journal entry book report

Accounting Journal Entries: Definition, How-to, and Examples

Janet Berry-Johnson, CPA

Reviewed by

March 6, 2024

This article is Tax Professional approved

Every transaction your business makes requires journal entries. They take transactions and translate them into the information you, your bookkeeper, or accountant use to create financial reports and file taxes.

Here’s everything you need to know about this essential building block of bookkeeping, including what they are, why they’re important, and how to make them.

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‍ What is a journal entry?

A journal entry in accounting is how you record financial transactions. To make a journal entry, you enter the details of a transaction into your company’s books. In the second step of the accounting cycle , your journal entries get put into the general ledger .

Every journal entry in the general ledger will include the date of the transaction, amount, affected accounts with account number, and description. The journal entry may also include a reference number, such as a check number, along with a brief description of the transaction.

If you use accounting software or outsource your accounting , your journal entries may not be visible, but they’re being generated in the back end, ensuring your books are accurate and up to date.

What are journal entries for?

Once business transactions are entered into your accounting journals, they’re posted to your general ledger . Think of “posting” as “summarizing”—the general ledger is simply a summary of all your journal entries.

Your general ledger is the backbone of your financial reporting. It’s used to prepare financial statements like your income statement , balance sheet , and (depending on what type of accounting you use) cash flow statement .

Financial statements are the key to tracking your business performance and accurately filing your taxes. They let you see, at a glance, how your business is performing.

Suggested reading: How to Read (and Analyze) Financial Statements

Outsourcing your accounting means you don’t have to worry about making journal entries

Going through every transaction and making journal entries is a hassle. But with Bench, all of your transaction information is imported into the platform and reviewed by an expert bookkeeper. No more manually inputting journal entries, thinking twice about categorizing a transaction, or scanning for missing information—someone else will do that all for you. Learn more .

Double-entry bookkeeping

There are two methods of bookkeeping (and, therefore, two methods of making journal entries): single and double-entry.

Think of the double-entry bookkeeping method as a GPS showing you both your origin and your destination. It will show you where the money is coming from and where it’s going to.

Single-entry bookkeeping is much simpler. If you spend money on office supplies, note it down. If you make a sale, note it down. You don’t need to include the account that funded the purchase or where the sale was deposited.

Even though single-entry bookkeeping is simpler, the most common form of bookkeeping today is double-entry . That’s because single-entry gives you a highly limited view of your business’s actual financial status. We’ll be using double-entry examples to explain how journal entries work.

Debits and credits in the context of double-entry accounting

If you’re totally new to double-entry accounting and you don’t know the difference between debits and credits, you can pause here and check out our visual guide to debits and credits . It’ll teach you everything you need to know before continuing with this article.

If you’d rather just get the basics, here’s a quick explanation:

Debits (abbreviated as DR) refer to any money that flows into an account.

Credits (abbreviated as CR) refer to any money that flows out of an account.

Your debit journal entries and credit journal entries should always cancel each other out—this is what is meant by having “balanced books.”

Common journal examples

The precise journals you use for your bookkeeping will depend on what kind of business you run. Broadly, they’re split into two categories: The general journal and the special journals .

The general journal contains entries that don’t fit into any of your special journals—such as income or expenses from interest. It can also be the place you record adjusting entries .

The special journals , also referred to as accounts, are used to record the common, day-to-day transactions in your accounting system. All of your special journals are listed in your chart of accounts . Common examples of account names include:

• Sales: income you record from sales
• Accounts receivable : money you’re owed
• Cash receipts: money you’ve received
• Sales returns: sales you’ve refunded
• Purchases: payments you’ve made
• Accounts payable : money you owe
• Equity: retained earnings and owners’ investment

Journal entry examples

You’ve got a busy day today. You’re going to meet up with a client, pick up some office supplies, and stop by the bank to make a loan payment.

You get paid by a customer for an invoice

When you’re visiting with your client, they pay the $600 invoice you sent them.

Date lets you know when the entry was recorded.

Description includes relevant notes about the business transaction—so you know where the money is coming from or going to. In this case, it’s the invoice number.

Debit notes that $600 is being added to your cash account.

Credit notes money leaving cash. In this case, there’s no money being paid out.

At the same time you make this entry, you’d make another in the accounts receivable (aka money clients owe you) ledger account.

The money is being removed from accounts receivable—your client doesn’t owe you $600 anymore—so it’s listed as a credit (written in parentheses). Here, the credit amount and debit amount are the exact same.

You picked up some office supplies

On the way back from meeting with your client, you stopped to pick up $100 worth of office supplies.

Cash journal

When the invoice was paid, money entered the cash account, so we recorded it as a debit. But now money is leaving the account, so we credit the account for the amount leaving.

Expense journal

Just as every action has an equal and opposite reaction, every credit has an equal and opposite debit. Since we credited the cash account, we must debit the expense account.

You make a payment on your bank loan

Finally, you stop at the bank to make your loan payment. When you make a payment on a loan, a portion goes towards the balance of the loan while the rest pays the interest expense. This is called loan principal and interest .

This is an example of a compound entry. This happens when the debit or credit amount is made up of multiple lines.

Let’s look at a payment of $1,000 with $800 going towards the loan balance and $200 being interest expense.

For the cash side, we record the $1,000 leaving the account (a credit).

In the expense journal, we record a debit for the amount that went towards interest separately from the amount that reduces the balance.

Loan journal

Finally, we record a debit for the amount that went towards the principal.

Here, the debit was broken up into multiple lines: the interest amount and principal amount.

Closing accounting entries

At the end of the financial year, you close your income and expense journals—also referred to as “closing the books”—by wiping them clean. That way, you can start fresh in the new year, without any income or expenses carrying over.

You can’t just erase all that money, though—it has to go somewhere. So, when it’s time to close, you create a new account called income summary and move the money there.

Here’s a simplified example of how that might look.

First, credit all the money out of your asset accounts . In this example, that consists only of cash.

Sales Revenue Journal

Close Income Accounts to Income Summary

Then, credit all of your expenses out of your expense accounts. For the sake of this example, that consists only of accounts payable.

Expense Journal

Close Expense Accounts to Income Summary

Adjusting journal entries

If you use accrual accounting , you’ll need to make adjusting entries to your journals every month.

Adjusting entries ensure that expenses and revenue for each accounting period match up—so you get an accurate balance sheet and income statement . Check out our article on adjusting journal entries to learn how to do it yourself.

The above information is an overview of how journal entries work if you do your bookkeeping manually. But most people today use accounting software to record transactions. When you use accounting software, the above steps still apply, but the accounting software handles the details behind the scenes.

Some small business owners love making journal entries. Most don’t. If you fall into the second category, let Bench take bookkeeping off your hands for good .

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• Small Business
• The Top 10 Accounting Software for Small Businesses

A Beginner's Guide to Recording Journal Entries

See Full Bio

Our Small Business Expert

Journal entries are used to record the financial activity of your business. Journal entries are either recorded in subsidiary ledgers if you’re keeping your books manually, or they’re recorded directly into the general ledger (G/L) if you use accounting software.

Whichever way they’re recorded, they are a necessity for any business.

Overview: What is a journal entry?

As a small business owner, one of the jobs you typically assume is that of a bookkeeper or accountant. Part of that job is recording journal entries.

If you’re familiar with accounting terms, you know that journal entries are simply a record of all of your business transactions. They are the first step in the accounting cycle, and perhaps the most important, as they represent all of the financial activities that will affect your business.

It’s important to know how to create a proper journal entry, or general entry for your business. Accounting journal entries always follow the double-entry accounting method, with each journal entry always having a debit entry and a credit entry.

Journal entries are always dated and should include a description of the transaction. Accountants and bookkeepers typically assign a unique number to each journal entry when they’re entered manually, and if using accounting software, your application will automatically assign a number to each journal entry.

Top accounting software options

These selections represent our top choices for accounting software , combining both excellent value and the features essential for comprehensive accounting solutions and can assist with recording journal entries for your business.

How to prepare journal entries for your small business

The first step in preparing journal entries for your business is to determine exactly what transaction needs to be entered.

If you’re using accounting software, the majority of journal entries are made by your accounting software, so you’ll only need to enter month-end adjusting entries, such as when reconciling your bank accounts, or when entering accruals for payroll and other expenses.

Let’s use the following as an example. You visit your local office supply store and purchase paper and pens for your business. The total purchase is $150.00. Here’s how you would prepare your journal entry.

Step 1: Identify the accounts that will be affected

Before you can write and post a journal entry, you’ll need to determine which accounts in your general ledger will be affected by your journal entry. In this example, your office supplies account and your cash account are the accounts that will be affected.

Tips for identifying the right accounts:

• Sort your transactions first: If you have bank deposits, expenses, and sales entries to make, sorting them by transaction type will make it much easier to record your journal entries.
• Use common sense when identifying the correct accounts: This process may be confusing at first, but as you process more journal entries, you’ll begin to understand which accounts you should use for your transactions.

Step 2: Determine your account type

If you spent $150 at the store, you’ll be creating an expense for your office supplies account while reducing the amount of cash in your bank account. You’ll need to apply standard accounting rules to each account.

To increase an expense account, you would need to debit the account, and to decrease your cash account, which is an asset, you would need to credit the account.

Tips for identifying the account type:

• Remember your account types: Account types include Assets, Liabilities, Expense, Revenue, and Capital/Owner Equity accounts. All journal entries in accounting have to fall into one of these categories. For instance, the office supplies account is an expense, while the cash account is an asset.
• Use standard accounting rules to determine which account is debited and which account is credited: When recording the above transaction in the office supplies example, you will be increasing your expenses because you purchased office supplies, which is an expense account, while decreasing your assets because you used your cash account, which is an asset, to purchase those supplies.

Step 3: Prepare your journal entry

You’ve identified the accounts that will be involved in your journal entry, as well as the type of accounts they are. Now you’re ready to prepare your journal entry.

Tips for preparing a journal entry:

• Enter the correct date: The first step is to date your journal entry. This is to ensure it’s posted in the correct period.
• Write out the account name and number: When preparing a journal entry, always include the G/L account number as well as the account name.
• Enter the debit and credit amount: Using the above example, you will be debiting (increasing) your office supplies account, which is an expense account, and crediting (reducing) your cash account, which is an asset account.

Example of a journal entry

Below is an example journal entry that was completed based on the above financial transaction.

Notice that the date is entered for both lines. It’s journal entry No. 1, the account number is included after the account name, and the office supplies account has been debited and the cash account credited.

The best accounting software for documenting journal entries

By far, the best way to reduce the amount of journal entries you need to do while easily completing the ones necessary is by using accounting software.

When you’re using accounting software, journal entries are completed every time you process accounts payable, calculate accounting cost, or perform any other basic bookkeeping transactions, leaving you to record only items such as month-end adjusting entries.

Accounting software also automatically calculates and posts closing entries, ensuring that opening balances are correct for the new year.

Here are three small business accounting applications that make creating and posting journal entries a breeze.

1. AccountEdge Pro

AccountEdge Pro is a desktop application that also offers remote connectivity. AccountEdge Pro is a good fit for small and growing businesses that are looking for an accounting application that can grow along with them.

Particularly well-suited for retailers and online sellers, AccountEdge Pro offers integration with Shopify and UPS Shipping.

Under the Accounts tab, AccountEdge Pro gives you the option to record a journal entry. Image source: Author

AccountEdge Pro does not include a bank feed, but you can download your bank statement for reconciliation within the application. The Accounts entry screen in AccountEdge Pro makes it easy for you to record journal entries, with an option available to make a journal entry recurring, as well as the ability to reverse a previous month’s journal entry for things such as accruals.

A memo field is also available for you to enter a description of the journal entry.

AccountEdge offers four plans: Basic, Pro, Priority Zoom, and Priority ERP, with pricing starting at $149 annually.

2. Sage 50cloud Accounting

Sage 50cloud Accounting is considered a hybrid application, offering on-premise installation as well as remote access to the application using Microsoft 365.

Sage 50cloud Accounting offers plans suitable for one-person offices as well as businesses that require multi-user capability, with the Quantum edition supporting up to 40 users.

The Sage 50cloud Accounting dashboard offers a summary view of account balances. Image source: Author

You can easily create journal entries in Sage 50cloud Accounting by going to the General Journal Entry screen, where you can enter the details of your transaction, including a unique transaction code and description of the journal entry.

You can also reverse a transaction by clicking on the Reverse Journal Entry box at the top of the screen.

Sage 50cloud Accounting offers three plans: Accounting, Premium Accounting, and Quantum Accounting, with pricing starting at $278.95 annually.

3. QuickBooks Online

Originally designed for very small businesses, QuickBooks Online continues to add features and functionality, making it a good fit for growing businesses as well.

Available in four plans, with a self-employed plan also available, features are very plan-driven, with many features found only in the more expensive plans.

