What a Journal Does (and Why It Matters)
A journal is the chronological record where you first write a transaction in accounting form. Your source documents (receipts, invoices, bills, bank notices) show what happened; the journal turns that evidence into a clear, standardized entry that can be posted to the ledger later. A well-written journal entry should let someone else understand the transaction without hunting for extra context.
- Chronological: entries are recorded by date.
- Complete: includes the accounts affected, amounts, and a short explanation.
- Traceable: includes a reference to the source document (invoice number, receipt ID, bank statement line).
Standard Journal Entry Layout
Many systems format journal entries similarly. The goal is consistency so entries are easy to review and post.
| Field | What to include | Example |
|---|---|---|
| Date | Transaction date (not the day you happen to enter it, unless they are the same) | 2026-01-18 |
| Accounts | Account(s) affected; often debit line(s) first, credit line(s) second | Cash; Sales Revenue |
| Debit | Amount(s) to debit | 250.00 |
| Credit | Amount(s) to credit | 250.00 |
| Memo / Description | Plain-language business purpose; include customer/vendor and what was sold/bought when helpful | Cash sale to Walk-in customer for repair service, Receipt #R-1042 |
| Reference | Source document ID, invoice/bill number, bank statement line, etc. | R-1042 |
Typical Visual Layout
Even if your software looks different, the same information is captured. A common manual layout is:
Date Account Debit Credit Ref Memo/Description
2026-01-18 Cash 250.00 R-1042 Cash sale to walk-in customer for repair service
Sales Revenue 250.00 R-1042
Notes on format:
- Debit line(s) are listed first; credit line(s) follow (often indented).
- The memo should explain the business purpose, not just restate the accounts.
- The reference should point back to the source document so the entry can be verified quickly.
How to Write Strong Journal Entries
1) Start with the source document details
Before choosing accounts, extract the facts:
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- Date: when the transaction occurred.
- Parties: customer/vendor/bank.
- What happened: sale, purchase, payment, fee, etc.
- Amount(s): total and any breakdowns shown (for example, shipping, discounts, tax if applicable).
- Payment terms: cash now vs. pay later.
- Document ID: receipt number, invoice number, bill number, statement line.
2) Decide the accounts affected
Translate the document into accounting language by selecting the accounts that match what happened (for example, Cash, Accounts Receivable, Sales Revenue, Accounts Payable, Bank Fees Expense). Use the names exactly as they appear in your chart of accounts to keep posting clean.
3) Draft the entry lines and amounts
Write the debit and credit lines with amounts. If there are multiple lines (for example, splitting an expense), keep each line clear and tied to the document.
4) Write a memo that explains the business purpose
A strong memo answers: who, what, and why (and sometimes how paid), in one sentence.
- Weak memo: “Sale”
- Better memo: “Sale to Greenway Cafe for 10 mugs, Invoice #1029, terms net 30”
- Best memo (when helpful): “Sale to Greenway Cafe for 10 branded mugs, Invoice #1029, net 30; delivery included”
5) Add the reference and do a quick quality check
- Reference: enter the document number (Invoice #, Bill #, Receipt #, bank statement line/date).
- Check: debits equal credits; date matches the document; memo matches the document; account names are correct.
Step-by-Step: Converting a Source Document Into a Journal Entry
Example source document (simplified)
Customer Invoice #1029
Date: 2026-01-10
Customer: Greenway Cafe
Description: 10 branded mugs
Total: $300.00
Terms: Net 30 (customer will pay later)
Step 1: Pull key facts
- Date: 2026-01-10
- Customer: Greenway Cafe
- What: Sale of goods (10 mugs)
- Amount: $300.00
- Payment timing: later (on account)
- Reference: Invoice #1029
Step 2: Choose accounts
- Customer will pay later → Accounts Receivable
- Sale earned → Sales Revenue
Step 3: Draft the journal entry lines
Date Account Debit Credit Ref
2026-01-10 Accounts Receivable 300.00 INV-1029
Sales Revenue 300.00 INV-1029
Step 4: Write a memo that explains the business purpose
Memo example: “Credit sale to Greenway Cafe for 10 branded mugs, Invoice INV-1029, terms net 30.”
Step 5: Final entry with memo included
Date Account Debit Credit Ref Memo/Description
2026-01-10 Accounts Receivable 300.00 INV-1029 Credit sale to Greenway Cafe for 10 branded mugs, net 30
Sales Revenue 300.00 INV-1029
Examples of Common Journal Entries
1) Cash sale
Source document: Receipt #R-1042, 2026-01-18, walk-in customer, repair service, total $250.00, paid in cash.
Date Account Debit Credit Ref Memo/Description
2026-01-18 Cash 250.00 R-1042 Cash sale to walk-in customer for repair service
Sales Revenue 250.00 R-1042
2) Credit sale (Accounts Receivable)
Source document: Invoice #INV-1029, 2026-01-10, Greenway Cafe, 10 mugs, total $300.00, terms net 30.
Date Account Debit Credit Ref Memo/Description
2026-01-10 Accounts Receivable 300.00 INV-1029 Credit sale to Greenway Cafe for 10 branded mugs, net 30
Sales Revenue 300.00 INV-1029
3) Purchase on account (Accounts Payable)
Source document: Vendor Bill #B-778, 2026-01-12, Supply Depot, office supplies, total $85.00, due in 15 days.
Date Account Debit Credit Ref Memo/Description
2026-01-12 Office Supplies Expense 85.00 B-778 Purchase of office supplies from Supply Depot on account, due in 15 days
Accounts Payable 85.00 B-778
4) Paying a supplier bill
Source document: Bank payment confirmation #PMT-551, 2026-01-20, paid Supply Depot for Bill #B-778, amount $85.00.
Date Account Debit Credit Ref Memo/Description
2026-01-20 Accounts Payable 85.00 PMT-551 Payment to Supply Depot for Bill B-778
Cash 85.00 PMT-551
If your system tracks vendor names inside Accounts Payable, the memo and reference help tie the payment to the correct bill.
5) Recording a bank fee
Source document: Bank statement, 2026-01-31, “Monthly service fee,” $12.00.
Date Account Debit Credit Ref Memo/Description
2026-01-31 Bank Fees Expense 12.00 STMT-Jan Monthly bank service fee per January statement
Cash 12.00 STMT-Jan
Practice Set: Draft Journal Entries From Simplified Source Documents
For each item below, draft a journal entry using the standard layout: date, accounts, debit/credit amounts, memo, and reference. Keep memos to one clear sentence that states the business purpose and includes the document ID.
Practice documents
Receipt #R-1101
Date: 2026-02-03
Details: Cash sale to walk-in customer for “Intro workshop ticket”
Total: $75.00Invoice #INV-1108
Date: 2026-02-05
Customer: Northside Yoga
Details: 20 water bottles
Total: $240.00
Terms: Net 15Vendor Bill #B-901
Date: 2026-02-06
Vendor: PrintWorks
Details: Flyers for promotion
Total: $130.00
Due: 2026-02-20Payment Confirmation #PMT-610
Date: 2026-02-20
Details: Paid PrintWorks for Bill #B-901
Amount: $130.00Bank Statement Line
Date: 2026-02-28
Details: “Wire fee”
Amount: $18.00
Practice template (copy and fill)
Date Account Debit Credit Ref Memo/Description
YYYY-MM-DD ____________________________ ________ ________ ________________________________
____________________________ ________ ________
Self-check: For each entry, confirm (1) the date matches the document, (2) the reference matches the document ID, (3) the memo explains the business purpose, and (4) total debits equal total credits.
