Learning 100 Journal Entries in Tally with Practical Examples is an effective way to understand accounting concepts and apply them to real business transactions. Whether you are a commerce student, accountant, job seeker, business owner, or Tally learner, understanding journal entries helps you record financial transactions accurately and maintain reliable accounting records.
In accounting, every financial transaction affects at least two accounts. One account is debited, and another account is credited, following the double-entry accounting system. For example, when a business purchases furniture for ₹30,000 through its bank account, the Furniture Account is debited, and the Bank Account is credited.
However, practical accounting involves much more than simple cash purchases and sales. Businesses also record expenses outstanding, prepaid expenses, depreciation, bad debts, loans, GST, TDS, inventory adjustments, advances, and year-end transactions.
This guide explains 100 journal entries with practical examples, debit and credit treatments, and narration suitable for learning how business transactions are recorded in TallyPrime and Tally ERP 9.
The examples use illustrative amounts in Indian rupees. GST and tax-related examples are provided for accounting practice; actual tax treatment must follow the applicable rules and the business’s circumstances.
What Is a Journal Entry in Accounting?
A journal entry is a formal record of a financial transaction that identifies the accounts to be debited and credited. It provides the foundation for preparing ledgers, trial balances, profit and loss accounts, and balance sheets.
For example, a business pays office rent of ₹15,000 through its bank account.
The journal entry is:
| Particulars | Amount |
|---|---|
| Rent Expense Account Dr. | ₹15,000 |
| To Bank Account | ₹15,000 |
Narration: Being office rent paid through the bank.
The Rent Expense Account is debited because rent is an expense. The Bank Account is credited because the bank balance decreases.
In Tally, transactions are recorded through different voucher types. Although a journal entry describes the underlying accounting treatment, a transaction such as a regular cash sale or supplier payment should generally be entered through the appropriate Sales, Purchase, Receipt, Payment, or Contra voucher.
Rules of Debit and Credit
Before practising journal entries, it is important to understand why an account is debited or credited.
1. Traditional rules of accounting
The traditional rules classify accounts into three categories.
| Account Type | Debit and Credit Rule |
|---|---|
| Personal Accounts | Debit the receiver; credit the giver. |
| Real Accounts | Debit what comes in; credit what goes out. |
| Nominal Accounts | Debit all expenses and losses; credit all incomes and gains. |
These traditional rules are useful for beginners. Modern accounting also explains entries through changes in assets, liabilities, equity, income, and expenses.
2. Modern accounting rules
The following table helps you understand the effect of a transaction on different account categories.
| Account Category | Normal Balance |
|---|---|
| Assets and expenses | Debit |
| Liabilities, capital, and income | Credit |
An increase in an asset or expense is generally recorded as a debit. An increase in a liability, owner’s capital, or income is generally recorded as a credit.
A decrease normally has the opposite treatment.
3. How to identify the debit and credit accounts
Use these three questions whenever you prepare a journal entry:
- Which accounts are affected by the transaction?
- Is each account increasing or decreasing?
- Which account should be debited, and which should be credited?
For example, when a business receives a bank loan of ₹2,00,000, its bank balance increases and its loan liability increases.
The entry is:
- Bank Account Dr. ₹2,00,000
- To Bank Loan Account ₹2,00,000
Both sides equal ₹2,00,000, so the entry balances.
100 Journal Entries in Tally with Practical Examples
The following examples cover routine business transactions, adjustments, GST, payroll, manufacturing, and year-end accounting.
Section 1: Basic Journal Entries for Business Transactions
These first ten entries cover the transactions commonly encountered when a business starts operations and begins purchasing or selling goods.
| No. and Transaction | Journal Entry |
|---|---|
| 1. Owner introduces ₹1,00,000 in cash. | Cash A/c Dr. ₹1,00,000; To Capital A/c ₹1,00,000 |
| 2. Owner introduces ₹2,00,000 directly into the business bank account. | Bank A/c Dr. ₹2,00,000; To Capital A/c ₹2,00,000 |
| 3. Cash of ₹25,000 is deposited into the bank. | Bank A/c Dr. ₹25,000; To Cash A/c ₹25,000 |
| 4. Cash of ₹10,000 is withdrawn from the bank for office use. | Cash A/c Dr. ₹10,000; To Bank A/c ₹10,000 |
| 5. Proprietor withdraws ₹8,000 for personal expenses. | Drawings A/c Dr. ₹8,000; To Cash A/c ₹8,000 |
| 6. Proprietor takes goods costing ₹3,000 for personal use. | Drawings A/c Dr. ₹3,000; To Purchases/Inventory A/c ₹3,000 |
| 7. Goods are purchased for cash for ₹15,000, excluding any applicable GST. | Purchases A/c Dr. ₹15,000; To Cash A/c ₹15,000 |
| 8. Goods worth ₹40,000 are purchased on credit from a supplier. | Purchases A/c Dr. ₹40,000; To Supplier A/c ₹40,000 |
| 9. Goods worth ₹22,000 are sold for cash, excluding any applicable GST. | Cash A/c Dr. ₹22,000; To Sales A/c ₹22,000 |
| 10. Goods worth ₹65,000 are sold on credit to a customer. | Customer A/c Dr. ₹65,000; To Sales A/c ₹65,000 |
Important points
Capital introduced: Capital represents the owner’s investment in the business. It is not business revenue and should not be credited to Sales or another income account.
Drawings: Money or goods taken by a proprietor for personal use are generally recorded as drawings, not as business expenses.
