11

FUNDAMENTALS OF
ABM 1
QUARTER 3

ACTIVITY SHEETS

1
Fundamentals of Accountancy, Business and Management 1 - Grade 11
Learning Activity Sheets
Quarter 3

Republic Act 8293, section 176 states that: No copyright shall subsist in any work of the
Government of the Philippines. However, prior approval of the government agency or office wherein the
work is created shall be necessary for exploitation of such work for profit. Such agency or office may,
among other things, impose as a condition the payment of royalties.
Borrowed materials (i.e., songs, stories, poems, pictures, photos, brand names, trademarks,
etc.) included in this activity sheet are owned by their respective copyright holders. Every effort has
been exerted to locate and seek permission to use these materials from their respective copyright
owners. The publisher and authors do not represent nor claim ownership over them.

Published by the Department of Education – Schools Division of Tacloban City

Schools Division Superintendent: Mariza S. Magan
Assistant Schools Division Superintendent: Edgar Y. Tenasas

Department of Education - Region No. VIII – Schools Division Office of Tacloban City
Office Address: Real St., Tacloban City

2
 Learning Activity Sheet in
FUNDAMENTALS OF ACCOUNTANCY, BUSINESS
AND MANAGEMENT 1
Quarter 3 - Week 7
Grade 11

Name: ___________________________________ Grade and Section: _______________

Activity Sheet No. 7 Date Answered: ___________________

Lesson Journalizing Business Transactions

8 of a Service Company

Learning Competencies:
• Describes the nature of transactions in a service business.
• Records transactions of a service business in the general journal.

Let’s Kick It Off!

Activity 1. TRUE OR FALSE!

Directions: Read each statement carefully. Write TRUE if the statement is correct
and FALSE if it is incorrect.

______ 1. A service company is a type of business that derives its income from services
rendered to its clients or customers.
______ 2. The first step in the accounting process is posting journal entries to the
ledger.
______ 3. A journal entry is said to be complete if it has an explanation of the nature
of the transaction.
______ 4. The process of recording transactions in the journal is called Journalizing.
______ 5. There should be only one debit account and one credit account when
journalizing transactions.
______ 6. Department Stores and Bookstores are examples of a service company.
______ 7. The name of the account to be debited is always listed first.
______ 8. The total amount of debit should always equal the total amount of credit.
______ 9. A compound entry contains only one debit entry and two credit entry.
______ 10. The credited account is listed on the second line and is usually indented.

3
 Are You Taking It?

Activity 2. THINK, RELATE & CONNECT!

Directions: Analyze the business transaction below and answer the questions that
follows:

On January 1, 2020, Mr. Jerry Co, a Certified Public Accountant, decided

to open an Accounting firm. He invested P100,000 to start the business.

1. What should be the debit account?

2. What should be the credit account?
3. What should be the explanation of the transaction?
4. What should be the amount to be debited and credited?

Fill in the table with your answers:

GENERAL JOURNAL
Date Account Title and Explanation Ref Debit Credit

Here’s How It Is!

JOURNALIZING TRANSACTION OF A SERVICE BUSINESS

There are basically three types of business according to activities – service,

merchandising and manufacturing. Each type of business requires different
accounting process.
In this learning activity sheet, we will focus on journalizing business
transactions in a service company. A Service Business is a firm that generally use
their employees to provide intangible products or services to customers. These
services include professional skills, advice, expertise, and other related products. The
primary source of revenues of service companies is the performance of services, often
referred to as service revenue or service income. Examples of this are law firm,
accounting firm, school, bank, hospital, bus company and others.
Sources: Florendo, Joselito G. 2016. Fundamentals of Accountancy Business and Management 1. Manila Philippines: Rex
Book Store.

Journalizing is the process of recording business transactions in a journal. It

is just one of the steps in the accounting process. Below is the illustration of the
Accounting Process which will be discussed in this subject.

4
 Source: Andres, C.S., et al. 2016. Teaching Guide for Senior High School Fundamentals of Accountancy, Business and Management 1. Quezon City,
Philippines: Commission on Higher Education.

After analyzing if a business transaction is accountable or not, the next step

in the accounting process is the recording of the business transactions in a journal.
A journal typically contains the following parts:

GENERAL JOURNAL
Date Account Title and Explanation Ref Debit Credit
Jan. 1 Cash 101 10 000
S. Santos, Capital 10 000
Initial Investment

• Date. The date at which the transaction occurred.

• Account Title and Explanation. The account to be debited and the account to
be credited are recorded. Also, a brief explanation of the business
transaction is described.
• Reference Number. Reference number of each account journalized which can
be found in the Chart of Account.
• Debit. Corresponding amount of the account debited is entered.
• Credit. Corresponding amount of the account credited is entered.
Sources: Florendo, Joselito G. 2016. Fundamentals of Accountancy Business and Management 1. Manila Philippines: Rex
Book Store.

