The June 5 transaction involves the return of supplies

originally purchased on credit. This does not involve cash

and is recorded in the GJ as follows:
GENERAL JOURNAL
Date Particulars Ref. Dr. Cr.

Jun.5 Accounts Payable 400

Store Supplies 400
Returned store supplies purchased

Purchased from J store equipment worth

Jun 6 P30,000 on cash basis [CV#002]

This transaction involves a credit to Cash and is recorded

in the CDJ. A special column for “Store Equipment Dr” is
set up to record the cost of store equipment purchased.
This entry is entered in the CDJ as follows:
CASH DISBURSEMENT JOURNAL

Date Check Paid Ref. Accounts Purchase Store Purchase Cash

Voucher to Payable s Dr. Equipment Discount Cr
No. (Dr) Cr Dr Cr
Jun 6 002 J 30,000 30,000

Was granted a P2,500 allowance on store

Jun 7 equipment purchased from J [OR#003]

Similar to June 3 transaction, an allowance granted on the

store equipment purchased originally on cash basis
increases the Cash account of the business and is
recorded in the CRJ. A special column for Store
Equipment Cr” is set up to recognize the decrease in the
cost of store equipment. This is entered in the CRJ as
illustrated below:

CASH RECEIPTS JOURNAL

Official Received Ref. Cash Sales Accounts Sales Store

Date Receipt from Dr Discoun Receivable Cr Equipment
No. t Dr Dr (Cr) Cr
Jun 7 003 J 2,500 2,500

Purchased from K store equipment worth

Jun 8 P40,000 on items P10,000 down, balance on
account [CV#003]
This transaction involves purchase of equipment with
downpayment and is recorded in the CDJ as illustrated in
the next page:
 CASH DISBURSEMENT JOURNAL

Paid Ref Account Purchases Store Purchase Cash

Date Check to s Dr Equipment Discount Cr
Voucher Payable Dr. Cr
No. (Dr) Cr
Jun 8 003 K 30,000 40,000 10,000

Notice that a column for “Store Equipment Dr” was set up in order to
reflect the increase in Store Equipment. If there is limited space, a sundry
column for miscellaneous receipts and disbursements can be used. The
sundry column acts as the general journal in special journals.
Recall also that there are two methods in recording purchase of fixed
assets. In this case, we assume the gross method so the credit to
Accounts Payable is simply the difference between the P40,000 cost of
store equipment and P10,000 downpayment. The other method, the net
method, would have taken out any cash discount from the P30,000
Accounts Payable immediately on the date of purchase.

Jun 9 Was granted a P3,500 allowance on store

equipment purchased from K.

This transaction is not a purchase or sale of merchandise on account and

does not involve cash. It is therefore recorded in the GJ as follows:

GENERAL JOURNAL

Date Particulars Ref. Dr Cr

Jun 9 Accounts Payable- K 3,500

Store Equipment 3,500
Allowance on store equipment purchased

Jun 10 Received from Meralco the electricity bill for the

month of May, P11,000

The receipt of the utility bill does not involve cash and is recorded in the GJ
as illustrated below:
GENERAL JOURNAL

Date Particulars Ref. Dr Cr

Jun 10 Utilities Expense 11,000

Accounts Payable- Meralco 11,000
Received utility bill
 Jun 11 Paid rent for the month, P20,000 [CV#004]

Payment of expense such as rent is recorded in the CDJ as follows:

CASH DISBURSEMENTS JOURNAL

Date Check Paid to Ref. Accounts Purchases Rent Purchase Cash

Voucher Payable Dr Expense Discount Cr
No. (Dr) Cr Dr Cr
Jun 11 004 Lessor 20,000 20,000

Jun 12 Paid utility bill received last June 10

(CV#007)
The payment of utility bill involves a debit to the liability
set up upon receipt of the bill and a credit to the Cash
account. It is recorded in the CDJ as follows:

CASH DISBURSEMENT JOURNAL

Date Check Paid to Ref. Accounts Purchases Other Purchase Cash

Voucher Payable Dr Accounts Discount Cr
No. (Dr) Cr Dr Cr
Jun 007 Meralco (11,000) 11,000
12

Jun 13 The owner invested additional

merchandise worth 12,000 into the
business.
The additional investment of merchandise is recorded
in the GJ as follows:

GENERAL JOURNAL
Date Particulars Ref. Dr Cr

Jun 13 Purchases 12,000

L, Capital 12,000
Additional investment by owner

The owner withdrew merchandise

Jun 30 worth P6,000 for personal use.

