RECORDING OF TRANSACTIONS

OF A SERVICE BUSINESS IN THE

GENERAL JOURNAL
for Fundamentals of Accountancy,
Business and Management 1
Senior High School (ABM)
Quarter I / Week 8

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 FOREWORD

This Self Learning Kit for Fundamentals of Accountancy,

Business and Management 1 is designed specifically for
Grade 11 Accountancy, Business & Management (ABM)
students in the Senior High School. In this learning kit, ABM
students will gain knowledge on steps of the accounting
cycle of a service business specifically on how to record
business transactions in the general journal.
It is aligned with the BEC of the Department of
Education following the prescribed MELCs (Most Essential
Learning Competencies. It has the following features proven
to be valuable aids to learning Accounting even at home.
What Happened
This section contains pre-activities like review of the
prior knowledge and a pretest on what you have learned in
their previous discussions.
What You Need To Know (Discussion)
This section contains definition of terms, examples and
the corresponding analysis on how to record transactions
on the general journal.
What Have I Learned (Post Test)
The exercises contained in this section are guaranteed
to build accounting comprehension, skills, and
competence. These serve as a diagnostic tool to identify
your areas of strengths and difficulties.
 OBJECTIVES
At the end of the lesson, the learners are expected to:
K: Familiarize oneself with the journal as a book of
account and its content.
S: Prepare and record journal entries of business
transactions in a service business
A: Display appreciation in recording transactions of a
service business in the general journal.

LEARNING COMPETENCY:
Record transactions of a service business in the general
journal. FABM11-Iva-d-30

I. What Happened
You are now done with the first Step of the Accounting Cycle
of a Service Business which is describing the nature of transactions in
a service business, and familiarizing appropriate business
documents used in recording these transactions.

Now, let us proceed and together we will learn the second

Step of the Accounting Cycle which concentrate on recording
transactions of a service business in the general journal.

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PRE-TEST:

TEST YOUR UNDERSTANDING 1

Direction: List down five (5) examples of Assets, Liabilities, and Owner
Equity (OE) accounts as previously discussed by previous self-learning
kits. Write your answer on your activity notebook.

ASSETS LIABILITIES OWNER’S EQUITY

1. 1. 1.
2. 2. 2.
3. 3. 3.
4. 4. 4.
5. 5. 5.

TEST YOUR UNDERSTANDING 2

Direction: Below are balance sheet accounts. Classify these accounts

as ASSETS or LIABILITIES by writing them under the columns specified.
Write your answer on your activity notebook.
Land Notes Receivable
Accounts Payable Equipment
Accounts Receivable Prepaid Rent
Loan Payable Utilities Payable
Furniture Supplies
Cash Truck
Building Taxes Payable

ASSETS LIABILITIES
___________________ ___________________
___________________ ___________________
___________________ ___________________
___________________ ___________________
___________________ ___________________
___________________ ___________________

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II. What You Need to Know

DISCUSSION

Step 2- PREPARATION OF JOURNAL ENTRIES (JOURNALIZATION)

The journal is a chronological record of events or business

transactions showing all the effects of each transaction in terms of debits
and credits. Because transactions are initially recorded in the journal, it is
called the book of original entry (Ong 2016)

A journal entry should contain the following:

1. Date. Write the month on the first transaction unless there is a change
in month for the succeeding transactions or a new page is used.

2. Account Titles and Explanation. Write the debit account on the

extreme left of the first line and indent the credit account half-inch on
the next line. The explanation describing the transaction is written on
the extreme left of the next line below the credit, Remember to skip
the line before proceeding to the next transaction.

3. P.R. (Posting Reference). Write the corresponding account number

here once the entry is posted. However, it is left black until the posting
has been done.

4. Debit. Under this column, write the debit amount for each debit
amount.

5. Credit. Under this column, write the debit amount for each credit
amount.

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 Illustration 1:

Presume that Jinsha Kho established Anime World Gallery with an

initial investment of Php 300,000 on May 2, 2019. The journal entry is
being recorded like the following:

GENERAL JOURNAL
DATE ACCOUNT TITLE and EXPLANATION P.R. DEBIT CREDIT

2019

May 2 Cash 300,000

Kho, Capital 300,000

To record initial investment of

owner J. Kho

JOURNALIZING THE TRANSACTIONS

Journalizing is the process of recording a transaction in the journal

after it has been recognized and measured.

