Journal Entries Questions with Answers: 50 Solved Examples

How do you write a journal entry? Format and steps

The journal has five columns: Date, Particulars, Ledger Folio (L.F.), Debit amount and Credit amount. The account to be debited is written first with “Dr”, and the account to be credited goes on the next line, indented, starting with “To”. A short narration in brackets explains the transaction. This is the format taught in the ICAI Foundation study material on the accounting process. Every entry must balance: the total of the debit column equals the total of the credit column, even when more than two accounts are involved (a compound entry).

Dates run in order, and each entry is posted later to its ledger accounts, with the ledger page number written in the L.F. column. In an exam, marks usually go for the correct accounts, the correct sides and amounts, and a clear narration. So write the account names in full, such as “Purchases A/c” rather than “Goods”, and show GST in a separate ledger for each tax type.

Follow the same five steps for every transaction:

1. Identify the two (or more) accounts the transaction affects.
2. Classify each account: personal, real or nominal (or asset, liability, capital, income, expense).
3. Apply the debit and credit rule for that type of account.
4. Check that total debits equal total credits.
5. Write a narration that a stranger could understand a year later.

Debit and credit rules used in these answers

Every answer below comes from one of two equivalent rule sets. The traditional golden rules work on account type. The modern approach works on whether an account increases or decreases. Both always give the same entry. If either set is new to you, read our guide to the three golden rules of accounting, with examples first.

Assumptions for the solved questions

The trader is registered under GST as a regular taxpayer in Delhi. To keep the maths easy, every taxable item carries GST at 18%. That means 9% CGST plus 9% SGST on sales and purchases within Delhi, and 18% IGST on purchases from another state. Real rates depend on the item: since 22 September 2025 the main slabs are 5% and 18%, with 40% for a small list of demerit goods, as recommended by the 56th GST Council meeting. Check the actual rate of your item on CBIC’s rate page before you pass a real entry.

• Goods bought for resale go to Purchases A/c (the periodic method used in most Indian textbooks).
• GST paid on purchases goes to Input CGST / SGST / IGST accounts. GST charged on sales goes to Output CGST / SGST accounts.
• Where GST or TDS would complicate a question that is about something else, the question says so and leaves it out.

Solved questions: capital, cash and bank (Q1 to Q4)

These entries set up the business. Cash, bank and loan transactions are the simplest place to practise, because only two accounts move each time.

• Q1: Cash comes in (real, debit). The owner gives the money, so Capital, the owner’s personal account, is credited.
• Q2 and Q4 are contra entries: both sides are cash or bank. In Tally they go in a Contra voucher.
• Q3: The bank balance rises (debit). The loan is a liability owed to the lender (credit the giver).

Purchases and sales with GST, cash and credit (Q5 to Q12)

A GST purchase entry splits the bill into the cost of goods and the tax you can claim back as input tax credit. A GST sale entry splits it into sales and the tax you owe the government. Under AS 2, recoverable taxes are not part of the cost of inventory, which is why input GST sits in its own account instead of inside Purchases.

• Q6 and Q9: On credit, the party’s account replaces cash. Gupta Traders becomes a creditor and Mehta Stores a debtor. See debtor and creditor explained for how these balances appear in the balance sheet.
• Q7: A supply from another state attracts IGST instead of CGST plus SGST.
• Q10 and Q11: Returns reverse the original tax. The seller issues a GST credit note under Section 34 of the CGST Act, so the buyer’s input credit and the seller’s output tax both come down.
• Q12: Furniture is a fixed asset, not a purchase of goods for resale, so it has its own account. Input tax on business furniture is generally claimable, subject to the conditions in Section 16 of the CGST Act.

Discounts, receipts and payments (Q13 to Q15)

A trade discount is never recorded in the books, while a cash discount always is. Trade discount reduces the invoice price itself. Cash discount is a reward for paying early, so it becomes an expense for the seller and an income for the buyer.