Credit transactions: When goods are purchased on credit, the supplier becomes a creditor. When goods are sold on credit, the customer becomes a debtor.
Cash deposited into the bank: This is a transfer between two asset accounts. It does not create income or expense and is normally recorded through a Contra voucher in Tally.
Section 2: Purchase Returns, Sales Returns, Fixed Assets, and Rent
These entries explain how to record goods returned to suppliers, goods returned by customers, asset purchases, and common rent-related transactions.
| No. and Transaction | Journal Entry |
|---|---|
| 11. Goods worth ₹5,000 are returned to a supplier. | Supplier A/c Dr. ₹5,000; To Purchase Returns A/c ₹5,000 |
| 12. A customer returns goods worth ₹3,000 from an earlier sale. | Sales Returns A/c Dr. ₹3,000; To Customer A/c ₹3,000 |
| 13. Office furniture worth ₹30,000 is purchased through the bank. | Furniture A/c Dr. ₹30,000; To Bank A/c ₹30,000 |
| 14. Computer equipment worth ₹45,000 is purchased on credit. | Computer Equipment A/c Dr. ₹45,000; To Supplier A/c ₹45,000 |
| 15. Office rent of ₹18,000 is paid through the bank. | Rent Expense A/c Dr. ₹18,000; To Bank A/c ₹18,000 |
| 16. Rent of ₹18,000 has become due but remains unpaid at year-end. | Rent Expense A/c Dr. ₹18,000; To Outstanding Rent A/c ₹18,000 |
| 17. Advance rent of ₹36,000 is paid for a future period. | Prepaid Rent A/c Dr. ₹36,000; To Bank A/c ₹36,000 |
| 18. Rental income of ₹12,000 is received. | Bank A/c Dr. ₹12,000; To Rent Income A/c ₹12,000 |
| 19. Rent of ₹12,000 has been earned but not yet received. | Rent Receivable A/c Dr. ₹12,000; To Rent Income A/c ₹12,000 |
| 20. Employee salaries of ₹75,000 are paid through the bank. | Salaries Expense A/c Dr. ₹75,000; To Bank A/c ₹75,000 |
Why are prepaid and outstanding expenses important?
Prepaid and outstanding expenses are common year-end adjustments.
A prepaid expense is an amount paid before the related service or benefit has been fully consumed. For example, if a business pays ₹36,000 for future rent, the amount relating to future months is initially treated as a prepaid asset.
An outstanding expense is an expense that belongs to the current accounting period but has not yet been paid. If December rent remains unpaid on 31 March, the business must still recognise the expense in the financial year in which it was incurred.
These adjustments help ensure that income and expenses are recorded in the correct accounting period.
Section 3: Salary, Office Expenses, Insurance, and Other Operating Expenses
Businesses incur several expenses to operate their offices, employ staff, maintain equipment, and acquire customers.
| No. and Transaction | Journal Entry |
|---|---|
| 21. Salaries of ₹10,000 are outstanding at the end of the month. | Salaries Expense A/c Dr. ₹10,000; To Outstanding Salaries A/c ₹10,000 |
| 22. Workers are paid wages of ₹12,000. | Wages Expense A/c Dr. ₹12,000; To Cash/Bank A/c ₹12,000 |
| 23. An electricity bill of ₹4,800 is paid. | Electricity Expense A/c Dr. ₹4,800; To Bank A/c ₹4,800 |
| 24. An electricity expense of ₹3,500 has been incurred but not paid. | Electricity Expense A/c Dr. ₹3,500; To Electricity Payable A/c ₹3,500 |
| 25. Internet and telephone charges of ₹1,800 are paid. | Internet and Telephone Expense A/c Dr. ₹1,800; To Bank A/c ₹1,800 |
| 26. Office stationery worth ₹2,200 is purchased for immediate consumption. | Stationery Expense A/c Dr. ₹2,200; To Cash A/c ₹2,200 |
| 27. Carriage inward of ₹1,500 is paid to transport purchased goods to the business. | Carriage Inward A/c Dr. ₹1,500; To Cash A/c ₹1,500 |
| 28. Delivery expenses of ₹2,100 are paid for sending sold goods to customers. | Carriage Outward A/c Dr. ₹2,100; To Bank A/c ₹2,100 |
| 29. An insurance premium of ₹24,000 is paid. | Insurance Expense A/c Dr. ₹24,000; To Bank A/c ₹24,000 |
| 30. At year-end, ₹6,000 of an insurance premium already charged to expense relates to a future period. | Prepaid Insurance A/c Dr. ₹6,000; To Insurance Expense A/c ₹6,000 |
Understanding business expenses
The purpose of an expense account is to record costs associated with running the business. These might include salaries, rent, electricity, advertising, insurance, transportation, or office supplies.
However, not every payment is an expense. Purchasing a computer for long-term business use is generally the acquisition of an asset. The cost is recognised as an expense over time through depreciation, where applicable.
Similarly, purchasing goods for resale is usually recorded through the purchases or inventory accounts, depending on the accounting system used.
Carriage inward versus carriage outward: Carriage inward relates to bringing purchased goods into the business, while carriage outward relates to delivering sold goods to customers. Their presentation in the financial statements can differ.
