Compound journal entry:

Compound journal entry:-

    When two or more transaction of the same nature take place on the same date, a compound or combined journal entry may be passed for them instead of passing separate entry for each transaction. Thus total number of book keeping entries may be reduced.

                In a compound journal entry, there may be:

One account to be debited and two or more accounts to be credited. For example, if

X pays to his creditor, Z Rs. 5,000 and Z allows X a discount of Rs.500, than compound journal entry will be passed as follows:

 

   Z’s account                                         Dr.                          Rs. 5000

          To Cash a/c                                         Cr.                         Rs. 4,500

          To Discount a/c                                    Cr.                         Rs.    500

                         ( Being payment of cash to Mr. Z, discount received Rs. 500)