Q.What is a Compound Journal Entry? Journalise the following transaction as a compound entry: Received cash ₹9,500 from Anil in full settlement of his account of ₹10,000, having allowed him a cash discount of ₹500.

Some transactions genuinely need more than one debit or credit line to be recorded correctly in a single entry.

A Compound Journal Entry is one in which two or more accounts are debited, or two or more accounts are credited, because related transactions of the same date are recorded together. Here, Cash A/c and Discount Allowed A/c are both debited (9,500 + 500 = 10,000) against a single credit to Anil's A/c of ₹10,000.

A Compound (Combined) Journal Entry is a journal entry in which two or more accounts are debited, or two or more accounts are credited (or both), because two or more related transactions of the same nature and date are recorded together in a single entry, instead of as separate simple entries. The rule that total debits equal total credits still applies, spread across the extra lines.

In the given transaction, three accounts are affected: Cash A/c (Real — comes in, debited), Discount Allowed A/c (Nominal — an expense to the business, debited), and Anil's A/c (Personal — the giver, since he is settling what he owed, credited).

Check: total debit = 9,500 + 500 = ₹10,000 = total credit. The entry balances.

A common numerical slip is crediting Anil's A/c with only ₹9,500 (the cash actually received) instead of the full ₹10,000 he owed — Anil's account must be cleared of the FULL amount due, with the shortfall explained by the Discount Allowed debit, not by understating the credit.