a supplier on the account of raw material purchased then, purchase account will be debited and cash account will be credited.
Steps to Create Journal Entry :
- Enter the date f the transaction.
- Enter the names of the accounts that are involved in the transaction.
- Enter the page number in the Ledger where the account is maintained.
- Enter the amount or amounts to be debited to the various accounts involved.
- Enter the amount or amounts to be credited to various accounts involved.