• Q13: GST is charged on ₹18,000, the price after trade discount. Section 15(3) of the CGST Act excludes a discount shown on the invoice at the time of supply from the taxable value.
• Q14: ₹88,500 is ₹94,400 (Q9) less the ₹5,900 return (Q11). Discount allowed is a loss for the seller, so it is debited.
• Q15: ₹1,06,200 is ₹1,18,000 (Q6) less the ₹11,800 return (Q10). Discount received is a gain, so it is credited.
• A cash discount offered only at the time of payment, with no prior agreement linked to the invoice, does not reduce the GST already charged. That is why Q14 and Q15 carry no GST adjustment.

Expenses, drawings, losses and TDS (Q16 to Q20)

Expense entries debit the expense and credit whatever paid for it. The two traps in this group are goods taken for personal use and goods lost, because input tax already claimed on them has to be reversed.

• Q16 is a compound entry: two debits, one credit, same total.
• Q17: Drawings reduce the owner’s capital. Drawings is never an expense of the business.
• Q18: Goods leave the business, so Purchases is credited at cost. Section 17(5) of the CGST Act blocks input tax credit on goods used for personal consumption, so the ₹900 claimed is reversed and charged to the owner.
• Q19: Section 17(5) also blocks credit on goods lost, stolen or destroyed. An uninsured loss is debited to a loss account. If the goods were insured, the claim amount would be debited to the insurance company instead.
• Q20: TDS deducted is owed to the government until deposited. When you deposit it, pass TDS Payable A/c Dr, To Bank A/c. From 1 April 2026, non-salary TDS provisions such as the old Sections 194C and 194J sit in Section 393 of the Income-tax Act, 2025, so check the current rate and threshold there.

GST set-off entry at month end (Q21)

At the end of each return period, input tax credit is adjusted against output tax, and only the balance is paid in cash. The order matters. Under Sections 49 and 49A of the CGST Act, IGST credit is used first, CGST credit cannot pay SGST, and SGST credit cannot pay CGST.

Q21. For the month, output CGST is ₹20,000 and output SGST is ₹20,000. Available credit is input CGST ₹12,000, input SGST ₹12,000 and input IGST ₹5,000. There is no IGST liability, so the IGST credit is used against CGST. Pass the set-off entry and the payment entry.

CGST: ₹20,000 less ₹5,000 IGST credit less ₹12,000 CGST credit leaves ₹3,000 to pay. SGST: ₹20,000 less ₹12,000 leaves ₹8,000. The IGST credit could have been split between CGST and SGST in any proportion; the cash outgo would still be ₹11,000.

Year-end adjusting entries: depreciation, outstanding and prepaid expenses (Q22 to Q27)

Adjusting entries make the accounts follow the accrual basis: income and expenses belong to the year they relate to, not the year cash moved. Accrual is one of the three fundamental accounting assumptions in AS 1, alongside going concern and consistency. The balance sheet date here is 31 March 2027.

• Q22: AS 10 defines depreciation as the systematic allocation of an asset’s depreciable amount over its useful life. Many businesses credit a Provision for Depreciation (accumulated depreciation) account instead of the asset, which keeps the original cost visible. Both methods are correct.
• Q23: The March salary is an expense of FY 2026-27 even though it is paid in April. Outstanding Salaries is a current liability.
• Q26 and Q27 are the income-side mirrors: accrued income is an asset, and income received in advance is a liability until the service period arrives.

Accounting entry for prepaid expenses, step by step

A prepaid expense is an expense paid in advance for a period that falls partly or wholly in the next accounting year. The unexpired part is an asset at the year end, because the business still has the benefit to come. Q24 shows the full cycle with the expense method, which most Indian textbooks and small businesses use:

Result: FY 2026-27 bears ₹12,000 of insurance (six months), and FY 2027-28 bears the other ₹12,000. Prepaid Insurance appears on the assets side of the 31 March 2027 balance sheet as a current asset.

The asset method is the alternative, and Q25 uses it. When the whole payment relates to a future period, debit Prepaid Rent directly at the time of payment. Then transfer ₹25,000 each month to expense with Rent A/c Dr, To Prepaid Rent A/c. Both methods end with the same profit and the same balance sheet.

