Points to be Noted While Passing Journal Entries: From Sr. No.31
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31. Whenever some debts (i.e., amounts due from debtors)are written off as bad (i.e., irrecoverable), the two accounts involved in the transaction are (1) bad debts account and (2) concerned debtor's account.
32. Whenever some bad debts are recovered (i.e., debts written off as bad in earlier year now recovered), the two accounts involved are (1) cash account and (2) bad debts recovered account (and not the concerned debtor's account.
33. If a journal entry contains only one debit and only one credit it is called a simple journal entry. On the other hand, if a journal entry contains more than one debit or more than one credit or more than one debit and more than one credit, it is called a Compound journal entry.
A Compound journal entry is, actually, a combination of two or more simple journal entries. Two or more simple journal entries can be combined into a compound journal entry, if two conditions are satisfied, viz., (a) if the two or more simple journal entries are passed on the same date and (b) if there is a common item (i.e., account), debit item or credit item in those simple journal entries.
As such, whenever two or more transactions if the same nature (i.e., transactions where there is a common item or account) take place on the same date, a composite, compound or combined journal entry may be passed for them instead of passing a separate journal entry for each of them. For instance, if cash is paid for salaries, wages and rent on the same date, a compound journal entry may be passed for all the three transactions.
34. In the case of a concern which had been in existence in the previous year, the ledger account balances of the previous year have to be brought forward and recorded in the journal as opening balance at the beginning of the current year through an entry called opening entry. The balances to be recorded in the journal by way of an opening entry are the balances in the concerned assets, liabilities and capital accounts. The asset accounts will be having debit balances, the liabilities accounts will be having credit balances and the capital account also will be, generally, having a credit balance. As such, while passing the opening entry in the journal for recording the balances of assets, liabilities and capital brought forward from the previous year to the current year, each of the asset accounts has to be debited with its debit balance and each of the liabilities accounts has to be credited with its credit balances and capital account has to be credited with the difference between the opening values of assets and the opening values of liabilities.
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31. Whenever some debts (i.e., amounts due from debtors)are written off as bad (i.e., irrecoverable), the two accounts involved in the transaction are (1) bad debts account and (2) concerned debtor's account.
32. Whenever some bad debts are recovered (i.e., debts written off as bad in earlier year now recovered), the two accounts involved are (1) cash account and (2) bad debts recovered account (and not the concerned debtor's account.
33. If a journal entry contains only one debit and only one credit it is called a simple journal entry. On the other hand, if a journal entry contains more than one debit or more than one credit or more than one debit and more than one credit, it is called a Compound journal entry.
A Compound journal entry is, actually, a combination of two or more simple journal entries. Two or more simple journal entries can be combined into a compound journal entry, if two conditions are satisfied, viz., (a) if the two or more simple journal entries are passed on the same date and (b) if there is a common item (i.e., account), debit item or credit item in those simple journal entries.
As such, whenever two or more transactions if the same nature (i.e., transactions where there is a common item or account) take place on the same date, a composite, compound or combined journal entry may be passed for them instead of passing a separate journal entry for each of them. For instance, if cash is paid for salaries, wages and rent on the same date, a compound journal entry may be passed for all the three transactions.
34. In the case of a concern which had been in existence in the previous year, the ledger account balances of the previous year have to be brought forward and recorded in the journal as opening balance at the beginning of the current year through an entry called opening entry. The balances to be recorded in the journal by way of an opening entry are the balances in the concerned assets, liabilities and capital accounts. The asset accounts will be having debit balances, the liabilities accounts will be having credit balances and the capital account also will be, generally, having a credit balance. As such, while passing the opening entry in the journal for recording the balances of assets, liabilities and capital brought forward from the previous year to the current year, each of the asset accounts has to be debited with its debit balance and each of the liabilities accounts has to be credited with its credit balances and capital account has to be credited with the difference between the opening values of assets and the opening values of liabilities.
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