Rules on journalizing transactions:

• The name of the account to be debited is always listed first. The debited
account is listed on the first line with the amount in the left side of the journal.
• The credited account is listed on the second line and is usually indented. The
credited amount is recorded on the right side of the journal.
• The total amount of debit should always equal the total amount of credit.
• The first word of the explanation is indented from the credit item. It must state
briefly but concisely the nature of the transaction.
• Leave a vacant space before recording the next transaction.
• The use of peso (₱) is eliminated because the debit and credit columns are
understood to be money columns.

An Opening Entry
The first entry made in the general journal is called an Opening Entry. This
constitute either the recording of the initial investments of a proprietor who is
engaged in the business for the first time or the recording of the beginning balances
of accounts in preparation for the next annual accounting period.

5
Example: On August 1, 2020, Mr. Juan Jao opens a current account with Savings
Banking Corporation in the amount of ₱350,000 to start with his Car Wash
business under the trade name “Car Wash and Go”.

Opening Journal Entry:

GENERAL JOURNAL
Date Account Title and Explanation Ref Debit Credit
Aug. 1 Cash in Bank 112 350 000
J. Jao, Capital 201 350 000
Initial Investment.

Simple and Compound Journal Entry

A simple journal entry is one that has one debit entry and one credit entry.
Example: On February 5, 2020, the company bought office supplies on account
amounting to ₱25,000.

GENERAL JOURNAL
Date Account Title and Explanation Ref Debit Credit
Feb. 5 Office Supplies 112 25 000
Accounts Payable 201 25 000
Bought office supplies on account

A compound journal entry is one that may have one debit entry and two or
more credit entries; two or more debit entries and one credit entry, or two or more
entries on both sides.
Example: On March 25, 2020, the company bought computer equipment
amounting to 40,000, paying half in cash and the other half on credit.

GENERAL JOURNAL
Date Account Title and Explanation Ref Debit Credit
Mar 25 Computer Equipment 115 40 000
Cash 101 20 000
Accounts Payable 201 20 000
Bought computer equipment in
cash and on account
Sources: Lopez, Jr., Rafael M. 2016. Fundamentals of Accounting. Davao City, Philippines: MS Lopez Printing and Publishing.

Illustrative Problem:
Investment by the Owner (Opening Entry):
May 1 – Miss Ela Tamayo invested cash of ₱300,000 to start with her laundry
shop business under the trade name “Fast Wash Laundry Shop”
Analysis: Increase in Asset (debit) Cash ₱300,000
Increase in Owner’s Equity (credit) E. Tamayo, Capital ₱300,000

6
Journal Entry:
May 1 Cash ₱300,000
E. Tamayo, Capital ₱300,000
Initial Investment.

Purchase of Equipment on credit:

May 2 – The company purchased laundry machines on account from GL Appliance
Center, ₱180,000.
Analysis: Increase in Asset (debit) Laundry Equipment ₱180,000
Increase in Liability (credit) Accounts Payable ₱180,000
Journal Entry:
May 2 Laundry Equipment ₱180,000
Accounts Payable ₱180,000
Bought laundry machine on account.

Payment of Taxes, Licenses and other Government dues:

May 5 – The company paid taxes and licenses to the city government, ₱6,000.
Analysis: Decrease in Owner’s Equity (debit) Taxes and Licenses ₱6,000
Decrease in Assets (credit) Cash ₱6,000
Journal Entry:
May 5 Taxes and Licenses ₱6,000
Cash ₱6,000
Payment of taxes and licenses.

Services Rendered for Cash and for Credit (Compound Entry):

May 10 – The company rendered laundry services to H&B Inn for ₱50,000,
receiving 30% in cash and the remaining to be received in 10 days.
Analysis: Increase in Asset (debit) Cash ₱15,000
Increase in Asset (debit) Accounts Receivable ₱35,000
Increase in Liability (credit) Laundry Income ₱50,000
Journal Entry:
May 10 Cash ₱15,000
Accounts Receivable ₱35,000
Laundry Income ₱50,000
Rendered service for cash and on credit.

Withdrawal by the Owner:

May 14 – Miss Ela withdrew ₱10,000 from the business for her personal use.
Analysis: Decrease in Owner’s Equity (debit) E. Tamayo, Drawing ₱10,000
Decrease in Asset (credit) Cash ₱10,000
Journal Entry:
May 14 E. Tamayo, Drawing ₱10,000
Cash ₱10,000
Withdrawal by the owner.

