Lessons · Accounting · the journal entry
The journal entry: date, debit, credit, and a line of why
A journal entry records one transaction: the date, the account debited on the first line, the account credited indented beneath it, equal totals, and a short note saying what happened.
Hone is a place to practise a career, one idea a day. This is one of its lessons, written out in full and free to read without an account.
What it is for
Six months on, a customer disputes an invoice, or the auditor points at a 2,400 and asks what it was. The entry and its note are the only memory the business has of that day.
How to think about it
Debits first, credits indented under them, then add each column. If the two totals differ, stop; the entry is wrong, whatever else is right about it.
Worked example
3 Mar Dr Equipment 2,400The account that got bigger on the debit side, first.
Cr Cash 2,400The account credited, indented. Cash went down.
Bought a printer from OfficeCo, invoice 118The note. Short, and enough to find the paperwork.
Check: debits 2,400 = credits 2,400Every entry, every time.
Your turn
Paid 350 cash for fuel. Write the credit line.
Dr Fuel expense 350 / Cr 350
Solve one, graded on the server
The trap
Letting the two totals differ by a little and moving on. There is no small difference; an entry that does not balance breaks the trial balance at month-end, and finding it then costs an afternoon.