Journal Entries Most UsedThis post contains a list of the journal entries that most used by accountant and is likely to deal with. There are a plethora of possible transactions that would require an immense tome to address, so the emphasis here is solely on the most common journal entries, not on those that will only crop up on rare occasions. The journal entries are listed in alphabetical order, and include explanatory text. This text may be sufficient for one to copy into actual journal entry descriptions, with slight modifications. The text makes additional explanatory notations where necessary, but the main focus is on presenting a brief summarization of each entry.

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A set of accounts are listed for each sample journal entry, which may vary somewhat from the titles of accounts used in one’s company. If there are a wide range of possible entries to different accounts, then this is noted with an entry in brackets, such as “[Salaries—itemize by department]”.  A triple “x” is denoting the most likely entry that would be made. If there is a reasonable chance that either a debit or credit entry would be made, then this is noted in the description.

There are a few instances in which journal entries should be reversed in the following accounting period. When this is necessary, a warning note is attached to the bottom of the relevant journal entries. Go a head…..

 

Accounts Payable, Reversal

To reverse an account payable transaction that had previously been entered. There are a variety of possible accounts to which a reversal could be credited, so many possible accounts are noted in brackets:

[Debit]. Accounts payable  = xxx
[Debit]. [Expense account]  = xxx
[Debit]. [Asset account]  = xxx
[Credit]. [Accrued liability account]  = xxx

 

Accounts Payable, Void Company Check

This journal entry is to reverse a previous check payment to a supplier.  This entry assumes that there is an additional charge from the bank for a stop payment on the check, as well as the reversal of an early payment discount on the original payment:

[Debit]. Bank charges (stop payment)   = xxx
[Debit]. Early payment discount  = xxx
[Debit]. Cash   = xxx
[Credit]. [Expense or asset for which payment was made]  = xxx

 

Accounts Receivable, Write Off

This journal entry is to cancel an account receivable by offsetting it against the reserve for bad debts located in the bad debt accrual account:

[Debit]. Bad debt accrual   = xxx
[Credit]. Accounts receivable   = xxx

 

Accrue Bad Debt Expense

This journal entry is to accrue for projected bad debts, based on historical experience:

[Debit]. Bad debt expense   = xxx
[Debit]. Bad debt accrual  = xxx

 

Accrue Benefits

This journal entry is to accrue for all employee benefit expenses incurred during the month, for which an associated accounting entry has not yet been made:

[Debit]. Medical insurance expense  = xxx
[Debit]. Dental insurance expense  = xxx
[Debit]. Disability insurance expense  = xxx
[Debit]. Life insurance expense  = xxx
[Credit]. Accrued benefits  = xxx

Note: This entry should be reversed in the following accounting period.

 

Accrue Property Taxes

This journal entry is to accrue for the property tax liability incurred during the accounting period based on the known base of fixed assets:

[Debit]. Property tax expense  = xxx
[Credit]. Accrued property taxes  = xxx

Note: This entry should not be reversed in the following accounting period, since the tax payment will not normally occur in the following period, but instead only a few times per year. Instead, the actual payment should be charged directly against the accrual account.

 

Accrue Salaries & Wages

This is to accrue for salaries and wages earned through the end of the accounting period, but not yet paid to employees as of the end of the accounting period:

[Debit]. Direct labor expense = xxx
[Debit]. [Salaries—itemize by department]= xxx
[Credit]. Accrued salaries  = xxx
[Credit]. Accrued payroll taxes = xxx

Note: This entry should be reversed in the following accounting period.

 

Accrue Vacation Pay

This is to accrue vacation pay earned by employees, but not yet used by them, subject to the year-end maximum vacation carry forward limitation. The same entry can be used to record accrued sick time:

[Debit]. Payroll taxes = xxx
[Debit]. [Salaries—itemize by department] = xxx
[Credit]. Accrued salaries = xxx
[Credit]. Accrued payroll taxes = xxx

Note: This entry should not be reversed in the following accounting period, since the vacation time may not be used in the following period. Instead, the actual vacation-related payment should be charged directly against the accrual account.

 

Acquisition, Pooling Method

This is to record an acquisition using the book value of assets and liabilities. This should be essentially all balance sheet accounts currently in use:

[Debit]. Accounts receivable = xxx
[Debit]. Marketable securities = xxx
[Debit]. Inventory = xxx
[Debit]. Computer equipment = xxx
[Debit]. Computer software = xxx
[Debit]. Furniture & fixtures = xxx
[Debit]. Manufacturing equipment = xxx
[Credit]. Bad debt accrual = xxx
[Credit]. Obsolete inventory reserve = xxx
[Credit]. Accumulated depreciation = xxx
[Credit]. Accounts payable = xxx
[Credit]. Debt = xxx
[Credit]. Common stock = xxx
[Credit]. Additional paid-in capital = xxx