The banking feature in QuickBooks Online lets you easily record your expenses. Image source: Author

QuickBooks Online offers features such as automatic bank feeds, which will greatly reduce the number of journal entries that need to be created.

When you do need to create a journal entry, you can do so easily, with QuickBooks Online automatically assigning a reference number to all journal entries. A description field and a memo field are available to detail what the entry is for.

QuickBooks Online also lets you delete a previously posted journal entry, but in order to maintain an audit trail, any journal entry posted in error should be reversed, not deleted.

QuickBooks Online offers four regular plans: Simple Start, Essentials, Plus, and Advanced, as well as a Self-Employed plan available for freelancers, with pricing starting at $10 per month for the first three months.

Journal entries are part of the financial accounting process

If you’ve made the choice to use accounting software, financial accounting journal entries become rare, with typical journal entries made only to enter accruals, month-end adjustments, and depreciation expenses.

In turn, your accounting software application handles the brunt of the work, creating journal entries automatically when financial transactions are processed, increasing accuracy and reducing your workload.

If you’d like to learn more about other small business accounting applications, be sure to check out our small business accounting software reviews .

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• HR & Payroll

Journal Entries Explained - Full Guide With Examples

Creating a journal entry is the process of recording and tracking any transaction that your business conducts. Journal entries help transform business transactions into useful data.

Want to learn how to correctly write journal entries for your business? You’ve come to the right place!

What Is a Journal Entry?

Journal entries are records of financial transactions flowing in and out of your business. These transactions all get recorded in the company book, called the general journal .

Journal entries are the very first step in the accounting cycle . The main thing you need to know about journal entries in accounting is that they all follow the double-accounting method.

What this means is that for every recorded transaction, two accounts are affected - and as a result, there is always a debit entry and a credit entry.

Before diving into the nits and grits of double-entry bookkeeping and writing journal entries, you should understand why journal entries are so important for a business.

Why Are Journal Entries So Important?

Well, for starters, maintaining organized records of your transactions helps keep your company information organized . Accountants record data chronologically based on a specific format. This way they can easily find information and keep an eye out for any possible accounting errors .

Secondly, journal entries are the first step in the recording process. So you’ll eventually need them to prepare other financial statements . The income statement, cash flow, balance sheet, all of them are based on the initial recordings of journal entries.

Lastly, performance measurement . Auditors use financial reports to analyze how transactions are impacting the business.

What Is Double-Entry Bookkeeping?

As we said above, in every transaction, at least two accounts will change, where one is debited and the other one credited. This is known in accounting as double-entry bookkeeping .

Double-entry bookkeeping isn’t as complicated as it might sound. To understand the concept, think about any purchase you’ve ever made.

Money in exchange for a product, right? In accounting language, this is a transaction that simultaneously affects two accounts . The cash account, which decreases since you’re paying, and the equipment account, which increases from buying the product.

So in simple terms, in the business world, money doesn’t simply appear or disappear. If it goes into one account, it has to get out of another. That’s why it’s called “double-entry”.

This is where the concepts of debit and credit come to play.

First, let’s get some common misconceptions out of the way.

Debit and credit are neither good nor bad . And no, they’re not the same as adding or subtracting .

They are just words that show the double-sided nature of financial transactions .

In brief: debit is money that flows into an account , whereas credit is money that flows out of an account .

Here’s all you need to remember:

• A credit is always on the right side of a journal entry . It increases the owner's equity, liabilities, and revenue when credited. It decreases them when debited.
• A debit, on the other hand, is always on the left side of a journal entry . It increases assets and expenses when debited. It decreases them when credited.
• At the end of the journal entry, the credit and debit balance should be equal to each other . If they don’t, double-check because you’ve probably made a mistake.

Does it all still sound a bit confusing? Don’t worry! We’ve made a cheat sheet so you can easily remember.

Ready to solve an example? Let’s take a simple one and explain the process step-by-step.

Double-Entry Bookkeeping Example

Let’s say the owner of an advertising company decides to invest $10,000 cash in his business.

There are three main steps you have to follow to make the perfect journal entry:

First, figure out which accounts are affected . In this transaction, they are the assets account and the owner’s equity account.

Now, determine which items have been increased or decreased , and by how much .

Since the owner is making an investment , both of the accounts will increase by $10.000. The asset account will have $10.000 more in cash, whereas the Owner’s Equity account $10.000 more in Capital.

Lastly, we have to translate the changes into debits and credits . We learned that debits increase assets, so cash will be debited for $10,000. On the other hand, the opposite will happen to the owner’s equity. Capital will be credited for $10,000.

After this point, the hardest work is done. All there’s left to do now is neatly document the transaction.

Here’s how you do it ...

What Is Included in a Journal Entry?

To make a complete journal entry you need the following elements:

• A reference number or also known as the journal entry number , which is unique for every transaction.
• The date of the journal entry .
• The account column , where you put the names of the accounts that have changed .
• Two separate columns for debit and credit . Here you will put the amounts that will be credited and debited. Again, it’s important to remember that they must be equal in the end. If you’re using accounting software, it won’t let you post the journal entry unless the amounts match. However, if you’re using manual apps like Sheets or Excel, always triple check the balance.
• Lastly, the journal entry explanation . This needs to be a brief but accurate description of the journal entry. You may need to refer back to it in the future, so be as clear as possible.

This is what the previous transaction would look like in a Journal:

What are the Most Common Types of Journals?

Businesses are diverse - in size, service, ownership. That’s why there are different types of journals, based on the company you run. Mainly, however, we divide them into two categories: general and special .

We briefly mentioned the general journal in the beginning. To recap, the general journal is the company book in which accountants post (or summarize) all journal entries.

While small businesses and startups might not have difficulty fitting all of their entries in the general journal, that’s not always the case.

For big industries like trading or manufacturing, other journals, called special journals are necessary. Their purpose is to group and record transactions of a specific type. These types depend on the nature of the business. Usually, though, special journals record the most recurring transactions within a company.

Here’s a list of the most frequent types of special journals utilized by companies:

• Sales - income you earn from sales.
• Sales Return - loss of income from sales you’ve refunded
• Accounts Receivable - cash owed to the company
• Accounts Payable - cash the company owes
• Cash Receipts - cash you’ve gained
• Purchases - payments you’ve done
• Equity - owner’s investment
• Payroll - payroll transactions such as gross wages, or withheld taxes

Most Common Journal Entries for a Small Business

Some of the most common types of journal entries that a small business will make are the following:

All examples assume tax is applied on sales and purchase. If no tax, then it can be removed as the value will be zero.

Journal Entry for Sales of Services

Journal Entry for Sales Invoice - Goods/Inventory

Journal Entry for Cash Sales

Journal Entry for Receiving Payment for Invoice

Journal Entry for Purchase of Goods

Journal Entry for Purchase of Services

Journal Entry for Making Payments for Purchases

Journal Entry for Only Fulfilling Orders (transfer of goods/inventory out of the system)

Journal Entry for Only Receiving Goods (transfer of goods/inventory into the system)

As you might’ve guessed, a journal entry for sales of goods, is created whenever your business sells some manufactured goods. Since these are self-descriptive enough, let’s move on to some more complex accounting journal entries.

What Are the Different Types of Journal Entries?

There are three other main types of journal entries in accounting:

Compound Entries

When transactions affect more than two accounts , we make compound entries . These are common when the recordings are related in nature or happen during the same day.

Remember: debits and credits must always be equal. The principle stays the same, there are just more accounts that change.

Let’s check out an example.

XYZ company decides to buy new computer software for $1,000. They pay $500 in cash right away and agree to pay the remaining $500 later.

The steps are the same as in the double-entry bookkeeping.

First, we figure out which accounts have changed and by how much. In this scenario, those are three:

• Asset account, which increases by $1,000 when buying the new computer software.
• Cash account, which decreases $500 in Cash from paying.
• Accounts payable account, which increases $500 from the remaining unpaid amount.

The next step is to translate them into debit and credit.

Assets increase when debited, so Equipment will be debited for $1,000. Expenses decrease when credited, so Cash will be credited for $500. Liabilities increase when credited, so Accounts Payable will also be credited for $500.

This is what the transaction would like in a Journal:

Adjusting Entries

Adjusting entries are used to update previously recorded journal entries . They ensure that those recordings line up to the correct accounting periods. This does not mean that those transactions are deleted or erased, though.  Adjusting entries are new transactions that keep the business’ finances up to date .

They are usually made at the end of an accounting period . The accounting period usually coincides with the business fiscal year.

There are four main types of adjusting entries:

• Prepaid expenses are payments in cash for assets that haven’t been used yet. Think of insurance. It protects a company from possible losses, like fire or theft, which haven’t happened yet.
• Unearned revenue is cash received before the product or service is provided. Take your yearly gym membership or Spotify subscription - you’re paying in advance for future service.
• Accrued revenue is money earned, but not collected. If you take a loan, the interest rate income from the loan will be recorded as an accrued revenue.
• Accrued expenses are expenses made, but not paid. An example would be not paying your workers their salary until the end of the month.

Let’s put all of this information into a concrete exercise.

On October 2nd, you sell to a client, a service worth $3,000. You receive the payment for the provided service, however, you forget to make a journal entry.

Then at the end of October, you compare the actual cash reserve with the cash reserve shown on the balance sheet.

Since the two sums will not match, it means that there is a missing transaction somewhere. At this point, you need to make a journal entry adjustment .

The journal entry on October 31st would look like this:

Reversing Entries

Reverse entries are the opposite of adjusting entries. When we say the opposite, we don’t mean that the adjusting entries get deleted. No amount previously recorded changes. Reverse entries only simplify financial reports , by canceling out the effect of the adjusting entries.

Since their goal is just to simplify, reverse entries are optional. Some accountants choose to make them, others don’t.

They’re usually done at the start of a new accounting period .

Because adjusting entries are made at the end of the period. So, for instance, if the period ends on December 31st, you would do the reverse the next day, on January 1st.

Now, you can’t reverse all types of adjusting entries: only accrued revenues and accrued expenses .

Let’s see how the previous accrued revenues example would look like reversed.

The adjusting entry in the last section was:

• Accounts receivable debited for $3000
• Service revenue credited for $3000

What reversing entries do is switch the places of the two. So now:

• Service revenue will be debited for $3000
• Accounts receivable will be credited for $3000

This is what the complete journal entry would look like:

How to Use Accounting Software to Document Your Journal Entries

Running your own company comes with many challenges . No business owner has time to write down all of their journal entries by hand.

That’s why most companies record their entries using accounting software.

You might be thinking - isn’t accounting software only for accountants?

Well, most are, but we at Deskera prioritize small business owners. We’ve spent over 10 years working with small business owners from 100+ different countries to create a cloud accounting software that fits any type of business.

Need to create invoices , manage inventory, create financial reports, track payments, manage dropshipping? You can do all of that with Deskera. Our program is specifically built for you, to easily manage and oversee the finances of your business.

Here’s how you can use Deskera Books to record journal entries. 1.  Go to Accounting > Journal Entry.

Here, you’ll be able to view, create, and manage all your journal entries. The main attributes displayed for every entry here are the journal entry number, the journal entry date, the journal entry type, and the related document number .

To view the details of each journal entry, you can press on the expand all records button. As you can see, the account name, debit amount, credit amount, and description will all appear .

2.   Next, to manually create a journal entry, press on the create button on the top right . You’ll notice two journal entry options: normal or fund transfer. Each option depends on the type of entry you’re making.

3.   Click JE - Normal . This will take you to the general journal page. The top half of the page contains the auto numbering format, currency, and journal date . There’s also an option that allows you to include the entry on the tax report . Then there’s the bottom half , where you can add the account, description, type, and amount .

4. Fill in all of these boxes with the appropriate information and press Save . Ta-da, you’ve created a journal entry!

What if you accidentally enter the wrong amounts? The software will notice and won’t save the journal entry . That’s what the “unbalanced account” on the bottom right of the page serves for. The exact off-balance amount will show.

Automate Journal Entry Creation Using Accounting Software

Businesses have moved on from the age of pen and paper for a reason. Using accounting software like Deskera will help you automate the entire journal entry creation process.

When your business creates an invoice , the corresponding journal entry is added automatically by the system in the respective ledger for Accounts Receivable, Sales, Sales Tax, etc...

Similarly, when a payment is processed, the bank and the accounts receivable are adjusted automatically by the accounting software.

Deskera , allows you to integrate your bank directly and track any expenses automatically. When you make an expense, the journal entry is automatically created, and it is mapped to the correct ledger account.

You can also create custom invoices using the provided templates, and send reminders to make sure you don’t miss out on any invoice payments .

To top it off, creating financial reports with Deskera is as easy as 1-2-3.

Still not sure? Well, luckily Deskera offers a completely free trial. You can sign up here and try out all 3 Deskera platforms - Books, Sales (CRM), & People (HRIS).

Key Takeaways

Hope our guide to journal entries was helpful!

