Journal voucher is prepared for the transactions which does not relate to sales, purchases, cash, bank, material returns.  Journal vouchers are prepared for the following transactions:-

  1. Opening balances
  2. Purchases of fixed assets and other assets on credit
  3. Sale of fixed assets and other assets on credit
  4. Depreciation on fixed assets.
  5. Purchase of any items relating to business expenditures on credit
  6. Adjustment entries.
  7. Closing entries.
  8. Correction entries.
  9. Transfer entries.
  10. Provisions for expenditures
  11. Accrual income.
  12. The entries for transactions which are no repeated very frequently. For example if there are very limited transaction in respect of material return then the journal vouchers can be prepared rather than preparing the purchase return voucher or sales return vouchers etc.

Support Documents to be Required for Preparation of Journal Vouchers

Following documents are required for preparation of journal vouchers:-

1.Invoices for all non-trading items.

2.Bills or Debit notes or Credit notes for  services availed or provided

3. The debit notes and the credit notes in respect of  material returns and other adjustments.

4. For prepaid and outstanding expenses, the copy of payment voucher whenever the same are paid.

5. Any document which can authenticate the happening of journal voucher.

6. For rectification of errors.

Points to be Kept in Mind for Preparation of Voucher

While preparing the journal vouchers, the accountant must keep the following points in mind:-

  1. The support documents must be attached with the journal voucher as far as possible. These support documents must be duly checked and passed by the concerned authorities.
  2. For adjustments, provisions, and corrections, transfers etc. there should be a perfect logic and the working of the transaction must be attached with the journal voucher. The justification of transaction must be approved by the competent authorities.
  3. Amount must be written both in figures and words.
  4. The journal voucher must be signed by the accountant and the authorized person.

Illustration:

M/s XYZ Limited purchased a car from M/s Delhi Motors for Rs.650000/= as per their Bill No. 110 dated 10.10.15.

Prepare the necessary voucher in the books of M/s XYZ Limited.

Solution:

Since the car is not the part of  purchases of trading items and it is not purchased in cash also, therefore, journal voucher shall be prepared for the above transaction as under:-

M/S XYZ LIMITED

JOURNAL VOUCHER

Voucher No. 101                                                                                     Date: 10.10.15

PARTICULARS

AMOUNT IN Rs.

Debit:  Car Account

65000/=

Total

65000/=

Credit: M/s Delhi Motors

65000/=

Total

65000/=

Narration: Being car purchased from M/s Delhi motors as per their bill no. 110 dated 10.10.15 enclosed.
Amount in words: Rupees Sixty Five Thousand only.
Manager                                              Accountant

Illustration

M/s XYZ Limited purchased stationery items Rs.6500/= on credit from M/s Gift House as per their bill No. 555 dated 01.10.15

Prepare the necessary voucher in the books of M/s XYZ Limited.

Solution:

Since the stationery is the part of business expenses and also purchased on credit, therefore, the journal voucher will be prepared for above transaction as under:

M/S XYZ LIMITED

JOURNAL VOUCHER

Voucher No. 98                                                                                        Date: 01.10.15

PARTICULARS

AMOUNT IN Rs.

Debit:  Printing & Stationery Expenses Account

6500/=

Total

6500/=

Credit: M/s Gift House

6500/=

Total

6500/=

Narration: Being stationery purchased from M/s Gift House as per their bill no. 555 dated 01.10.15 enclosed.
Amount in words: Rupees Sixty Thousand Five Hundred only.
Manager                                              Accountant

Illustration:

Provision made for Outstanding Salaries for the month of March”2015 for Rs.22000/=

Prepare the necessary voucher in the books of M/s XYZ Limited on 31.03.15

Solution:

According to above transaction, no payment has been made but a provision is made for outstanding expenses to know the correct position of the business activities. Therefore, journal voucher will be prepared for above transaction as under:-

M/S XYZ LIMITED

JOURNAL VOUCHER

Voucher No. 215                                                                                        Date: 31.03.15

PARTICULARS

AMOUNT IN Rs.

