Introduction to Accounting Entries for a Business
Senior 2 · Entrepreneurship
Introduction to Accounting Entries for a Business
Lesson 4 of 5
22 min
A busy wholesaler may send out dozens of invoices a week. Posting each one straight into the ledger would fill the sales account with hundreds of lines. Instead, transactions of the same kind are first listed in a journal, and only the totals go to the ledger. This saves time, keeps the ledger tidy and makes errors easier to trace.
Books of prime entry (also called books of original entry, or journals) are where transactions are first recorded, straight from the source documents, before they are posted to the ledger.
| Book of prime entry | What it records | Source document |
|---|---|---|
| Sales journal | Sales of goods on credit | Copies of invoices sent |
| Purchases journal | Purchases of goods for resale on credit | Invoices received |
| Returns inwards (sales returns) journal | Goods sent back by customers | Copies of credit notes sent |
| Returns outwards (purchases returns) journal | Goods sent back to suppliers | Credit notes received |
| Cash book | All cash and bank receipts and payments | Receipts, payment vouchers, deposit slips |
| General journal | Anything not in the other books: opening entries, buying or selling non-current assets on credit, corrections | Letters, agreements, memos |
Cash sales and cash purchases go to the cash book, not to the sales or purchases journal: those two journals are for credit transactions only.
Written by Ganzaa. VAT is left out to keep the example simple.
Sales journal, September 2026
| Date | Customer | Invoice no. | Frw |
|---|---|---|---|
| 2 Sept | Kivu View Hotel | 101 | 350,000 |
| 5 Sept | Umutoni Restaurant | 102 | 180,000 |
| 9 Sept | Byiringiro School Canteen | 103 | 240,000 |
| Total credited to the sales account | 770,000 | ||
Posting: each customer's account is debited with its own invoice (they now owe the business), and the sales account is credited once with the total, 350,000 + 180,000 + 240,000 = 770,000 Frw.
Purchases journal, September 2026
| Date | Supplier | Invoice no. | Frw |
|---|---|---|---|
| 3 Sept | Kinigi Potato Cooperative | K45 | 420,000 |
| 7 Sept | Nyabihu Farmers' Cooperative | N12 | 260,000 |
| 10 Sept | Gatete Farm | G08 | 95,000 |
| Total debited to the purchases account | 775,000 | ||
Posting: the purchases account is debited with the total, 775,000 Frw; each supplier's account is credited with its own invoice (the business now owes them).
Returns inwards journal
| Date | Customer | Credit note | Frw |
|---|---|---|---|
| 12 Sept | Umutoni Restaurant (spoilt potatoes) | CN01 | 20,000 |
Debit returns inwards 20,000; credit Umutoni Restaurant 20,000. She now owes 180,000 − 20,000 = 160,000 Frw.
Returns outwards journal
| Date | Supplier | Credit note received | Frw |
|---|---|---|---|
| 14 Sept | Nyabihu Farmers' Cooperative (rotten sacks) | NC03 | 15,000 |
Debit Nyabihu Farmers' Cooperative 15,000; credit returns outwards 15,000. The business now owes Nyabihu 260,000 − 15,000 = 245,000 Frw.
General journal: on 15 Sept the business buys a platform weighing scale on credit from Rwanda Scales Ltd for 180,000 Frw. The scale is a non-current asset, not goods for resale, so it does not go in the purchases journal.
| Date | Details | Dr (Frw) | Cr (Frw) |
|---|---|---|---|
| 15 Sept | Equipment (weighing scale) | 180,000 | |
| Rwanda Scales Ltd | 180,000 | ||
| Being a weighing scale bought on credit, invoice RS77. | |||
A general journal entry lists the debit first, the credit below it, and a short explanation called the narration.
Tip
Exam technique. Ask two questions: is it on credit? and is it goods for resale? Credit sales of goods: sales journal. Credit purchases of goods for resale: purchases journal. Anything paid or received in cash or through the bank: cash book. A credit purchase of equipment or furniture: general journal.
Solution: (a) sales journal; (b) returns inwards journal; (c) general journal; (d) cash book.
Solution: Credit the sales account with the total, 265,000 Frw.
Solution: Credit notes received from suppliers.
Solution: Debit Equipment (sewing machine) 150,000; credit Capital 150,000. Narration: Being a sewing machine brought in by the owner as capital.
Summary
Sources and credits
The wholesaler example and the practice items are written by Ganzaa.
This lesson adapts CC BY-SA material and is shared under CC BY-SA 4.0.