For a quick recap let’s go through the main points we’ve covered:

• Journal entries record the financial transactions of a business . They’re the first step in the accounting cycle.
• Each transaction in a journal entry affects two accounts . One of them is debited, the other one credited. Simply put, debit is money flowing into a company, whereas credit is money flowing out.
• Never forget: debits and credit should always be equal in the end.
• To write a journal entry you need to figure out which accounts are affected, which items decrease or increase, and then translate the changes into debit and credit.
• A complete journal entry is made of 6 elements : a reference number, date, account section, debits, credits, and a journal explanation.
• You can record these journal entries into either a General Journal or a Special Journal .
• There are three main types of journal entries: compound, adjusting, and reversing .
• Use accounting software like Deskera to automate the process of creating journal entries, and save a ton of time!

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How to Write a Journal Entry

Last Updated: August 15, 2024 Fact Checked

This article was co-authored by Nicolette Tura, MA and by wikiHow staff writer, Danielle Blinka, MA, MPA . Nicolette Tura is an Empowerment Coach based in the San Francisco Bay Area. Through her work, Nicolette helps high achievers discover their true potential and grow personally. She recently founded the non-profit Celestial Wellness Network and started a musical project, The Feather and Stone. With over ten years of experience in nonprofit leadership and running her own wellness business, Nicolette combines her background in psychology, mindfulness, and psychophysiology to create profound change. Nicolette has hands-on experience as a Therapy Associate, and has worked with patients recovering from neurological disorders. She offers one-on-one coaching tailored to each client's needs, with options for short-term, transformative engagements. Her personalized coaching sessions help individuals break free from self-limiting beliefs and achieve their goals. She completed a 500-hour Registered Yoga Teacher certification and is a NASM Certified Corrective Exercise Specialist. She holds a BA in Sociology from the University of California, Berkeley, and a Master’s degree is Sociology from San Jose State University. There are 16 references cited in this article, which can be found at the bottom of the page. This article has been fact-checked, ensuring the accuracy of any cited facts and confirming the authority of its sources. This article has been viewed 2,888,509 times.

Keeping a journal allows you to record what’s happening in your life and to work through your thoughts and feelings. Sometimes, you might write a journal for school to help you deepen your understanding of what you’re studying. Fortunately, writing a journal entry is a simple process. First, choose a topic to write about, like what's happening in your life. Then, write an opening for your entry and express your thoughts.

Choosing a Topic

• This is a great way to help you document things you want to remember.
• For instance, you might write about something funny that happened at lunch, scoring the winning goal in a soccer game, or a fight you had with your friend. The events can be positive or negative.

• Let’s say you’re feeling sad because you’re going through a breakup. You could write about how you feel and what you’ll miss about the relationship. This will help you release your feelings so you can start to feel better .

• Write about what you’d like to do this weekend.
• Discuss a place you’d like to visit.
• Pretend that you found a fantasy creature.
• Write about something you want to change.
• Write from the perspective of your favourite book or movie character.

• A summary of a reading or lecture.
• Your analysis of the course material.
• Connections between topics you’ve studied.
• Personal connections you made with the coursework.
• Questions you have about the text or lecture.

Tip: Keep a journal for school focused on studying and analyzing your course material. For instance, you might summarize your coursework, record your reflections on it, and write down questions you have. Leave out how you feel about what you’re reading or studying.

Opening Your Journal Entry

• Your instructor has assigned journaling to help you deepen your understanding of your coursework and to improve your writing skills . Following their instructions will help you best achieve these goals.

• For instance, you might write, “July 24, 2019,” “07-24-19,” or “24 July 2019.”

• For instance, you might write “Good Beans Coffee House,” “School,” “Paris,” or “My bedroom” for your location. For the time, you could write the actual time, such as “12:25 p.m.,” or the time of day, like “Early morning.”

Tip: You usually don’t include a salutation when you’re writing a journal for school.

Expressing Yourself in a Personal Journal

• If mistakes really bother you, it’s okay to go back and correct them after you finish writing your journal entry.

• Turn a memory into a story.
• Record what you dreamed last night.
• Write a list, such as what you did that day or what you’re grateful for.
• Doodle or paste pictures into your journal.
• Record song lyrics or quotes that mean something to you.
• Write your own lyrics or a poem.
• Write in stream of consciousness.

• For instance, you’d write, “I went to lunch with Sari today,” not “Amy had lunch with Sari today.”

• For instance, let’s say you’re on vacation at the beach. You might include details like, “sea spray hitting my face,” “the smell of burning wood from bonfires on the beach,” “the taste of salt on my lips,” “the sun glinting off the surface of the water,” and “the shouts from other beach goers having fun.”

• With journaling, it’s more important to write often than to write a lot.

Drafting an Academic Journal Entry

• If you’re telling a story, try to follow a narrative structure to give it a beginning, middle, and end.
• Read over your journal entry before your submit it to check that it makes sense.

• For handwritten journals, your instructor may require that you simply fill up a page. Make sure you know the exact requirements so you can do your assignment correctly.
• If you’re struggling to think of something to write, make a mind map about the topic to help you brainstorm some new ideas.

• If you’re struggling with your grammar, visit your school’s writing center or ask your instructor about tutoring options. Additionally, you can find online programs that help you with grammar.

• This is especially important if you’re keeping your journal as a graded assignment.
• If you’re typing your journal entries in an online portal, there may be a spellcheck tool you can use. However, you should still proofread the entry to look for other errors.

Journal Entry Template

Community Q&A

Reader Videos

• It’s best to write regularly so that journaling becomes a habit. To help you remember, write in your journal at the same time everyday. [19] X Research source Thanks Helpful 0 Not Helpful 0
• You can write about anything you want, so don’t feel like you can only write about how you feel. You might instead prefer to write about your daily accomplishments or what you enjoyed that day. Thanks Helpful 27 Not Helpful 5
• While you can use a paper journal, there are journaling apps and websites you can try. Additionally, it’s okay to use a word processor like Google Docs or Microsoft Word for journaling. Thanks Helpful 18 Not Helpful 9

• Since your journal is private, prevent people from reading it by keeping it in a safe place. If it’s a digital journal, you might even password protect it. Thanks Helpful 27 Not Helpful 4

You Might Also Like

• ↑ https://libguides.usc.edu/writingguide/title
• ↑ Nicolette Tura, MA. Empowerment Coach. Expert Interview. 23 January 2020.
• ↑ https://positivepsychology.com/benefits-of-journaling/
• ↑ https://www.readingrockets.org/article/journal-writing
• ↑ https://www.hamilton.edu/academics/centers/writing/writing-resources/journal-writing
• ↑ https://writing.wisc.edu/handbook/assignments/writing-an-abstract-for-your-research-paper/
• ↑ https://www.niu.edu/citl/resources/guides/instructional-guide/reflective-journals-and-learning-logs.shtml
• ↑ https://psychcentral.com/blog/ready-set-journal-64-journaling-prompts-for-self-discovery
• ↑ https://psychcentral.com/lib/the-health-benefits-of-journaling
• ↑ https://www.bates.edu/biology/files/2010/06/How-to-Write-Guide-v10-2014.pdf
• ↑ https://files.eric.ed.gov/fulltext/EJ1081806.pdf
• ↑ https://writing.wisc.edu/handbook/style/connectingideas/
• ↑ https://positivepsychology.com/writing-therapy/
• ↑ https://apastyle.apa.org/style-grammar-guidelines/capitalization
• ↑ https://libguides.usc.edu/writingguide/proofreading
• ↑ https://www.psychologytoday.com/us/blog/modern-minds/202301/10-good-reasons-to-keep-a-journal

About This Article

To write a journal entry, first find a quiet, comfortable spot where you won’t be disturbed. Take a moment to brainstorm what you want to write about. You can journal about anything, like your day, your dreams, work, school, friends, or an upcoming project. If you’re not sure, choose a writing prompt for your entry, like “What was your earliest childhood memory?” or “What is your biggest secret?” Open to a new page in your journal and write the date at the top. Then, start writing. Let your thoughts flow and don’t edit yourself. Write whatever comes to mind. It’s okay to be honest since nobody else will be reading what you write. Draw pictures if specific images come to mind while you’re writing. Try to journal for somewhere between 5 and 20 minutes every day. The more you journal, the easier it will become! Keep reading to learn how to write a journal entry for school! Did this summary help you? Yes No

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• 101 Accounting Basics Strong foundation on fundamental concepts and the accounting process
• FIN Financial Accounting Financial accounting and reporting, financial statements, IFRS and GAAP
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• DIC Accounting Dictionary Accounting terms defined and carefully explained
• MIS Misc Articles Miscellaneous topics about anything accounting
• References +
• 1 Analyzing business transactions
• 2 Rules of debit and credit
• 3 Chart of accounts
• 4 Journal entries
• 5 More journal entry examples
• 6 Posting to the ledger
• 7 Trial balance
• 8 Correcting entries

Journal entries: More examples

For additional practice in preparing journal entries, here are some more examples of business transactions along with explanations on how their journal entries are prepared.

A Few Things Before We Start

The transactions in this lesson pertain to Gray Electronic Repair Services, our imaginary small sole proprietorship business.

For account titles, we will be using the chart of accounts presented in an earlier lesson.

All transactions are assumed and simplified for illustration purposes.

Note: We will also be using this set of transactions and journal entries in later lessons when we discuss the other steps of the accounting process.

Alright! Let's start.

Transaction #1: On December 1, 2021, Mr. Donald Gray started Gray Electronic Repair Services by investing $10,000. The journal entry should increase the company's Cash, and increase (establish) the capital account of Mr. Gray; hence:

Transaction #2: On December 5, Gray Electronic Repair Services paid registration and licensing fees for the business, $370.

First, we will debit the expense (to increase an expense, you debit it); and then, credit Cash to record the decrease in cash as a result of the payment.

Transaction #3: On December 6, the company acquired tables, chairs, shelves, and other fixtures for a total of $3,000. The entire amount was paid in cash.

There is an increase in an asset account (Furniture and Fixtures) in exchange for a decrease in another asset (Cash).

Transaction #4: On December 7, the company acquired service equipment for $16,000. The company paid a 50% down payment and the balance will be paid after 60 days.

This will result in a compound journal entry. There is an increase in an asset account ( debit Service Equipment, $16,000), a decrease in another asset ( credit Cash, $8,000, the amount paid), and an increase in a liability account ( credit Accounts Payable, $8,000, the balance to be paid after 60 days).

Transaction #5: Also on December 7, Gray Electronic Repair Services purchased service supplies on account amounting to $1,500.

The company received supplies thus we will record a debit to increase supplies. By the terms "on account", it means that the amount has not yet been paid; and so, it is recorded as a liability of the company.

Transaction #6: On December 9, the company received $1,900 for services rendered. We will then record an increase in cash (debit the cash account) and increase in income (credit the income account).

Transaction #7: On December 12, the company rendered services on account, $4,250.00. As per agreement with the customer, the amount is to be collected after 10 days. Under the accrual basis of accounting , income is recorded when earned.

In this transaction, the services have been fully rendered (meaning, we made an income; we just haven't collected it yet.) Hence, we record an increase in income and an increase in a receivable account.

Transaction #8: On December 14, Mr. Gray invested an additional $3,200.00 into the business. The entry would be similar to what we did in transaction #1, i.e. increase cash and increase the capital account of the owner.

Transaction #9: Rendered services to a big corporation on December 15. As per agreement, the $3,400 amount due will be collected after 30 days.

Transaction #10: On December 22, the company collected from the customer in transaction #7. We will record an increase in cash by debiting it. Then, we will credit accounts receivable to decrease it. We are reducing the receivable since it has already been collected.

Actually, we simply transferred the amount from receivable to cash in the above entry.

Transaction #11: On December 23, the company paid some of its liability in transaction #5 by issuing a check. The company paid $500 of the $1,500 payable.

To record this transaction, we will debit Accounts Payable for $500 to decrease it by the said amount. Then, we will credit cash to decrease it as a result of the payment. The entry would be:

Accounts payable would now have a credit balance of $1,000 ($1,500 initial credit in transaction #5 less $500 debit in the above transaction).

Transaction #12: On December 25, the owner withdrew cash due to an emergency need. Mr. Gray withdrew $7,000 from the company.

We will decrease Cash since the company paid Mr. Gray $7,000. And, we will record withdrawals by debiting the withdrawal account – Mr. Gray, Drawings .

Transaction # 13: On December 29, the company paid rent for December, $ 1,500. Again, we will record the expense by debiting it and decrease cash by crediting it.

Transaction #14: On December 30, the company acquired a $12,000 short-term bank loan; the entire amount plus a 10% interest is payable after 1 year.

Again, the company received cash so we increase it by debiting Cash. The company now has a liability. We will record it by crediting the liability account – Loans Payable .

Transaction #15: On December 31, the company paid salaries to its employees, $3,500.