7
Collection of Accounts Receivable:
May 20 – Collected accounts from H&B Inn. (refer to May 10 transaction)
Analysis: Increase in Asset (debit) Cash ₱35,000
Decrease in Asset (credit) Accounts Receivable ₱35,000
Journal Entry:
May 20 Cash ₱35,000
Accounts Receivable ₱35,000
Collection of accounts

Partial Payment of Accounts Payable:

May 22 – The company made partial payment of account to GL Appliance Center,
₱60,000. (refer to May 2 transaction)
Analysis: Decrease in Liability (debit) Accounts Payable ₱60,000
Decrease in Asset (credit) Cash ₱60,000
Journal Entry:
May 22 Accounts Payable ₱60,000
Cash ₱60,000
Partial Payment of account.

Issuance of a Note for Borrowed Money:

May 25 – The company loaned money to Tacloban Lending Corp., ₱150,000 and
issued a note.
Analysis: Increase in Asset (debit) Cash ₱150,000
Increase in Liability (credit) Notes Payable ₱150,000
Journal Entry:
May 25 Cash ₱150,000
Notes Payable ₱150,000
Issued a not for borrowed money.

Payment of Expenses:
May 30 – The company paid the following expenses: Salaries - ₱40,000, Telephone,
Water and Electricity - ₱25,000, and Rental - ₱15,000
Analysis: Decrease in Owner’s Equity (debit) Expenses ₱80,000
Decrease in Asset (credit) Cash ₱80,000
Journal Entry:
May 30 Salaries Expense ₱40,000
Utilities Expense ₱25,000
Rental Expense ₱15,000
Cash ₱80,000
Paid various expenses.

Sources: Lopez, Jr., Rafael M. 2016. Fundamentals of Accounting. Davao City, Philippines: MS Lopez Printing and Publishing.

8
 Now Do It!

Activity 3. FILL ME!

Direction: Below is the General Journal of Malaya Dental Clinic, owned by Dr. Mary
Malaya. Fill it in with the correct debit account to complete the journal entries. The
first one is done for you. Write your answers on a separate sheet of paper.

GENERAL JOURNAL

Date Account Title and Explanation Ref Debit Credit

Jan 1 (1)Cash_______________ 150,000

M. Malaya, Capital 150,000
Initial Investment.
3 (2)_____________________ 45,000
Accounts Payable 45,000
Bought computer equipment on account

5 (3)_____________________ 10,000
Cash 10,000
Payment of taxes and licenses.
10 (4)_____________________ 25,000
Service Income 25,000
Rendered Service on account
15 (5)_____________________ 12,000
Cash 12,000
Payment of Water and Telephone bill
18 (6)_____________________ 45,000
Cash 45,000
Payment of accounts
21 (7)_______________________ 15,000
Cash 15,000
Withdrawal of the owner
25 (8)_______________________ 60,000
Service Income 60,000
Rendered service for cash
28 (9)_______________________ 100,000
Cash 100,000
Paid 5 years advance rental fee.
31 (10)______________________ 25,000
Accounts Receivable 25,000
Collection of account

9
Activity 4. COMPLETE ME!

Direction: Complete the General Journal of JB Car Wash Services, owned by Mr.
Jason Beltran, by filling in the blanks with the correct credit account. The first one
is done for you. Write your answers on a separate sheet of paper.

GENERAL JOURNAL
Date Account Title and Explanation Ref Debit Credit
Oct 2 Notes Receivable 20,000
(1)Service Income____ 20,000
Received a note for service rendered.

6 Salaries Expense 12,000

(2)____________________ 12,000
Payment of salaries.

11 Cash 5,000
(3)____________________ 5,000
Additional Investment.
16 Shop Equipment 30,000
(4)____________________ 30,000
Issued a note for shop equipment on
account.
20 Accounts Receivable 8,000
(5)____________________ 8,000
Rendered service on credit.
22 Cash 8,000
(6)____________________ 8,000
Collection of accounts.

24 Notes Payable 30,000

(7)_____________________ 30,000
Payment of notes issued.
27 Rent Expense 16,000
(8)_____________________ 16,000
Payment of rental expense.
28 Cash 18,000
(9)__________________________ 18,000
Received cash for service not yet rendered.
30 Delivery Equipment 980,000
(10)_________________________ 980,000
Bought delivery van on account.

10
 Ace It!

Assessment:

Directions: Journalize the following business transactions of A. Homerez Accounting

Firm, owned by Mr. Allan Homerez, a CPA, using a two (2) column general journal.
Use the Chart of Accounts provided in making your journal entries.

