Table of Content

Journal Proper and Adjusting entries Class 11

Concept of Journal Proper

Journal Proper may be defined as a Journal in which only a few non-routine typed financial transactions are recorded systematically and in chronological order as and when they take place. It is also called Journal Residual or General Journal. 

The transactions recorded in the journal proper include drawings, reserves, provisions, credit purchase and sale of operating assets, adjustment for depreciation, prepaid expenses, pre-received incomes, outstanding expenses, accrued incomes, etc. Thus, a journal proper is a book, which is maintained to record such special types of transactions, which are not recorded in any subsidiary book such as purchase book, sales book, cash book, etc. 

Some of the above transactions do not have any source documents. Journal proper, especially in the case of adjustments, can become the primary record as well as the source document. The rules for recording transactions in the journal proper are the same as we have done by debiting and crediting the transaction in a general journal


Types of Entries Involved in Journal Proper

The journal proper mainly includes the following entries:

  • Opening entries
  • Closing entries
  • Transfer entries
  • Residual entries or Entries for Credit Purchase and Sold of Assets Rectification entries
  • Adjustment entries

Opening Entries

These are the entries passed by a new business or by an already existing business to open its books of accounts in a new accounting year. For a newly opened business firm, the opening entries are passed just by debiting the assets brought in the business firm and crediting the capital.

Closing Entries

In the process of preparing final accounts, the various ledger accounts are closed by passing an entry, which is known as a closing entry. Among permanent and temporary accounts, the permanent accounts are balanced and shown on the assets and liabilities side of the balance sheet. Whereas, the temporary accounts, which include revenues and expenses accounts, are closed at the end of the accounting year by transferring them to the Trading and Profit and loss account. Finally, the trading and profit and loss accounts are also closed to reset the result in zero balances. 

Transfer Entries

Transfer entries are used to transfer the remaining balance of one account to another account. The entries which are made to close the revenues, expenses, and profit and loss accounts, as discussed in the closing entries section, are a part of transfer entries. Apart from these, transfer of withdrawals and dividends (which are directly transferred to owners' equity accounts), and transfer of profit to reserve are a few examples of transfer entry. 


Entries for Credit Purchase or Sale of Fixed Assets

Credit purchases or sales of fixed assets are not recorded in subsidiary books as merchandise goods. For recording credit purchases and sales of fixed assets, a journal proper is required. Here, we particularly deal with an easy way of recording transactions of the sale of fixed assets on credit, when the sales involve profit or loss. If the book value of the assets sold is known, there is a profit when the selling price is higher than the book value and a loss when it is less than the book value.


Adjusting Entries

The Expenses and incomes may occur even after the closing of ledger accounts at the end of the accounting period. They appear in the form of adjustments. It means that such expenses and incomes are left to be unrecorded in the respective ledger accounts. However, these expenses/ incomes must be adjusted at the time of preparation of final accounts. If these expenses/incomes are not adjusted, the true operating result and financial position of the business may not be ascertained. Therefore, the entries passed to record/adjust the unrecorded events/transactions of the business are called adjusting entries.

Important adjusting entries

Some important adjusting entries are dealt with in the section below.



Outstanding expenses / Expenses due / Unpaid expenses

Expenses a/c Dr.

   To Outstanding expenses

Prepaid Expenses

Prepaid expense a/c Dr.

    To Expenses

Advance Income

Income receive in advance

Income (receive) a/c Dr.

    To advance income

Unearned commission earned

Unearned income a/c Dr.

   To income earned a/c

Accrued Income  

Accrued income a/c Dr.

   To income a/c  


Depreciation a/c Dr.

    To related fixed assets a/c

Bad Debt

Bad Debt a/c Dr.

   To Debtor a/c

Provision for bad debt

Provision for bad debt a/c Dr.

    To Debtor a/c

Provision for discount on a debtor

Provision for discount on debtor a/c Dr.

   To debtors a/c

Provision for discount on creditor

Creditors a/c Dr

   To provision for discount on creditor a/c

Closing stock

Closing stock a/c Dr.

   To cost of goods manufactured a/c


Machinery a/c Dr.

   To appreciation a/c

Interest on capital

 Interest on capital a/c Dr

   To Capital a/c

Interest drawing 

Drawing a/c Dr.

   To interest on drawing a/c

Goods used in the business for charity, donation, gift, etc for sales promotion

Advertisement a/c Dr.

   To purchase a/c

Goods are withdrawn by owner for personal use

Drawing a/c Dr.

   To purchase a/c

For abnormal loss

a. When goods are lost by 

Goods lost by ... a/c Dr. 

    To purchase a/c Or Trading a/c

b. When no insurance claim 

Profit and loss a/c Dr

    To purchase a/c or Trading a/c

b. When an insurance claim admitted

Insurance co. a/c Dr

Cash a/c Dr

    To purchase a/c or Trading a/c

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