For this transaction, we will record/increase the expense account by debiting it and decrease cash by crediting it. ( Note: This is a simplified entry to present the payment of salaries. In actual practice, different payroll accounting methods are applied. )

There you have it. You should be getting the hang of it by now. If not, then you can always go back to the examples above. Remember that accounting skills require mastery of concepts and practice.

We've gone through 15 journal entry examples and explained how each are prepared to help you learn the art of recording. By now you'd feel more confident in preparing journal entries. Feel free to refer back to the examples above should you encounter similar transactions.

More under Analyzing, Recording, and Classifying Business Transactions

• 1 Analyzing Business Transactions
• 2 Rules of Debit and Credit
• 3 Chart of Accounts
• 4 Journal Entries
• 5 More Journal Entry Examples
• 6 Accounting Ledger
• 7 Trial Balance
• 8 Correcting Entries

How Do You Do Journal Entries in Accounting: Step-by-step

Learning how to do Journal Entries is at the core of learning accounting. Following these step-by-step directions will help you understand how to do journal entries like a pro.

What is a Journal Entry in Accounting?

A Journal Entry is a method of recording increases and decreases to accounts. A journal entry details the accounts being impacted, and the debits and credits needed to record business transactions in accounting.

Journal Entries use a standard format to record transactions. That format includes the date of the transaction, the accounts being impacted by the transaction, columns for entering debits or credits, and a description line to enter the reason for the transaction.  

In a journal entry, every debit entry must have a credit entry and the debits must always equal the credits. The credit portion of the journal entry is indented to make reading a long line of transactions easier.

The Account Name used in a journal entry must exactly match the Account Name from a company’s Chart of Accounts , an official list of accounts used by that company. For example, if the Account Name in the Chart of Accounts is Supplies Expense, the journal entry Account Name must be Supplies Expense, rather than Supplies or Supply Expense or Supplies Exp.

Examples of Accounting Transactions

To demonstrate the correct method of completing journal entries, we will use the follow sample accounting transactions commonly found in accounting textbooks:

Sample Accounting Transactions Step-by-step

Transaction 1.     Opened a business bank account with a deposit of $55,000 from personal funds.

When a business owner opens a business, they are turning personal funds into business funds. The business now owes that investment back to the business owner. To put it differently, the funds represent the  owner’s equity  in the business and are recorded in an account called “Owner’s Name, Equity” or “Owner’s Name, Capital”. The funds become a business asset recorded in the company’s books under an account called “Cash”.

What to Debit and What to Credit:

Cash has the account type of  Asset . Assets have a normal debit balance. To increase an asset, debit it.

Joe Smith, Capital has the account type of Equity. Equity has a normal credit balance. To increase an equity account, credit it.

In the journal entry, the $55,000 deposit to the bank account goes on the left (debit) side of the account because Cash is increasing.

In the Joe Smith, Capital, the $55,000 deposit goes on the right (credit) side of the account because equity is increasing.

(Notice there are no + or – signs. The debit or credit indicates whether the account is increasing or decreasing.)

Impact on the Accounting Equation:

Transaction 2.     Purchased office supplies on account, $3,300.

Whenever an accounting textbook transaction using the phrase “on account”, it means no money has changed hands. Purchases on account mean that the goods have been received but payment will be made later. When a payment is owed, we record it in a liability account called “Accounts Payable.”

“Supplies” is a tricky part of this transaction. Accounting textbooks use two accounts with the word “Supplies”–  Supplies  (an asset), (sometimes called Supplies Asset), and  Supplies Expense . Supplies (the asset) works like an inventory account. You hold the supplies in an inventory until they are used. When supplies are used, they are moved from the asset account into the expense account.

Supplies (the asset) has the account type of  Asset . Assets have a normal debit balance. To increase an asset, debit it.

Accounts Payable has the account type of  Liability . A Liability has a normal credit balance. To increase a liability account, credit it.

In the journal entry, the $3,300 purchase of supplies goes on the left (debit) side of the account because Supplies is increasing.

In the Accounts Payable T-Account, the $3,300 deposit goes on the right (credit) side of the account because the liability is increasing.

Transaction 3.     Received cash from fees earned for managing rental property, $18,300.

When a business sells to its customers, it receives cash either “now” or “later”. If cash is being received at the time of the sale, the textbook will specify “received cash” to indicate that. If the textbook says “on account”, it means that cash will come later. When cash will be  received later  the account we use to track what the business will be receiving later is Accounts Receivable. In this case, we received the cash at the time of the sale.

When a business sells something to its customers, the business has Revenue . The name of the revenue account is specific to the business. For example, this business could call its revenue account: Fees Earned, Management Fees, Rental Property Management Fees, Revenue, or a hundred other names. Always refer to the company’s Chart of Accounts for the official name of the revenue account. For this business, our revenue account is called Fees Earned .

Fees Earned has the account type of  Revenue . A Revenue account has a normal credit balance. To increase a revenue account, credit it.

In the journal entry, the $18,300 receipt of cash goes on the left (debit) side of the account because Cash is increasing.

In the Fees Earned account, the $18,300 revenue goes on the right (credit) side of the account because the revenue is increasing.

Note:  Revenue increases equity . A business with revenue is more valuable than a business without revenue.

Transaction 4.     Paid rent on office and equipment for the month, $8,300.

When a business has expenses, it pays out cash either “now” or “later”. If cash is being paid at the time of the purchase, the textbook will specify “paid” to indicate that. If the textbook says “on account”, it means that cash will go out later. When cash will be  paid later  the account we use to track what the business will be paying later is Accounts Payable. In this case, we paid the cash.

When a business purchases something, it is either assigned to an Asset account (purchase of a piece of equipment or a vehicle) or an Expense account (utilities, employee wages, insurance.)

Always refer to the company’s Chart of Accounts for the official name of the expense accounts. In accounting, the name must always match exactly for accuracy and clarity. For example, Supplies and Supplies Expense are two different accounts. Insurance could be Prepaid Insurance or Insurance Expense.

Cash has the account type of  Asset . Assets have a normal debit balance. To increase an asset, debit it. In this case, cash is decreasing so we credit it.

The expense account we will use for the rent we paid is Rent Expense. An  Expense  account has a normal debit balance. To increase an expense account, debit it.

In the journal entry, the $8,300 payment of cash goes on the right (credit) side of the account because Cash is decreasing.

In the Rent Expense account, the $8,300 deposit goes on the left (debit) side of the account because the expense is increasing.

Note:  Expenses decrease equity . A business with expenses is less valuable than a business without expenses. (Not that such business exists!)

Transaction 5.     Paid creditors on account, $2,290.

In Transaction 2, we purchased Supplies on account. We said:

In Transaction 5, we are now going to pay part of this bill. We know it is a partial payment because the original transaction was for $3,300 and we are paying only $2,290. When you pay a bill, your cash decreases and the amount you owe (liability) decreases (you owe less).

Once the transaction is posted to the account, we will have a balance due to the vendor of $1,010 [$3,300 – $2,290 = $1,010] which will be paid later.

Cash has the account type of  Asset . Assets have a normal debit balance. To decrease an asset, credit it.

Accounts Payable has the account type of  Liability . A Liability has a normal credit balance. To decrease a liability account, debit it.

In the journal entry, the $2,290 payment goes on the right (credit) side of the account because Cash is decreasing.

In the Accounts Payable account, the $2,290 payment goes on the left (debit) side of the account because the liability is decreasing.

Transaction 6.     Billed customers for fees earned for managing rental property, $30,800.

When a business sells to its customers, it receives cash either “now” or “later”. If cash is being received at the time of the sale, the textbook will specify “received cash” to indicate that. If the textbook says “on account” or “billed”, it means that cash will come later. When cash will be  received later  the account we use to track what the business will be receiving later is Accounts Receivable.

When a business sells something to its customers, the business has  Revenue . The name of the revenue account is specific to the business. For example, this business could call its revenue account: Fees Earned, Management Fees, Rental Property Management Fees, Revenue, or a hundred other names. Always refer to the company’s Chart of Accounts for the official name of the revenue account. For this business, our revenue account is called Fees Earned.

Accounts Receivable has the account type of  Asset . Assets have a normal debit balance. To increase an asset, debit it.

Fees Earned has the account type of Revenue . A Revenue account has a normal credit balance. To increase a revenue account, credit it.

In the journal entry, the $30,800 record of what is due to the company goes on the left (debit) side of the account because Accounts Receivable is increasing.

In the Fees Earned account, the $30,800 revenue goes on the right (credit) side of the account because the revenue is increasing.

Transaction 7.     Paid automobile expenses for the month, $1,380, and miscellaneous expenses, $1,800.

When a business has expenses, it pays out cash either “now” or “later”. If cash is being paid at the time of the purchase, the textbook will specify “paid” to indicate that. If the textbook says “on account”, it means that cash will go out later. When cash will be  paid later  the account we use to track what the business will be paying later is Accounts Payable. In this case, we paid cash.

When a business purchases something, it is either assigned to an Asset account (purchase of a piece of equipment or a vehicle) or an  Expense  account (utilities, employee wages, insurance.) In this case, we are paying two different expenses: Auto Expense of $1,380 and Miscellaneous Expense of $1,800.

Always refer to the company’s Chart of Accounts for the official name of the expense accounts. In accounting, the name must always match exactly for accuracy and clarity. For example, Supplies and Supplies Expense are two different accounts. “Insurance” could be Prepaid Insurance or Insurance Expense.

Cash has the account type of  Asset . Assets have a normal debit balance. To increase an asset, debit it. In this case, cash is decreasing so we credit it. Because we have two different expense accounts, we need to add together the two amounts to find the total amount of cash being paid out. [$1,380 + $1,800 = $3,180]

The expense account we are using are Auto Expense and Miscellaneous Expense. An Expense account has a normal debit balance. To increase an expense account, debit it. In this case, we debit each expense account for the amount of the expense.

In the journal entry, the $3,180 payment of cash goes on the right (credit) side of the account because Cash is decreasing.

In the Auto Expense account, the $1,380 expense amount goes on the left (debit) side of the account because the expense is increasing. In the Miscellaneous Expense account, the $1,800 expense amount goes on the left (debit) side of the account because the expense is increasing.

Because this journal entry has more than two accounts impacted, it is called a complex journal entry. (Look at you doing a complex journal entry! I’m so proud!)

Note:  Expenses decrease equity . A business with expenses is less valuable than a business without expenses. (Not that such a business exists!)

Transaction 8.     Paid office salaries, $7,300.

When a business has expenses, it pays out cash either “now” or “later”. If cash is being paid at the time of the purchase, the textbook will specify “paid” to indicate that. If the textbook says “on account”, it means that cash will go out later. When cash will be  paid later  the account we use to track what the business will be paying later for payroll is Salaries or Wages Payable. In this case, we paid cash.

When a business purchases something, it is either assigned to an Asset account (purchase of a piece of equipment or a vehicle) or an  Expense  account (utilities, employee wages, insurance.) When we are talking about payroll, payroll is an expense.

The expense account we will use for the salaries we paid is Salaries Expense. An Expense account has a normal debit balance. To increase an expense account, debit it.

In the journal entry, the $7,300 payment of cash goes on the right (credit) side of the account because Cash is decreasing.

In the Salaries Expense account, the $7,300 deposit goes on the left (debit) side of the account because the expense is increasing.

Transaction 9.     Determined that the cost of supplies on hand was $1,250; therefore, the cost of supplies used was $2,050.

This is the trickiest transaction in the group. Different accounting textbooks phrase this transaction in different ways. Here’s what we said about it in the Transaction 2:

“Supplies” is a tricky part of this transaction. Accounting textbooks use two accounts with the word “Supplies”– Supplies (an asset), (sometimes called Supplies Asset), and Supplies Expense. Supplies (the asset) works like an inventory account. You hold the supplies in an inventory until they are used. When supplies are used, they are moved from the asset account into the expense account.

In the original transaction, we recorded the purchase of supplies in the Supplies (asset) account:

During the month, we have gone to the office supply closet and taken out pens, sticky notes, and markers. Right now, our Supplies account says we have $3,300 worth of supplies in the supply closet, but this is no longer accurate.

Our job now is to determine what the balance SHOULD BE in our asset account. We want to make sure we are accurately accounting for what we have (asset) and what we used (expense).

This transaction is telling us that what we have “on hand” in our supply closet is $1,250 worth of supplies. Our Supplies (asset) account says we have $3,300. We need to reduce that number to reflect the actual value. The difference between the two is $2,050.

Where did the $2,050 worth of office supplies go? We used it up. We “expensed” it. When you use up an asset, we record the amount as an expense. We move $2,050 out of our Supplies (asset) account and into our Supplies Expense account.

Supplies (the asset) has the account type of Asset. Assets have a normal debit balance. To increase an asset, debit it. We want to decrease our balance so we credit it.

Supplies Expense has the account type of Expense . An expense has a normal debit balance. To increase an expense account, debit it.

