Journal Entry - A Complete Guide

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 What's Inside - Journal Entry - A Complete Guide

• Understanding Accounting Cycle
• Know What Transaction Means
• Understanding Double Entry System Of Book Keeping
• Understanding Classification Of Accounts
• Understanding Golden Rules Of Accounting
• Understanding Journal
• Know The Process of Journalizing
• Master Journal Entry - (Comprehensive List Of Journal Entries)

Before we jump to Mastering Journal Entries we must understand some basic concepts which are prerequisite  for advancing further. However if you are good at basic concepts feel free to jump to Understanding Journal section of the guide. You can always return to basic concepts if you face any problems. Don't forget to give your feedback good or bad, encouraging or criticizing. We always improve from your feedback.

Accounting Cycle

Accounting cycle or accounting process includes the following:

• Recording of Transaction: As soon as a transaction happens it is at first recorded in subsidiary book.
• Journal Entry: The transactions are recorded in Journal chronologically.
• Ledger: All journals are posted into ledger chronologically and in a classified manner.
• Trial Balance: After taking all the ledger account closing balances, a Trial Balance is prepared at the end of the period for the preparations of financial statements.
• Adjustment Entries : All the adjustments entries are to be recorded properly and adjusted accordingly before preparing financial statements.
• Adjusted Trial Balance: An adjusted Trail Balance may also be prepared.
• Closing Entries : All the nominal accounts are to be closed by the transferring to Trading Account and Profit and Loss Account.
• Financial Statements : Financial statement can now be easily prepared which will exhibit the true financial position and operating results.

When complete sequence of accounting procedure is done which happens frequently and repeated in same directions during an accounting period, the same is called an accounting cycle.

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Transaction

Transactions analysed in terms of money and supported by proper documents are recorded in the books of accounts under double entry system. A transaction is a type of event, which involves exchange of money or money’s worth between parties. It is generally external in nature and can be determined in terms of money and changes the financial position of a person.

In an accounting period, every business has huge number of transactions. These are analysed in financial terms and then recorded individually, followed by classification and summarisation process, to know their impact on the financial statements. A transaction is a two way process in which value is transferred from one party to another. In it either a party receives a value in terms of goods etc. and passes the value in terms of money or vice versa. Therefore, one can easily make out that in a transaction, a party receives as well as passes the value to other party. For recording transaction it is very important that they are supported by a substantial document (purchasing invoices, bills, pay-slips, cash-memos, passbook etc.).

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Double Entry System Of Book Keeping

In 1494 Luca Pacioli the Italian mathematician, first published his comprehensive thesis on the principles of Double Entry System. The use of principles of double entry system made it possible to record not only cash but also all sorts of Mercantile transactions. We may define the Double Entry System as the system which recognizes and records both the aspects of transactions.

Double Entry System is the only scientific system of accounting. According to it, every transaction has two-fold aspects–debit and credit. Both of these aspects are to be recorded in the books of accounts.

For example, if a business purchase of furniture either the cash balance will be reduced or a liability to the supplier will arise.  This system has proved to be systematic and has been found of great use for recording the financial affairs for all institutions requiring use of money.

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Classification Of Accounts

An account is an individual record of a person, firm, or thing, an item of income or an expense. An account  is prepared for each type of asset, liability, owner(s) equity, revenue and expense. For example, the account of cash would show the cash receipts, cash payments and balance of cash in hand.

An account has two sides. The left hand side is called as “Debit’ side and the right hand side is called as “Credit’ side.

Accounts are classified into three categories Personal, Real & Nominal.

• Personal Accounts: Personal accounts relate to persons, trade receivables or trade payables. Example would be; the account of Ram & Co., a credit customer or the account of Jhaveri & Co., a supplier of goods. The capital account is the account of the proprietor and, therefore, it is also personal. This account is further classified into three categories:
  • Natural personal accounts: It relates to transactions of human beings like Ram, Rita, etc.
  • Artificial (legal) personal account: Business entities are treated to have separate entity. They are recognized as persons in the eye of law for dealing with other persons. For example: Government, Companies (private or limited), Clubs, Co-operative societies etc.
  • Representative personal accounts: These are not in the name of any person or organization but are represented as personal accounts. For example: outstanding liability account or prepaid account, capital account, drawings account.
• Real Accounts: These are accounts related to assets or properties or possessions. Depending on their physical existence or otherwise, they are further classified as follows:-
  • Tangible Real Account: Assets that have physical existence and can be seen, and touched. e.g. Machinery Account, Stock Account, Cash Account, Vehicle Account, and the like.
  • Intangible Real Account: These represent possession of properties that have no physical existence but can be measured in terms of money and have value attached to them. e.g. Goodwill Account, Trade mark Account, Patents & Copy Rights Account, Intellectual Property Rights Account and the like.
• Nominal Account : These accounts are related to expenses or losses and incomes or gains e.g. Salary and Wages Account, Rent & Rates Account, Travelling Expenses Account, Commission received Account, Loss by fire Account etc. They are known as nominal as at the end of year these accounts transferred to Trading or P/L Account.

