The Journal (Edexcel IGCSE Accounting)
Revision Note
Written by: Dan Finlay
Reviewed by: Lucy Kirkham
The Journal
What is the journal?
The journal is also referred to as the general journal
The journal is used to record all transactions that do not go into the other books of original entry, such as:
Opening balances when a business is first created
Introducing capital
Taking drawings
Purchasing a non-current asset
Selling a non-current asset
Correcting errors
Transferring balances to the income statement
How do I make a journal entry for a transaction?
STEP 1
Enter the dateSTEP 2
Enter the name of the account(s) that need to be debited in the details columnIt is conventional to enter the debit accounts before the credit accounts
STEP 3
Enter the corresponding values in the debit columnSTEP 4
Enter the name of the account(s) that need to be credited in the details columnIt is conventional to leave an indent for the credit entries
STEP 5
Enter the corresponding values in the credit columnMake sure the total debit amount is equal to the total credit amount
STEP 6
Write a narrative for the journal entryThis is a brief explanation of the transaction
This is especially useful for non-regular transactions and for correction of errors
Examiner Tips and Tricks
Read the question carefully to see whether a narrative is required. If in doubt, you should include a narrative.
Worked Example
On 1 February 2024, John starts an online tutoring business. He takes out a bank loan for $5000 and uses it to purchase a computer for $4000. He puts the remaining money in a business bank account along with $2000 of his own money.
Prepare the general journal entry to record the opening assets and liabilities at 1 February. A narrative is required.
Answer
Money in bank from loan
$5 000 - $4 000 = $1 000
Total money in the bank
$1 000 + $2 000 = $3 000
Equity is the difference between assets and liabilities
$4 000 + $3 000 - $5 000 = $2 000
Journal
Date | Details | Debit $ | Credit $ |
2024 | Computer | 4 000 | |
Bank | 3 000 | ||
Bank loan | 5 000 | ||
Equity |
| 2 000 | |
7 000 | 7 000 | ||
Opening balances for assets, liabilities and equity |
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