Section 4: Commission, Interest, Bank Transactions, and Loans
These entries cover business income, expenses related to borrowing, bank charges, and loan repayments.
| No. and Transaction | Journal Entry |
|---|---|
| 31. Advertising expenses of ₹9,000 are paid. | Advertising Expense A/c Dr. ₹9,000; To Bank A/c ₹9,000 |
| 32. Commission expense of ₹2,500 is paid in cash. | Commission Expense A/c Dr. ₹2,500; To Cash A/c ₹2,500 |
| 33. Commission income of ₹7,000 is received in cash. | Cash A/c Dr. ₹7,000; To Commission Income A/c ₹7,000 |
| 34. Commission of ₹5,000 has been earned but is still receivable. | Commission Receivable A/c Dr. ₹5,000; To Commission Income A/c ₹5,000 |
| 35. Bank interest of ₹800 is credited to the business bank account. | Bank A/c Dr. ₹800; To Interest Income A/c ₹800 |
| 36. Bank charges of ₹350 are deducted from the account. | Bank Charges A/c Dr. ₹350; To Bank A/c ₹350 |
| 37. A business receives a bank loan of ₹3,00,000. | Bank A/c Dr. ₹3,00,000; To Bank Loan A/c ₹3,00,000 |
| 38. Loan principal of ₹20,000 is repaid. | Bank Loan A/c Dr. ₹20,000; To Bank A/c ₹20,000 |
| 39. An instalment of ₹12,500 consists of ₹10,000 principal and ₹2,500 interest. | Bank Loan A/c Dr. ₹10,000; Interest Expense A/c Dr. ₹2,500; To Bank A/c ₹12,500 |
| 40. Loan interest of ₹3,000 has accrued but remains unpaid. | Interest Expense A/c Dr. ₹3,000; To Interest Payable A/c ₹3,000 |
How should a loan instalment be recorded?
A loan instalment usually contains two components: repayment of principal and interest.
Suppose a business pays ₹12,500 towards a loan. Of this amount, ₹10,000 is principal and ₹2,500 is interest.
The correct accounting treatment is:
- Loan Account: Debit ₹10,000.
- Interest Expense Account: Debit ₹2,500.
- Bank Account: Credit ₹12,500.
The principal repayment reduces the outstanding liability. Interest is a cost of borrowing and is recorded separately as an expense, subject to the applicable accounting treatment.
Recording the entire instalment as interest expense would overstate expenses and leave the loan balance incorrect.
Section 5: Debtor and Creditor Transactions, Discounts, and Advances
These are particularly useful journal entries for accountants working with customer balances, supplier balances, and advance payments.
| No. and Transaction | Journal Entry |
|---|---|
| 41. A supplier is paid ₹20,000 against an outstanding balance. | Supplier A/c Dr. ₹20,000; To Bank A/c ₹20,000 |
| 42. ₹35,000 is received from a customer against an outstanding invoice. | Bank A/c Dr. ₹35,000; To Customer A/c ₹35,000 |
| 43. A customer owes ₹20,000 but pays ₹19,600 after receiving a discount of ₹400. | Bank A/c Dr. ₹19,600; Discount Allowed A/c Dr. ₹400; To Customer A/c ₹20,000 |
| 44. A supplier allows a discount of ₹300 against an amount payable of ₹10,000, and ₹9,700 is paid. | Supplier A/c Dr. ₹10,000; To Bank A/c ₹9,700; To Discount Received A/c ₹300 |
| 45. A customer pays an advance of ₹25,000 before the goods or services are supplied. | Bank A/c Dr. ₹25,000; To Customer Advances A/c ₹25,000 |
| 46. The business pays ₹15,000 as an advance to a supplier. | Supplier Advance A/c Dr. ₹15,000; To Bank A/c ₹15,000 |
| 47. Goods worth ₹50,000 are sold to a customer who has already paid an advance of ₹20,000. | Customer Advances A/c Dr. ₹20,000; Customer A/c Dr. ₹30,000; To Sales A/c ₹50,000 |
| 48. Materials costing ₹30,000 arrive from a supplier against whom a ₹10,000 advance was paid earlier. | Raw Materials/Purchases A/c Dr. ₹30,000; To Supplier A/c ₹20,000; To Supplier Advance A/c ₹10,000 |
| 49. A customer’s cheque for ₹12,000, previously recorded as a bank receipt, is dishonoured. | Customer A/c Dr. ₹12,000; To Bank A/c ₹12,000 |
| 50. A supplier’s cheque of ₹8,000, previously recorded as a payment, is returned unpaid by the bank. | Bank A/c Dr. ₹8,000; To Supplier A/c ₹8,000 |
What is the difference between a debtor and a creditor?
A debtor is a customer or other party from whom the business expects to receive money. A creditor is a supplier or other party to whom the business owes money.
For example, if goods worth ₹50,000 are sold on credit, the customer becomes a debtor. When the customer pays ₹20,000, the customer’s outstanding balance decreases.
A supplier advance is normally an asset because the business has paid money in anticipation of future goods or services. A customer advance is normally a liability because the business has received money before fulfilling its obligation.
The precise accounting and GST treatment of advances depends on the transaction and the applicable rules.
