Journal Entry in Accounting

Journal Entry in Accounting

Journal Entry in Accounting or adjusting ledgers is required when you need to transfer an amount from one account to another. The Profit and Loss and Balance sheet have lots of different accounts, and there may be lots of reasons why you may need to adjust the accounts.

The image shows the entry form in Xero; most accounting packages will look similar to this.

Double Entry Bookkeeping

Accounting software will create double entry bookkeeping, an example of this is you pay from your bank account for insurance of £150. The double entry would be to debit the bank account in the balance sheet and credit insurance in the profit and loss account.

Every transaction that is created will have two entries to the accounts.

If an adjustment is needed to the accounts, then a journal will need to be produced. There are lots of reasons why changes are required, which includes bad debts, prepayments, accruals, items posted to the wrong code and overpayments. Below are some examples of the transactions needed.

Journal Entry in Accounting – Format

The details required are the journal number, date of the transaction, account codes, description, debit amount and credit amount. The information is entered in a form, so a record of the transaction is kept and the posting is completed using the form.

The debit and credit amounts must be equal as you are moving a value from one account code to another.

General Accounting Journal Entry Examples


During the year insurance for 12 months is purchased for £150 but only six months relate to the current year. A prepayment of 6 months will need to be journaled to correct the figures for the year.

Here is what the original insurance entry to the accounts would have been:

Insurance £150

The journal entry in accounting form would look like this.

Journal Form for Accounting

Prepayment Journal entry example


Accruals are adjustments made for either sales that no sales invoice has been issued or expenses that an invoice has not yet been received from the supplier. These adjustments need to be made to ensure that the final accounts are accurate figures for the whole year.

Examples of accruals journals are

a) Sales were made during the month, but a sales invoice of £1000 has not been issued, a journal is required to correct the accounts.

Accruals £1000

b) Goods to the value of £60 have been received and sold to a customer (cost of sale), at the period end the purchase invoice has not been received.

Cost of Sales £60

Reversing Journals

In the examples for both prepayment and accruals when the invoice is received and posted to the ledgers, there will be duplicate figures in the accounts. You will, therefore, need to reverse the journal; most software packages allow you to enter a date to reverse a journal.

General Journal Entry Form

We have designed a general journal entry form that you can download as either a word document or PDF. Both are free to download and easy to use.

By downloading the templates you agree to our licence agreement.

Return from journal entry in accounting to balance sheet page.