Journal entry in tally What is journal entry? Why it is used?

After a long time I am back, I Know I have just provided some basic ideas on tally software in this blog, but still getting a lot of questions and requests to move ahead, and to provide advanced tutorials on tally. So decided to blog further .Today we will start with a journal entry in tally In general or in the manual accounting journal is a book where transactions are recorded initially. Transactions are recorded in the journal book then posted in to ledger, these books are called the books of accounts. But in tally we use this term differently. It is a voucher type like (Payment (F5), Receipt (F6), Sales (F8) is the examples) which is used to record special transaction which cannot be recorded using Payment ,receipt, contra, sales, purchase vouchers. Some of the examples of such transactions are

Adjusting journal entries: the use of adjusting entry is to get accurate financial result of a company, for example telephone bill of January 2014 will be paid on February 2014, but the expense should be recorded in January so as to get an accurate financial report. To do this we use a journal entry at the end of the January by debiting telephone expense and crediting expense payable ledger. Transfer journal entries:- Transfer entries are used to transfer funds from one account to another or one department to another. Simple example to understand this is , ABC Ltd has two accounts in your books of accounts as ABC Ltd ( Debtor) hold a debit balance of Rs 1000 and ABC Ltd ( Creditor) hold a credit balance of Rs 1000. To transfer funds from ABC Ltd ( Creditor) to ABC Ltd ( Debtor) and to close both accounts pass a journal entry by debiting ABC Ltd ( Creditor ) and crediting ABC Ltd ( Debtor) 1000.00 1000.00

ABC Ltd ( Creditor) Dr To; ABC Ltd ( Debtor)

Correcting entries: There may be situations where accounts are wrongly credited or debited by accountants, In such case to correct those entries we use two methods one is to reverse the first entry and making correct entries, or to making a single entry and to transfer from wrong account to the correct account. To get a clear picture click here Purchase and sale of fixed Asset on account: In tally we use journal vouchers are used to record the purchase or sale of fixed asset on account (credit basis), I have seen many are confused about the voucher type used to record fixed asset purchase. Use journal voucher instead purchase a voucher to record fixed asset purchase or sale on credit basis for example purchase of computer from Computer solutions on credit basis use this journal entry.

Computer& Peripherals ..Dr To ; Computer solutions

25000.00 25000.00

These are uses of journal voucher in tally, if anything missed out let me know through comments. How to enter journal in tally Now lets learn to enter journal in tally, journals are entered through journal vouchers the shortcut key for journal voucher is F7 To access journal voucher Gateway of Tally>>Accounting Vouchers Then press F7 or click on the Journal button provided on the right hand side

You will have a screen like below image

Now lets consider an example, Computer purchased from Computer solutions for Rs 25000.00 The journal entry for the above transaction is Computer & Peripherals Dr To; Computer Solutions 25000.00 25000.00

Create both the ledger if not existing in your company and enter as follows

Press enter key and save the screen .that is it.

Correction journal entries (Further understanding on journal voucher)

Lets do another example of correcting an entry A computer purchased from computer solutions wrongly entered in system solutions account as per bill no 1523 for Rs 25000.00 The entry you wrongly made was Computer & Peripherals Dr To System Solutions (Being computer purchased as per bill no 1523) 25000.00 25000.00

The credit should be computer solutions instead system solutions, to correct this we can follow two methods Method 1 Reverse the wrong entry and make correct entries The reverse journal entry is System Solutions Dr To; Computer & Peripherals (to cancel the jv no 1 as the it was a wrong entry) 25000.00 25000.00

The effect of the above journal is the cancellation of first entry, now what we do is make a fresh correct entry. Computer & Peripherals Dr To Computer Solutions 25000.00 25000.00

(Being computer purchased from computer solutions as per bill no 1523)

Method 2 Just make a single journal entry to transfer balance from system solutions to computer solutions System solutions-Dr To Computer Solutions 25000.00 25000.00

(Being computer purchased from computer solutions wrongly entered in system solution account transferred to computer solutions account as per bill no 1523)

That all for now about journal , feel free to discuss on the comment form below and share it with your friends.