Section 6: Bad Debts, Depreciation, Fixed Assets, and Inventory Adjustments
This section covers entries often required when preparing financial statements or correcting differences in accounting records.
| No. and Transaction | Journal Entry |
|---|---|
| 51. A customer balance of ₹6,000 is determined to be unrecoverable and written off. | Bad Debts Expense A/c Dr. ₹6,000; To Customer A/c ₹6,000 |
| 52. ₹2,000 is recovered from a debt previously written off. | Bank A/c Dr. ₹2,000; To Bad Debts Recovered A/c ₹2,000 |
| 53. A provision of ₹5,000 is created for expected credit losses on doubtful receivables. | Bad Debts/Impairment Expense A/c Dr. ₹5,000; To Allowance for Doubtful Debts A/c ₹5,000 |
| 54. Annual depreciation of ₹6,000 is provided on furniture. | Depreciation Expense—Furniture A/c Dr. ₹6,000; To Accumulated Depreciation—Furniture A/c ₹6,000 |
| 55. Annual depreciation of ₹9,000 is provided on computer equipment. | Depreciation Expense—Computer A/c Dr. ₹9,000; To Accumulated Depreciation—Computer A/c ₹9,000 |
| 56. Furniture with a carrying value of ₹20,000 is sold for ₹25,000 through the bank. | Bank A/c Dr. ₹25,000; To Furniture/Asset Disposal A/c ₹20,000; To Profit on Sale of Asset A/c ₹5,000 |
| 57. Equipment with a carrying value of ₹15,000 is sold for ₹12,000 through the bank. | Bank A/c Dr. ₹12,000; Loss on Sale of Asset A/c Dr. ₹3,000; To Equipment/Asset Disposal A/c ₹15,000 |
| 58. A physical stock count reveals a shortage of ₹1,800. | Inventory Shortage/Loss A/c Dr. ₹1,800; To Inventory A/c ₹1,800 |
| 59. A verified physical stock count reveals excess inventory of ₹2,000. | Inventory A/c Dr. ₹2,000; To Stock Difference/Inventory Gain A/c ₹2,000 |
| 60. Goods costing ₹30,000 are destroyed in a fire. | Loss by Fire A/c Dr. ₹30,000; To Inventory A/c ₹30,000 |
How depreciation works
Depreciation allocates the depreciable cost of a tangible asset over its useful life, using the applicable accounting method and estimates.
Suppose a computer costing ₹60,000 is expected to be used for several years. Its full cost is generally not treated as an ordinary operating expense immediately when it qualifies for recognition as a fixed asset. Instead, depreciation is recorded over its useful life.
The example of ₹9,000 depreciation above is illustrative. Actual depreciation depends on the asset’s cost, useful life, residual value, method, accounting policy, and applicable statutory requirements.
How are bad debts recorded?
Bad debts arise when an amount due from a customer is considered unrecoverable.
When a specific customer balance is written off directly, Bad Debts Expense is debited and the Customer Account is credited.
Where an allowance for doubtful debts has already been recognised, the eventual write-off is generally charged against that allowance instead of recording the expense a second time. The accounting approach must remain consistent with the business’s reporting framework.
Recording a loss by fire
When inventory is destroyed, the business must reduce the inventory balance and recognise the loss.
If an insurer subsequently accepts a claim, the expected recovery is recorded separately when recognition criteria are met. The insurance recovery should not be assumed automatically merely because an insurance policy exists.
Section 7: Insurance Claims, Goods Donated, Free Samples, and Closing Stock
These examples demonstrate inventory-related adjustments and the treatment of goods used for purposes other than normal sales.
| No. and Transaction | Journal Entry |
|---|---|
| 61. An insurer accepts a claim of ₹20,000 for stock previously destroyed by fire. | Insurance Claim Receivable A/c Dr. ₹20,000; To Loss by Fire A/c ₹20,000 |
| 62. The accepted insurance claim of ₹20,000 is received in the bank account. | Bank A/c Dr. ₹20,000; To Insurance Claim Receivable A/c ₹20,000 |
| 63. Goods costing ₹1,500 are donated to a charitable organisation. | Charity/Donation Expense A/c Dr. ₹1,500; To Inventory/Purchases A/c ₹1,500 |
| 64. Goods costing ₹2,500 are distributed as free promotional samples. | Advertisement/Promotion Expense A/c Dr. ₹2,500; To Inventory/Purchases A/c ₹2,500 |
| 65. Closing stock of ₹80,000 is recognised under a traditional final-accounts adjustment approach. | Closing Stock A/c Dr. ₹80,000; To Trading A/c ₹80,000 |
Accounting for closing stock in Tally
Closing stock represents inventory remaining unsold at the end of an accounting period. It is generally valued using the applicable inventory valuation policy and accounting framework.
In a manual final-accounts approach, a closing-stock adjustment may be passed through the books. However, in a Tally company using integrated inventory records, closing stock is generally determined through recorded quantities, stock valuation, and inventory balances.
Therefore, do not automatically post the traditional closing-stock journal entry in a company whose inventory and accounting records already calculate closing stock correctly. Doing so without understanding the configuration can duplicate the balance.
Similarly, stock given away as a sample or donated to charity must be removed from inventory so that the stock balance reflects the goods actually held by the business. GST implications, where applicable, should be examined separately.
Section 8: GST Journal Entries in Tally
GST accounting introduces additional accounts, such as Input CGST, Input SGST, Input IGST, Output CGST, Output SGST, and Output IGST.
For illustration, the following examples use an assumed GST rate of 18%. For an eligible intra-state transaction, this example divides the amount into CGST of 9% and SGST of 9%. For an eligible inter-state transaction, it uses IGST of 18%.
