Module 3 The Accounting Cycle - 1

In this module, the students will learn how to identify events to be

recorded by gathering information about transactions or events through
source documents, record these events in a general journal by preparing
journal entries, post these entries to a general ledger or to a “T”-
Account, and check the equality of the accounting equation by preparing the
trial balance.

Lesson 1
Recording Business Transactions in the Journal

EXTEND
Name: ________________________________________ Time: ___________________

Instruction: Indicate the accounts to be debited and credited when

recording the following transactions of Harmon Company by writing the
identifying letters in the answer column. The first answer is given as an
example.

Dr. Cr.
H C 0 Paid wages for the week.
1 . Paid rent for the month.
2 . Bought supplies on account.
3 . Received Utility bill.
4 . Received cash from customers to apply on
account.
5 . Owner withdrew cash.
6 . Paid creditors on account.
7 . Paid the next years premium for insurance.
8 . Bought supplies for cash.
9 . Billed customers for services performed.
10 . Owner interest additional cash in the
business.

A. Accounts Payable H. Wages Expense

B. Accounts Receivable I. Utilities Expense
C. Cash J. Prepaid Insurance
D. Equipment K. Rent Expense
E. Income from Services L. Harmon, Capital
F. Supplies M. Harmon, Drawing
G. Miscellaneous Expense

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EVALUATE
Name: ________________________________________ Time: ___________________

El Granado established the EG Data Encoders on May 15, 2020. The following
transactions occurred during the month.

a. El Granado invested P157,000 cash to establish the business

b. Bought office desks and filing cabinet for cash, P15,150.
c. El Granado invested in the business her personal computer with a fair
value of P57,500.
d. Bought computer software for use in the business from Dela Torre Computer
Center for P39,000 paying P15,000 down; the balance is due in thirty
days.
e. Paid rent for the month, P5,300.
f. Received cash for services rendered, P5,160.
g. Ordered a panaflex sign for P9,000 from Royal Bright Enterprises, with
P5,000 as down payment and the balance due when installed.
h. Received bill for advertising from Buy and Sell newspaper, P3,320.
i. Bought print paper and stationary on account, P2,290.
j. Received and paid electric bill, P1,240.
k. Paid bill for advertising recorded previously in transaction (h).
l. Received cash for services rendered, P10,900.
m. Paid salaries to employees, P8,400.
n. El Granado withdrew cash for personal use, P4,500.

Required: Journalize each transaction in a general journal paper. (use the

form below for your answer)

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Date Account titles and Explanation P .R. Debit Credit

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Date Account titles and Explanation P .R. Debit Credit

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Post Assessment

Name: ________________________________________ Time: ___________________

Multiple Choice. For each item, encircle the letter of your choice.
1. Which of the following is a business event that is not considered a
recordable transaction?
a. An entity receives a product previously ordered.
b. An entity pays an employee for work performed.
c. A customer inquires about availability of a service.
d. A customer purchases a service.

2. What function do general ledgers serve in the accounting process?

a. Summarizing
b. Recording
c. Classifying
d. Reporting

3. Refers to the process of transferring the debit and credit amounts

from journals to the ledger accounts.
a. Balancing off
b. Transferring
c. Posting
d. Closing

4. Refers to the process of entering transactions into the books of

original entry.
a. Identifying
b. Classifying
c. Reporting
d. Recording

5. A sole proprietor contributes his own van with a value of P400,000.00

to the business. The journal entry should be:

Account to be debited Account to be credited

a. Asset Liability
b. Cash Capital
c. Capital Van
d. Van Capital

6. Suppose an entity pays P50,000 to its creditors by check. The

journal entry should be:

Account to be debited Account to be credited

a. Accounts Receivable Bank
b. Accounts Payable Bank
c. Accounts Payable Cash
d. Cash Accounts Payable

7. Which of the following does not directly or indirectly affect the

owner’s capital account?
a. Paying an accounts payable
b. Withdrawals by the owner
c. Earning of revenues
d. Incurring of expenses

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8. Which of the following transactions correctly maintains the equality
in the accounting equation?
a. To record collections on account, cash and accounts receivables
are increased by P160,000.
b. To record the purchase of computer equipment, computer equipment
is increased and cash is decreased by P46,000.
c. To record payment of notes, notes payable is decreased and cash is
increased by P70,000.
d. To record payment of rent, rent expense and cash are increased by
P8,000.