In journalizing transactions, the double entry is used. In this case, two

or more accounts are affected by each transaction. It follows that
for every debit, a corresponding credit is made. The total debits
should equal total credits for every transaction. In this way, the
equality of the accounting equation is maintained.

RULES FOR DEBIT AND CREDIT

You debit to show: You credit to show:

1. Increase in assets
2. Decrease in liabilities
3. Decrease in owner’s equity
- Owner’s withdrawal
- Expenses
1. Decrease in Assets
2. Increase in liabilities
3. Increase in owner’s equity.
- Initial/Additional investment
- Revenue/income

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Illustrative Problem:
The following are transactions of Matapang Computer Repairs, a
service business for the month of February 2019. They will be recorded
using the double entry system.

February 14 Pedro Matapang, a computer technician decided to

open his computer repair shop and named it
Matapang Computer Repairs. Pedro knows that
business transactions should be separated from
personal finances. Thus, he decided to invest
PHP200,000 in this business. He deposited the amount
with Nation Bank.
Analysis: Assets Increased. Owner’s Equity Increased.
Rules: Debit increases in assets. Credit increases in owner’s equity.
Entry: Increase in assets is recorded by a debit to cash, Increase in
owner’s equity is recorded by a credit to Matapang, Capital

GENERAL JOURNAL
DATE ACCOUNT TITLE and P.R. DEBIT CREDIT
EXPLANATION
2019

February 14 Cash 200,000

Matapang, Capital 200,000

To record initial investment of

owner P. Matapang

February 15 Pedro purchased one computer unit from XY Computer

Store to be used for the business. He issued check
number 001 amounting to PHP25,000.
Analysis: An asset Increased. Another asset decreased.
Rules: Debit increases in assets. Credit decreases in assets.
Entry: Increase in assets is recorded by a debit to office equipment.
Decrease in assets is recorded by a credit to cash.

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 GENERAL JOURNAL
DATE ACCOUNT TITLE and P.R. DEBIT CREDIT
EXPLANATION
2019

February 15 Office Equipment 25,000

Cash 25,000

To record the purchase of 1

computer unit.

February 16 Pedro hired Juana Magaling, an experienced

secretary.
Analysis: No entry. This is not a financial transaction.

February 17 Repaired the computer of Jean and collected

PHP10,000.
Analysis: Asset Increased. Owner’s Equity Increased.
Rules: Debit increases in assets. Credit increases in owner’s equity.
Entry: Increase in assets is recorded by a debit to cash, increase in
owner’s equity is recorded by a credit to service revenue.

GENERAL JOURNAL
DATE ACCOUNT TITLE and P.R. DEBIT CREDIT
EXPLANATION
2019

February 17 Cash 10,000

Service Revenue 10,000

To record receipt of cash from

customer

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February 18 Repaired Mike’s computer. However, Mike will pay
PHP15,000 on March 18, 2019.

Analysis: Asset Increased. Owner’s Equity Increased.

Rules: Debit increases in assets. Credit increases in owner’s equity.
Entry: Increase in assets is recorded by a debit to accounts
receivable, increase in owner’s equity is recorded by a credit
to service revenue.

GENERAL JOURNAL
DATE ACCOUNT TITLE and P.R. DEBIT CREDIT
EXPLANATION
2019

February 18 Accounts Receivable 15,000

Service Revenue 15,000

To record services rendered

from customer on account

February 19 Pedro purchased Office Supplies from MM Merchandise

amounting to PHP5,000 on account. Pedro will pay this on
March 30, 2019.

Analysis: Asset Increased. Liabilities increased.

Rules: Debit increases in assets. Credit increases in liabilities.
Entry: Increase in assets is recorded by a debit to office supplies.
Increase in liabilities is recorded by a credit to accounts
payable.

GENERAL JOURNAL
DATE ACCOUNT TITLE and P.R. DEBIT CREDIT
EXPLANATION
2019

February 19 Office Supplies 5,000

Accounts Payable 5,000

To record purchased of office

supplies on account.