Debit:  Salaries Expenses Account

22000/=

Total

22000/=

Credit: Expenses Payable Account

22000/=

Total

22000/=

Narration: Being provision made for salaries payable for the month of March”2015 as per the copy of salary sheet enclosed.
Amount in words: Rupees Twenty Two Thousand only.
Manager                                              Accountant

Note: While making the above entry we can credit the following heads in place of Expenses Payable Account:-

Outstanding Expenses Account

or

Salaries Payable Account

Illustration

Rs.10000/= paid to National Insurance Company Limited, on 01.10.14 as Insurance Premium for building for the period of 01.10.14 to 30.09.15.

Prepare the necessary voucher on 31.3.15 for prepaid insurance in the books of M/s XYZ Limited.

Solution:

According to above transaction, it is clear that the insurance premium relating to next financial year i.e. 2015-16 is paid in advance. To know the correct position of profit and loss account for the current financial year as well as next financial year, it is necessary to make adjustment for all prepaid expenses. Therefore, amount relating to 01.04.14 to 30.09.15 will be reversed in current financial year. The prepaid insurance expenses will be calculated as follows:-

a) Insurance Premium paid from 01.10.14 to 30.09.15 Rs.10000/=

b) Actual Insurance expenses relating to current year should be (01.10.14 to 31.03.15)   Rs.5000/=

Prepaid Insurance (a-b)                                                Rs.5000/=

Following journal entry will be passed for prepaid insurance as on 31.03.2015:-

M/S XYZ LIMITED

JOURNAL VOUCHER

Voucher No. 216                                                                                       Date: 31.03.15

PARTICULARS

AMOUNT IN Rs.

Debit:  Prepaid Insurance Account

5000/=

Total

5000/=

Credit: Insurance Expenses Account

5000/=

Total

5000/=

Narration: Being amount paid for insurance from 01.04.14 to 30.09.15 adjusted against insurance expenses as per the copy of insurance policy enclosed)
Amount in words: Rupees Five Thousand only.
Manager                                              Accountant

Entry for Opening Balance of  Prepaid Expenses

Opening balances of all the prepaid expenses are transferred in to appropriate expenses in current financial year to show the correct picture of profit and loss of the firm for current financial year.

 Illustration

We take the above example of prepaid expenses only. As per above example the balance sheet for financial year 2014-15 will show the amount of prepaid expenses against building insurance for Rs.5000/= paid for the period of 01.04.15 to 30.09.15.

Prepare the required voucher for the above transaction on 01.04.15 in the books of M/s XYZ Limited.

Solution:

The journal entry shall be passed for above adjustment on 01.04.2015 as follows:

M/S XYZ LIMITED

JOURNAL VOUCHER

Voucher No. 001                                                                                       Date:01.04.15

PARTICULARS

AMOUNT IN Rs.

Debit:  Insurance  Expenses Account

5000/=

Total

5000/=

Credit:  Prepaid Insurance Account

5000/=

Total

5000/=

Narration: Being amount of prepaid insurance from 01.04.15 to 30.09.15 transferred to insurance expenses as per the copy of insurance policy enclosed)
Amount in words: Rupees Five Thousand only.
Manager                                              Accountant

 

Entry for Accrued Income

Accrued Income means any income which is earned for a financial year but not received on the date of preparation of balance sheet. To know the real position of profit and loss account the business firm must make proper adjustment for accrued income.

Illustration

Amount of Interest receivable on fixed deposit with bank is Rs.20000/= as on 31.03.15 relating to financial year 2014-15.

Prepare the necessary voucher in the books of M/s XYZ Limited.

Solution:

As we know that the interest relating to financial year 2014-15 is not received at the date of finalization of balance sheet. Therefore, we have to make adjustment entry for this accrued interest to know the exact profit of the business firm as follows:-

M/S XYZ LIMITED

JOURNAL VOUCHER

Voucher No. 217                                                                                      Date: 31.03.15

PARTICULARS

AMOUNT IN Rs.

Debit:  Accrued Interest Account

20000/=

Total

20000/=

Credit: Interest on Fixed Deposit Account

20000/=

Total

20000/=

Narration: Being amount of interest on fix deposit for financial year 2014-15 is due but not received as per interest certificate of bank enclosed)
Amount in words: Rupees Twenty Thousand only.
Manager                                              Accountant

Adjustment Entries

When any adjustment is made in any account on account of writing off the petty amounts or adjustment of balances of one account to other accounts, then also the journal entry will be made for the same.

Illustration

Writing off the Petty Amounts

An amount of Rs.15.25 is being shown as debit balance in account of a debtor M/s Gift House as on 31.03.15 and there is no hope of recovering this amount.

