Common Journal Entries
A searchable quick-reference library of the most common bookkeeping entries. Each example shows the business event, the entry, and why those accounts are used.
Owner contributes cash
EquityBusiness Event
The owner puts personal money into the business checking account.
Example Entry
| Account | Debit | Credit |
|---|---|---|
| Checking | $10,000 | |
| Owner Contribution | $10,000 |
Why
Cash increases (an asset, so a debit). The owner's stake in the business increases (equity, so a credit). This is not revenue.
Watch Out For
Do not credit Service Revenue. The owner is investing in the business, not buying something.
Cash sale
Customers & RevenueBusiness Event
The business completes work for a customer and receives payment immediately.
Example Entry
| Account | Debit | Credit |
|---|---|---|
| Checking | $500 | |
| Service Revenue | $500 |
Why
Cash increases and revenue is earned at the same time.
Sale on credit
Customers & RevenueBusiness Event
The business completes work and sends an invoice. The customer will pay later.
Example Entry
| Account | Debit | Credit |
|---|---|---|
| Accounts Receivable | $2,000 | |
| Service Revenue | $2,000 |
Why
Revenue is earned when the work is done, not when cash is received. The amount owed is tracked in Accounts Receivable.
Customer pays invoice
Customers & RevenueBusiness Event
A customer pays an invoice that was already sent.
Example Entry
| Account | Debit | Credit |
|---|---|---|
| Checking | $2,000 | |
| Accounts Receivable | $2,000 |
Why
Cash increases and the receivable decreases. Revenue was already recorded when the invoice was sent.
Watch Out For
Do not credit Revenue again. That would double-count the sale.
Customer deposit received before work is completed
Customers & RevenueBusiness Event
A customer pays in advance for work that has not been done yet.
Example Entry
| Account | Debit | Credit |
|---|---|---|
| Checking | $1,500 | |
| Unearned Revenue | $1,500 |
Why
Cash increases, but revenue has not been earned yet. The deposit is a liability — the business owes the work.
Watch Out For
Do not credit Revenue. The work has not been done yet.
Expense paid immediately
Vendors & ExpensesBusiness Event
The business pays for office supplies with a debit card.
Example Entry
| Account | Debit | Credit |
|---|---|---|
| Office Supplies Expense | $175 | |
| Checking | $175 |
Why
The expense is recorded and cash decreases at the same time.
Vendor bill received
Vendors & ExpensesBusiness Event
The business receives a bill for software services. It will be paid later.
Example Entry
| Account | Debit | Credit |
|---|---|---|
| Software Expense | $450 | |
| Accounts Payable | $450 |
Why
The expense is recorded when the bill is received. The amount owed is tracked in Accounts Payable.
Vendor bill paid
Vendors & ExpensesBusiness Event
The business pays a vendor bill that was already entered.
Example Entry
| Account | Debit | Credit |
|---|---|---|
| Accounts Payable | $450 | |
| Checking | $450 |
Why
The liability decreases and cash decreases. The expense was already recorded when the bill was entered.
Watch Out For
Do not debit the expense again. That would double-count the cost.
Business credit-card purchase
Credit CardsBusiness Event
The business buys office supplies using a credit card.
Example Entry
| Account | Debit | Credit |
|---|---|---|
| Office Supplies Expense | $240 | |
| Business Credit Card | $240 |
Why
The expense is recorded when the purchase happens. The credit card balance increases (a liability).
Credit-card payment
Credit CardsBusiness Event
The business pays the credit card balance from checking.
Example Entry
| Account | Debit | Credit |
|---|---|---|
| Business Credit Card | $500 | |
| Checking | $500 |
Why
The credit card liability decreases and cash decreases. The expenses were already recorded when the card was used.
Watch Out For
Do not record the payment as another expense if the original credit-card purchases were already recorded as expenses or assets.
Bank loan received
LoansBusiness Event
The business receives loan proceeds into its checking account.
Example Entry
| Account | Debit | Credit |
|---|---|---|
| Checking | $20,000 | |
| Loan Payable | $20,000 |
Why
Cash increases and the business owes the money back. This is not revenue.
Watch Out For
Do not credit Revenue. Borrowed money is not income.
Loan payment with principal and interest
LoansBusiness Event
The business makes a monthly loan payment of $500, of which $420 is principal and $80 is interest.
Example Entry
| Account | Debit | Credit |
|---|---|---|
| Loan Payable | $420 | |
| Interest Expense | $80 | |
| Checking | $500 |
Why
The principal reduces the loan liability. The interest is an expense. The total cash out is $500.
Watch Out For
Do not record the entire $500 as an expense. Only the interest portion is an expense.
Owner draw / distribution
EquityBusiness Event
The owner takes money out of the business for personal use.
Example Entry
| Account | Debit | Credit |
|---|---|---|
| Owner Draw | $1,000 | |
| Checking | $1,000 |
Why
Cash decreases and the owner's equity decreases. This is not a business expense.
Watch Out For
Do not debit an expense account. Owner draws are not deductible business expenses.
Prepaid insurance purchase
Adjusting EntriesBusiness Event
The business pays $1,200 for 12 months of insurance in advance.
Example Entry
| Account | Debit | Credit |
|---|---|---|
| Prepaid Insurance | $1,200 | |
| Checking | $1,200 |
Why
The payment creates an asset (prepaid insurance), not an immediate expense. The cost will be recognized over time.
Monthly prepaid insurance adjustment
Adjusting EntriesBusiness Event
One month of the prepaid insurance has been used up ($1,200 ÷ 12 = $100).
