Compound Journal Entries

Compound journal entry is an accounting entry which affects three or more account heads. A simple journal entry has just two rows i.e. one debit and one credit, whereas a compound journal entry has three or more rows.

A compound entry is actually a combination of two or more simple journal entries but instead of recording numerous separate journal entries, it is better to merge multiple journal entries of a single accounting event into a single compound entry because it saves time and keeps the related debits and credits in one place in the journal.


The following examples illustrate the format of a compound journal entry:

Example 1

On Jan 1, 20X3 Company T purchased a computer costing $1,000 from a supplier and issued a check of $3,400. The excess amount fully settles a previous amount owed by the company to the supplier.

Since the total payment of $3,400 comprised of $1,000 for computer and the remaining $2,400 for past payable, this transaction may be recorded in two separate journal entries:

  • Debit Equipment and Credit Cash for $1,000 each; and
  • Debit Payables and Credit Cash for $2,400 each.

Alternatively, it is much faster and intuitive if we record the above transaction as a single compound entry as follows:

Jan 1, 20X3Equipment1,000
Accounts Payable2,400

Example 2

FGH Company obtained a loan of $10,000 @12% interest on July 1, 20X2. The loan was repaid on Dec 31, 20X2, the year-end of FGH Company.

Interest expense on loan
= $10,000 × 6/12 × 12%
= $600.

The repayment can be recorded using the following compound journal entry:

Dec 31, 20X2Loan Payable10,000
Interest Expense600

by Irfanullah Jan, ACCA and last modified on is a free educational website; of students, by students, and for students. You are welcome to learn a range of topics from accounting, economics, finance and more. We hope you like the work that has been done, and if you have any suggestions, your feedback is highly valuable. Let's connect!

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