How to Pass Journal Entries in Tally Prime with Step-by-Step Guide and 25 Practical Journal Entry Examples

—

by

Himanshu
in

Journal entries form one of the most critical pillars of accounting. Whether you maintain books for a small business, a medium enterprise, or a corporate company, Tally Prime remains the most widely used accounting software in India for recording accurate and compliant transactions.

This comprehensive guide explains how to pass journal entries in Tally Prime step by step, followed by 25 deeply detailed practical examples used in everyday business operations. This article also covers the purpose of journal vouchers, common mistakes, and expert accounting tips.

Understanding Journal Entries in Tally Prime

What Is a Journal Entry?

A journal entry records non-cash or adjustment-based accounting transactions by debiting and crediting the appropriate ledger accounts.

When is Journal Voucher (F7) Used?

Journal vouchers are used when:

  • No cash or bank transaction occurs
  • Adjustments or corrections are needed
  • Expenses or incomes relate to another period
  • Creating provisions or outstanding amounts
  • Recording accruals
  • Passing GST/round-off adjustments
  • Transferring balances
  • Year-end closing entries

How to Pass a Journal Entry in Tally Prime

Step-by-Step Process

Step 1: Open Accounting Vouchers

Gateway of Tally → Vouchers

Step 2: Select Journal Voucher

Press F7 (Journal).

Step 3: Enter Transaction Date

Press F2 to set the voucher date.

Step 4: Debit the Appropriate Ledger

Debit the ledger receiving the benefit.

Step 5: Credit the Appropriate Ledger

Credit the ledger giving the benefit.

Step 6: Add Narration

Provide a short explanation of the transaction.

Step 7: Save the Entry

Press Ctrl + A.

Structure of a Journal Entry

ComponentDescription
Debit LedgerAccount to be debited
Credit LedgerAccount to be credited
NarrationShort description of transaction

25 Practical Journal Entries in Tally Prime (With Deep Explanations)

Each example includes the accounting logic used in real situations.

1. Outstanding Salary Entry

Salary has been incurred but not paid.

Entry:
Salary A/c Dr
  To Outstanding Salary A/c
Amount: 50,000

Explanation:
Salary is an expense → Debit
Outstanding salary creates a liability → Credit

2. Prepaid Rent Entry

Rent has been paid in advance for future months.

Entry:
Prepaid Rent A/c Dr
  To Rent A/c
Amount: 12,000

Explanation:
Expense paid early becomes an asset → Debit

3. Depreciation on Furniture

Furniture loses value over time.

Entry:
Depreciation A/c Dr
  To Furniture A/c
Amount: 15,000

4. Accrued Commission Income

Commission earned but not yet received.

Entry:
Commission Receivable A/c Dr
  To Commission Income A/c
Amount: 8,000

5. Interest Accrued on Loan

Interest has become due.

Entry:
Interest on Loan A/c Dr
  To Loan Payable A/c
Amount: 5,500

6. Free Sample Distribution

Goods are distributed for advertising.

Entry:
Advertisement Expense A/c Dr
  To Purchase/Inventory A/c
Amount: 10,000

7. Bad Debts Written Off

Debtor failed to pay.

Entry:
Bad Debts A/c Dr
  To Debtors A/c
Amount: 18,000

8. Provision for Doubtful Debts

Creating a reserve for doubtful customers.

Entry:
Provision for Doubtful Debts A/c Dr
  To Provision A/c
Amount: 5,000

9. Interest on Capital

Business rewards owner for capital contribution.

Entry:
Interest on Capital A/c Dr
  To Capital A/c
Amount: 12,500

10. Goods Withdrawn by Owner

Owner takes goods for personal use.

Entry:
Drawings A/c Dr
  To Purchase/Stock A/c
Amount: 3,000

11. Credit Purchase of Equipment

Equipment purchased but not paid immediately.

Entry:
Equipment A/c Dr
  To Creditor A/c
Amount: 40,000

12. Credit Sale of Machinery

Asset sold on credit.

Entry:
Debtor A/c Dr
  To Machinery A/c
Amount: 25,000

13. Outstanding Rent Entry

Rent is due, not yet paid.

Entry:
Rent A/c Dr
  To Outstanding Rent A/c
Amount: 8,000

14. Transfer of Profit to Capital

Closing the profit and loss account.

Entry:
Profit & Loss A/c Dr
  To Capital A/c
Amount: 95,000

15. GST Reverse Charge Adjustment

Under RCM, GST is payable by recipient.

Entry:
Input CGST A/c Dr
Input SGST A/c Dr
  To RCM Liability A/c
Amount: 900 + 900

16. Electricity Expense Payable

Bill received but not paid.

Entry:
Electricity Expenses A/c Dr
  To Electricity Payable A/c
Amount: 6,200

17. Commission Payable

Commission expense incurred.

Entry:
Commission Expense A/c Dr
  To Commission Payable A/c
Amount: 4,000

18. Round-Off Adjustment

Invoice rounding.

Entry:
Round Off A/c Dr
  To Sales A/c
Amount: 3

19. Purchase Return

Returning goods to supplier.

Entry:
Creditor A/c Dr
  To Purchase Return A/c
Amount: 2,000

20. Sales Return

Customer returns goods.

Entry:
Sales Return A/c Dr
  To Debtor A/c
Amount: 3,500

21. Loss by Fire

Stock destroyed.

Entry:
Loss by Fire A/c Dr
  To Stock A/c
Amount: 22,000

22. Provision for Tax

Creating tax liability at year-end.

Entry:
Provision for Tax A/c Dr
  To Taxation A/c
Amount: 35,000

23. Write-Off Preliminary Expenses

Old incorporation expenses written off.

Entry:
Expense Write-Off A/c Dr
  To Preliminary Expenses A/c
Amount: 7,500

24. Salary Payable to Staff

Salary due, unpaid.

Entry:
Salary A/c Dr
  To Staff Payable A/c
Amount: 42,000

25. Bonus Expense Payable

Bonus declared but not yet paid.

Entry:
Bonus Expense A/c Dr
  To Bonus Payable A/c
Amount: 13,000

Common Mistakes While Passing Journal Entries

Incorrect Ledger Grouping

Expenses should be under Indirect Expenses; assets must be properly grouped.

Using Journal Voucher for Cash Transactions

Cash or bank transactions must use Payment/Receipt vouchers.

Wrong GST Ledgers

Selecting wrong tax category may cause filing mismatches.

Ignoring Narration

Narration helps in audit and compliance checks.

Expert Tips for Perfect Journal Entries

  • Maintain a consistent chart of accounts
  • Create adjustment ledgers before year-end
  • Verify supporting documents before recording
  • Cross-check with Trial Balance regularly
  • Use predefined narrations to maintain clarity

Conclusion

Tally Prime simplifies the otherwise complex process of recording journal entries. Whether you manage outstanding expenses, GST adjustments, credit transactions, or provisions, understanding how to use the Journal Voucher properly ensures accurate and compliant books of accounts.

The 25 practical examples given in this article reflect real-world scenarios encountered in small businesses, corporates, and tax environments. With practice, journal entries become easy, systematic, and error-free.

Disclaimer

This article is meant for educational and informational purposes only. Actual accounting treatment may vary depending on company policies, statutory requirements, and professional advice. Users should consult a qualified accountant for complex or industry-specific scenarios.