Accounting Journal Entry Examples

Arnold Corporation sells a product to a customer for $1,000 in cash. This results in revenue
of $1,000 and cash of $1,000. Arnold must record an increase of the cash (asset) account
with a debit, and an increase of the revenue account with a credit. The entry is:
Debit Credit

Cash 1,000

Revenue 1,000

Arnold Corporation also buys a machine for $15,000 on credit. This results in an addition to
the Machinery fixed assets account with a debit, and an increase in the accounts payable
(liability) account with a credit. The entry is:

Debit Credit

Machinery - Fixed Assets 15,000

Accounts Payable 15,000

Unbalanced Journal Entry

If a journal entry is created where the debit and credit totals are not the same, this is called
an unbalanced journal entry. If you attempt to enter an unbalanced journal entry into a
computer accounting system, the error-checking controls in the software will likely reject
the entry. However, if you create an unbalanced journal entry in a manual accounting
system, the result will be an unbalanced trial balance, which in turn means that the balance
sheet will not balance. The following journal entry is unbalanced; note that the debit total is
less than the credit total. In such cases, you must correct the underlying unbalanced journal
entry before you can issue financial statements.
Debit Credit

Machinery - Fixed Assets 10,000

Accounts Payable 15,000