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Golden Rules Of Accounting

All the above classified accounts have two rules each, one related to Debit and one related to Credit for recording the transactions which are termed as golden rules of accounting, as transactions are recorded on the basis of double entry system.

• Personal account is governed by the following two rules:

Debit the receiver

Credit the giver

• Real account is governed by the following two rules:

Debit what comes in

Credit what goes out

• Nominal account is governed by the following two rules:

Debit all expenses and losses

Credit all incomes and gains.

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Journal

Transactions are first entered in this book to show which accounts should be debited and which credited. In this book transactions are recorded in their chronological order. The process of recording transaction in a journal is called as ‘Journalisation’. The entry made in this book is called a Journal Entry. A journal is generally kept in a columnar from.

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Process Of Journalisation

The following procedure is followed for passing a journal entry:

•  Analyze each transaction in terms of accounts affected. As a rule every transaction has at least two accounts.
•  Find out the type of accounts affected in a transaction i.e. personal, real or nominal.
•  Apply the rules of debit and credit to each type of accounts involved.
• The debit and credit accounts must be equal. Sometimes, a journal entry may have more than one debit or/and more than one credit. This type of journal entry is called compound journal entry. Regardless of the number of debits or credits in a compound journal entry, the aggregate amount of debits should be equal to the aggregate amount of credits.

Master Journal Entry

Great! You have completed the basics and itz time to master Journal Entry.

In every field mastery is attained by continuous practice and revision. To master journal entries bookmark this page and revise at least twice a month. I have compiled a comprehensive list of Journal Entries with the help of hypothetical problems. Either read through the guide or use index given below:

• General Business Transactions
• Bills Of Exchange
• Amalgamation
• Reconstruction
• Debentures
• Rebate on bills discounted
• Branch Accounting - Rectification Journal Entries

General Business Transactions

Let us take the following example to understand how to Journalize General Business Transaction.

Mr. X commences business with INR 5,00,000. Following transaction occurred during the year.

1. Deposited 4,00,000 in a newly opened bank account and balance is used to purchase furniture.
2. Purchased goods worth INR 80,000 net amount paid is INR 78,500 (paid by cheque). Also purchased goods worth INR 29,000 on credit from Mr. A who allowed trade discount of INR 1000.
3. Sold some goods  for  INR 60,000 allowing cash discount of INR 5,000. He also sold some goods to Mr. B on  INR 10,000 (Normal Selling Price) on credit allowing him trade discount of INR 1,000.
4. Paid cash to Mr. A INR 25,000. Also received INR 4,000 form Mr. B.
5. Paid rent of INR 1,500 & salary of INR 15,000 in cash.
6. Goods distributed by way of free samples INR 1,000.
7. Returned goods to Mr. A, INR 5,000 also goods returned by Mr. B 1500.
8. Withdrew goods worth 1,000 & cash of INR 2200 for personal use.
9. Bank charges amounted to INR 600
10. Depreciation on furniture @10%, 10,000.

Note: Before reading the solution please try to Journalize yourself.

• Journal Entry for introduction of cash as capital

! Cash A/c Dr.                 5,00,000
!           To Capital A/c                    5,00,000
(Being cash introduced as capital)

2.  Journal Entry for deposit of cash into Bank

! Bank A/c Dr.                        4,00,000
!            To Cash A/c                             4,00,000
(Being cash deposited into bank)

3.  Journal Entry for purchase of furniture

!   Furniture A/c   Dr.              1,00,000
!            To Cash A/c                              1,00,000
(Being furniture purchased)

Back To Example

4.  Journal Entry for purchase of goods (on cash discount)

!   Purchases A/c   Dr.             80,000
!           To Bank A/c                              78,500
!           To Discount Received A/c          1,500
(Being goods purchased)

