Journal Entries Examples: Eight Common Transactions, Journalized and Posted

A journal entry records one business transaction as equal debits and credits, with a date and a short description of what happened. Because total debits always equal total credits, every entry keeps the accounting equation in balance. The examples below journalize the eight transactions that appear most often in introductory coursework — owner investment, a cash sale, a credit sale, supplies bought on account, paying a bill, paying wages, receiving a loan, and an owner drawing — then follow one of them into the ledger.

All eight entries come from the same scenario: Rosa Rivera opens a mobile bike-repair business in June and runs it for one month.

The anatomy of an entry

Every journal entry has the same five parts, in the same order.

• Date — the day the transaction happened, not the day you record it.
• Debited account first, written at the left margin, with its amount in the debit column.
• Credited account second, indented in a handwritten journal, with its amount in the credit column. The indent is a visual signal, not decoration — a grader reads it as "this is the credit line."
• Description — one line stating what happened, so a reader can reconstruct the transaction without you.
• Equal totals — debits and credits must match to the cent before the entry is allowed into the books.

Which account gets which side comes from the normal-balance rules covered in debits and credits. This article assumes those rules and focuses on applying them. In the tables below, the debit and credit columns show the side, and the caption carries the description.

Cash (an asset) increases, so it is debited. The owner's claim on the business increases by the same amount, so the capital account is credited. Assets up $7,250, equity up $7,250 — the equation holds.

Seven more journal entries examples

Here is the rest of Rosa's June, one entry per transaction. Read each pair of lines as one entry: the first line is the debit, the second is the credit.

Why these accounts

Supplies on account (Jun 3). Rosa receives an asset (Supplies) without paying cash, so the offset is a liability, Accounts Payable. No cash moves, but a transaction still happened — the business owes $618.

Loan receipt (Jun 5). Cash comes in, so Cash is debited. The bank is not giving Rosa revenue; it is giving her an obligation to repay, so Notes Payable (a liability) is credited. Loan proceeds are never revenue.

Cash sale vs. credit sale (Jun 9 and Jun 14). Both entries credit Repair Revenue, because revenue is earned when the work is done. The only difference is the debit: Cash when the customer pays on the spot, Accounts Receivable when the customer will pay later. The credit sale earns revenue on Jun 14 even though no cash has arrived.

Paying the bill (Jun 18). This entry settles the Jun 3 purchase. Accounts Payable is debited because the liability shrinks; Cash is credited because it leaves. Notice that Supplies is not touched again — the asset was recorded when it was received, not when it was paid for.

Wages (Jun 25). Wages Expense is debited because expenses reduce equity, and equity reductions are recorded as debits. Cash is credited.

Drawing (Jun 30). The owner taking cash out is not an expense — the business received nothing in exchange. It is a direct reduction of the owner's claim, recorded in a separate Drawings account so the capital account stays clean until closing.

From journal to ledger

The journal and ledger hold the same information organized two different ways. The journal is chronological — a diary of transactions in date order. The ledger is organized by account — one page (or T-account) per account, collecting every debit and credit that touches it. Posting is the copying step: each line of a journal entry is transferred to the matching side of its ledger account, and a posting reference is noted in both places so you can trace any number back to its entry.

Take the Jun 25 wages entry. It has two lines, so it lands in two ledger accounts: $1,375 goes to the debit side of Wages Expense, and $1,375 goes to the credit side of Cash. One entry, two homes. Here is what the Cash ledger account looks like after all eight entries are posted.

The Jun 3 and Jun 14 entries never appear here because neither touched Cash — a reminder that "transaction" does not mean "cash moved." Every other account gets the same treatment: Repair Revenue collects two credits ($935 + $1,240 = $2,175), Accounts Payable shows a $618 credit and a $618 debit that cancel to zero, and so on. When posting is done, the total of all debit balances across the ledger equals the total of all credit balances — that check is the trial balance.

Where students go wrong

Flipping the order or skipping the indent. Debit line first, credit line second, credit indented. An entry written credit-first, or with both accounts at the margin, loses format points even when the amounts are right — and in a long problem the format is what keeps you from mixing up sides.

One-sided entries. Writing "Cash $935" and moving on records half a transaction. Every entry needs at least one debit and one credit, and they must total the same. If you cannot name the second account, you have not understood the transaction yet — stop and ask what the business gave or received in exchange.

Recording a drawing as an expense. Wages paid to an employee are an expense; cash the owner takes for personal use is a drawing. Both reduce equity, but expenses belong on the income statement and drawings do not. Debiting Wages Expense on Jun 30 would overstate expenses by $850 and understate net income.