Journalize
Credit & debit inventory for every day of the month
Journalizing is the process of recording business transactions in a journal or a book of original entry in a systematic and chronological order. The journal entry includes the transaction date, amount, and a brief description of the transaction.
To journalize, follow these steps:
1. Identify the transaction: The first step is to determine which transaction needs to be recorded. This could be a sale, a purchase, an expense, a payment, or any other business transaction.
2. Determine accounts involved: Identify the accounts that are affected by the transaction. For example, a sale would affect the revenue account, while a purchase would affect the inventory or accounts payable account.
3. Decide on the debit and credit amounts: Determine which accounts need to be debited and which need to be credited. The total amount of the debit must be equal to the total amount of the credit.
4. Record the transaction in the journal: Record the transaction in the journal with the date, description of the transaction, and the debit and credit amounts.
5. Post the journal entry: Transfer the journal entry to the appropriate ledger accounts to keep track of the transactions.
For example, if a company purchased inventory worth $1,000 on credit, the journal entry would be:
Date Account Debit Credit
MM/DD/YYYY Inventory $1,000
Accounts payable $1,000
This entry shows that the inventory account is debited with $1,000, and the accounts payable account is credited with $1,000.
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