Compound Journal Entry | Examples | Journal

Where transaction related to three or more accounts is recorded in the books with the single journal entry is known as a compound journal entry. 

What is Compound Journal Entry?

In the transaction, Where two or more accounts of Debit or Credit are involved, which can be recorded in journal day books by posting single journal entry, that journal entry is known as the Compound Journal Entry. It is also known as a combine journal entry.

For example: 

AB Co. purchased goods worth Rs. 50,000 and paid 30% amount in cash and the balance by cheque.

So, in the above transaction, there are three accounts involved these are shown as following: 

1. Purchase Account
2. Cash Account 
3. Bank Account 

The Purchase account will be debited and cash & bank account will be credited. So the accounting entry which will be posted in books includes two credited accounts. So that’s why this journal entry will be known as a compound journal entry. 

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Accounting Treatment of Compound Journal Entry:

The accounting treatment of compound Journal Entries may be in two types shown as follow:

1. By debited two or more accounts and credited only a single account.
2. By debited a single account and credited two or more accounts.

1. By debited two or more accounts and credited only a single account:

Example 1:

On Date 01/08/2017 Sold goods to Mr Rajan worth Rs. 40,000/- and He paid Rs. 5,000/- in cash and 35,000/- By cheque.

In this above transaction three accounts are involved shown as below:

1. Cash A/c –  Rs 5,000/- Cash received for it.
2. Bank A/c – Balance payment made with the cheque.
3. Sale A/c – Goods sold.

2. By debited a single account and credited two or more accounts.

Example 2:

On Date 01/08/2017 Purchase goods from Mr Rohan worth Rs. 30,000/- and paid him Rs. 5,000/- in cash and 25,000/- By cheque.

In this above transaction three accounts are involved shown as below:

1. Purchase A/c – Goods purchased.
2. Cash A/c –  Rs 5,000/- Cash paid for it.
3. Bank A/c – Balance payment made with the cheque.

Question for Practice:

You can Comment the answer in the comment box of the following question, I will check and reply to you as soon as possible. 

1. 01/04/2018 Mr Sohan started business with Building Rs 5,00,000, Cash Rs 50,000 Plant and machine Rs 2,50,000 and furniture Rs 1,50,000.
2. 02/04/2018 Purchase goods from Miss Radhika for Rs 75,000 and From M/s Ramu & Sons Pvt. Ltd. For Rs. 90,000.
3. 05/04/2018 Payment made to M/s Ramu & Sons Pvt. Ltd. and get discount of Rs 1,800/-.
4. 05/04/2018 Sold goods to Mr Rohan worth Rs. 25,000 and to Mrs Rajni worth Rs. 15,000/-.
5. 06/04/2018 Payment made to Miss Radhika for Rs 15,000/- by cash and 58,000/- by cheque and received discounts of Rs. 2,000/-
6. 10/04/2018 Salary worth Rs 50,000/- and Wages worth Rs. 30,000/- paid for the month.
7. 12/04/2018 Purchase goods worth Rs 25,000 and paid freight on it for Rs 500/-.
8. 15/04/2018 Payment received from Mrs Rajni for Rs. 14900 after deducting Rs 100 Discount.

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