Journaldrill

Journal entries, one page per transaction

The journal entry for every transaction people search for, from owner investment to bonds and leases, with the debit and credit first, a worked example with amounts, the effect on the statements, the mistakes that unbalance the books, and the Journaldrill exercises that practice it.

40 entries, each with the direct answer, syntax, worked examples, the mistakes people make and the drills that practice it. Updated November 2026.

Basics

  • Debits and creditsDebits and credits in plain English: the rule for assets, liabilities, equity, revenue and expenses, the DEALER memory aid and worked entries.
  • Journal entry formatThe standard journal entry format: date, debit accounts first, credits indented, amounts in two columns and a short explanation. Simple and compound examples.
  • Owner investmentHow to record an owner investing cash or equipment: debit the asset received, credit Owner's Capital or Common Stock. Examples and common mistakes.
  • Cash saleHow to record a cash sale: debit Cash, credit Sales or Service Revenue. For merchandise under a perpetual system add Dr Cost of Goods Sold, Cr Inventory.
  • Sale on accountHow to record a sale on credit: debit Accounts Receivable, credit Sales or Service Revenue, plus the cost of goods sold entry and the later collection.
  • Purchase on accountHow to record buying on credit: debit the asset or expense received and credit Accounts Payable. Examples for supplies, equipment and merchandise.
  • Paying accounts payableHow to record paying a supplier: debit Accounts Payable, credit Cash. Covers partial payments, paying within a discount period and the expense mistake.
  • Collecting a receivableHow to record a customer paying an invoice: debit Cash, credit Accounts Receivable. Partial payments, early-payment discounts and why there is no revenue.
  • Owner withdrawal and dividendsHow to record an owner drawing cash (Dr Owner's Drawing, Cr Cash) and a corporation declaring and paying dividends (Dr Dividends, Cr Dividends Payable).
  • Trial balanceA trial balance lists every ledger balance and checks that debits equal credits. Steps to prepare it, a worked example and how to find the error.

Adjusting entries

  • Prepaid expense adjustmentHow to record a prepayment as an asset and expense the part used each period: Dr Insurance Expense, Cr Prepaid Insurance. Prepaid rent and supplies too.
  • Unearned revenueHow to record a customer prepayment as a liability (Dr Cash, Cr Unearned Revenue) and recognize revenue as earned (Dr Unearned Revenue, Cr Revenue).
  • Accrued wagesHow to record wages employees earned by period end but are paid later: Dr Wages Expense, Cr Wages Payable. With the payday entry and reversing entry.
  • Accrued interestHow to accrue interest on a note at period end: Dr Interest Expense, Cr Interest Payable (borrower) or Dr Interest Receivable, Cr Interest Revenue (lender).
  • Accrued revenueHow to record revenue earned by period end but not yet billed or collected: Dr Accounts Receivable, Cr Service Revenue. With the later collection entry.
  • Depreciation entryHow to record depreciation: Dr Depreciation Expense, Cr Accumulated Depreciation. Straight-line formula, monthly and annual examples and book value.
  • Closing entriesHow to close the books: close revenues and expenses to Income Summary, close Income Summary to Retained Earnings, then close Dividends. Worked example.

Inventory and sales

  • Inventory purchase (perpetual)How to record merchandise bought for resale under a perpetual system: Dr Inventory, Cr Accounts Payable, plus freight-in, purchase returns and periodic.
  • Cost of goods soldHow to record cost of goods sold: Dr Cost of Goods Sold, Cr Inventory at each sale under a perpetual system, or compute it at year end under periodic.
  • Sales returns and allowancesHow to record a customer return: Dr Sales Returns and Allowances, Cr Accounts Receivable or Cash, and Dr Inventory, Cr Cost of Goods Sold when restocked.
  • Purchase discountsHow to record paying a supplier within the discount period: Dr Accounts Payable, Cr Cash and Cr Inventory (or Purchase Discounts). Gross and net methods.
  • Inventory write-downHow to write inventory down when net realizable value falls below cost: Dr Cost of Goods Sold or Loss on Write-Down, Cr Inventory. Shrinkage included.

Receivables and payables

  • Bad debt expenseHow to estimate and record bad debt expense: Dr Bad Debt Expense, Cr Allowance for Doubtful Accounts. Percent of credit sales versus aging of receivables.
  • Allowance methodThe allowance method explained: estimate uncollectibles, record the allowance, write off specific accounts against it and reinstate recoveries.
  • Writing off a receivableHow to write off an uncollectible account: Dr Allowance for Doubtful Accounts, Cr Accounts Receivable (allowance method) or Dr Bad Debt Expense (direct).
  • Notes payableHow to record a promissory note: Dr Cash, Cr Notes Payable when borrowing; Dr Interest Expense, Cr Interest Payable at period end; repayment at maturity.
  • Notes receivableHow to record a promissory note from a customer: Dr Notes Receivable, Cr Accounts Receivable; accrue interest income; collect at maturity; dishonored notes.
  • Credit card salesHow to record a sale paid by card: Dr Cash for the net deposit, Dr Credit Card Expense for the fee, Cr Sales Revenue for the full price. Receivable variant.
  • Petty cashHow to account for a petty cash fund: establish it (Dr Petty Cash, Cr Cash), record expenses only when replenishing, and handle a shortage or overage.

Payroll and equity

  • Payroll entryHow to record payroll: Dr Wages Expense for gross pay, Cr the withholding liabilities (income tax, Social Security, Medicare) and Cr Cash for net pay.
  • Employer payroll taxesHow to record the employer's payroll taxes: Dr Payroll Tax Expense, Cr FICA Social Security, FICA Medicare, FUTA and SUTA Payable. Rates and wage bases.
  • Sale of equipment (gain or loss)How to record selling a fixed asset: remove cost and accumulated depreciation, record the cash and book the gain or loss versus book value. Three examples.
  • Issuing stockHow to record a stock issue: Dr Cash, Cr Common Stock at par and Cr Paid-in Capital in Excess of Par. No-par shares, preferred stock and stock for assets.
  • Treasury stockHow to record share buybacks under the cost method: Dr Treasury Stock, Cr Cash. Reissuing above cost credits Paid-in Capital from Treasury Stock.
  • Cash dividendHow to record a cash dividend: Dr Dividends, Cr Dividends Payable on declaration; Dr Dividends Payable, Cr Cash on payment; nothing on the record date.
  • Stock dividendHow to record a stock dividend: small (under 20 to 25%) at market value, large at par, using Common Stock Dividend Distributable. Compared with a split.
  • Retained earningsWhat retained earnings are, how net income and dividends change them, the closing entries that post to the account, the formula and what a deficit means.

Long-term debt and leases

  • Bonds issued at par, discount or premiumHow to record a bond issue: Dr Cash, Cr Bonds Payable at face, with Discount on Bonds Payable (debit) or Premium on Bonds Payable (credit) for the difference.
  • Bond interest and amortizationHow to record each bond interest payment and amortize the discount or premium: Dr Interest Expense, Cr Cash, with Discount credited or Premium debited.
  • Finance leaseHow a lessee records a finance lease: Dr Right-of-Use Asset, Cr Lease Liability at the present value of payments; payments split into interest and principal.

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