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The Corporate Finance Institute    Accounting








                                              Journal Entry Examples




                                              The best way to master journal entries is through practice. Here are
                                              numerous examples that illustrate some common journal entries. The
                                              first example is a complete walkthrough of the process.



           Example 1:                         ABC Company borrowed $300,000 from the bank
           Borrowing money journal entry
                                              •  The accounts affected are cash (asset) and bank loan payable
                                                 (liability)
                                              •  Cash is increasing because we are receiving cash from the bank and
                                                 bank loan payable is increasing because the company is increasing
                                                 its liability to pay back the bank at a later date
                                              •    The amount in question is $300,000
                                              •    A = L + SE, A is increased by 300,000 and L is also increased by
                                                 300,000, keeping the accounting equation intact


                                              Therefore, the journal entry would look like:
                                              DR Cash: 300,000
                                              CR Bank Loan Payable: 300,000




           Example 2:                         Purchased equipment for $650,000 in cash
           Purchasing equipment               The accounts affected are cash (asset) and equipment (asset)
           journal entry
                                              DR Equipment: 650,000
                                              CR Cash: 650,000





           Example 3:                         Purchased inventory costing $90,000 for $10,000 in cash and the
           Purchasing inventory               remaining $80,000 on account.
           journal entry
                                              DR Inventory:  90,000
                                              CR Cash: 10,000
                                              CR Accounts Payable: 80,000





           corporatefinanceinstitute.com                                                                        11
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