These figures are only teaching examples. The applicable GST rate, place of supply, tax treatment, and input tax credit eligibility must be verified for the actual transaction.
| No. and Transaction | Journal Entry |
|---|---|
| 66. Intra-state goods worth ₹10,000 are purchased on credit, with illustrative GST of ₹1,800. | Purchases A/c Dr. ₹10,000; Input CGST A/c Dr. ₹900; Input SGST A/c Dr. ₹900; To Supplier A/c ₹11,800 |
| 67. Inter-state goods worth ₹10,000 are purchased on credit, with illustrative IGST of ₹1,800. | Purchases A/c Dr. ₹10,000; Input IGST A/c Dr. ₹1,800; To Supplier A/c ₹11,800 |
| 68. Intra-state goods worth ₹10,000 are sold on credit, with illustrative GST of ₹1,800. | Customer A/c Dr. ₹11,800; To Sales A/c ₹10,000; To Output CGST A/c ₹900; To Output SGST A/c ₹900 |
| 69. Inter-state goods worth ₹10,000 are sold on credit, with illustrative IGST of ₹1,800. | Customer A/c Dr. ₹11,800; To Sales A/c ₹10,000; To Output IGST A/c ₹1,800 |
| 70. Intra-state goods worth ₹2,000 are returned to a supplier, reversing illustrative GST of ₹360. | Supplier A/c Dr. ₹2,360; To Purchase Returns A/c ₹2,000; To Input CGST A/c ₹180; To Input SGST A/c ₹180 |
| 71. A customer returns intra-state goods worth ₹1,000, reversing illustrative GST of ₹180. | Sales Returns A/c Dr. ₹1,000; Output CGST A/c Dr. ₹90; Output SGST A/c Dr. ₹90; To Customer A/c ₹1,180 |
| 72. The business pays its net GST liability of ₹15,000 through the bank after appropriate tax-credit adjustments. | GST Payable A/c Dr. ₹15,000; To Bank A/c ₹15,000 |
| 73. Eligible Input CGST of ₹900 is adjusted against Output CGST of ₹900, where permitted. | Output CGST A/c Dr. ₹900; To Input CGST A/c ₹900 |
| 74. An expense of ₹1,000 has additional GST of ₹180 that is not eligible for input tax credit. | Relevant Expense A/c Dr. ₹1,180; To Supplier A/c ₹1,180 |
Input GST versus output GST
Input GST is generally the GST paid on eligible business purchases. Output GST is the GST collected or payable on taxable sales.
For example, suppose an eligible purchase has a taxable value of ₹10,000 and illustrative CGST and SGST of ₹900 each. The supplier’s total invoice value is ₹11,800.
The purchase entry records the purchase value, the applicable input tax accounts, and the total amount payable to the supplier.
On a corresponding taxable sale of ₹10,000 with the same illustrative GST split, the customer owes ₹11,800. Sales revenue is credited for ₹10,000, while the output tax accounts are credited for the relevant tax amounts.
GST is not automatically income or expense merely because money is received or paid. Its accounting depends on the transaction, eligibility for input tax credit, and applicable GST rules.
Why should GST invoices be recorded through the correct Tally voucher?
Although journal entries can illustrate the underlying debit and credit logic, a business should generally use the appropriate Purchase, Sales, Debit Note, Credit Note, Receipt, or Payment voucher for routine GST transactions.
The correct voucher type and tax-ledger configuration help Tally maintain invoice details and generate more reliable GST reports.
Before filing returns, reconcile the sales and purchase records, input tax credit, output tax, credit notes, debit notes, and tax payable balances. Never assume that a manually balanced journal entry automatically guarantees correct GST reporting.
Intra-state and inter-state transactions
The distinction between intra-state and inter-state supplies affects the tax treatment.
In the simplified examples above, an intra-state taxable transaction uses CGST and SGST, while an inter-state taxable transaction uses IGST. The actual treatment must be based on the place of supply, location of the supplier, nature of the supply, and applicable law.
Section 9: TDS, Salary Deductions, and Employee Provident Fund
Businesses may need to deduct tax at source from specified payments and maintain separate payable or receivable accounts.
The figures below are illustrative accounting amounts and are not a statement of current statutory TDS or provident fund rates.
| No. and Transaction | Journal Entry |
|---|---|
| 75. Professional fees of ₹50,000 are subject to an illustrative TDS deduction of ₹5,000; the balance is paid. | Professional Fees A/c Dr. ₹50,000; To Bank A/c ₹45,000; To TDS Payable A/c ₹5,000 |
| 76. TDS of ₹5,000 is deposited with the government. | TDS Payable A/c Dr. ₹5,000; To Bank A/c ₹5,000 |
| 77. A customer settles an invoice of ₹50,000 after deducting illustrative TDS of ₹5,000 and transferring ₹45,000. | Bank A/c Dr. ₹45,000; TDS Receivable A/c Dr. ₹5,000; To Customer A/c ₹50,000 |
| 78. Gross salary is ₹1,00,000; illustrative employee deductions total ₹10,000, and ₹90,000 is paid. | Salaries Expense A/c Dr. ₹1,00,000; To Bank A/c ₹90,000; To Employee Deductions Payable A/c ₹8,000; To TDS Payable A/c ₹2,000 |
| 79. The employer’s provident fund contribution of ₹12,000 is recognised as an expense and liability. | Employer PF Expense A/c Dr. ₹12,000; To Employer PF Payable A/c ₹12,000 |
| 80. Outstanding employee deductions and employer PF liabilities totalling ₹22,000 are deposited. | Employee Deductions Payable A/c Dr. ₹8,000; TDS Payable A/c Dr. ₹2,000; Employer PF Payable A/c Dr. ₹12,000; To Bank A/c ₹22,000 |
Understanding TDS payable and TDS receivable
TDS payable and TDS receivable represent two different situations.