5.  Journal Entry for purchase of goods (on trade discount)

!   Purchases A/c   Dr.                29,000
!            To Mr. A's A/c                             29,000
(Being goods purchased)

6.  Journal Entry for sale of goods (on cash discount)

!   Bank A/c   Dr.                          60,000
!   Discount A/c Dr.                        5,000
!             To Sales A/c                               65,000
(Being goods sold)

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7.  Journal Entry for sale of goods (on trade discount)

!   B's A/c   Dr.                                     9,000
!          To Sales A/c                                       9,000
(Being goods sold)

8.  Journal Entry for payment to creditor

!   Mr. A's A/c   Dr.                              25,000
!             To Cash A/c                                      25,000
(Being cash paid to creditor)

9.  Journal Entry for cash received from debtor

!   Cash A/c   Dr.                                    4,000
!              To Mr. B's A/c                                     4,000
(Being cash of Rs. 4000 received from Mr B)

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10.  Journal Entry for payment of expenses

!   Salary A/c   Dr.                               15,000
!   Rent  A/c     Dr.                                 1,500
!            To Cash A/c                                        16,500
(Being salary of Rs. 15000 & Rent of Rs. 1500 paid in cash)

11.  Journal Entry for distribution of goods as free samples

!   Advertisement Expenses A/c   Dr.                      1,000
!                  To Purchases A/c                                           1,000
(Being goods worth Rs. 1,000 distributed as free samples)

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12.  Journal Entry for Purchase return

!   Mr. A's A/c   Dr.                                             5,000
!             To Purchases Returns A/c                                5,000
(Being goods worth Rs. 5,000 returned to Mr. A)

13.  Journal Entry for Sales return

!   Sales Returns A/c   Dr.                                  1,500
!               To Mr. A's A/c                                               1,500
(Being goods worth Rs. 1,500 returned to Mr. A)

14.  Journal Entry for withdrawal of goods for personal use

!   Drawings A/c  Dr.                                         1,000
!             To Purchases's A/c                                        1,000
(Being goods worth Rs. 1,000 withdrawn for personal use)

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15.  Journal Entry for withdrawal of cash for personal use

!   Drawings A/c   Dr.                                        2,200
!                 To Cash A/c                                               2,200
(Being cash of Rs. 2,200 withdrawn for personal use)

16.  Journal Entry for recording bank charges

!   Bank Charges A/c   Dr.                      600
!              To Bank A/c                                    600
(Being bank charges of Rs. 600 recorded)

17.  Journal Entry for recording bank charges

!   Depreciation A/c   Dr.                                 10,000
!                  To Furniture A/c                                       10,000
(Being depreciation of Rs. 10,000 charged on furniture)

Back To Example

Bills Of Exchange

In the books of receiver (creditor)

A bill receivable can be treated in the following four ways by its receiver (assuming the bill is honored on due date).

1. He can retain it till the date of maturity, and
   • get it collected on date of maturity directly, or
   • get it collected through the banker.
2. He can get the bill discounted from the bank.
3. He can endorse the bill in favor of his Creditor

Journal Entries for the above alternatives are as follows.

1.  When he retains it till the date of maturity and get it collected directly.

On receiving the bill:

!   Bills Receivables A/c   Dr.                       XXXXX
!                To Debtors A/c                                        XXXXX
(Being Bill received from the debtor)

On maturity of the bill:

!   Cash/ Bank A/c   Dr.                              XXXXX
!               To Bills Receivables A/c                         XXXXX
(Being Bills Receivable collected)

2.  When he retains it and sends it for collection few days before the date of maturity.

On receiving the bill:

!   Bills Receivables A/c   Dr.                       XXXXX
!              To Debtors A/c                                        XXXXX
(Being Bill received from the debtor)

On sending the bill for collection:

!   Bills Sent for Collection A/c   Dr.             XXXXX
!             To Bills Receivables A/c                             XXXXX
(Being bill sent for collection)

On receiving the advice from the bank that the bill has been collected

!   Cash/ Bank A/c   Dr.                                 XXXXX
!             To Bills Sent for Collection A/c                    XXXXX

(3) When the receiver gets the bill discounted from the bank:

On receiving the bill:

!   Bills Receivables A/c   Dr.                           XXXXX
!              To Debtors A/c                                             XXXXX
(Being Bill received from the debtor)

On discounting the bill:

!   Bank A/c   Dr.                                             XXXXX
!   Discount A/c   Dr.                                       XXXXX
!                  To Bills Receivables A/c                         XXXXX
(Being bill discounted)