This transaction does not involve cash, thus is

recorded in the GJ as follows:

GENERAL JOURNAL
Date Particulars Ref. Dr Cr

Jun 30 L, Drawing 6,000

Purchases 6,000
Withdrawal of merchandise by owner
 Summary
Below is a summary of the other transactions as recorded in general and special journals.
GENERAL JOURNAL
Date Particulars Ref Dr Cr

Jun 4 Store Supplies 4,000

Accounts Payable 4,000
Purchased store supplies

5 Accounts Payable - H 400

Store Supplies 400
Returned store supplies purchased

9 Accounts Payable 3,500

Store Equipment 3,500
Allowance on store equipment purchased

10 Utilities Expense 11,000

Accounts Payable - Meralco 11,000
Received utility bill

13 Purchases 12,000
L, Capital 12,000
Additional investment by owner

30 L, Drawing 6,000
Purchases 6,000
Withdrawal of merchandise by owner

CASH DISBURSEMENT JOURNAL

Date Check Paid to Ref. Accounts Purchases Store Store Rent Purchase Cash
Voucher Payable Dr Supplies Equipment Expense Discount Cr
No. (Dr) Cr Dr Dr Dr Cr
Jun 2 001 G 3,000 3,000
6 002 J 30,000 30,000
8 003 K 30,000 40,000 10,000
11 004 Lessor 20,000 20,000
12 007 Meralc (11,000) 11,000
o

CASH RECEIPTS JOURNAL

Date Official Received Ref. Cash Merchandise Accounts L, Store Store

Receipt From Dr Inventory Dr Payable Capital Supplies Equipment
No. Cr Cr Cr Cr
Jun 001 L 300,00 50,000 10,000 340,000
2 0
3 002 G 300 300
7 003 J 2,500 2,500
STEP 3
Posting to The Ledger
After the recording phase which is journalizing, the classifying phase is
next. This is done through posting to the ledger. Posting is the process of
transferring information from the journal to the ledger.
From Chapter 7, you have learned that there are two major types of ledger,
namely, the general ledger and the subsidiary ledgers. In this chapter, the
merchandising transactions are posted to both general and subsidiary ledgers
Posting to General and Subsidiary Ledgers
In this section, the recorded transactions in the general and special journals
in the previous steps are used to illustrate posting to the ledgers. However
it is important to note the following posting procedures:
1. Posting to the general ledger is normally done every month.
a. If information came from a special column in the special journal, then
only the total amount is posted to the specific general ledger account
at the end of the month.
b. If information came from the general journal or a sundry (others/
miscellaneous) column in the special journal, then the individual
amount is posted to the specific general ledger accounts on date of
transaction.
c. To show that postings have been made to the general ledger, the account
number is indicated in the "Ref. column in the journals, while the
source is indicated in the "Ref. column in the general ledger.

2. Posting to the subsidiary ledger is normally done immediately after

recording a control account in the journal, whether from the general
or special journal. This is to ensure that subsidiary ledgers are updated
after every transaction involving customers or suppliers.
a. The individual amount is posted.
b. To show that postings have been made to the subsidiary ledger, the
subsidiary ledger reference number is indicated in the "Ref." column
in the journals, while the source is indicated in the "Ref." column in
the general ledger.
3. If postings to both ledgers have to be done, then the "Ref" column is
separated by a slash (/) symbol and the usual posting procedures to both
ledgers are observed.
The posting of purchase-related transactions to the appropriate ledgers
is illustrated first.

CASH DISBURSEMENT JOURNAL

Date Check Paid Ref. Accounts Purchase Other Purchase Cash

Voucher to Payable s Dr Accounts Discount Cr
No. (Dr) Cr Dr Cr
Jun 11 005 A 10,000 10,000

The above June 11 entry in the CDJ shows a debit to Purchases and a
to Cash. This is not posted immediately to the general ledger accounts
of Purchases and Cash. Instead, only the total amount at month-end will be
posted to Purchase and Cash ledger accounts. Why? An advantage of using
special journals is the use of special columns which eases the journalizing
and posting process. Recall that special columns are normally set up in
special journals for frequently used accounts. In the June 11 entry, since
special columns in the CDJ are used, posting to the specific ledger accounts
can be deferred or postponed until the end of the month to wait for other
transactions which may affect the accounts in the special columns.
Moreover, since the transaction does not involve any control accounts
which are Accounts Receivable and Accounts Payable, then there is no need
to post to subsidiary ledgers.
 CASH DISBURSEMENT JOURNAL

Date Check Paid to Ref. Accounts Purchases Freight- Purchas Cash

Voucher Payable Dr in Dr e Cr
No. (Dr) Cr Discount
Cr
Jun 11 006 Freight 800 10,000
Co.