TDS payable arises when a business is required to deduct tax from a payment and remit it to the government. Until the amount is deposited, it remains a liability.
TDS receivable arises when another party deducts tax from money owed to the business. The amount received in the bank is less than the gross invoice value, but the deduction is recorded separately rather than automatically treating it as a business expense or sales discount.
For example, if an invoice is ₹50,000 and a customer transfers ₹45,000 after deducting ₹5,000 as TDS, the accounts must reflect the full invoice settlement.
The actual deduction, applicable section, threshold, rate, payment date, and reporting requirements depend on the transaction and current law.
Salary accounting in Tally
Salary accounting can involve gross salary, employee deductions, employer contributions, salary advances, and net salary paid.
These amounts should not be combined into a single undifferentiated expense. The business should maintain the relevant expense accounts and liability accounts so that statutory deductions can be reconciled and paid correctly.
Section 10: Manufacturing, Raw Materials, Foreign Exchange, Tax Provisions, and Adjustments
The final ten entries cover practical transactions found in manufacturing businesses, businesses dealing in foreign currencies, and organisations preparing year-end accounts.
| No. and Transaction | Journal Entry |
|---|---|
| 81. Raw materials worth ₹50,000 are purchased on credit for manufacturing. | Raw Materials Inventory A/c Dr. ₹50,000; To Supplier A/c ₹50,000 |
| 82. Raw materials costing ₹35,000 are issued to production. | Work in Progress/Production A/c Dr. ₹35,000; To Raw Materials Inventory A/c ₹35,000 |
| 83. Direct production wages of ₹18,000 are incurred. | Work in Progress/Production A/c Dr. ₹18,000; To Bank/Wages Payable A/c ₹18,000 |
| 84. Factory overhead of ₹6,500 is recognised. | Manufacturing Overhead A/c Dr. ₹6,500; To Bank/Relevant Payable A/c ₹6,500 |
| 85. Completed goods with a manufacturing cost of ₹45,000 are transferred to finished goods inventory. | Finished Goods Inventory A/c Dr. ₹45,000; To Work in Progress/Production A/c ₹45,000 |
| 86. Job-work or processing charges of ₹7,000 are paid for services associated with production. | Job-work/Processing Charges A/c Dr. ₹7,000; To Bank A/c ₹7,000 |
| 87. Packing and dispatch expenses of ₹3,200 are paid. | Packing/Dispatch Expense A/c Dr. ₹3,200; To Bank A/c ₹3,200 |
| 88. Scrap is sold for ₹1,800, received in cash. | Cash A/c Dr. ₹1,800; To Scrap Sales/Other Income A/c ₹1,800 |
| 89. A foreign-currency supplier liability carried at ₹1,00,000 is settled for ₹98,000, giving an exchange gain of ₹2,000. | Supplier A/c Dr. ₹1,00,000; To Bank A/c ₹98,000; To Foreign Exchange Gain A/c ₹2,000 |
| 90. A foreign-currency supplier liability carried at ₹1,00,000 is settled for ₹1,02,000, creating an exchange loss of ₹2,000. | Supplier A/c Dr. ₹1,00,000; Foreign Exchange Loss A/c Dr. ₹2,000; To Bank A/c ₹1,02,000 |
Manufacturing entries explained
Manufacturing businesses need to distinguish raw materials, work in progress, finished goods, direct labour, and production overheads.
When raw materials are purchased, the cost is first recorded in the appropriate raw materials inventory or purchase account, depending on the accounting system. When those materials are issued to production, their cost is transferred to work in progress or the manufacturing account.
As production progresses, eligible direct labour and manufacturing overheads are accumulated according to the business’s costing policies. When goods are completed, their accumulated production cost is transferred to finished goods inventory.
These entries should be consistent with the business’s stock valuation, manufacturing, and cost-accounting setup in Tally. Avoid transferring costs manually where the integrated inventory or manufacturing configuration already performs the necessary accounting.
Foreign exchange gain and loss
Foreign-currency transactions can create a gain or loss when an outstanding liability is settled at an exchange rate different from its recorded amount.
If a supplier liability of ₹1,00,000 is settled for ₹98,000, the difference of ₹2,000 is an exchange gain in this illustration.
If settlement instead costs ₹1,02,000, the difference of ₹2,000 is an exchange loss.
Actual foreign-currency accounting can require additional remeasurement and reporting adjustments, depending on the applicable accounting framework and transaction.
Remaining 10 journal entries: Tax, accruals, advances, and corrections
The following final entries complete the collection of 100 practical accounting examples.
