Journal Entries: Recording

Business Transactions
 After analyzing and preparing business
documents, the transactions are then recorded in
the books of the company. In double-entry
accounting, transactions are recorded in the
journal through journal entries.
 A journal, also known as Books of Original
Entry, keeps records of business transactions in a
systematic order.

 Transactions are recorded in the journal in

chronological order, i.e. as they occur; one after
the other.
A simple journal looks like this:
A column for posting reference or folio may also be included to
facilitate easier tracking and cross-referencing with the ledger. Also,
an explanation of the transaction may be included below the entry.
The journal would then look like this:
 Illustration
 Let's try to prepare the journal entry for this
transaction: On June 3, 2019, our company purchased
computer equipment for its main office and paid
$1,200.00 in cash.
 When we analyze that transaction, it would show that
the accounting effects would be an increase in an asset
account (Computer Equipment), and a decrease in
another asset (Cash) since we paid for the equipment.
 We would then increase Computer Equipment by
debiting it and decrease Cash by crediting it. The
journal entry would be:
 computer equipment is an asset account. To increase an asset
account, you debit it. Hence, we debited Computer
Equipment. Cash is also an asset account. However, there is a
decrease in cash because we paid for the computer
equipment. And so, we credited Cash.
 Compound Journal Entries
 When there is only one account debited and one credited,
it is called a simple journal entry. There are however
instances when more than one account is debited or
credited. They are called compound journal entries.

 Let's take the previous transaction and change it up a bit.

Here's the new transaction: On June 3, 2019, our
company purchased computer equipment for $1,200.00.
Our company paid $800.00 and the $400.00 balance will
be paid after 30 days.
 The journal entry shows that the company received computer equipment worth
$1,200. Cash is decreased by $800, the amount paid.

 In addition, the company incurred in an obligation to pay $400 after 30 days. The
liabilities of the company increased. When we increase liabilities, we credit it.
That is why we credited Accounts Payable (a liability account) in the above entry.

 Notice that the total amount debited is equal to the total amount credited.