Journal Entries
Part 1 — Special Transactions
Bad Debts · Loss by Fire · Advertisement Samples · Drawings — complete journal format
📝 Handwritten Class Note
CA Devesh Thakur’s handwritten note for Day 12 — save it for quick revision!
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Journal Entries Part 1 — Day 12
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Bad Debts, Loss by Fire, Advertisement Samples & Drawings journal entries explained with full format. Day 12 of 50 Days Accounting Challenge ✍️
▶ Watch on InstagramDay 12: Journal Entries — Part 1
In Days 9 & 10 we mastered account classification. Today in Day 12, we apply that knowledge to pass real journal entries for 4 special transactions — Bad Debts, Loss by Fire, Advertisement Samples, and Drawings. We also map every account to the correct financial statement! ✍️
What is a Journal?
Journal ek book of original entry hai — yahan pe har transaction pehle chronological order mein record hota hai. Format: Date | Particulars | L.F. | Dr. Amount | Cr. Amount. Every entry must balance: Total Dr. = Total Cr.
📑 Where These Accounts Appear
📊 Trading / P&L A/c
Nominal accounts — income & expenses
⚖️ Balance Sheet
Real & Personal accounts
✍️ 4 Special Journal Entries
Bad Debts Written Off
Amount confirmed unrecoverable from debtor
| Ageing Bucket | Period | Risk Level |
|---|---|---|
| Current | 0–30 days | Low risk |
| Overdue 1 | 31–60 days | Moderate |
| Overdue 2 | 61–90 days | High |
| Bad Debt territory | 90+ days | Very High / Write off |
| Particulars | L.F. | Dr. (₹) | Cr. (₹) |
|---|---|---|---|
| Bad Debts A/c Nominal | XX | — | |
| Debtors A/c Personal | — | XX |
Loss by Fire — Partly Insured Goods
Insurance claim receivable + uninsured loss both recorded
🏦 Insurance Company A/c (Dr.)
Claim amount jo insurance company se milega — Personal A/c. Shown as Receivable on Assets side of Balance Sheet until received.
🔥 Loss by Fire A/c (Dr.)
Uninsured loss amount — Nominal A/c. Shown on Dr. side of P&L A/c as an expense/loss.
| Particulars | L.F. | Dr. (₹) | Cr. (₹) |
|---|---|---|---|
| Insurance Company A/c Personal (Claim amount receivable) | XX | — | |
| Loss by Fire A/c Nominal (Uninsured loss) | XX | — | |
| Purchases A/c Nominal (Cost of goods destroyed by fire) | — | XX |
Key Note
Insurance Company A/c Dr. + Loss by Fire A/c Dr. = Total cost of goods lost = Purchases A/c Cr. Total Dr. always equals Total Cr.!
Advertisement — Goods Distributed as Samples
Goods used for promotion — treated as advertisement expense
| Particulars | L.F. | Dr. (₹) | Cr. (₹) |
|---|---|---|---|
| Advertisement A/c Nominal | XX | — | |
| Purchases A/c Nominal [Goods distributed as samples] | — | XX |
Drawings — Cash & Goods Withdrawn by Owner
Capital reduces — two separate credits (cash + goods)
💵 Cash Withdrawn
Cash A/c Cr. — Real A/c. Cash goes out of business → Credit (what goes out).
📦 Goods Withdrawn
Purchases A/c Cr. — Nominal A/c. Goods taken at cost price → Purchases reduced.
| Particulars | L.F. | Dr. (₹) | Cr. (₹) |
|---|---|---|---|
| Drawings A/c Personal (Capital ↓ — owner’s withdrawal) | XX | — | |
| Cash A/c Real (Cash withdrawn — goes out) | — | XX | |
| Purchases A/c Nominal (Goods withdrawn at cost) | — | XX |
Common Exam Mistakes in These Entries
1. Bad Debts: Always debit Bad Debts A/c (Nominal) — never debit customer directly.
2. Loss by Fire: Credit Purchases A/c (cost) — NOT Sales A/c (selling price).
3. Samples: Credit Purchases A/c — NOT Sales A/c (goods are given free, not sold).
4. Drawings: Drawings is a Personal A/c that reduces Capital — it is NOT an expense in P&L.
Connection with Previous Days
Day 6: Bad Debts (P&L Dr.) and Bad Debts Recovered (P&L Cr.) — now we know the exact journal entry!
Day 9: Drawings = Personal A/c. Debtors = Personal A/c. Cash = Real A/c. Purchases = Nominal A/c.
Day 10: Modern Approach — Expense increases → Dr. Asset decreases → Cr. All perfectly applied here.
📊 Quick Summary — All 4 Journal Entries
| Transaction | Account Dr. | Account Cr. | Key Point |
|---|---|---|---|
| Bad Debts (31.08.XX) | Bad Debts A/c (Nominal) | Debtors A/c (Personal) | Amount not recoverable → write off |
| Loss by Fire (30.10.XX) | Insurance Co. A/c + Loss by Fire A/c | Purchases A/c (at cost) | Insured portion = asset; uninsured = loss |
| Advertisement Samples (01.01.XX) | Advertisement A/c (Nominal) | Purchases A/c (Nominal) | Goods given free — credit Purchases not Sales |
| Drawings (28.02.XX) | Drawings A/c (Personal) | Cash A/c + Purchases A/c | Capital ↓ | Both cash & goods withdrawn |