On receiving the advice from the bank that the bill has been collected

!   Cash/ Bank A/c   Dr.                                    XXXXX
!                  To Bills Sent for Collection A/c                 XXXXX

(Being cash received)

(4) When the bill is endorsed by the receiver in favor of his creditor:

On receiving the bill:

!   Bills Receivables  A/c   Dr.                             XXXXX
!               To Debtors A/c                                               XXXXX
(Being Bill received from the debtor)

On discounting the bill:

!   Creditor's A/c   Dr.                                         XXXXX
!            To Bills Receivables A/c                                    XXXXX
(Being bill endorsed in favor of creditor)

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In the books of promisor (debtor)

Following journal entries will be recorded in all the alternatives.

On issuing (accepting) the bill:

!   Creditors A/c   Dr.                              XXXXX
!               To Bills Payables A/c                         XXXXX
(Being Bills payable issue to creditor)

On maturity of  the bill:

!   Bills Payables A/c   Dr.                        XXXXX
!              To Bank A/c                                           XXXXX
(Being bill paid on maturity)

Dishonor of Bill of exchange.

A bill of exchange is said to be dishonored when the drawee refuses to accept or make payment on the bill.

Journal Entries on dishonor of a bill (In the books of creditor)

At the time a bill is dishonored, there can be following four scenarios.

1. When the bill of exchange is still in the drawer’s possession:

! Acceptor’s personal A/c (full value of the bill and noting charges) [Dr.]       xxx
!            To Bills receivable A/c                                                                                     xxx
!            To Cash account (noting charges)                                                                 xxx

2. When the bill of exchange has been discounted with the bank:

! Acceptor’s personal A/c   Dr.                          xxx
!         To Bank A/c                                                     xxx

3.  When the bill of exchange has been sent for collection:

! Acceptor’s personal A/c Dr.                 xxx
!                To Bank for collection A/c                xxx

4.  When the bill of exchange was issued to creditor:

!  Acceptor’s personal A/c Dr.                     xxx
!                  To Personal account of creditor            xxx

Journal Entries on dishonor of a bill (In the books of debtor)

Following journal entry will be passed in all the scenarios.

!  Bill payable A/c (full value of the bill) Dr.                xxx
!  Trade expenses A/c (noting charges) Dr.                xxx
!                   To personal account of drawer                        xxx

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Amalgamation

Some important definitions:

"Amalgamation means when two or more companies are combined to make a new company".
"Absorption means when one company takes over (absorbs) another company".
"External Reconstruction means where a company is transformed into a new company".

Journal Entries - By Purchase Method

In the books of new company

First Entry
!  Business Purchase A/c Dr.                        xxx
!                To Liquidators of old co.                       xxx

On acquisition of assets
!  Sundry Assets A/c   Dr.                                     xxx
!            To Sundry Liabilities                                       xxx
!            To Business Purchase (P.C)
Note: Difference (if any) in this entry is goodwill.

On payment of purchase consideration (P.C)
!  Liquidators A/c   Dr.                                              xxx
!          To Equity Share Capital A/c                                     xxx
!          To Security Premium A/c                                          xxx
!          To Preference Share Capital A/c                              xxx
!          To Cash A/c                                                               xxx

On cancellation of contra items
!  Creditors A/c Dr.                                     xxx
!              To debtors A/c                                     xxx

On Payment of liabilities
!  Liability A/c Dr.                                     xxx
!           To Bank A/c                                         xxx
!           To New Liability                                  xxx

On payment of liquidity expenses of old company
!  Goodwill A/c Dr.                                     xxx
!             To Cash A/c                                         xxx
Note: Goodwill will be set off with goodwill (if any) mentioned in above note.

For creation of statutory reserves
!  Amalgamation adjustment reserve Dr.                                 xxx
!                  To Statutory reserve A/c                                               xxx

For unrealized profit on stock transfer
!  Goodwill A/c Dr.                                     xxx
!             To Stock A/c                                         xxx

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Journal Entries - Merger

First Entry
!  Business Merger A/c Dr.                        xxx
!                To Liquidators of old co.                       xxx

On acquisition of assets
!  Sundry Assets A/c   Dr.                                     xxx
!            To Sundry Liabilities                                       xxx
!            To Business Merger (P.C)
Note: Difference (if any) in this entry is general reserve.