Example Entry
| Account | Debit | Credit |
|---|---|---|
| Insurance Expense | $100 | |
| Prepaid Insurance | $100 |
Why
One month of the asset has been used. That portion becomes an expense and the prepaid asset decreases.
Accrued wages
Adjusting EntriesBusiness Event
Employees have earned $800 in wages that will not be paid until next month.
Example Entry
| Account | Debit | Credit |
|---|---|---|
| Wage Expense | $800 | |
| Accrued Wages Payable | $800 |
Why
The wages belong in this period even though they have not been paid. The liability records what is owed.
Accrued revenue
Adjusting EntriesBusiness Event
The business has completed $600 of work that has not been invoiced yet.
Example Entry
| Account | Debit | Credit |
|---|---|---|
| Accounts Receivable | $600 | |
| Service Revenue | $600 |
Why
Revenue is earned when the work is done, not when the invoice is sent. The receivable records what is owed.
Deferred revenue recognized
Adjusting EntriesBusiness Event
Work has been completed on a customer deposit that was previously recorded as unearned revenue.
Example Entry
| Account | Debit | Credit |
|---|---|---|
| Unearned Revenue | $1,500 | |
| Service Revenue | $1,500 |
Why
The work is now done, so the deposit is no longer a liability. It becomes revenue.
Depreciation
Adjusting EntriesBusiness Event
Monthly depreciation on equipment is $200.
Example Entry
| Account | Debit | Credit |
|---|---|---|
| Depreciation Expense | $200 | |
| Accumulated Depreciation | $200 |
Why
Depreciation spreads the cost of a fixed asset over its useful life. The expense appears on the P&L; the accumulated total reduces book value on the Balance Sheet.
Watch Out For
Do not credit the Equipment account directly. Use Accumulated Depreciation so the original cost stays visible.
Inventory purchase
InventoryBusiness Event
The business buys 10 units of product at $40 each.
Example Entry
| Account | Debit | Credit |
|---|---|---|
| Inventory | $400 | |
| Checking | $400 |
Why
Inventory is an asset. The cost stays on the Balance Sheet until the product is sold.
Watch Out For
Do not debit Cost of Goods Sold at purchase. COGS is recorded when the inventory is sold.
Inventory sale — revenue side
InventoryBusiness Event
The business sells 3 units at $75 each for cash.
Example Entry
| Account | Debit | Credit |
|---|---|---|
| Checking | $225 | |
| Product Revenue | $225 |
Why
Cash is received and revenue is earned from selling the product.
Inventory sale — Cost of Goods Sold side
InventoryBusiness Event
The cost of the 3 units sold (3 × $40 = $120) must be recognized.
Example Entry
| Account | Debit | Credit |
|---|---|---|
| Cost of Goods Sold | $120 | |
| Inventory | $120 |
Why
When inventory is sold, its cost moves from the Balance Sheet (Inventory) to the P&L (COGS). This is the second half of the sale.
Sales tax collected
Sales TaxBusiness Event
A customer buys $1,000 of taxable goods. Sales tax is 8%.
Example Entry
| Account | Debit | Credit |
|---|---|---|
| Checking | $1,080 | |
| Product Revenue | $1,000 | |
| Sales Tax Payable | $80 |
Why
The business receives $1,080, but only $1,000 is revenue. The $80 is tax collected on behalf of the government.
Sales tax remitted
Sales TaxBusiness Event
The business pays the $80 of collected sales tax to the tax agency.
Example Entry
| Account | Debit | Credit |
|---|---|---|
| Sales Tax Payable | $80 | |
| Checking | $80 |
Why
The liability is paid off. This is not a new expense — the tax was already collected from the customer.
Watch Out For
Do not debit an expense. Paying sales tax is not a business expense.
Payroll summary entry
PayrollBusiness Event
Gross wages are $5,000. Employee taxes withheld are $1,000. Net pay is $4,000. Employer taxes are $450.
Example Entry
| Account | Debit | Credit |
|---|---|---|
| Wage Expense | $5,000 | |
| Employer Payroll Tax Expense | $450 | |
| Employee Withholding Liability | $1,000 | |
| Employer Tax Liability | $450 | |
| Checking | $4,000 |
Why
Wage expense is the gross amount, not the net pay. Employer taxes are a separate expense. The withholdings and employer taxes are liabilities until paid.
Watch Out For
Do not record only the $4,000 net pay as wage expense. The full $5,000 gross is the wage cost.
Payroll liability payment
PayrollBusiness Event
The business pays $1,450 of payroll tax liabilities to the tax agency.
Example Entry
| Account | Debit | Credit |
|---|---|---|
| Employee Withholding Liability | $1,000 | |
| Employer Tax Liability | $450 | |
| Checking | $1,450 |
Why
The liabilities are paid off. This is not another payroll expense — the expense was already recorded.
Watch Out For
Do not debit Payroll Expense. The expense was already recorded in the payroll entry.
Bank fee
BankingBusiness Event
The bank charges a $25 monthly fee.
Example Entry
| Account | Debit | Credit |
|---|---|---|
| Bank Fee Expense | $25 | |
| Checking | $25 |
Why
The fee is an expense and cash decreases.
Interest income
BankingBusiness Event
The bank credits $12 of interest to the checking account.
Example Entry
| Account | Debit | Credit |
|---|---|---|
| Checking | $12 | |
| Interest Income | $12 |
Why
Cash increases and the interest is income.