| No. and Transaction | Journal Entry |
|---|---|
| 91. Advance income tax of ₹10,000 is paid by the business. | Advance Income Tax A/c Dr. ₹10,000; To Bank A/c ₹10,000 |
| 92. An estimated income tax liability of ₹25,000 is recognised at year-end. | Income Tax Expense A/c Dr. ₹25,000; To Income Tax Provision/Payable A/c ₹25,000 |
| 93. Professional fees of ₹15,000 have been incurred but not yet paid. | Professional Fees Expense A/c Dr. ₹15,000; To Accrued Professional Fees A/c ₹15,000 |
| 94. Previously accrued professional fees of ₹15,000 are paid through the bank. | Accrued Professional Fees A/c Dr. ₹15,000; To Bank A/c ₹15,000 |
| 95. Services worth ₹10,000 have been provided, but the related income has not yet been invoiced or collected. | Accrued/Unbilled Income A/c Dr. ₹10,000; To Service Income A/c ₹10,000 |
| 96. A customer pays ₹30,000 for services that will be delivered in a future period. | Bank A/c Dr. ₹30,000; To Unearned Revenue/Income Received in Advance A/c ₹30,000 |
| 97. Services worth ₹10,000 are subsequently delivered from an amount earlier recorded as unearned revenue. | Unearned Revenue A/c Dr. ₹10,000; To Service Income A/c ₹10,000 |
| 98. A customer advance of ₹5,000 is refunded. | Customer Advances A/c Dr. ₹5,000; To Bank A/c ₹5,000 |
| 99. A supplier returns ₹7,000 of an advance previously paid to them. | Bank A/c Dr. ₹7,000; To Supplier Advance A/c ₹7,000 |
| 100. An internet expense of ₹5,000 was incorrectly placed in Suspense; the error is corrected. | Internet Expense A/c Dr. ₹5,000; To Suspense A/c ₹5,000 |
Notes on tax provisions and accrued income
Advance income tax and income tax expense are not necessarily interchangeable accounts. Advance tax is an amount paid in advance, while an income tax provision represents a recognised estimated obligation. Their final presentation depends on the business entity and applicable reporting requirements.
Similarly, income received in advance is generally recorded as a liability until the business earns it by providing the relevant goods or services.
Accrued income represents income earned in the current period but not yet received. The business should recognise it only when the relevant recognition requirements are satisfied and record any related tax treatment separately where applicable.
What is a Suspense Account?
A Suspense Account is a temporary account used when a transaction cannot initially be classified correctly or when an accounting discrepancy remains unresolved.
For example, if an amount of ₹5,000 has been debited to Suspense but is later identified as an internet expense, the correcting entry debits Internet Expense and credits Suspense.
A Suspense Account should not be used as a permanent substitute for identifying errors. Its balance should be investigated and cleared wherever possible.
How to Enter Journal Entries in TallyPrime
Once you understand the debit and credit treatment, the next step is to record transactions in Tally.
The exact screen layout can vary by product version, configuration, and enabled features, but the general process is as follows.
Step 1: Open the correct company
Open TallyPrime or Tally ERP 9 and select the company in which you want to record the transaction.
Verify that you have selected the correct company and accounting period before entering a voucher.
Step 2: Open the Journal voucher
In commonly used Tally configurations, press F7 to open the Journal voucher. You can also navigate to the voucher entry screen and select Journal where supported.
Step 3: Enter the date
Select the transaction date. The date should reflect the actual transaction or the relevant accounting adjustment date.
For year-end adjustments, ensure that the date belongs to the correct financial year and accounting period.
Step 4: Select the debit ledger
Select the account to be debited, enter the amount, and confirm the ledger details.
For example, if rent expense of ₹15,000 is being recorded, select Rent Expense and enter ₹15,000 on the debit side.
Step 5: Select the credit ledger
Select the appropriate credit account and enter the amount.
For the rent example, select Bank and credit ₹15,000.
The debit and credit totals should match before the voucher is accepted.
Step 6: Enter the narration
A narration explains the reason for the transaction. A useful narration is specific and easy to understand.
For example:
Being office rent for the month of September paid through the business bank account.
Avoid vague narrations such as “payment entry” or “journal adjustment” when more detail is available.
Step 7: Verify and save the voucher
Review the date, ledgers, amount, narration, and any relevant tax or inventory details. Accept or save the voucher according to the interface.
For regular purchases, sales, receipts, payments, and cash-bank transfers, use the corresponding voucher type rather than selecting Journal merely because a debit and credit entry is involved.
Which Voucher Type Should You Use in Tally?
Choosing the correct voucher type is just as important as understanding debit and credit.
| Voucher Type | Common Purpose |
|---|---|
| Contra | Cash deposited into bank, cash withdrawn from bank, and qualifying transfers between cash and bank accounts. |
| Payment | Cash or bank payments, such as rent, expenses, and supplier payments. |
| Receipt | Money received from customers, income received, or other receipts. |
| Journal | Adjustments, depreciation, outstanding expenses, prepaid expenses, and suitable non-routine accounting entries. |
| Sales | Recording sales invoices and related customer and tax details. |
| Purchase | Recording supplier purchase invoices and related expense, inventory, and tax details. |
| Credit Note | Sales returns and other qualifying customer-credit adjustments. |
| Debit Note | Purchase returns and other qualifying supplier-debit adjustments. |
| Stock Journal | Supported stock transfers or manufacturing-related inventory movements, where configured. |
The exact treatment depends on the transaction and the company’s Tally configuration. In particular, GST transactions should be recorded using the appropriate voucher type and tax ledgers so that invoice details and statutory reports remain consistent.
Common Mistakes to Avoid While Passing Journal Entries
Even when the amounts balance, an entry can still be wrong if the accounts are classified incorrectly.
1. Treating every payment as an expense
Buying a computer, paying off loan principal, and paying office rent are three different types of transactions. A computer may be an asset, loan principal reduces a liability, and rent is generally an expense.
2. Recording capital as income
Money introduced by the owner is capital, not sales or other operating income.
3. Ignoring outstanding expenses
Expenses incurred during an accounting period should not be omitted simply because the invoice has not been paid by the reporting date.