In a trial balance adjustment question, a prepaid expense has two effects: deduct it from the expense in the Profit and Loss Account, and show it as a current asset in the balance sheet. Forgetting either half is the most common mistake students make here.

Bad debts and provision for doubtful debts (Q28 to Q30)

A bad debt is an amount a customer will never pay, so it is written off as a loss. A provision for doubtful debts is an estimate, made at the year end, of debts that may not be recovered.

• Q28: The customer’s account must be closed in full: the cash received plus the amount written off.
• Q29: The old customer account was already closed, so the recovery is credited to an income account, not to the customer.
• Q30: The provision is deducted from debtors in the balance sheet. Companies that follow Ind AS measure this allowance as an expected credit loss under Ind AS 109, but the journal entry has the same shape.

Practice set: accounts questions with solutions, simple journal entries (Q31 to Q50)

These 20 simple journal entries complete the set of 50 journal entries with solutions. They are the everyday cash, bank, expense and year-end entries that Class 11 exams and accounts interviews ask most often. GST is left out so you can focus on the debit and credit logic.

• Q31 to Q39: each moves cash or bank against one other account. Expenses and losses are debited (nominal account rule); incomes are credited.
• Q35 to Q37 are entries you pass from the bank statement, which is why they often come up during bank reconciliation.
• Q40: a personal expense of the owner paid by the business is drawings, not an expense of the business.
• Q41 and Q42: goods leave the business without a sale, so Purchases is credited at cost. If input tax was claimed on them, it must be reversed as in Q18, because Section 17(5) of the CGST Act blocks credit on goods given away as gifts or free samples.
• Q43: the asset account is closed at its book value; the shortfall is a loss.
• Q44 and Q45: an advance is not a sale or purchase yet. It sits in the customer’s or supplier’s account until the invoice is raised.
• Q46: a dishonoured cheque puts the customer back in debt, so the customer is debited and the bank credited.
• Q47 and Q48: interest on capital is an expense for the business and income for the owner; interest on drawings works the other way.
• Q49 and Q50 are closing entries passed while preparing final accounts.

Common mistakes in journal entries

Most wrong answers come from a handful of repeat errors. Check your work against this list before you move to the ledger.

• Recording trade discount. Only the net price goes into the books (Q13).
• Treating drawings as an expense. Drawings reduce capital; they never reach the Profit and Loss Account.
• Debiting Purchases for a fixed asset. Furniture, computers and vehicles get their own asset accounts (Q12).
• Putting GST inside Purchases. Claimable input tax has its own account; only non-claimable tax is added to cost.
• Forgetting ITC reversal on goods taken for personal use or destroyed (Q18, Q19).
• Crediting the customer on bad debts recovered. The customer account is already closed (Q29).
• Doing only half of an adjustment. Outstanding and prepaid items affect both the Profit and Loss Account and the balance sheet.
• Skipping the narration. Auditors and your future self both rely on it.

How these journal entries work in Tally

In TallyPrime you rarely open a plain journal. Each type of transaction has its own voucher, and Tally builds the double entry for you from the ledgers you choose. Knowing the underlying journal entry is still what lets you pick the right ledger and spot an error in a report.

Want to practise all 50 entries on live company data? IPA’s Tally course in Delhi covers voucher entry with GST, and the GST course goes deeper into input tax credit, credit notes and returns. Students aiming for an accounts job can take these topics further in the ADFA diploma. Interviewers ask these exact entries too, as our list of accounting interview questions shows.

How we teach this at IPA

A journal entry is the first thing you meet in the Tally course at IPA. The core accounting module has you create a company, set up ledgers and groups, then post sales, purchase, payment, receipt, contra and journal vouchers. Working the questions above on paper first and then entering the same vouchers on TallyPrime is a good way to check your understanding.

Once your entries are posted, check them with a trial balance, and reconcile the bank column with a bank reconciliation statement, both worked with examples.

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