How to record transactions in the General Journal

Books of Prime Entry

What you need

• Source documents for the transaction, such as invoices, internal memos, or opening balances carried from last year's Statement of Financial Position (Balance Sheet).
• An understanding of the double-entry principle: every transaction has debit and credit entries of equal total.
• A list of account names following the KSSM syllabus and the related ledger folio numbers.
• The General Journal format with columns for Date, Particulars, Folio, Debit (RM) and Credit (RM).

Step by step

1. 1

   Set up the General Journal format

   Draw a table with columns for Date, Particulars, Folio, Debit (RM) and Credit (RM). Write the debited account against the left margin, and indent the credited account slightly with the prefix 'Kt' (or 'Cr'). End each entry with a short narration in brackets. Our example is Perniagaan Setia, which starts business on 1 January 2024.

2. 2

   Record the opening entry

   Enter the assets, liabilities and capital at the start of the year. Debit Cash RM3,000; Bank RM8,000; Vehicle RM20,000; Stock RM5,000; Debtor RM2,000. Credit Creditor RM4,000; Loan RM6,000; Capital RM28,000. Capital is calculated as total assets RM38,000 minus total liabilities RM10,000 = RM28,000. Narration: 'Assets, liabilities and capital at the start of business'.

3. 3

   Record the purchase of a non-current asset on credit

   On 5 January, Perniagaan Setia buys furniture worth RM3,000 on credit from Perabot Murni, supported by Invoice 305. The entry is: Debit Furniture RM3,000; Credit Perabot Murni RM3,000. This is not entered in the Purchases Journal because that journal is only for goods for resale (stock).

4. 4

   Record the sale of a non-current asset on credit

   On 10 January, the business sells an old vehicle at its book value of RM8,000 on credit to Kedai Mekar. The entry is: Debit Kedai Mekar RM8,000; Credit Vehicle RM8,000.

5. 5

   Record drawings of goods

   On 15 January, the owner takes stock costing RM600 for personal use. The entry is: Debit Drawings RM600; Credit Purchases RM600. Goods taken are recorded at cost, not at selling price.

6. 6

   Record bad debts

   On 20 January, the debtor Kedai Harmoni is unable to pay RM500, which is written off as a bad debt. The entry is: Debit Bad Debts RM500; Credit Debtor (Kedai Harmoni) RM500.

7. 7

   Complete the narrations and folios, then post to the ledger

   Write a narration under each entry and fill in the folio column when posting. Post each debit amount to the debit side of its ledger account and each credit amount to the credit side. Check that total debits equal total credits so the entries remain balanced.

Second example

Consider Perniagaan Damai. On 1 March 2024 the owner buys a machine on credit from Jentera Bakti for RM12,000 (Invoice 418): Debit Machine RM12,000; Credit Jentera Bakti RM12,000. On 8 March, the owner takes goods costing RM250 as a family gift: Debit Drawings RM250; Credit Purchases RM250. On 20 March, the debtor Warung Ceria, who owes RM900, can only pay RM600 through the bank, and the balance is written off as a bad debt: Debit Bank RM600 and Debit Bad Debts RM300; Credit Warung Ceria RM900. Notice that a single transaction may have more than one account debited, as long as total debits equal total credits.

Common mistakes

Related chapter: Books of Prime Entry →

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