The balance in the Supplies account will now be $1,250 [Debit of $3,300 – Credit of $2,050]

Note: Expenses decrease equity . A business with expenses is less valuable than a business without expenses. (Not that such a business exists!)

Transaction 10. Withdrew cash for personal use, $13,800.

In Transaction 1, we said:

When a business owner opens a business, they are turning personal funds into business funds. The business now owes that investment back to the business owner. To put it differently, the funds represent t he owner’s equity in the business and are recorded in an account called “Owner’s Name, Equity” or “Owner’s Name, Capital”. The funds become a business asset recorded in the company’s books under an account called “Cash”.

Now, our business owner wants to withdraw some cash from the business for personal use. When this happens, the business owner’s equity is decreasing. He has less value in his business. Cash is decreasing, as well.

Cash has the account type of Asset. Assets have a normal debit balance. To increase an asset, debit it. In this case, we are decreasing cash so we credit it.

When Joe opened his business, we increased his equity this way:

Now, we want to decrease his equity. To decrease equity we need to debit it. But, we don’t do that in Joe’s main equity account. We want to separate out what he has put into the business from what he took out of the business for several reasons (for example, taxes).

Rather than use the main equity account, we use an account specifically for tracking withdrawals by the owner. For this business, the account we use is called Joe Smith, Drawing. You may also see the account called Owner Name , Withdrawals or Owner Name , Dividends.

Joe Smith, Drawing is a sub-account of the Joe Smith, Capital account. It’s purpose is to reduce an equity account. An equity account has a normal credit balance. It increases on the credit side. In this case, we want to reduce equity so we debit the account.

The impact of this transaction is a decrease to Joe’s equity [$55,000 – $13,800 = 41,200]. If the transaction had been posted to the Joe Smith, Capital account as a debit, that is what the new balance in the account would have been. We are just using the sub-account to track withdrawals.

Complete Set of Journal Entries for Sample Transactions

The chart below shows the complete set of journal entries discussed in this article:

For a video walkthrough of these journal entries, watch this video:

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Petty Cash Book

What kinds of transactions are suitable with petty cash, imprest system on petty cash, petty cash book example: accounting record for petty cash transaction.

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Set Up Petty Cash

For example, the company has decided to set the petty cash float of $ 1,000 and this cash is withdrawn from bank account on 01 Jan 202X.

Replenishment

Journal Entry:

Internal Control for Petty Cash

The petty cash must keep in a proper locker in order to prevent any thief or miss place which can lead to the loss of company assets. If the amount is significant, the cash should keep in safe and key need to separate to more than one person.

How to Set Up Petty Cash?

The cash needs to transfer or deposit to bank account when the balance more than the float. It will help to ensure that only enough balance keeps in petty cash balance.

The cashier needs to prepare petty cash top up when the amount falls below the minimum balance. The total balance cannot be higher than the float limit.

Petty Cash Book Template

How to use this template.

Please follow the instruction as follows:

Petty Cash Template 2

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Home > Bookkeeping Basics > Journal Entries Basics

Journal Entries Basics

Use of journal entries.

Journal Entries are used to record transactions in the Journal.

There are however entries which do not go through a book of prime entry which are recorded in the Journal using Journal Entries.

• A description of the transaction being recorded.
• The account name and account code being debited and the amount
• The account name and account code being credited and the amount.
• The transaction date
• A reference number to documents supporting the transaction.

The Transaction Date for Journal Entries

The date entered in the journal entry should be the date the transaction occurred, not the date the entry is made. This will mean that the journal entry date agrees with the date on the transaction documentation.

The Account Name for Journal Entries

The account names and account code are selected from your Chart of Accounts .

The Amounts

In double entry bookkeeping for every debit there must be a credit, so when the basic accounting journal entries are complete the total of all the debits must equal the total of all the credits.

Why do we need Journal Entries?

• It provides an ongoing record of typical transactions. This is particular useful when producing monthly management accounts as it ensures transactions are not forgotten.
• It means that there are no unexplained transactions in the general ledger, as the journal entry provides full details and links to supporting documentation.
• It helps eliminate fraud and errors, as full explanations of all transactions are required.

What does a typical Journal Entry look like?

Journal Entries are used for many things, a typical example would be the recording of a monthly accrual for an expense such as rent. The entry would be as follows:

The journal entry involves two accounts with one debit entry and one credit entry and is referred to as a simple journal entry .

Compound Journal Entry

A compound journal entry is one in which the accounting transaction involves more than two accounts and therefore more than one account is debited or credited.

Suppose a business settles an accounts payable account for 2,300 after deducting a settlement discount of 4% (92). The following journal entry would be made

In this journal entry there are three accounts involved, cash, accounts payable, and discount received, and the transaction has one debit entry and two credit entries.

Further examples of compound journals can be seen at our double entry bookkeeping journal examples page.

About the Author

Chartered accountant Michael Brown is the founder and CEO of Double Entry Bookkeeping. He has worked as an accountant and consultant for more than 25 years and has built financial models for all types of industries. He has been the CFO or controller of both small and medium sized companies and has run small businesses of his own. He has been a manager and an auditor with Deloitte, a big 4 accountancy firm, and holds a degree from Loughborough University.

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What are Journal Entries in Accounting?

Download the free template, how to approach journal entries, journal entry examples, how to track journal entries, why do journal entries matter to me and my career in accounting, more resources, journal entries guide.

A guide to understanding Journal Entries

In an accounting career , journal entries are by far one of the most important skills to master. Without proper journal entries, companies’ financial statements would be inaccurate and a complete mess.

An easy way to understand journal entries is to think of Isaac Newton’s third law of motion, which states that for every action, there is an equal and opposite reaction. So, whenever a transaction occurs within a company, there must be at least two accounts affected in opposite ways.

For example, if a company bought a car, its assets would go up by the value of the car. However, there needs to be an additional account that changes (i.e., the equal and opposite reaction). The other account affected is the company’s cash going down because they used the cash to purchase the car.

Finally, just like how the size of the forces on the first object must equal that of the second object, the debits and credits of every journal entry must be equal.

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A journal is the company’s official book in which all transactions are recorded in chronological order. Although many companies use accounting software nowadays to book journal entries, journals were the predominant method of booking entries in the past.

In every journal entry that is recorded, the debits and credits must be equal to ensure that the accounting equation (Assets = Liabilities + Shareholders’ Equity) remains in balance. When doing journal entries, we must always consider four factors:

• Which accounts are affected by the transaction
• For each account, determine if it is increased or decreased
• For each account, determine how much it is changed
• Make sure that the accounting equation stays in balance

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.

To learn more, launch our free accounting courses .

Example 1 – Borrowing money journal entry

ABC Company borrowed $300,000 from the bank

• The accounts affected are cash (asset) and bank loan payable (liability)
• Cash is increasing because the company is gaining 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 this:

DR Cash                      300,000

CR Bank Loan Payable          300,000

Example 2 – Purchasing equipment journal entry

Purchased equipment for $650,000 in cash.

DR Equipment            650,000

CR Cash                      650,000

Example 3 – Purchasing inventory journal entry

Purchased inventory costing $90,000 for $10,000 in cash and the remaining $80,000 on the account.

DR Inventory              90,000

CR Cash                                  10,000

CR Accounts Payable             80,000

Example 4 – Acquiring land journal entry

Purchased land costing $50,000 and buildings costing $400,000. Paid $100,000 in cash and signed a note payable for the balance.

DR Land                     50,000

DR Buildings              400,000

CR Cash                      100,000

CR Note payable         350,000

A significant component of accounting involves financial reporting. Financial reporting is the act of presenting a company’s financial statements to management, investors, the government, and other users to help them make better financial decisions.

To determine the final monetary value of accounts listed on the financial statements on the company’s year-end, multiple journal entries are recorded and tracked in an account called a T-account, which is a visual representation of a general ledger account.

The appropriate debits and credits are listed under the appropriate columns under the T-Accounts to determine the final value to be reported. Click the link below to learn more about T-Accounts.

Although recording journal entries can be very monotonous and repetitive, recording accurate entries at the right time is imperative for companies to show their correct financial status to not only people within the firm but also to external users.

With inaccurate entries, companies may be perceived to be possessing more debt or less debt or as more profitable or less profitable than they actually are. As a result, this could lead companies and investors to make decisions based on false, misleading information, leading to negative ramifications.

Having the skills to record and understand journal entries is essential in any career in accounting, whether you are involved in public practice and are working on a client’s audit file, or you are working in an industry and helping to prepare a company’s financial statements.

In simple terms, the first step to proper financial reporting heavily relies on recording accurate journal entries.

Thank you for reading CFI’s Journal Entries Guide. To that end, we have published many more additional resources you will find helpful:

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Journal Entry Examples (Easy-to-Understand)

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Introduction

Journal entries act as the building blocks of financial accounting, providing a chronological record of all transactions made by a business. They enable companies to keep track of all financial transactions and ensure that the accounts are balanced.

Whether you’re a seasoned accountant or a small business owner acquiring accounting acumen, comprehending the mechanics of journal entries paves the way for coherent, accurate, and insightful financial recording and reporting, thereby contributing to the overall financial health and sustainability of the business.

This article will delve into the essentials of journal entries, discussing their purpose, their components, and how they are crafted, offering easy-to-understand examples along the way.

1. What Is a Journal Entry in Accounting?

The heartbeat of financial accounting is encapsulated in journal entries, ensuring every financial transaction is recorded systematically. A journal entry in accounting refers to the logging of transactions into accounting journal items.

The entry has a left-hand side (debit) and a right-hand side (credit) to maintain the accounting equation balance, which is:

Assets = Liabilities + Equity

These entries provide a comprehensive chronological record, itemizing the date of a transaction, the accounts affected, the amounts, and a brief description.

If a business takes a loan of $5,000 from a bank:

• Debit: Cash $5,000
• Credit: Loans Payable $5,000

2. What Are Debits and Credits?

Debits and Credits are the terminologies that guide the directionality of journal entries, with debits indicating an increase in assets or expenses and a decrease in liabilities or equity. Conversely, credits signify an increase in liabilities or equity and a decrease in assets or expenses. It’s pivotal to remember:

• Increases an asset or expense account.
• Decreases a liability or equity account.
• Increases a liability or equity account.
• Decreases an asset or expense account.

Every journal entry must have at least one debit and one credit entry, ensuring the accounting equation stays balanced.

What Is the Purpose of A Journal Entry?

Journal entries are indispensable to maintaining financial coherence and enabling accurate financial reporting.

The primary purposes include:

• Recording Transactions : Every financial transaction is systematically logged, ensuring no event goes unnoticed.
• Tracking Activity : Journal entries provide a chronological record of all economic events impacting a business.
• Facilitating Audit Trails : They enable auditors to trace any discrepancies or anomalies back to their origin, ensuring financial integrity.
• Preparing Financial Statements : By ensuring accurate and consistent record-keeping, journal entries directly inform the generation of the income statement, balance sheet, and cash flow statement.

What Is Included in a Journal Entry?

An accounting journal entry contains the following components:

• Date of the Transaction : Ensuring chronological order and period accuracy.
• Account Names/Numbers : Clearly identifying which accounts are impacted by the transaction.
• Debit and Credit Amounts : Indicating the financial value of the transaction, maintaining the equilibrium of the accounting equation.
• Description or Narrative : Offering a brief explanation of the transaction for clarity and context.

Consider a business takes out a loan of $10,000. The journal entry would be:

• Date: [Date of Transaction]
• Debit: Cash $10,000
• Credit: Loans Payable $10,000
• Description: To record the borrowing of a $10,000 loan.

The above entry ensures that the increase in the company’s cash (an asset, hence debited) is counterbalanced by recognizing a liability (loan payable, hence credited) of an equal amount, adhering to the accounting equation.

How Do You Write a Journal Entry?

Creating a journal entry, while systematically structured, is a straightforward process.

Here’s a simplified step-by-step guide:

• Identify Transactions: Recognize and authenticate the financial transaction to be recorded.
• Understand Accounts: Determine the accounts affected and whether they will be debited or credited.
• Journalizing: Record the entry in the journal, ensuring adherence to the debit and credit system.

Each entry should consist of:

• The date of the transaction.
• The accounts impacted.
• The amount to be debited and credited.
• A brief descriptive note.

Types of Journal Entries

Opening entries:.

These are the initial entries that establish the opening balances in the various ledger accounts.

Transfer Entries:

Facilitate the movement of amounts from one account to another, ensuring each transaction impacts the financial statements appropriately.

Closing Entries:

Made at the end of the accounting period to transfer the balances from the temporary accounts to the permanent accounts.

Adjusting Entries:

Made before preparing the financial statements, adjusting entries account for items that are not recorded in the accounting system at the period’s end.

Compound Entries:

Involve more than two accounts where there are multiple debits, multiple credits, or both.

Reversing Entries:

Made at the beginning of the new accounting period, reversing entries negate specific adjusting entries made in the previous period.

