Identify the business areas you want to monitor using journal entry bookkeeping. This enables you to determine how many books of original entry or business journals you require to help you budget accordingly. Such books may include a sales journal, a purchases journal, a cash received journal, a cash disbursement journal or a general journal.
Obtain a blank book and divide the pages into four columns in order to denote the date and/or time of the transaction, accounts that the transaction affects, debit and credit. These are the main elements handled in journal entries and affect every transaction in a business. This format is ideal because it helps list all transactions in order of occurrence.
Record every transaction detail in the journal. For example, in a transaction where the firm purchases raw materials from company Y, you will note down the date in the date column, note down the company Y account name under account and debit it with the value of the goods. Credit the firm's bank with the value of the goods to indicate that a transfer of funds occurred from the firm's account to company Y's account.
Transfer this information to the respective ledgers at the time stipulated by company policy. This period may vary from a day to a month depending on the company. The information provides a sound source of information for the preparation of other financial ledgers and balance sheets and provides backing in case of audits.