How to Write a Journal Entry in 5 Steps

Write a journal entry in 5 simple steps. See how to prepare basic journal entries for revenues and expenses.

See my other "How To" journal entry video here:
youtu.be/V_rYqvhLyVs


In this video I want to show you how easily you can write a journal entry

in just five steps. Before we get into these five steps, let's take an example and see how

they're used.

Say we're recording transactions for a doctor's office. We'll analyze a typical

transaction and come up with a journal entry.

Our doctor's office is open and a patient comes in who isn't feeling well. The
doctor examines the patient, tells the

patient what's wrong and prescribes some medicine. At this point the doctor has

earned his revenue. He charges a fee, say, $100, and the patient pays in cash.

Now we're ready for our five steps. Step 1: we need a date, the date that the transaction occurred.

Step 2: we need at least 1 debit. Step 3: we need at least one credit. Step 4: the

total of the dollar amounts of the debits must equal the total of the dollar amounts of

the credits. And finally, Step 5: we need an explanation as to why we're writing the

journal entry. Let's write this journalentry. Step 1: the date. Let's say this

transaction occurred on July 1st.

Step 2: we need at least one debit. In this case, cash increased. Cash is an asset.

When cash increases we debit the account

Cash. In this case, will debit the account for $100. Step 3: we need at least one

credit. The doctor earned his revenue. We'll credit the Revenue account.

When revenue increases, the revenue account is credited, in this case for $100. Step 4:
the total of

our debits, in this case there's only one for $100, equals the only $100 credit. And Step 5:

to record fees earned and cash received. That's our explanation.

Notice that the credits are indented to the right. This is proper form for any

journal entry. Also know which accounts increase with debits and which accounts

increase with credits. When the doctor receives cash, the account Cash is debited.

When the doctor earns more revenue, the account Fee Revenue is credited. Cash has a

normal debit balance. Revenue has a normal credit balance.

Check your accounting textbook for more information on this. And finally, all journal
entries have a reference.

In this case we'll call this entry, General Journal Entry

#1. Are you ready to record an expense? Let's say we still have our same doctor and as
with any doctor's office, he has

expenses. Let's say he's paying his telephone bill for the month of July. He'll cut

a check or give cash. Let's record this journal entry. Say the doctor is cutting his
check on July 30th

and the telephone bill is for the month of July. We'll put July 30. We'll debit telephone
expense for $60.

Let's say the bill came out to $60. We'll credit cash for $60 because cash decreased. $60

= $60. Our debts equal our credits. Our journal entry balances. And finally our
explanation, to record telephone expenses.

Let's review this journal entry. Step 1, we gave it a date. Step 2, we debited at least one
account. We debited Telephone Expenses. Step 3, we need

at least one credit, in this case we credited Cash. Step 4, our debit of $60 equals

our credit of $60. And Step 5, our explanation. In this case, we had to know which accounts
increased with debits and which accounts decreased with credits.

When the doctor pays with cash, the Cash account is credited. When the doctor's office incurs
an expense, the

expense account is debited. Expenses have a normal debit balance. Cash has a normal debit.
Again,

check your textbook for more information. And there you have it: five steps to write a
journal entry.

Thanks for watching.