What is Compound Journal Entry?

What is Compound Journal Entry?

Compound Journal Entry

When two or further transactions of comparable nature take place on the similar date, such transactions can be entered in the journal by means of a combined journal entry is called Compound Journal Entry. A compound journal entry is an accounting entry in which there is more than one debit, more than one credit, or more than one of both debits and credits.

It is basically a mixture of two or more simple journal entries but instead of recording many simple journal entries it is enhanced to record journal entries of single accounting event as a compound entry because it saves time and keeps related debits and credits in one place.

The only precaution is that the total debits should be equal to total credits.

Example 17: June 1, 2004 – Anju contributed capital Rs. 50,000 Manju contributed capital Rs. 70,000.