TRANSFER JOURNAL ENTRIES

Journalizing is the process of recording a business transaction in the accounting

records. This activity only applies to the double-entry bookkeeping system. The steps
involved in journalizing are as follows:

1. Examine each business transaction to determine the nature of the transaction.

For example, the receipt of a supplier invoice means that an obligation has been
incurred. Or, throwing out obsolete inventory means that the inventory asset
will be reduced.

2. Determine which accounts will be affected. This calls for the identification of the
general ledger accounts that will be altered as a result of the transaction. For
example, recording a supplier invoice could mean that the office supplies
expense account will be increased, as well as the offsetting accounts payable
account.

3. Prepare a journal entry. This involves not just entering the transaction in the
accounting system, but also documenting it sufficiently so that someone
reviewing the entry later will understand why it was created. Ideally, the entry
should note the impacted accounts, the debits and credits entered, a journal
entry number, and a narrative comment.

Journalizing can result in entries to the general ledger or to subsidiary ledgers. An

entry is made to a subsidiary ledger when it involves a high-volume transaction that
management has decided to summarize separately from the general ledger.

As an example of the journalizing process, ABC International has just signed a

contract with a maintenance contractor to pay it $1,000 per month in exchange for
routine preventive maintenance services. The nature of the transaction is a recurring
obligation. The affected accounts will be a debit of $1,000 to the maintenance expense
account, and a credit of $1,000 to the accounts payable account. This will be a
recurring monthly entry. The journal entry is created as just noted, and flagged to
recur automatically at the beginning of each subsequent month.

Transfer Entries

Journal is the primary book of accounts in which we originally record transactions in

chronological order. It is a book of original entry because we first enter a transaction
in the Journal from where we then post it to the ledger. Ledger is a book or register
which contains, in a summarized and classified form, a permanent record of all
transactions. It is the most important book of accounts since we draw the trial balance
from it. Learn transfer entries here

Types of Entries

There are the following types of entries in accounting :

1. Opening entries

2. Transfer entries

3. Adjustment entries

4. Closing entries

Transfer Entries

Sometimes it is necessary to transfer an amount or balance of one account to some

other account. We do this by means of a transfer journal entry in the Journal Proper.

We use a Transfer Journal Entry to allocate an expense or revenue from one account
to another. It is used to transfer funds between object codes within an account or
sponsored project.

Browse more Topics under Special Entries

• Closing Entries

• Adjustment Entries

Transfers journal entries shall include a description of the items and an explanation of
why the transfer is necessary.

Transfers journal entries shall include a description of the items and an explanation of
why the transfer is necessary.

Source: freepik.com

1. Amount withdrawn from Capital

xx Capital A/c Dr. xxx

To Drawings A/c xxx

( Being amount is withdrawn from capital)

2. Amount withdrawn from the bank

xx Cash A/c Dr. xxx

To Bank A/c xxx

( Being amount withdrawn from the bank)

Learn more about Closing Entries here in detail.

3. Cash deposited at the bank

xx Bank A/c Dr. xxx

To Cash A/c xxx

( Being deposit of cash at the bank)

4. Amount received for petty cash

xx Petty Cash A/c Dr. xxx

To Cash A/c xxx

( Being amount received for petty cash)