Similar to the June 11 entry on cash purchase, the payment of freight

the CDJ is posted in total to the general ledger and is not posted to a subsidiary ledger
Regarding posting to the general ledger, it may be done individually or
In total depending on the column used in the special journal. Recall that
special journals are used, the posting procedure is different from
when a special column or a sundry column is used. A special column is
used for account titles which are often affected by business transactions. A sundry column is
used for account titles and serves as the general journal in a special journal.

In the case of the account Freight-in for the June 11 transaction, if we

assume a special column is set up in the CDJ, then posting to the
general ledger of Freight-in is done in total at the end of the month. If we assume a
sundry column, then this will have to be posted individually to the general
ledger immediately. We assume a special column for the account Freight-in?

PURCHASE JOURNAL

Date Supplier’s Name Ref. Dr

Purchases
Cr A/P
Jun 12 B 15,000

The June 12 transaction involves a debit to Purchases and a credit to

Accounts Payable. Since a control account is affected, this is posted to the
subsidiary ledger of B as follows:

ACCOUNTS PAYABLE – B AP1

Date Supplier’s Name Ref. Dr Cr Balance

Jun 12 2/10, n/30 P1 15,000 15,000

PURCHASES JOURNAL P1

Date Supplier’s Name Ref. Dr Purchases Cr A/P

Jun 12 B AP1 15,000

The process of copying the source in the "Ref." column of the ledger and the
supplier subsidiary ledger number in the "Ref." column of the journal is known
as cross-referencing. "P1" in the "Ref." column of Accounts Payable - B refers
to the reference number in the Purchases Journal. The "P" in P1 represents the
journal used which is PJ, while the "1" refer to the page number. Others make
use of PJ1 instead of P1 for the reference number. This is also acceptable.
Meanwhile, in the "Ref." column of the PJ, "AP1" refers to the reference
number in the subsidiary ledger. "AP" refers to the type of subsidiary ledger
which is accounts payable subsidiary ledger, while "1" refers to the page number.
If the subsidiary ledgers are arranged alphabetically, a checkmark (“√”) can be
used in lieu of the reference number.
Notice that the P15,000 balance in B’s subsidiary ledger is not enclosed in
parentheses. This is because the balance column assumes normal balance of
account. Since Accounts Payable has a normal credit balance, the P15,000 is
assumed to be a credit balance. If the account balance is opposite the normal
balance, then there is a need to enclose the amount of the balance in parentheses.
Similar to the June 11 transaction, since the special column in a special
journal, the posting to general ledger will be done in total at the
end of the month.

CASH DISBURSEMENT JOURNAL

Date Check Paid Ref. Accounts Purchase Other Purchase Cash

Voucher to Payable s Dr Accounts Discount Cr
No. (Dr) Cr Dr Cr
Jun 13 008 C 10,000 20,000 10,000

The June 13 transaction involves Accounts Payable so it has to be posted

to the subsidiary ledger of C as shown below:

Accounts Payable – C AP2

Date Supplier’s Name Ref. Dr Cr Balance

Jun 13 2/10, n/30 CD1 15,000 15,000

CASH DISBURSEMENT JOURNAL CD1

Date Check Paid Ref. Accounts Purchase Other Purchase Cash

Voucher to Payable s Dr Accounts Discount Cr
No. (Dr) Cr Dr Cr
Jun 13 008 C AP2 10,000 20,000 10,000

"CD1 refers to cash disbursement journal page number 1, while "AP2"

refers to the second accounts payable subsidiary ledger. Posting to general
ledger accounts will be done in total at the end of the month.

CASH RECEIPTS JOURNAL

CR1

Date Check Paid to Ref. Cash Sales Accounts Sales Purchase

Voucher Dr Discoun Receivable Cr returns &
No. t Dr Dr (Cr) allowances
Cr
Jun 14 080 A 500 500 500

The June 14 transaction does not involve any control accounts which
ae Accounts Receivable and Accounts Payable so there is no need to post
subsidiary ledgers. Regarding posting to the general ledger accounts, this
will be done in total at the end of the month.