On payment of purchase consideration (P.C)
!  Liquidators A/c   Dr.                                              xxx
!          To Equity Share Capital A/c                                     xxx
!          To Security Premium A/c                                          xxx
!          To Preference Share Capital A/c                              xxx
!          To Cash A/c                                                               xxx

On cancellation of contra items
!  Creditors A/c Dr.                                     xxx
!              To debtors A/c                                     xxx

On Payment of liabilities
!  Liability A/c Dr.                                     xxx
!           To Bank A/c                                         xxx
!           To New Liability                                  xxx

On payment of expenses 
!  P/L          A/c Dr.                                     xxx
!             To Cash A/c                                         xxx
Note: Goodwill will be set off with goodwill (if any) mentioned in above note.

For unrealized profit on stock transfer
!  General Reserve A/c Dr.                           xxx
!             To Stock A/c                                         xxx

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Reconstruction

"Reconstruction means restructuring of assets and liabilities and share capital".

Journal Entries

For reduction of assets
!  Capital Reduction A/c Dr.                        xxx
!                To Sundry Assets A/c                         xxx

For reduction of liabilities
!  Sundry Liabilities A/c   Dr.                                     xxx
!            To Capital Reduction A/c                                    xxx

For reduction in share capital

1. Reduction in paidup value only
   !  Share capital A/c   Dr.                                              xxx
   !          To Capital Reduction A/c                                         xxx
2. For reduction in face value and paidup value
   !  Share capital A/c   Dr. (Old F.V)                                         xxx
   !          To Share capital A/c   Dr. (New Paidup Value)                 xxx
   !          To Capital Reduction A/c                                                   xxx

On payment of expenses 
!  Capital Reduction A/c   Dr.                                     xxx
!             To Bank A/c                                                         xxx

For fresh issue of shares
!  Bank A/c Dr.                                                   xxx
!             To Share Capital A/c                                      xxx

Closing Entry (For Balancing figure in capital reduction account)
!  Capital Reduction A/c   Dr.                                xxx
!             To Capital Reserve A/c                                      xxx

'or'

!  Goodwill A/c   Dr.                                              xxx
!             To Capital Reduction A/c                                 xxx

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Debentures

Journal Entries on issue and redemption of debentures

Journal entry for issue of debentures for cash
!  Bank A/c   Dr.                                         xxx
!                To Debentures   A/c                         xxx

Journal Entry, if issue is on discount
!  Loss on issue/discount on issue A/c   Dr.                                     xxx
!            To Premium on redemption  A/c                                               xxx

Journal entry for issue of debentures for consideration other than cash

!  Sundry Assets   A/c   Dr.                                              xxx
!          To Debentures    A/c                                                   xxx

Journal entries for redemption of debentures in lumpsum
!  Debentures A/c   Dr.                                                 xxx
!  Premium on redemption A/c Dr.                             xxx
!             To Debenture Holders  A/c                                     xxx

'and'

!  Debenture Holders A/c Dr.                                      xxx
!             To Bank  A/c                                                         xxx

Journal entries for redemption of debentures by open market operations
!  Debentures A/c   Dr.                                                              xxx
!             To Debenture redemption bank A/c Dr.                             xxx
!             To Gain on cancellation  A/c                                               xxx

Journal entries for redemption of debentures by conversion!  Debentures A/c   Dr.                                                 xxx
!  Premium on redemption A/c Dr.                             xxx
!             To Debenture Holders  A/c                                     xxx

'and'

!  Debenture Holders A/c Dr.                                      xxx
!             To Equity Share Capital  A/c                                   xxx
!             To Securities Premium   A/c                                   xxx

Journal Entries in case of Sinking Fund

Journal entry for transfer of fund
!  P/L Appropriation A/c   Dr.                                         xxx
!                To Sinking Fund   A/c                                            xxx

'and'

!  Sinking Fund Bank A/c   Dr.                                     xxx
!            To Bank  A/c                                                            xxx

Journal Entry for purchase of investments (from sinking fund)
!  Sinking Fund Investments A/c   Dr.                                     xxx
!            To Sinking Fund bank  A/c                                               xxx

Journal Entry for sale of investments (sinking fund)
!   Sinking Fund Bank     A/c   Dr.                                     xxx
!            To Sinking Fund Investments A/c                                 xxx

Journal entries for interest on investments (if fund is cumulative)
!  Sinking Fund Bank A/c   Dr.                                         xxx
!             To Interest on SFI  A/c                                             xxx

Closing Entries
!   Bank A/c   Dr.                                                        xxx
!             To Sinking fund bank   A/c                                xxx

