Journal Proper: Meaning, Format and Examples

What is Journal Proper?

Journal Proper is the book that is maintained to record those transactions which are not recorded in the special books. Transactions that do not find a place in any other subsidiary book, such as Cash Book, Purchase Book, Sales Book, Bills Payable Book, Purchase, and Sales Return Book are recorded in the Journal Proper. It is also known as Journal Residual.

Uses of Journal Proper

1. Opening Entry:

Opening Entries are recorded at the beginning of the accounting year. It records the assets’ debit balances, the liabilities’ credit balance, and the capital that appears on the Balance Sheet of the previous year. The following entry is passed to record the opening balances:

2. Closing Entry:

Closing entry is passed at the end of the accounting year to record the transactions and close the accounts relating to expenses and revenues by transferring them to the Trading Account and Profit and Loss Account. Closing Entries recorded in the Journal for preparing the Trading and Profit and Loss Account, i.e., transferring revenue and expenditure accounts to these two accounts.

3. Rectification Entry:

Journal Proper records the entries that are passed to rectify the errors in the books of original entries or of a Ledger.

4. Transfer Entry:

When an amount is to be transferred from one account to another, the transfer entry is recorded in the Journal Proper.

5. Adjustment Entry:

The number of expenses or revenue needs to be adjusted at the end of the year due to advance or non-payment of income or expenses of the concerned account. Journal Proper records the entry for adjustment of the amount received or paid in advance or for the amounts not yet settled in cash.

a. Prepaid Expenses: Expenses paid in advance for the future period.

b. Outstanding Expenses: Expenses that have arisen but have not yet been paid.

c. Interest on Capital: The interest that the proprietor thinks is suitable to allow for his investment in the business.

d. Depreciation: Depreciation is the fall in the value of assets due to wear and tear over a period.  

6. Entry for Dishonor Of Bills:

When the accepted promissory notes or bills are not being paid by the person who accepted them, an entry is passed in the Journal Proper to record the dishonour or non-payment of the bill or promissory note.

7. Miscellaneous Entries:

Journal Proper also records the following transactions:

a) Credit purchase of goods or material other than the goods dealt in by the business.

b) Discount Allowed or Discount Received.

c) Loss or Damage of Goods or property, either due to fire or accidents.

d) When any debtor becomes insolvent, the amount due to him becomes irrecoverable.

e) An allowance to be given to customers or a charge to be made to them after the issue of the invoice. 

Format of Journal Proper

Explanation of the column of the Journal Proper:

Date: In this first column, the date of the transaction is recorded, i.e. on the date on which the transaction took place.

Particulars: In the second column, the name of accounts are recorded through which transactions took place. The accounts in which debit amounts and credit amounts are recorded. Narration is written after the entry has been passed in this column. Narration is a short description of the transactions.

Ledger Folio(L.F.): In the third column, the accounts posted to which the ledger page is recorded.

Debit Amount(₹): In the fourth column, the amount debited is recorded concerning the account recorded in the second column.

Credit Amount(₹): In the last column, the amount credited is recorded concerning the account in the second column

Illustration: 

For the following transactions, pass the necessary journal entries in the specified Journal book:

1. On 31st March 2022,  the Ledger accounts had the following balances:

Building ₹3,00,000, Plant and Machinery ₹1,50,000, Furniture ₹75,000, Stock ₹25,500, Investments ₹50,000, Debtors ₹22,500, Cash and Bank ₹10,800, Outstanding Salaries ₹23,600, General Reserve ₹72,700, Creditors ₹17,500, Capital ₹5,20,000.

Pass the journal entries for opening the books for the year 2022-23.

2. On 31st March 2022, the accounts are to be closed:

Opening Stock ₹22,600, Purchases ₹30,200, Wages ₹7,000, Salaries ₹9,200, Sales ₹64,900, Purchase Return ₹3,500, Carriage Inward ₹1,900, Sales Return ₹1,250, Rent ₹13,100, Discount Allowed ₹850, Discount Received ₹1,200, Closing Stock ₹35,800, Bills Receivable ₹16,000, Cash in Hand ₹22,000, Cash at Bank ₹30,900, Freehold Premises ₹64,000, Building ₹1,20,000, Furniture ₹40,000.

3. On 31st March 2022, the following transfer entries were made:

a) Santosh drawing ₹3,000 to Purchase Account.

b) Sales Return of ₹6,400 to Sales.

c) Gross Profit of ₹34,800.

4. Following adjustment entries have to be passed on 31t March 2022:

a) Interest accrued on Investment ₹850.

b) Appreciate Land(₹7,50,000) by 10%.

c) Wages Outstanding ₹12,500.

d) Good worth ₹9,000 lost due to fire.

e) Purchased Furniture from Amit Traders on credit worth ₹37,800.

Solution:

1.

2.

3.

4.