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Journal Entries in a Corporate Set-up

The previous example assumed that the business is a sole

proprietorship. How are transactions recorded if the owner of the business
is a Corporation? Basically, the same entries are made, except for
transactions affecting capital or equity accounts.
ILLUSTRATION: Sweeper Corporation was established to provide
janitorial services to clients for a fee. The corporation issued 5,000
shares of common stock, at PHP100 par value to shareholders. The
issue price paid by the shareholders on January 3, 2019 equal the
par value. The entry to record this transaction is:

GENERAL JOURNAL
DATE ACCOUNT TITLE and P.R. DEBIT CREDIT
EXPLANATION
2019

January 3 Cash 500,000

Share Capital-Common 500,000

To record issuance of 5,000

shares at par value of Php 100

In the above illustration if the issue price is PHP120 per share, what is
the entry?

GENERAL JOURNAL
DATE ACCOUNT TITLE and EXPLANATION P.R. DEBIT CREDIT
2019
January 3 Cash 600,000
Share Capital-Common 500,000
Share Premium-Common 100,000
To record issuanceof 5,000 shares at
Php 120 per share, Php 100 par
value.

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III. What Have I Learned

POST TEST:
LET’S HAVE AN EVALUATION!

A. Indicate in each independent case whether the is to be debited

(DR) or to be credited (CR). Write your answer on your activity
notebook.
1. Increase in accounts Payable
2. Decrease in Owner’s Equity
3. Increase in Service Revenue
4. Increase in Cash
5. Decrease in Accounts Receivable

B. Direction: Journalize the following transactions of ABC

Consultancy Services for the month of June 2020. Write it on your
activity notebook.

2020
June 3 Ms, Mae Garcia invested Php 880,000 in the
account of the company.
5 Consultancy services rendered to Mongolia
Corp. on account, Php 50,000 and promised to
pay on February 15, 2020.
8 Bought Php 100,000 worth of office equipment in
cash.
10 Consultancy services rendered to various clients
for cash Php 100,000.
15 Received water bill, Php 980.

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 DEPARTMENT OF EDUCATION
SCHOOLS DIVISION OF NEGROS ORIENTAL

SENEN PRISCILLO P. PAULIN, CESO V

Schools Division Superintendent

FAY C. LUAREZ, TM, Ed.D., Ph.D.

OIC - Assistant Schools Division Superintendent
Acting CID Chief

ADOLF P. AGUILAR
OIC - Assistant Schools Division Superintendent

NILITA L. RAGAY, Ed.D.

OIC - Assistant Schools Division Superintendent

ROSELA R. ABIERA
Education Program Supervisor – (LRMS)

ARNOLD R. JUNGCO
Education Program Supervisor – (SCIENCE & MATH)

MARICEL S. RASID
Librarian II (LRMDS)

ELMAR L. CABRERA
PDO II (LRMDS)

CHRISTINE G. DE PADUA
Writer

BB. BOY JONNEL C. DIAZ

Lay-out Artist
_________________________________

ALPHA QA TEAM
LITTIE BETH S. BERNADEZ
MERCYDITHA D. ENOLPE
RONALD G. TOLENTINO

BETA QA TEAM
ELIZABETH A. ALAP-AP
EPIFANIA Q. CUEVAS
NIDA BARBARA S. SUASIN
VRENDIE P. SYGACO
MELBA S. TUMARONG
HANNAHLY L. UMALI

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 REFERENCES

Andres, C., Barrido, A., Honorario, C. 2016. Teaching Guide for Senior High
School FUNDAMENTALS OF ACCOUNTANCY, BUSINESS, AND
MANAGEMENT 1. Quezon City: Commission on Higher Education.

Ong, F. 2016. Fundamentals of Accountancy, Business, and Management 1 for

Senior High School. Quezon City: C & E Publishing, Inc.

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 SYNOPSIS AND ABOUT THE AUTHOR

SYNOPSIS SYNOPSIS ANSWER KEY

This Self Learning Kit will serve

as a guide for students taking up

Accountancy, Business &

Management on how to analyze

business transactions applying the

rules and debit and credit before

recording/journalizing it to the

general journal.

Enjoy the rest of the module.

Have fun while learning.

AUTHOR

CHRISTINE G. DE PADUA. She graduated at Saint

Francis College-Guihulngan with a degree of
Bachelor of Science in Business Administration major in
Financial Management in the year 2012. She took her
Continuing Professional Education (CPE) units at Cebu
Technological University-Moalboal Campus in the
year 2015. She is currently teaching at La Libertad
Technical-Vocational School (SHS),and at the same
time designated as the Teacher In-Charge of the
Senior High School Department.