!  Sinking Fund A/c   Dr.                                                 xxx
!             To Debenture Redemption Reserve  A/c                 xxx

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Rebate on bills discounted (Banking Companies)

Journal entry for cancellation of previous years rebate
!  Rebate on bills discounted  A/c   Dr.                                         xxx
!                To Interest & Discount    A/c                                              xxx

Journal Entry for creation of rebate for current year
!  Interest & Discount   A/c         Dr.                                     xxx
!            To Rebate on bills discounted  A/c                                 xxx

Journal Entry for transfer of income to P/L account
!  Interest & Discount A/c   Dr.                                     xxx
!            To Profit & Loss   A/c                                              xxx

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Branch Accounting (Rectification/Adjustment Entries)

Note: In branch accounting branch and head office are considered as separate entities for accounting purposes.

Journal entry for debtors of branch collected by head office

In the books of head office
!  Bank   A/c  Dr.                                                       xxx
!                To Branch    A/c                                              xxx

In the books of branch
!  Head office A/c   Dr.                                            xxx
!            To Debtor's   A/c                                                  xxx

Journal Entry for fixed assets of head office transfered to branch
In the books of head office
! Branch A/c   Dr.                                                xxx
!            To Fixed Assets  A/c                                               xxx

In the books of branch
!  Fixed Assets A/c   Dr.                                         xxx
!            To Head office  A/c                                               xxx

Journal Entry for incorporation of assets & liabilities of branch
In the books of head office

! Sundry Assets A/c   Dr.                                          xxx
!            To Branch A/c                                                    xxx

'and'

! Branch A/c   Dr.                                                xxx
!            To Sundry Liabilities  A/c                                  xxx

'and'

! Branch A/c   Dr.                                                xxx
!            To Profit & Loss  A/c                                     xxx

In the books of branch

! Head Office A/c   Dr.                                          xxx
!            To Sundry Assets A/c                                              xxx

'and'

! Sundry Liabilities A/c   Dr.                                                xxx
!            To Head Office A/c                                                        xxx

'and'

! Profit & Loss A/c   Dr.                                                xxx
!            To Head Office  A/c                                               xxx

Journal entries for depreciation on furniture transfered to branch

In the books of head office

! Branch A/c   Dr.                                                xxx
!            To Fixed Assets  A/c                                      xxx

In the books of branch

! Depreciation  A/c   Dr.                                           xxx
!            To Head Office A/c                                              xxx

Journal entries for recording expenses incurred by head office on behalf of branch

In the books of head office

! Branch A/c   Dr.                                                xxx
!            To Cash/Expenses  A/c                                      xxx

In the books of branch

! Expenses  A/c   Dr.                                              xxx
!            To Head Office A/c                                              xxx

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Note: If branch incurs expenses on behalf of head office, then above entries will be reversed.

Journal entries for reconciliation of cash in transit or goods in transit

In the books of head office when 
Head Office sent cash/goods which are in transit
No entry will be passed in the books of head office

In the books of branch
! Cash/Goods In transit  A/c   Dr.                              xxx
!            To Head Office A/c                                              xxx

In the books of head office when 
Branch sent cash/goods which are in transit
! Cash/Goods In transit  A/c   Dr.                              xxx
!            To Branch A/c                                              xxx

In the books of branch
No entry will be passed in the books of branch

Back To Index

Basic Journal Entries on issue of share capital

On Receipt of application money
!  Bank A/c   Dr.                                                 xxx
!                To Share Application   A/c                        xxx

Journal Entry on allotment of shares
!  Share Allotment  A/c   Dr.                                     xxx
!  Share Application  A/c   Dr.                                  xxx
!            To Share Capital   A/c                                               xxx

Journal Entry on receipt of allotment money
!   Bank     A/c   Dr.                                               xxx
!            To Share Allotment A/c                                 xxx

Journal Entry on call being made
!  Share Call  A/c   Dr.                                     xxx
!            To Share Capital   A/c                                               xxx

Journal Entry on receipt of allotment money
!   Bank     A/c   Dr.                                               xxx
!            To Share Call A/c                                           xxx

Great!!! you have learnt journal entries for all the major transactions of business, now what. Shall you close this guide and never open it again. No, that will only rust the iron. To master journal entries bookmark this page and revise at least twice a month. And yes, don't forget to mention what I missed in this guide or if you think anything should be added or removed feel free to comment or give your feedback.