Introduction

Journal entries in Tally are the most widely used accounting entries after payment and receipt entries.

Note: Journal entries are used when there is NO involvement of cash or bank account in an accounting entry. Otherwise it would be payment or receipt entry. Generally, journal entries are created for closing books of accounts at the end of the year or for adjusting entries.

Journal entries are an important part of accounting in general as well as in Tally. Any entry that does not include the following accounts will be a journal entry.

· Cash Account

· Bank Account

For example, if we take an entry of depreciation. As it is a non-cash entry and it does not involve bank, sales and purchase account as well, it will be journal entry. There are 4 major journal entries which are used in day to day transactions. They are:

1. Depreciation entry

2. Accrued Income entry

3. Entry for Purchase on Credit

4. Entry for Sales on Credit

How to create Journal Entries in Tally

For creating journal entries in Tally, you have to select Journal Voucher from the available vouchers in Tally.

From Gateway of Tally, you have to select Accounting Vouchers. Then from the green right hand side bar, select Journal or press F7 from the keyboard for going into the journal voucher in Tally as shown in the picture.

Now, we will create different journal entries in Tally.

Journal Entry for Depreciation in Tally

Before we create journal entry for depreciation, we need to know the accounting entry for it. Let’s take an example of an asset called Furniture. We already have Furniture worth Rs.10,000 and we want to apply depreciation of Rs.1,000. The accounting entry will be:

Depreciation Account Debit by Rs.1,000 and

Furniture Account Credit by Rs.1,000.

Note: Depreciation Ledger will come under Indirect Expenses

The entry for depreciation as shown in the picture below. As you can see in the top left corner, it is journal entry. The value of furniture has been decreased from Rs.10,000 to Rs.9,000 because depreciation has been charged on the furniture.

Now, let’s look at the second journal entry in Tally which is about accrued income.

Journal Entry for Accrued Income in Tally

Accrued income simply means that you are eligible for the income but it is not received by you. For example, I have some pending amount from a person named Prem of Rs.1,000 but I have not received it till now. Therefore it will be an accrued income for me. Journal entry for the above transaction will be as under:

Prem's Account Debit by Rs.1, 000

and

Accrued Interest Income will be Credit by Rs.1,000.

Note: Here Prem Ledger will create under Sundry Debtors

Please note that Prem can be my debtor or a person to whom I have given a loan and Accrued Interest Income will be my income. Journal entry in Tally for the above transaction will be as shown in the picture below but before the entry, create a ledger.

Now, the entry will be:

This is how the journal entry for accrued interest in Tally is done. If you want to create a journal entry for accrued expenses in Tally, it is exact opposite of the above entry will be done. Entry for accrued expense will be Accrued Expenses Debit and Prem's Account will be Credit.

Let’s move on to the next journal entry of Purchase on Credit.

Journal Entry for Purchase on Credit in Tally

When we purchase something on credit, you can even create a Purchase Voucher in Tally. But for this example, we will create a journal entry. For example, if I purchased from Prem on credit goods worth Rs.5,000. The journal entry will for this transaction will be as under.

Purchase by Rs.5,000

and

Prem by Rs.5,000.

Note that in this case, Prem will be my creditor as I am purchasing from her on credit. Journal entry in Tally for the above transaction will be as shown in the picture below:

This is a simple purchase entry. If you have purchased different items and want to include it in the entry that is also possible. Now, let’s move on to the last journal entry which is Sales on Credit.

Journal Entry for Sales on Credit in Tally

As I said while creating journal entry for purchase, it can also be created in Purchase Voucher. Similarly Sales entry can also create in both Sales Voucher as well as Journal Voucher.

For example, I sold some goods worth Rs.6,000 to Prem. Prem's Account will be Debit by Rs.6,000 and Sales will be Credit by Rs.6,000. In this case, Prem will be my debtor as I am selling goods to her.

Now let’s look at the actual journal entry in Tally. Journal entry in Tally for the above transaction will be shown in the picture below:

Again this is a simple sales entry and obviously you can include stock items, taxes or other expenses if you want. These were the major journal entries in Tally you can create easily. Of course, there will be many more journal entries but these were the major ones.

Summary…

Journal entries are an inevitable part of accounting. You can say that Journal entry is the foundation of double entry system of accounting.