4. Forgetting prepaid expense adjustments
Where a payment relates partly to a future accounting period, the unexpired portion may need to be shown as an asset rather than fully expensed in the current period.
5. Recording an entire loan instalment as interest
Separate loan principal from interest so that the liability and expense balances remain accurate.
6. Posting every GST transaction through the Journal voucher
Routine GST invoices are generally better recorded through the appropriate Purchase, Sales, Debit Note, or Credit Note voucher. Manual journal entries can fail to capture the details required for reliable tax reporting.
7. Creating duplicate closing-stock entries
Businesses using integrated stock records should check their inventory configuration before posting year-end stock adjustments manually.
8. Using a Suspense Account indefinitely
Investigate unidentified balances and clear errors when the correct account is established.
9. Ignoring narration
A clear narration helps accountants, auditors, and business owners understand the purpose of an entry without having to reconstruct the entire transaction.
10. Failing to reconcile ledgers
Customer balances, supplier balances, bank accounts, tax ledgers, loans, inventory, and employee liabilities should be reconciled regularly.
Practical Tips for Students Learning Journal Entries in Tally
The most effective way to learn accounting is to combine the rules with repeated practice.
Start with simple transactions. Practise capital introduced, cash purchases, cash sales, credit purchases, and credit sales before moving on to adjustments.
Understand the accounts before memorising entries. For every transaction, identify whether the affected account represents an asset, liability, capital, income, or expense.
Use a consistent working format. Record the transaction, identify the accounts, decide the debit and credit treatment, calculate the amount, and write a brief narration.
Practise adjustments separately. Outstanding expenses, prepaid expenses, depreciation, bad debts, accrued income, and income received in advance require a sound understanding of the accounting period.
Study GST entries after basic accounting. Learn the purchase or sales treatment first, then introduce the relevant tax ledgers, input tax credit, and output tax.
Use a practice company in Tally. Enter transactions, inspect the ledger balances, and check how they affect the trial balance and financial reports.
Understand rather than memorise. When you understand why an account is debited or credited, you can handle transactions that do not appear in a textbook example.
Frequently Asked Questions About Journal Entries in Tally
1. What are journal entries in Tally?
Journal entries in Tally are accounting records that debit and credit the appropriate accounts for a financial transaction. They are commonly used for adjustments such as depreciation, outstanding expenses, prepaid expenses, and accrued income. Regular sales, purchases, payments, and receipts are generally entered through their relevant voucher types.
2. How many types of journal entries are there in accounting?
There is no single fixed number of journal entry types. Common categories include opening entries, transfer entries, adjustment entries, rectification entries, closing entries, and entries for ordinary business transactions. The classification depends on the purpose of the transaction and the accounting context.
3. What is the shortcut key for the Journal voucher in TallyPrime?
In commonly used TallyPrime configurations, F7 opens the Journal voucher. Shortcuts and navigation can vary with the version and configuration, so verify the available options in your installed software.
4. What is the difference between a Journal voucher and a Payment voucher in Tally?
A Journal voucher is commonly used for accounting adjustments and transactions that do not require a specialised voucher. A Payment voucher records money paid through cash or bank. Using the correct voucher helps maintain clearer accounting records and supports appropriate reporting.
5. How do you record a GST purchase entry in Tally?
For a taxable purchase, the accounting treatment generally records the purchase or inventory value, eligible input GST where applicable, and the total supplier liability. Routine purchase invoices should normally be recorded through a Purchase voucher with the appropriate tax ledgers and transaction details.
6. How do you record depreciation in Tally?
A typical depreciation adjustment debits the Depreciation Expense Account and credits the relevant accumulated depreciation account or asset account, depending on the accounting method used. The amount should be calculated according to the applicable depreciation policy and accounting requirements.
7. What is the golden rule for journal entries?
The traditional rules are: debit the receiver and credit the giver for personal accounts; debit what comes in and credit what goes out for real accounts; and debit expenses and losses while crediting incomes and gains for nominal accounts.
8. Can all accounting transactions be recorded through Journal vouchers?
No. Tally provides specialised voucher types for purchases, sales, receipts, payments, cash-bank transfers, and other transactions. Using an appropriate voucher type is especially important when inventory, customer invoices, supplier invoices, or GST reporting is involved.
Conclusion
Understanding 100 Journal Entries in Tally with Practical Examples provides a solid foundation for accounting practice. From basic capital and purchase entries to depreciation, GST, TDS, manufacturing costs, and year-end adjustments, each transaction follows a logical debit and credit structure.
The most important skill is not memorising hundreds of entries. It is learning to identify the accounts affected, understand their classification, and determine whether each account increases or decreases.
For students, regular practice can improve examination performance and prepare them for practical accounting work. For accountants and business owners, accurate entries help keep ledgers, financial statements, and supporting reports reliable.
When working in TallyPrime or Tally ERP 9, combine correct accounting principles with the right voucher type, clear narration, regular reconciliation, and careful review of tax treatment. These habits will help you manage routine transactions and more advanced accounting adjustments with greater confidence.
Disclaimer
This article is intended for educational and practical accounting training. All amounts and examples are illustrative and are provided to explain the debit and credit treatment of common transactions. The examples do not replace professional accounting, taxation, or legal advice. GST rates, input tax credit eligibility, TDS provisions, payroll deductions, depreciation treatment, income tax provisions, and statutory reporting requirements may vary according to the transaction, business entity, accounting framework, and applicable law. Verify the relevant rules and the configuration of your accounting software before entering actual business transactions or filing statutory returns.