How Do I Prepare Journal Entries for My Business?

• Organize Transaction Information : Ensure all relevant transaction documents like invoices and receipts are gathered and verified.
• Analyze Transactions : Identify which accounts are affected and determine the amount involved.
• Apply the Accounting Equation : Ensure Assets = Liabilities + Equity after the transaction.
• Apply Debit and Credit Rules : Ascertain which account to debit and which to credit.
• Record the Entry : Input the entry into the accounting journal, providing all pertinent details.
• Review : Periodically review the journal entries to ensure accuracy and consistency in financial recording.

Examples of Common Journals

General Journal: This is the primary journal where all kinds of business transactions are recorded. From purchases to sales, various activities find a place in the general journal, making it a comprehensive record of the financial activities of a business.

Special Journal: Tailored for recording specific types of transactions in a dedicated journal, special journals streamline the recording process by categorizing similar transactions.

Some of the prominent special journals include:

• Sales Journal: Records all credit sales transactions.
• Purchase Journal: Records all credit purchase transactions.
• Cash Receipts Journal: Catalogues all cash inflows.
• Cash Payments Journal: Logs all cash outflows.

By segregating transactions according to their nature and grouping them into designated journals, the special journals facilitate focused and organized record-keeping.

How to Track Journal Entries

Tracking journal entries is crucial to maintain the accuracy and reliability of financial data.

Here are some strategies:

• Utilize Accounting Software : Employ modern accounting software that allows for easy data entry, tracking, and reporting.
• Regular Audits : Schedule periodic internal audits to scrutinize the entries for accuracy and completeness.
• Assign Reference Numbers : Ensure each journal entry has a unique reference number, aiding in quick retrieval and verification.
• Ensure Proper Documentation : Maintain thorough documentation for each transaction to validate the corresponding journal entries.

Examples of Journal Entries

Example 1: purchasing inventory on credit.

• Date: [Date]
• Debit: Inventory $5,000
• Credit: Accounts Payable $5,000
• Description: Recorded inventory purchase on credit.

Example 2: Recording Depreciation

• Debit: Depreciation Expense $1,000
• Credit: Accumulated Depreciation $1,000
• Description: To record monthly depreciation on machinery.

Example 3: Service Revenue Earned and Received in Cash

• Debit: Cash $2,000
• Credit: Service Revenue $2,000
• Description: Cash received for services rendered.

Frequently Asked Questions:FAQs

• How are adjusting journal entries different from regular journal entries?

Adjusting journal entries are made at the end of an accounting period to align the account balances with the accrual accounting. In contrast, regular entries are made as and when transactions occur.

• Why are journal entries important in accounting?

Journal entries provide a chronological record of all financial transactions, ensuring that the impact on the financial statements is accurately reflected, and facilitating compliance and audit trails.

• How do you record depreciation in a journal entry?

Depreciation is recorded by debiting the Depreciation Expense account and crediting the Accumulated Depreciation account, reflecting the reduction in value of an asset over its useful life.

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Understanding and accurately crafting journal entries is pivotal in encapsulating the financial essence of all business activities. By ensuring consistency, reliability, and accuracy in journalizing, a firm safeguards its financial integrity and lays a robust foundation for transparent and insightful financial reporting.

Journal entries stand at the core of financial accounting, ensuring every transaction is accurately chronicled, and the financial position of an entity is transparently depicted. Through systematic recording, tracking, and analysis of journal entries, businesses not only ensure compliance with statutory requirements but also carve a path toward informed strategic decision-making.

Equipped with the knowledge and examples provided, businesses, especially small and burgeoning entities, can navigate through the intricacies of journalizing with augmented confidence and precision, fostering a robust financial management ecosystem.

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What is a journal entry in accounting.

A journal entry is a record of the business transactions in the accounting books of a business. A properly documented journal entry consists of the correct date, amounts to be debited and credited, description of the transaction and a unique reference number.

A journal entry is the first step in the accounting cycle. A journal details all financial transactions of a business and makes a note of the accounts that are affected. Since most businesses use a double-entry accounting system , every financial transaction impact at least two accounts, while one account is debited, another account is credited. This means that a journal entry has equal debit and credit amounts.

What this article covers:

What Is the Purpose of a Journal Entry?

What is included in a journal entry, how do you write a journal entry.

A journal is a record of transactions listed as they occur that shows the specific accounts affected by the transaction. Used in a double-entry accounting system, journal entries require both a debit and a credit to complete each entry. So, when you buy goods, it increases both the inventory as well as the accounts payable accounts.

Journal entries are the foundation for all other financial reports. They provide important information that are used by auditors to analyze how financial transactions impact a business. The journalized entries are then posted to the general ledger .

A journal entry requires the following elements:

• A header which includes the date of the entry
• A reference number or a journal entry number that can be used to index and retrieve the journal when required
• The account number and name. These are recorded in the first column into which the entry is recorded
• The debit amount is entered in the second column
• The credit amount is entered in the third column
• The description of the journal entry in the footer

The basic format of a journal entry is as follows:

The total amount you enter in the debit column equals the total amount entered in the credit column.

There are different types of journal entries that include:

Adjusting Entry

To bring the financial statements in to compliance with the accounting framework such as GAAP, adjusting entries are made at the end of the accounting period . These entries are typically made to record accrued income, accrued expenses , unearned revenue and prepaid expenses.

Compound Entry

When there are more than two lines of entry in a journal, it’s known as compound entry. This is often used to record several transactions at once or enter details of complex transactions such as payroll that involves a number of deductions and tax liabilities, and hence, contains several lines.

Reversing Entry

Made at the beginning of the accounting period, reversing journal entries are made to reverse or cancel entries that were made in the preceding period and are no longer required. Such as wage accrual which is replaced by an actual payroll expenditure.

Manual journal entries and the verification process is often a long and tedious process which exposes businesses to the unnecessary risk of errors and fraud. Since the spreadsheets prepared manually are unable to verify key information such as account numbers, entries might be made incorrectly.

To avoid this many small businesses are adoption accounting software that provide advanced accuracy and control with improved efficiency at every step of the accounting process. The accounting software allows you to create, review and approve journal, along with supporting documentation.

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• Journal Entries

Home › Accounting › Accounting Cycle › Journal Entries

• What is a Journal Entry?

1. Identify Transactions

2. analyze transactions, 3. journalizing transactions, common journal entry questions.

Journal entries  are the first step in the accounting cycle and are used to record all  business transactions  and events in the accounting system. As business events occur throughout the accounting period, journal entries are recorded in the general journal to show how the event changed in the accounting equation. For example, when the company spends cash to purchase a new vehicle, the cash account is decreased or credited and the vehicle account is increased or debited.

How to Make a Journal Entry

Here are the steps to making an accounting journal entry.

There are generally three steps to making a journal entry. First, the business transaction has to be identified. Obviously, if you don’t know a transaction occurred, you can’t record one. Using our vehicle example above, you must identify what transaction took place. In this case, the company purchased a vehicle. This means a new asset must be added to the accounting equation.

After an event is identified to have an economic impact on the accounting equation, the business event must be analyzed to see how the transaction changed the accounting equation. When the company purchased the vehicle, it spent cash and received a vehicle. Both of these accounts are asset accounts, so the overall accounting equation didn’t change. Total assets increased and decreased by the same amount, but an economic transaction still took place because the cash was essentially transferred into a vehicle.

After the business event is identified and analyzed, it can be recorded. Journal entries use debits and credits to record the changes of the accounting equation in the general journal. Traditional journal entry format dictates that debited accounts are listed before credited accounts. Each journal entry is also accompanied by the transaction date, title, and description of the event. Here is an example of how the vehicle purchase would be recorded.

Since there are so many different types of business transactions, accountants usually categorize them and record them in separate journal to help keep track of business events. For instance, cash was used to purchase this vehicle, so this transaction would most likely be recorded in the cash disbursements journal. There are numerous other journals like the sales journal, purchases journal, and accounts receivable journal.

We are following Paul around for the first year as he starts his guitar store called Paul’s Guitar Shop, Inc. Here are the events that take place.

Entry #1 — Paul forms the corporation by purchasing 10,000 shares of $1 par stock.

Entry #2 — Paul finds a nice retail storefront in the local mall and signs a lease for $500 a month.

Entry #3  — PGS takes out a bank loan to renovate the new store location for $100,000 and agrees to pay $1,000 a month. He spends all of the money on improving and updating the store’s fixtures and looks.

Entry #4 — PGS purchases $50,000 worth of inventory to sell to customers on account with its vendors. He agrees to pay $1,000 a month.

Entry #5  — PGS’s first rent payment is due.

Entry #6 — PGS has a grand opening and makes it first sale. It sells a guitar for $500 that cost $100.

Entry #7 — PGS sells another guitar to a customer on account for $300. The cost of this guitar was $100.

Entry #8 — PGS pays electric bill for $200.

Entry #9  — PGS purchases supplies to use around the store.

Entry #10 — Paul is getting so busy that he decides to hire an employee for $500 a week. Pay makes his first payroll payment.

Entry #11 — PGS’s first vendor inventory payment is due of $1,000.

Entry #12 — Paul starts giving guitar lessons and receives $2,000 in lesson income.

Entry #13 — PGS’s first bank loan payment is due.

Entry #14 — PGS has more cash sales of $25,000 with cost of goods of $10,000.

Entry #15 — In lieu of paying himself, Paul decides to declare a $1,000 dividend for the year.

Now that these transactions are recorded in their journals, they must be posted to the T-accounts or  ledger accounts  in the next step of the  accounting cycle .

Here is an additional list of the most common business transactions and the journal entry examples to go with them.

• Depreciation Expense Entry
• Accumulated Depreciation Entry
• Accrued Expense Entry

What is a manual Journal Entry? 

Manual journal entries were used before modern, computerized accounting systems were invented. The entries above would be manually written in a journal throughout the year as business transactions occurred. These entries would then be totaled at the end of the period and transferred to the ledger. Today, accounting systems do this automatically with computer systems.

What is a general journal entry in accounting?

An accounting journal entry is the written record of a business transaction in a double entry accounting system. Every entry contains an equal debit and credit along with the names of the accounts, description of the transaction, and date of the business event.

What is the purpose of a journal and ledger?

The purpose of an accounting journal is record business transactions and keep a record of all the company’s financial events that take place during the year. An accounting ledger, on the other hand, is a listing of all accounts in the accounting system along with their balances.

What is the purpose of a journal entry?

A journal entry records financial transactions that a business engages in throughout the accounting period. These entries are initially used to create ledgers and trial balances. Eventually, they are used to create a full set of financial statements of the company.

Accounting & CPA Exam Expert

Shaun Conrad is a Certified Public Accountant and CPA exam expert with a passion for teaching. After almost a decade of experience in public accounting, he created MyAccountingCourse.com to help people learn accounting & finance, pass the CPA exam, and start their career.

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Have a book report submission deadline and want to know how to write one? We’re here to help! Book reports are vital in academics, helping students sharpen their understanding and critical thinking, while for authors, they offer a deep dive into a text’s composition and stylistic elements.

In this article, we will understand how to write a good book report. It’s a skill that not only helps you get more out of what you’re reading but also lets you create a report that truly reflects how good the book is. Let’s get started!

Ace your assignment with a perfect book report! Learn more

Firstly, let us understand what is a book report.

What is a book report?

A book report is an in-depth analysis, an objective summary of a book’s main content and arguments. Book reports discuss a book’s content, structure, and themes. Far from just a recap of the plot outline , a book report examines the details of a book’s narrative, offering insights into the characters, themes of the story , and the author’s writing style. 

Note: A book report is usually assigned to students from secondary schools to colleges. As per book report format, book reports are typically 500–1000 words long.

Elements of a book report

A proper book report outline consists of the following elements:

• Introduction: Think about how to start a book report with an engaging opening. Mention the book’s title, author, genre, and a brief plot summary. State your main theme or viewpoint.
• Content summary: Give a clear, summary of the plot. Highlight key events and turning points. Avoid spoilers.
• Analysis and perspective: Examine the key characters, their traits, motivations, development, and plot roles. Explore major themes, symbols, and motifs, and their narrative effect. Review the author’s style and perspective, and their impact on the story.
• Conclusion: Summarize your main points. Restate your overall impression of the book and possibly suggest who might enjoy it or what kind of readers would benefit from it.
• Citations and references (if necessary): If you have used external sources or have been influenced by other analyses, make sure to cite these references properly to avoid plagiarism.

By following this book report outline, your book report will be comprehensive, informative, and engaging.

How to write a book report

Before learning how to do a book report, it is important to remember that following a book report format is essential. 

