If you weren’t already aware, bookkeeping is absolutely the backbone of any successful business. That’s because financial excellence is a priority for any successful business. At the foundational level, journal entries are one of the core tasks for bookkeepers. Fundamental records of every transaction need to be kept, and since record-keeping can be time-consuming, delegating it to an expert can help boost your business in a way you’ve never seen before.
It doesn’t matter if you’re managing a small business or just getting your start as a bookkeeper, having a keen understanding of bookkeeping journal entries and examples will help you tremendously when it comes to maintaining accurate financial records. So, today, we’re diving into bookkeeping journal entry examples that will help you as a beginner grasp one of the most integral accounting elements.
Let’s get started!
What Are Bookkeeping Journal Entries?
In this context, journal entries are not the small posts you write in a personal notebook and pour your feelings into. Journal entries in the accounting context are a very detailed record of every financial transaction within your organization’s accounting system. Journal entries are always complete with two sides: credit and debit. Through this double-entry system, you’re able to verify that all transactions are accounted for and balanced, which is one of the most essential components of bookkeeping.
To give an example, let’s say your business buys office supplies with cash. Here’s how your balanced books would look:
- 1st account (Office Supplies) is debited the amount you paid
- 2nd account (Cash) is credited the amount you paid
This particular method is used to capture the value you received and the cost incurred for the office supplies. Let’s keep going.
Basic Types of Bookkeeping Journal Entries
Now, we’re going to get into some sample bookkeeping entries to show you the way different transactions are recorded:
Sales Transactions
When your company sells $3,000 worth of electronics to a customer on credit. The element of credit means that the consumer is going to pay at a later date. That’s where your journal entry will come in. It’s the entry’s job to showcase the revenue earned and the amount owed by the consumer. Let’s check it out:
- Debit: Account Receivable $3,000
- Credit: Sales Revenue $3,000
This is the format used to show that your business has earned income, but not yet received payment. Even though the $3,000 hasn’t been received, once the customer pays, you’ll record another entry reflecting the cash received.
Purchase Transactions
Let’s say your company purchases $40,000 worth of furniture and pays in cash immediately. Your journal entry should reflect the expense and the reduction in cash, like so:
- Debit: Furniture $40,000
- Credit: Cash $40,000
This record-keeping will allow you to keep track of and analyze how much you’ve spent on what your company needs.
Payroll Entries
Suppose your company pays $7,000 in wages per pay period to employees, you can count on your journal entries to look something like this:
- Debit: Wages Expense: $7,000
- Credit: Cash $7,000
You want to be sure that the journal entry reflects employees’ compensation accurately and that your financial records are up to date.
Create Accurate Journal Entries
If you’re just starting out, using bookkeeping journal entry examples to practice your record-keeping will help you sharpen your skills over time. Here’s a quick guide to crafting accurate entries:
- Identify the transaction type: Make sure you know whether it should be categorized as a sale, purchase, or otherwise.
- Determine the affected accounts: Each transaction should affect at least two accounts. If it only affects one, you’ve encountered a hiccup along the way.
- Decide the debit and credit amounts: Are the total debits equal to the total credits for every entry? They should be. Be sure to double-check your work.
- Record the entry: Log the transaction into your accounting software or journal.
When you’re consistent in practicing with sample bookkeeping entries, over time you’ll build more confidence and accuracy in your record-keeping.
Common Mistakes to Avoid
When you’re practicing, you might come across a few hiccups. Here are some common mistakes you should be looking out for when record-keeping:
- Misclassifying accounts: Make sure you understand which accounts are affected by which transaction.
- Imbalance entries: Verify that your debits and credits are equal.
- Overlooking recurring transactions: If your company holds regular expenses like subscriptions and utilities, be sure to include them every time.
You can side-step these issues with a keen attention to detail and a little practice.
How Estess CPAs Can Help
Here at Estess CPAs, we understand that bookkeeping can be a bit overwhelming and time-consuming. That’s why we’ve dedicated our time to helping small businesses all across New Orleans find financial success.
We deliver customer-centric solutions to deliver expert guidance on all of your accounting affairs. It doesn’t matter if you need help with payroll, tracking income, or expert advice, our team will make sure all of your fiscal records are in order.
Are you ready to find out how bookkeeping can elevate your business? Click here to get in touch with the Estess CPAs team! We’ll work with you closely to understand all of your business’s financial goals and needs and lead you into a better fiscal tomorrow.
Let us handle the numbers!
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