Pass the necessary entry to make the balance nil of above debtor in the books of M/s XYZ Limited.

Solution:

Since books are closed on 31.03.2015 and a petty amount of Rs.15.25 is lying as debit balance in debtor’s account, there is no sense to carry forward this balance in next year.

Therefore, this petty amount must be written off in this year itself. To write-off this type of amounts, Journal Voucher is prepared as follows:-

M/S XYZ LIMITED

JOURNAL VOUCHER

Voucher No. 218                                                                                      Date: 31.03.15

PARTICULARS

AMOUNT IN Rs.

Debit:  Excess & Short Account

15.25

Total

15.25

Credit: M/s Gift House

15.25

Total

15.25

Narration: Being petty amount lying as debit balance in account of M/s Gift House, written off as per the authorized sanction slip enclosed)
Amount in words: Rupees Fifteen and Paisa Twenty Five only)
Manager                                              Accountant

Note:  Miscellaneous Expenses or Petty Expenses or General Expenses also, can be debited in place of Excess & Short Account.

Transferring the Amounts from One Account to another Accounts

Illustration

On 31.03.2015, an amount of Rs.15000/= is shown as debit balance in account of M/s ABC Limited while M/s ABC Pvt. Limited is showing the credit balance of Rs.15000/=. Both companies belong to same management. As per the instruction of the management, this amount is to be adjusted between two accounts.

Prepare the necessary voucher for this adjustment in the books of M/s XYZ Limited.

Solution:

Some time what happens is that a business firm deals with so many companies under same group. As per the instruction given by the company concerned, any amount can be transferred to other company’s account. For this type of adjustment, Journal Voucher is prepared. For above adjustments, following Journal Voucher will be prepared:-

M/S XYZ LIMITED

JOURNAL VOUCHER

Voucher No. 219                                                                                      Date: 31.03.15

PARTICULARS

AMOUNT IN Rs.

Debit:  M/s ABC Pvt. Limited

15000/=

Total

15000/=

Credit: M/s ABC Limited

15000/=

Total

15000/=

Narration: Being amount transferred From M/s ABC Ltd to M/s ABC Pvt. Ltd. as per the instruction letter given by parties enclosed.
Amount in words: Rupees Fifteen Thousand only)
Manager                                              Accountant

Rectification of Errors

Journal vouchers are prepared to rectify the errors in accounts.

Illustrations

An amount of Rs.20000/= paid to Mr. X on 15.10.15 as advance, debited to Salaries Expenses Account instead of Staff Advances Account. Pass the Journal Entry for rectification on 31.12.15 in the books of M/s XYZ Limited.

Solution:

Since the advances are an asset and salary is expenditure, it will be wrong to show the advance amount as salary. Therefore, correct head should be debited. The rectification of this error can be done by preparing the Journal Voucher as follows:-

M/S XYZ LIMITED

JOURNAL VOUCHER

Voucher No. 170                                                                                       Date: 31.12.15

PARTICULARS

AMOUNT IN Rs.

Debit:  Staff Advances Account

20000/=

Total

20000/=

Credit: Salaries Expenses Account

20000/=

Total

20000/=

Narration: Being amount paid to Mr. X as advance, wrongly debited to salaries expenses, now corrected as per the copy of payment voucher enclosed.
Amount in words: Rupees Twenty Thousand only)
Manager                                              Accountant

Depreciation on Fixed Assets

All the entries relating to depreciation of fixed assets are prepared through Journal Voucher.

Illustration

An amount of Rs.16000/= charged as Depreciation on Machinery for financial year 2014-15. Prepare the required voucher for above in the books of M/s XYZ Limited.

Solution:

As we know that the depreciation is also an adjustment entry. Therefore, the Journal Voucher is to be prepared at the end of the financial year as follows:-

M/S XYZ LIMITED

JOURNAL VOUCHER

Voucher No. 220                                                                                       Date: 31.03.15

PARTICULARS

AMOUNT IN Rs.

Debit:  Depreciation  Account

16000/=

Total

16000/=

Credit: Machinery  Account

16000/=

Total

16000/=

Narration: Being amount of depreciation for financial year 2014-15 accounted for.
Amount in words: Rupees Twenty Thousand only)
Manager                                              Accountant

 

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