Chart of Accounts

Ref. # Assets Ref. # Owner’s Equity

101 Cash in Bank 301 A. Homerez, Capital
111 Accounts Receivable 302 A. Homerez, Drawing
121 Notes Receivable Income
126 Prepaid Rental Expense 400 Professional Income
132 Office Supplies Expenses
150 Office Equipment 600 Interest Expense
Liabilities 605 Taxes and Licenses
201 Accounts Payable 611 Salaries Expense
212 Notes Payable 621 Utilities Expense

Transactions:

Sept. 2 Mr. Homerez deposited ₱300,000 to the bank and invested his old
computer worth ₱30,000 in the business.
5 Paid licenses and business permits to the city government, ₱2,500.
9 Paid 1-year advance office rent amounting to ₱85,000.
12 Received cash for the installation of accounting system, ₱20,000.
16 Rendered professional service to various clients on account, ₱50,000.
18 Paid ₱16,500 for telephone and internet bill.
20 Bought various office supplies to PaperMart Trading amounting to
₱14,000 paying 30% in cash and the remaining in credit.
21 Borrowed a loan from InstaCash Lending Corporation and issued a note
amounting to ₱40,000.
24 Paid salaries to his staff amounting to ₱24,000.
25 The owner got cash from his business for personal use, ₱5,000.
28 Received a note from services rendered on account, ₱6,000.
29 Paid ₱500 interest for the loan from Instacash Lending Corporation.
30 Paid the remaining account with PaperMart Trading from Sept. 20
transaction.

11
References

Andres, C.S., et al. (2016). Teaching Guide for Senior High School Fundamentals of

Accountancy, Business and Management 1. Commission on Higher Education.

Florendo, J. G. (2016). Fundamentals of Accountancy Business and Management 1.

Rex Book Store.

Lopez, Jr. R. M. (2016). Fundamentals of Accountancy Business and Management 1.

MS Lopez Printing & Publishing.

Lopez, Jr. R. M. (2016). Fundamentals of Accounting. MS Lopez Printing & Publishing.

12
Answer Key

Activity 1:

1. TRUE 6. FALSE
2. FALSE 7. TRUE
3. TRUE 8. TRUE
4. TRUE 9. FALSE
5. FALSE 10.TRUE

Activity 2:

GENERAL JOURNAL
Date Account Title and Explanation Ref Debit Credit

Jan 1 Cash 100,000

J. Co, Capital 100,000
Initial Investment.

Activity 3:

1. Cash
2. Computer Equipment
3. Taxes and Licenses
4. Accounts Receivable
5. Utilities Expense
6. Accounts payable
7. M. Malaya, Drawings
8. Cash
9. Prepaid Rental Expense
10.Cash

Activity 4:

1. Service Income 6. Accounts Receivable

2. Cash 7. M. Malaya, Drawings
3. J. Beltran, Capital 8. Cash
4. Notes Payable 9. Unearned Income
5. Service Income 10.Accounts Payable

13
Assessment:

GENERAL JOURNAL
Date Account Title and Explanation Ref Debit Credit
Sep 2 Cash in Bank 101 300 000
Office Equipment 150 30 000
A. Homerez, Capital 301 330 000
Initial Investment
5 Taxes and Licenses 605 2 500
Cash in Bank 101 2 500
Payment for license and business permits.
9 Prepaid Rental Expense 126 85 000
Cash in Bank 101 85 000
Payment of 1-year advance rent.
12 Cash in Bank 101 20 000
Professional Income 400 20 000
Rendered professional service for cash
16 Accounts Receivable 111 50 000
Professional Income 400 50 000
Rendered professional service on account
18 Utilities Expense 621 16 500
Cash in Bank 101 16 500
Payment of telephone and internet bill
20 Office Supplies 132 14 000
Cash in Bank 101 4 200
Accounts Payable 201 9 800
Bought office supplies paying in cash and
on account
21 Cash in Bank 101 40 000
Notes payable 212 40 000
Issued a note for borrowed money.
24 Salaries Expense 611 24 000
Cash in Bank 101 24 000
Payment of salaries.
25 A. Homerez, Drawings 302 5 000
Cash in Bank 101 5 000
Withdrawal by the owner.
28 Notes Receivable 121 6 000
Professional Income 400 6 000
Received a note for professional service
rendered on account
29 Interest Expense 600 500
Cash in Bank 101 500
Payment of interest on loan.
30 Accounts Payable 201 9 800
Cash in Bank 9 800
Payment of accounts.

14
For inquiries or feedback, please write or call:

Department of Education – SDO of Tacloban City

Real St., Barangay 54, Tacloban City (Capital), Leyte, 6500

Telephone: 053-888-5239

Email Address: lrmds.depedtacloban@gmail.com

15