What is a Journal Entry?
The journal is the book of original entry. Every business transaction is first recorded here as a journal entry showing which account is debited, which is credited, the amount and a short narration. Entries are later posted to the ledger, summarised in the trial balance and finally reported in the Profit & Loss Account and Balance Sheet.
The golden rules of debit and credit
- Personal accounts: Debit the receiver, credit the giver.
- Real accounts: Debit what comes in, credit what goes out.
- Nominal accounts: Debit all expenses and losses, credit all incomes and gains.
Under the modern approach: assets and expenses increase on the debit side; liabilities, capital and income increase on the credit side.
How this tool works
Add one row per account line with the date, account name, Dr/Cr, amount and narration. The tool keeps a running total of debits and credits, shows the difference, flags any unbalanced entry and gives an account-wise summary. Rows are saved in your browser, so you can keep a running journal for the month and export it to Excel or CSV. The Ledger Maker tool can read these entries directly and post them to T-accounts.
Worked example
Goods worth ₹50,000 are purchased on credit from Sharma Traders with 18% GST (CGST 9% + SGST 9%):
- Purchases A/c Dr ₹50,000
- Input CGST A/c Dr ₹4,500
- Input SGST A/c Dr ₹4,500
- To Sharma Traders A/c ₹59,000 (Being goods purchased on credit, Bill No. 101)
Total debit ₹59,000 = total credit ₹59,000, so the entry is balanced. If you had typed ₹5,900 for the creditor by mistake, the tool would immediately show a difference of ₹53,100 and mark the journal UNBALANCED.
Who should use it
Commerce students practising journal entries, small shop owners who keep manual books, freelancers who record a handful of transactions a month, and accountants who want a quick scratch pad before entering vouchers into Tally or Busy.
Frequently Asked Questions
Why must debits equal credits?
Double-entry bookkeeping records every transaction in at least two accounts with equal debit and credit amounts. If the totals differ, the books will not balance and the trial balance will show a difference.
Can one entry have more than two lines?
Yes. A compound entry can debit or credit several accounts, as in the GST purchase example, as long as total debits equal total credits.
Is my data uploaded anywhere?
No. Entries are stored only in your browser (localStorage). Use Export Excel/CSV to keep a copy.
How do I post these entries to the ledger?
Open the Ledger Maker tool and click "Load from Journal Entry Maker" — it groups your lines account-wise into T-ledgers with balances.
Disclaimer: This tool is for general information and estimation only. Tax rates and rules change — verify with official sources or a professional before acting. Read full disclaimer.