Here’s how to write a book report:

• Read the book carefully: Start by reading the book thoroughly. Take notes on key points, characters, themes, and any passages that stand out.
• Create an Outline: Organize your thoughts and notes into an outline. This will be your roadmap and will help keep your writing focused.
• Write the introduction: Begin with an engaging introduction that provides basic information about the book, including the title, author, and a brief synopsis.
• Develop the body: You can follow your outline or a book report template to write the body of your report. Discuss each element (plot, characters, themes, etc.) in separate paragraphs or sections.
• Conclude your report: Summarize your main points and offer your final thoughts and evaluation of the book.
• Review and revise: Finally, review and proofread your report for clarity, coherence, and correctness. Make sure to correct any grammatical mistakes and ensure your report flows logically.

Taking a look at a few examples of book reports will help you understand how to do a book report easily.  So let’s explore some book report examples next.

Book report examples

Starting with book report examples, let’s look at a book report example on The Diary of a Young Girl by Anne Frank.

Introduction: Diary of a Young Girl by Anne Frank is a powerful and poignant diary that gives an intimate glimpse into the life of a Jewish teenager during the Holocaust.

Summary: The diary chronicles Anne Frank’s life from 1942 to 1944, during which she and her family hid from the Nazis in Amsterdam. The entries detail her daily life in the secret annex, her thoughts, fears, and hopes for a better future.

Analysis and themes: Anne’s diary is a testament to the resilience of the human spirit in the face of unimaginable adversity. Themes of hope, the cruelty of war, the innocence of youth, and the power of writing shine through her words.

Conclusion: Diary of a Young Girl is more than just a diary; it’s a moving narrative that brings to light the horrors of war and the timeless strength of hope and human dignity. Anne Frank’s voice continues to resonate with readers around the world, making this book a must-read for understanding history and humanity.

Now let’s look at a fiction book report example on Percy Jackson and the Lightning Thief by Rick Riordan.

Introduction: Percy Jackson and the Lightning Thief by Rick Riordan is a thrilling fantasy novel that introduces us to a world where Greek gods and mythology come to life in the modern era.

Summary: The story follows Percy Jackson, a young boy who discovers he is the son of Poseidon, the Greek god of the sea. After being accused of stealing Zeus’s lightning bolt, Percy embarks on a dangerous adventure across America to find the real thief and prevent a war among the gods.

Analysis and themes: Riordan’s novel is rich in Greek mythology and cleverly intertwined with modern-day settings and issues. Themes of identity, friendship, and bravery are prominent as Percy navigates the challenges of being a demigod. The book also explores the concept of good vs. evil and the importance of understanding one’s strengths and weaknesses.

Conclusion: Percy Jackson and the Lightning Thief is an engaging and imaginative novel that offers a fresh perspective on Greek mythology. It’s a captivating read for young adults, effectively combining action, humor, and life lessons, making it a standout in the genre of fantasy fiction.

Book report template

You can easily write a book report using our free book report template.

It’s clear that writing a book report is more than a mere academic exercise; it’s an opportunity to delve deeper into the world of literature and gain insights. 

By using the provided template and examples as starting points, you’re well on your way to writing insightful and compelling book reports. Also, to make your book report perfect, we are always here to help you with our expert editing and proofreading services ! 

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Frequently Asked Questions

How long should a book report be, what should a book report include, how to conclude a book report, how to write an introduction for a book report, what is the purpose of a book report.

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Financial transactions are foundational to any business—and so is tracking them. And, whether you create them manually or use software to assist, a journal entry is essential for all a law firm’s transactions.

In the realm of accounting and bookkeeping, journal entries collect key details of business transactions. These accounting entries allow you to maintain accurate financial records and reports, monitor cash flow, comply with regulatory requirements, and more.

But what is a journal entry in accounting, and how are they created?

In the following post, we’ll cover the fundamentals of understanding journal entry accounting—from how to record a journal entry to an overview of common types of journal accounting entries. We’ll also outline how using accounting software can simplify journal entries for your business.

With Clio Accounting you can connect your bank accounts, manage your firm’s expenses, vendors, and payments, reconcile your trust accounts, produce financial reports, and more! 

What is a journal entry?

A journal entry is a record of a financial transaction in an accounting system. It specifies the date, accounts involved, and amounts to be debited and credited, ensuring that debits equal credits. Each entry also includes a brief description of the transaction, maintaining accurate and traceable financial records.

What is a journal entry in accounting?

In accounting, a journal entry is the record of a financial transaction that a business (like your law firm) makes in the law firm’s journal. Journal entries provide specific information about how a transaction impacts accounts and balances.

In a double-entry bookkeeping system , where every financial transaction must have a debit with a corresponding credit in at least two different accounts, a journal entry records the details of debits, credits, and accounts affected.

Once recorded, journal entries are used to update a law firm’s general ledger. 

In general, each journal entry should include the following information about a transaction:

• Transaction date
• The names of the accounts impacted by the transaction (plus account numbers, if applicable)
• Amount debited (DR)
• Amount credited (CR)
• A brief description of the transaction

Journal entries may also include other details (such as a reference number), depending on your business and record-keeping needs.

What are the three rules of a journal entry?

The three rules of a journal entry in accounting are (for the double-entry system): debit the receiver and credit the giver for personal accounts, debit what comes in and credit what goes out for real accounts, and debit expenses and losses while crediting incomes and gains for nominal accounts. These rules ensure accurate and consistent recording of financial transactions in the double-entry accounting system.

Why are journal entries important for a business? 

Journal entries are essentially the first step in the accounting process, which is necessary for providing accurate financial records. 

Ensuring accurate financial records is crucial for a variety of reasons, including:

• Reliable financial reporting
• Empowering informed business decisions
• Compliance with regulatory requirements
• Allowing for properly filing taxes

Put simply, if transactions are not recorded accurately in journal entries (whether you or your bookkeeper do this manually, or you use accounting software to take care of it), then you risk having incomplete or inaccurate financial and business records.

How to record a journal entry 

While the specifics will vary depending on factors like the type and complexity of a transaction and the accounts impacted by it, there is a general process for recording a journal entry in accounting. 

When manually creating a journal entry, you (or your accountant or bookkeeper) will follow these common steps:

Step 1: Identify the transaction

First, you need to determine which transaction you’ll be recording.

Step 2: Identify the accounts

Next, determine which accounts are affected by the transaction.

Step 3: Determine debits and credits

For each account affected by the transaction, identify the exact amounts for which the account was increased or decreased. (We’ll outline more about the difference between debits and credits in journal entry accounting later in this post).

Step 4: Record the journal entry

Once you have all the details, you can record the transaction as a journal entry. As described previously, this includes the transaction date, account names, amount debited, amount credited, a brief description of the transaction, and any other pertinent details.

Let’s look at this standard journal entry example to demonstrate how this could look. If Company ABC purchased $1,000 in office chairs on March 1, that transaction could be recorded as a journal entry like this:

Note: Many modern accounting software options will automate the journal entry process. If you use accounting software at your business, the journal entry may look a bit different, but the details and principles are the same.

Step 5: Review and check

It’s important to review the journal entry to ensure that it is:

• Accurate (i.e., are the accounts and amounts correct?)
• Balanced (i.e., are the debits and credits equal, so that the accounting equation “Assets = Liabilities + Shareholders’ Equity” is balanced?)

Note: If you use accounting software that automatically creates journal entries for certain transactions, you may not see each journal entry or you may have to run a report to view journal entry details for a specific transaction. Be sure to know how your accounting software tracks and makes these details available.

Debits and credits in journal entries

To understand journal entries, it’s important to understand the distinction between debits and credits in accounting (which are different from how we may think of debits and credits in everyday life or banking). 

Put simply, in journal entries for double-entry bookkeeping, we differentiate between debits and credits based on how they impact different types of accounts.

Debits , which are recorded on the left side of an account:

• Increase asset and expense accounts
• Decrease liability, equity, and revenue accounts

Credits , which are recorded on the right side of an account:

• Decrease asset and expense accounts
• Increase liability, equity, and revenue accounts

In accounting terms, we group account types as assets, liabilities, and shareholders’ equity (comprised of revenue, expenses, and capital/equity), referring to the following:

• Assets: Things of tangible value, including cash, funds in bank accounts, accounts receivable, tech hardware (such as computer hardware), furniture, etc. 
• Liabilities: Things that are owing, including bank loans, credit cards, and accounts payable.
• Revenue: Funds received in exchange for goods or services as part of business.
• Expenses: Things related to the cost of doing business, like rent, payroll, supplies, etc.
• Capital/equity: Represents the owner’s financial interest in the business, including investments made by owners and retained earnings.
• General ledger: the central accounting record that tracks all financial transactions of a business, categorizing them into different accounts for reporting and analysis purposes.

Common mistakes to avoid when recording journal entries

While it’s a good idea to have an accounting professional or accounting software assist to help ensure accuracy and timely entries, there are also some common mistakes to watch out for when recording journal entries. 

Avoid mistakes like:

• Inputting incorrect amounts. Double-check that debit and credit amounts are accurate (especially if inputting data manually).
• Unbalanced amounts. When using double-entry accounting, each transaction must balance with equal debits and credits.
• Recording under the wrong accounts. Be sure that transactions get recorded in the correct accounts. For a law firm, for example, if court filing fees are incurred, they should be classified under accounts for client or litigation costs—not office supplies.
• Formatting inconsistencies. Use the same format for things like dates and account naming conventions. Also, debits should always be recorded on the left and credits should always be recorded on the right. Not only does this help your bookkeeper, but it allows you to maintain more accurate records. 
• Lack of order. Journal entries should be recorded in chronological order.

What are the different types of journal entries?

There are many different types of journal entries in accounting, and each has a specific purpose related to recording different transaction types. 

Opening journal entries

Made at the beginning of an accounting period, opening journal entries establish the opening balance for relevant accounts. These types of journal entries typically carry over the ending balance from the previous accounting period or system (which may involve adjusting for changes).

For example, if you run a law firm, the opening journal entries for a new fiscal year would establish the opening balances for all accounts (such as the balances of the firm’s cash account, equipment, accounts payable, and owner’s equity).

Closing journal entries

Closing journal entries serves as a way to mark the end of an accounting period (such as the end of a fiscal year ). This type of journal entry is made to close temporary accounts (for instance, revenue and expense accounts) and transfer their balances to permanent accounts on the balance sheet (such as retained earnings).

Recording closing journal entries thus allows a business to reset its general ledger to start the next period with a new journal.

Standard journal entries

Standard journal entries pertain to standard or routine business transactions. This type of journal entry records things like sales, purchases, and expenses.

For example, a standard journal entry for the payment of $1,200 in bar association fees in cash would show a debit of $1,200 and a credit of $1,200 in cash.

Transfer journal entries

As the name suggests, transfer journal entries record transactions that move an expense or income between accounts within the same organization.

For example, if a law firm transfers $15,000 from a trust account to an operating account, this would be recorded in a transfer journal entry showing:

• Operating account: $15,000 debit 
• Trust account: $15,000 credit

Adjusting journal entries

Adjusting journal entries updates account balances and ensures that financial records are accurate by recording any changes to accounts that are not otherwise accounted for during a specific period. This type of journal entry takes place at the end of an accounting period.

Adjusting journal entries may be made, for example, if you find that your financial records don’t match your revenue and expenses. In this case, you may record transactions like:

• Unearned revenue
• Accrued expenses (i.e. an expense reported in an accounting period, but before it is paid) and accrued revenue (i.e. work that has been performed in an accounting period, but for which the client has not yet been invoiced)
• Expense deferrals (such as when a payment is made in an account period before the period in which the expense is incurred)

You may also need to make adjusting journal entries to correct for errors like a missed or incorrect entry previously made.

Compound journal entries

Compound journal entries record when more than one account is affected by a single transaction (that is, when there is more than one account debited or more than one account credited in a transaction). These types of journal entries include multiple lines, and—while the number of credits and debits do not have to be equal—the total of debits and credits must be equal.

For example, if a business were paying off a $5,000 loan (liability) from multiple sources ($4,000 cash, an asset, and $1,000 in inventory, an asset), then:

• There would be one line for debit ($5,000 notes payable) for the loan amount paid
• There would be two lines for credits: one for $4,000 cash (an asset being used to pay the loan) and one for $1,000 in inventory (an asset being used to pay the loan) 

In this example, while there are multiple lines, the total of debits ($5,000) and credits ($4,000+$1,000 = $5,000) are equal and balanced.

Reversing journal entries

Made at the start of an accounting period, reversing journal entries cancel an adjusting entry that was recorded in the previous period to help simplify the accounting process. Reversing journal entries are often made to account for accrued revenue and expenses. 

For example, if a business made a journal entry for an accrued expense (like accrued wages for work performed, but not yet paid) in the previous accounting period, they might then use a reverse journal entry to allow them to account for the wages payable in the current accounting period.