 

Acquisition, Purchase Method

This journal entry is to record an acquisition using the fair market value of assets and liabilities, with an entry to goodwill that records the difference between this total and the price paid:

[Debit]. Accounts receivable  = xxx
[Debit]. Marketable securities  (current market value)  = xxx
[Debit]. Inventory (lower of cost or market)  = xxx
[Debit]. Computer equipment (appraised value)  = xxx
[Debit]. Computer software (appraised value)  = xxx
[Debit]. Furniture & fixtures (appraised value)  = xxx
[Debit]. Manufacturing equipment (appraised value)  = xxx
[Debit]. Goodwill  = xxx
[Credit]. Accounts payable  = xxx
[Credit]. Debt (book value)  = xxx
[Credit]. Common stock  = xxx
[Credit]. Additional paid-in capital  = xxx

 

Bank Reconciliation

This journal entry is to adjust the accounting records to reflect differences between the book and bank records. The cash entry is listed as a credit, on the assumption that bank-related expenses outweigh the interest income:

[Debit]. Bank charges  = xxx
[Debit]. Credit card charges  = xxx
[Credit]. Interest income  = xxx
[Credit]. Cash  = xxx

 

Depreciation

This journal entry is to record the depreciation incurred during the month. The amortization account is used to write off goodwill:

[Debit]. Depreciation, computer equipment  = xxx
[Debit]. Depreciation, computer software  = xxx
[Debit]. Depreciation, furniture & fixtures  = xxx
[Debit]. Depreciation, leasehold improvements  = xxx
[Debit]. Depreciation, manufacturing equipment  = xxx
[Debit]. Amortization expense  = xxx
[Credit]. Accum. Depreciation equipment, computer   = xxx
[Credit]. Accum. depreciation, computer  software  = xxx
[Credit]. Accum. depreciation, furniture & fixtures   = xxx
[Credit]. Accum. depreciation, leasehold  improvements   = xxx
[Credit]. Accum. depreciation, manufacturing equipment   = xxx
[Credit]. Goodwill  = xxx

 

Dividend Declaration

This journal entry is to separate the sum total of all declared dividends from retained earnings once dividends have been approved by the Board of Directors:

[Debit]. Retained earnings  = xxx
[Credit]. Dividends payable  = xxx

 

Dividend Payment

This journal entry is to issue payment to shareholders for dividends declared by the Board of Directors:

[Debit]. Dividends payable  = xxx
[Credit]. Cash  = xxx

 

Fixed Asset (Sale of Fixed Asset)

This journal entry is to record the cash received from the sale of an asset, as well as any gain or loss in its sale. This entry also eliminates all associated accumulated depreciation that has built up over the term of the company’s ownership of the asset:

[Debit]. Cash  = xxx
[Debit]. Accumulated depreciation  = xxx
[Debit]. Loss on sale of assets  = xxx
[Credit]. [various fixed asset accounts]  = xxx
[Credit]. Gain on sale of assets  = xxx

 

Fixed Asset Write off

This journal entry is to record the unreimbursed disposal of an asset. This entry also eliminates all associated accumulated depreciation that has built up over the term of the company’s ownership of the asset:

[Debit]. Accumulated depreciation  = xxx
[Debit]. Loss on disposal of assets  = xxx
[Credit]. [various fixed asset accounts]  = xxx

 

Foreign Currency Gain/Loss

This journal entry is to record in the first entry the loss expected to occur on foreign currency accounts payable at the end of the accounting period. To record in the second entry the income arising from a gain on foreign currency accounts payable at the end of the accounting period:

[Debit]. Unrealized loss on currency fluctuations  = xxx
[Credit]. Accounts payable  = xxx
[Debit].  Accounts payable  = xxx
[Credit].  Gain on currency fluctuations  = xxx
[Credit].  Cash  = xxx

 

Goodwill, Amortization

This journal entry is to record the periodic reduction in the amount of recorded goodwill. There are two methods available for making this entry. The first entry charges amortized goodwill directly to the goodwill asset account, while the second entry charges it to a contra account that is netted against the goodwill asset account:

[Debit]. Goodwill amortization expense  = xxx
[Credit].  Goodwill (asset account)  = xxx
[Debit]. Goodwill amortization expense  = xxx
[Credit].  Accumulated goodwill expense  = xxx

 

Interest, Imputed

This journal entry is to reduce the balance of a note payable by the difference between the market interest rate and the interest rate itemized on the note ( first entry), as well as to recognize the associated interest expense over time (second entry):

[Debit]. Unamortized premium on notes payable  = xxx
[Credit]. Note payable  = xxx
[Debit]. Interest expense  = xxx
[Credit]. Unamortized premium on notes payable  = xxx

 

You can find the other most used journal entries set on: Journal Entries Most Used Part 2