Compound journal entry
In one sentenceA journal entry with more than one debited account or more than one credited account, in which total debits still equal total credits.
Simply put
Some transactions affect more than two accounts, such as a sale that carries tax, or a purchase paid partly in cash and partly on credit. Instead of splitting them into several entries, they are recorded in one compound entry.
What matters is that the two sides are equal in total and that the description explains the whole transaction.
Worked example
A store sold goods for cash for a tax-inclusive amount of 11,500 SAR.
Dr: Cash on hand (debit)11,500
Cr: Sales (credit)10,000
Cr: Output VAT (credit)1,500
Total credits (10,000 + 1,500) = Debits11,500 SAR
Formula: VAT = 11,500 × 15 ÷ 115 = 1,500
Don't confuse it with
Journal entryIt has only one debited account and one credited account.