Best practices for using different types of journal entries 

When it comes to using different types of journal entries, consider the following best practices:

• Stay within your knowledge base. Keeping accurate financial records is crucial. While it’s important to familiarize yourself and understand how different types of journal entries work, if you don’t have accounting experience, you may want to delegate journal entries to accounting professionals or accounting software. 
• Consider the purpose. Because there are many types of journal entries that you can make, it’s important to carefully consider the purpose of each type of entry in order to use them accurately. 
• Be timely. Be sure to record journal accounting entries promptly and accurately. This helps avoid errors and missed entries, while also keeping records up-to-date. The more time that passes between the transaction and recording the journal entry, the less likely you are to note it with accuracy. 
• Use technology to help. Modern accounting software can go a long way towards helping to simplify and streamline the recording of financial transactions. In some cases, it can automate this process almost entirely. If you’re a law firm, you’ll just want to make sure your solution is legal-specific.
• Ensure audit trails. Whether you create journal entries manually or use software, it’s important to maintain audit trails to document the details of your law firm’s journal entries.
• Review regularly. Just because a process works at one time doesn’t mean it’s the best fit forever. Review your journal entry processes periodically to identify potential areas of improvement.

Read more about accounting and bookkeeping best practices for law firms in our article here.

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Proper tracking of journal entries is crucial for accurate financial reporting for any business. 

When it comes to exactly how you track and manage journal entries, there are a few different directions you can take. Ultimately, the best method for your firm will come down to factors like the size and complexity of your law firm’s accounting needs, your budget, and the degree of scalability your law firm may require.

Some common methods and tools for tracking journal entries for small businesses include:

• Ledgers or journals. To record journal entries manually, you can opt for a ledger or journal (for hand-written journal entries), or you can type out and print entries to create physical journals. 
• Spreadsheets. You can also use programs like Excel to track and manage journal entries.
• Accounting software. Many of today’s accounting software options offer automated journal entry creation, with added features like audit trails, reporting, and integrations. While this is certainly the most accurate and efficient option, it’s important for law firms to select software that understands the needs of legal professionals to maintain compliance and relevance. 

Tips for efficient journal entry management

Whichever method you use to record and track journal entries for your business, accuracy, and efficiency should be your primary goals.

With this in mind, consider these tips for effective journal entry management:

• Create a clear, standardized procedure. Regardless of the method you choose, make sure that the process for creating and reviewing journal entries is clear and consistent.
• Go chronological. Ensure that journal entries are logged chronologically. 
• Conduct regular reviews and reconciliations. By reviewing your books regularly, you can help better ensure their accuracy. 
• Utilize templates. One way to help ensure consistency is to use standardized journal entry templates where possible. Accounting software can help with this.
• Document, document, document. Create and maintain clear and detailed records documenting journal entry activities (such as who created each entry and when, and who made any modifications).

Using accounting software for journal entries 

Complete and accurate journal entry accounting is crucial for proper financial recordkeeping and reporting for all businesses, including law firms. Manual journal entry accounting, however, can be tedious and isn’t typically an area of expertise for most lawyers. 

With this in mind, most modern law firms have moved beyond manual accounting entries—turning instead to accounting software to assist. 

Using accounting software for journal entry accounting streamlines and automates many of the manual tasks related to journal entry management. For example, most accounting software can automatically create journal entries when you receive invoices or payments. And, when you do need to create journal entries manually (for things like month-end adjustments or depreciation expenses, for instance), accounting software can simplify the process for you.

By using modern accounting software to track journal entries, law firms can:

• Save time and reduce duplicate and manual data entry
• Reduce human entry errors for more accurate journal entries
• Simplify the review of journal entries
• Streamline other workflows by integrating their accounting software with other systems (Clio, for example, integrates with a variety of accounting tools )

Considering adopting software to help simplify journal accounting entries? There are a number of options to choose from, such as:

Clio Accounting

Clio Accounting is built for lawyers, not just accountants–and works alongside Clio Manage to reduce manual entries and errors. It’s intentionally designed to reduce the intimidation factor that comes with lawyers managing their firm’s accounting and sets legal accountants up for success by expediting financial workflows and accelerating financial tasks to ensure smooth accounting operations for your firm. Clio Accounting allows law firms to easily:

• Manage and track finances in one place
• Eliminate manual data entry and the risk of error
• Get a real-time view of the money you’re owed
• Auto-sync financial information across Clio
• Automatically match transactions from your bank account to your books
• Reconcile trust and operating accounts
• Access reconciliation and ledger reports
• Generate financial reports with ease

Book your demo today to see how Clio Accounting can manage your bookkeeping and accounting from the same place you manage everything else for your firm.

QuickBooks Online

QuickBooks Online is a popular accounting software solution for small businesses. The software automatically records most business transactions (such as invoice payments, expenses, and inventory purchases) to your general ledger accounts, without you having to create a manual journal entry for each transaction. 

QuickBooks Online integrates with Clio , which means your law firm can save even more time by using the software together. The integration lets you automatically sync Clio your contacts, bills, payments, trust, and operating transactions to your QuickBooks Online ledgers.

Xero , which also integrates with Clio for streamlined workflows, creates journal entries directly into your general ledger for transactions like payments on invoices and bills, expense claims, and more. To easily view the entries made in your general ledger, you can run a Journal Report in Xero.

Ultimately, choosing accounting software for your law firm is an important decision for any law firm. The ideal option for you depends on your firm’s specific needs. Our guide to the best legal accounting software for lawyers can help. 

You can also consider the following features when choosing accounting software for journal entries:

• Reporting. Does the software provide audit trail and reporting features? It’s crucial that you’re able to track journal entries, generate financial statements, and meet any applicable regulatory requirements for legal accounting.
• Customization. If needed, can the software tailor journal entry templates (for example, with custom fields) to ensure journal entry records are as accurate and useful as possible for your firm.
• Integrations. As previously mentioned, accounting software that can integrate with other commonly used tools, like legal practice management software for law firms, can further streamline workflows and improve efficiency. 
• Support. Does the software offer customer support options if you have questions or need help?
• Security. As with any technology you consider for your law firm, it’s important to ensure that accounting software tools maintain robust security protocols to ensure data stays secure and compliant.

Final thoughts on journal entries in accounting

Maintaining accurate financial records is crucial to any law firm. Journal entries are a key first step in the accounting process. As such, it’s important for legal professionals to understand the fundamentals of how accounting entries work.

With that said, that doesn’t mean that you have to—or should, necessarily—be writing out your law firm’s journal entries by hand. Accounting software can help you (or your accounting team) to more easily, efficiently, and accurately record, track, and manage journal entries. 

If you’re seeking a unified solution for case management and legal accounting, Clio could be the perfect fit. With Clio Manage handling your cases and Clio Accounting managing your financials, you can streamline operations and minimize manual entry errors–enhancing your firm’s performance visibility from intake to payment. Discover the power of Clio’s tools and book your personalized demo today .

Note: The information in this article applies only to U.S. practices. This post is provided for informational purposes only. It does not constitute legal, business, or tax advice.

We published this blog post in March 2024. Last updated: July 30, 2024 .

Categorized in: Accounting

Struggling to manage your firm’s finances? Learn essential legal accounting tips and tricks that improve your firm’s financial health—while staying compliant.

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Booktopia to begin trading again after being bought by online electronics store digiDirect

Topic: Book Publishing Industry

Booktopia was a champion of Australian authors before its sudden collapse last month. ( ABC News: Emilia Terzon )

Booktopia has been sold to online electronics store digiDirect after going into administration

Administrator McGrathNicol said the deal enabled the immediate resumption of trading for the business.

What's next?

Administrators are now preparing to convene a second creditors meeting.

The administrators of online book retailer Booktopia have confirmed they have secured a buyer for the troubled business.

The Australian company appointed administrators in July, after building up deep debts totalling an estimated $60 million.

The vast majority was owed to publishers who had been supplying it with stock, while $15 million was owed to customers with orders and gift vouchers.

McGrathNicol said it had organised the sale of Booktopia on Friday to online electronics store digiDirect, which it described as "a leading Australian-owned omnichannel consumer electronics retailer".

"Booktopia has been a key part of Australia's publishing industry for 20 years, and transitioning the business to such a well-known Australian retailer is a great outcome for all stakeholders," Keith Crawford, a partner and administrator at McGrathNicol, said.

The administrator said the deal would enable the business to immediately resume trading, with the new buyers confirming a formal relaunch was set for late August once operational processes resumed.

The digiDirect acquisition included the Angus & Robertson and Co-Op Bookshop brands and about $14 million in inventory.

Shant Kradjian, the founder and owner of digiDirect, said there were significant opportunities to revitalise Booktopia's business and introduce systems and processes.

"There are clear opportunities for shared expertise and efficiencies that will eventually create a better experience for Booktopia and digiDirect customers, however that is a conversation for down the road," he said.

However, the ABC understands publishers and customers are unlikely to see anything from the sale.

DigiDirect will retain Booktopia employees

The tender was managed by McGrathNicol's deals team and supported by Booktopia's secured creditor, Moneytech, which provided funding to the administrators to preserve the business pending the sale process.

As it was finalised, digiDirect confirmed to McGrathNicol that it intended to hire more than 100 employees, with former Booktopia staff encouraged to rejoin the group to "return it to its past glories before growing from there".

Orders being fulfilled in Booktopia warehouse. ( Supplied: Booktopia )

"We are incredibly pleased to have completed the sale of the Booktopia business to the owner of digiDirect," Mr Crawford said.

"The transaction will result in the retention of all remaining employees, the recruitment of some 100 additional employees and continuity of supply for Booktopia's trade creditors."

Mr Kradjian was among several high-profile bidders, which were rumoured to include Kogan.com, Woolworths, Dymocks and QBD Books.

The digiDirect founder said he had been looking to expand into "new retail verticals" when Booktopia came up for sale.

"I'm excited about this acquisition and glad it could be kept in Australian hands," he said.

What happens to previous book orders?

When Booktopia went into administration, there were about 150,000 orders worth about $12 million that went unfulfilled, many of them pre-ordered books that had not yet been delivered to the company.

An estimated $3 million was also owed to customers with gift cards.

The administrators said digiDirect was offering "special arrangements" to customers with unredeemed gift cards.

However, it is understood the final sale price was nowhere near the $60 million Booktopia owed to creditors and the deal does not include the book retailer's debts being paid off.

McGrathNicol said the sale price "will not be sufficient to provide for a return to shareholders".

This means only secured creditors like banks and Booktopia's employees are likely to see cash from the sale.

After the retailer's collapse, some customers who were owed books from the company managed to get refunds from their credit providers, such as PayPal, while publishers might have had their debts covered by credit insurance.

One prominent publisher told the ABC they welcomed Booktopia's sale to digiDirect because it had online sales experience and cashflow that would allow sales to continue for publishers.

Booktopia's main competitor was American technology giant Amazon, a sprawling online marketplace that has become the largest online retailer in the world.

Industry players say the gap in the online sales market left by Booktopia's collapse has seen customers migrate to Amazon as well as other players such as The Nile.

Booktopia was founded in 2004 by Steve Traurig and brothers Tony and Simon Nash.

It celebrated its 20th year in business in February, but since its debut on the ASX in December 2020 it lost more than 98 per cent of its value and last traded at $0.05.

Before it went into voluntary administration, the book retailer had been grappling with profit losses, a fine from the consumer watchdog for breaching consumer law with deceptive marketing tactics, and a revolving door of senior executives.

Booktopia's chief financial officer Fiona Levens resigned in May and chief executive David Nenke followed in June.

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Israel’s Hunt for the Elusive Leader of Hamas

Yahya Sinwar’s ability to evade capture or death has denied Israel a military success in a war that began after he planned the Oct. 7 attacks.

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By Mark Mazzetti Ronen Bergman Julian E. Barnes and Adam Goldman

Mark Mazzetti and Julian Barnes reported from Washington. Ronen Bergman and Adam Goldman reported from Tel Aviv and Rafah.

In January, Israeli and American officials thought they had caught a break in the hunt for one of the world’s most wanted men.

Israeli commandos raided an elaborate tunnel complex in the southern Gaza Strip on Jan. 31 based on intelligence that Yahya Sinwar, the Hamas leader, was hiding there, according to American and Israeli officials.

He had been, it turned out. But Mr. Sinwar had left the bunker beneath the city of Khan Younis just days earlier, leaving behind documents and stacks of Israeli shekels totaling about $1 million. The hunt went on, with a dearth of hard evidence on his whereabouts.

Since the deadly Oct. 7 attacks in Israel that he planned and directed, Mr. Sinwar has been something of a ghost: never appearing in public, rarely releasing messages for his followers and giving up few clues about where he might be.

He is by far Hamas’s most important figure, and his success in evading capture or death has denied Israel the ability to make a foundational claim: that it has won the war and eradicated Hamas in a conflict that has decimated the group’s ranks but also destroyed the Gaza Strip and killed tens of thousands of civilians.

American and Israeli officials said Mr. Sinwar abandoned electronic communications long ago, and he has so far avoided a sophisticated intelligence dragnet. He is believed to stay in touch with the organization he leads through a network of human couriers. How that system works remains a mystery.

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