I know, many of the Accounts student journal entries, they just memorize which is not a good idea to understand accounting very well. Every day I get tons of email, requesting me to write article on journal entries.
To me Journal Entry is very easy. 8 Easy Query will help you to understand, what will be the journal entry. In the transaction you need to query, what happen with your company? Generally there will be eight type of event can happen after one successful transaction.
1. Increase Asset
2. Increase Expenses
3. Decrease Asset
4. Decrease Expenses
5. Increase Income
6. Increase Liability
7. Decrease Income
8. Decrease Liability
Now I will discuss each of the case with some simple example:
Your Company Purchased 1 Laptop worth $ 1,000, on credit from IBM. What happen here? Asset increased (As Laptop purchased) and Liability increased as Company have to pay the sum to IBM
Fixed Asset – Laptop ……… Dr. 1000
Accounts Payable – IBM ……….Cr. 1000