9. The posting reference column in the ledger shows that an item has
been posted when which of the following is placed in it?
a. An X
b. The account number
c. The journal page number
d. A check mark

10. Suppose a sole proprietor withdraws P50,000 worth of supplies

from his business, the journal entry should be:

Account to be debited Account to be credited

a. Capital Supplies
b. Drawings Supplies
c. Supplies Drawings
d. Supplies Capital

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 Lesson 2
Posting the Journal Entries to the Ledger

EXTEND
Name: ________________________________________ Time: ___________________

John Karlo Dalangin, a dentist, established Dalagan Clinic. The following

transactions occurred during June of this year:

a. Dalangin deposited P280,000 in a bank account in the name of the

business.
b. Bought a 3-in-1 office equipment from Pitular Equipment for P4,950
paying P1,000 in cash and the balance on account.
c. Bought waiting room chairs and a table, paying cash, P12,300.
d. Bought office intercom on account from NE office Supply, P2,750.
e. Received and paid the telephone bill, P1,080.
f. Performed professional services on account, P12,940.
g. Received and paid the electric bill, P1,850.
h. Received and paid the bill for the Regional Dental Convention,
P3,500.
i. Performed professional services for cash, P17,650.
j. Partially settled accounts with NE Office Supply, P1,000.
k. Paid rent for the month, P8,400.
l. Paid salaries of the part-time receptionist, P3,500.
m. Dalangin withdrew cash for personal use, P8,500.
n. Received P5,500 on account from patients who were previously billed.

Required:

1. Establish the following accounts in the Ledger: Cash; Accounts

Receivable; Office Equipment; Office Furniture; Accounts Payable;
Dalangin, Capital; Dalangin, Withdrawals; Professional Fees; Salaries
Expense; Rent Expense; Utilities Expense and Miscellaneous Expense.

2. Record the transactions directly into the Ledger using the alphabets
to identify each transaction. Use the sample format below.

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 Date Particulars P . R. Debit Credit Balance
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 Date Particulars P . R. Debit Credit Balance
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EVALUATE
Name: ________________________________________ Time: ___________________

The following accounts are used by Godofredo Cadelina Maintenance Services:

1. Cash
2. Accounts Receivable
3. Supplies
4. Prepaid Insurance
5. Equipment
6. Notes Payable
7. Accounts Payable
8. Cadelina, Capital
9. Cadelina, Withdrawals
10. Service Revenues
11. Rent Expense
12. Repairs Expense

Cadelina Maintennace Services completed the following transactions:

a. Paid for supplies purchased on account last month.

Debit :___________________________
Credit :___________________________

b. Billed customers for services performed.

Debit :___________________________
Credit :___________________________

c. Paid the current month’s rent.

Debit :___________________________
Credit :___________________________

d. Purchased supplies on credit.

Debit :___________________________
Credit :___________________________

e. Received cash from customers for services performed.

Debit :___________________________
Credit :___________________________
f. Acquired equipment on account.

g. Received a bill for repairs.

Debit :___________________________
Credit :___________________________

h. Returned part of the equipment purchased in (f).

Debit :___________________________
Credit :___________________________

i. Received cash from customers previously billed.

Debit :___________________________
Credit :___________________________

j. Paid the bill received in (g).

Debit :___________________________
Credit :___________________________

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 k. Booked an appointment for services.
Debit :___________________________
Credit :___________________________

l. Paid for repairs with cash.

Debit :___________________________
Credit :___________________________

m. Made cash withdrawals.

Debit :___________________________
Credit :___________________________

Required: Analyze each transaction and show the accounts affected by

entering the corresponding numbers in the appropriate debit or credit
column. Indicate no entry, if appropriate.

Post Assessment
Name: ________________________________________ Time: ___________________

Indicate whether the effect on the balances of the following accounts is

increased or decreased by encircling the corresponding letter of choice:

1. Notes Receivable account was debited

a. Increased
b. Decreased

2. Accounts Payable account was debited

a. Increased
b. Decreased

3. Teofe Gonzales, Capital account was credited

a. Increased
b. Decreased

4. Rent Expense account was debited

a. Increased
b. Decreased

5. Petty Cash Fun account was debited

a. Increased
b. Decreased

6. Accounts Receivable account was debited

a. Increased
b. Decreased

7. Teofe Gonzales, Withdrawals account was debited

a. Increased
b. Decreased

8. Accounts Payable was credited

a. Increased
b. Decreased

9. Prepaid Insurance account was credited

a. Increased
b. Decreased

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10. Insurance Expense account was debited
a. Increased
b. Decreased

11. Notes Payable account was debited

a. Increased
b. Decreased

12. Accounts Receivable account was credited

a. Increased
b. Decreased

13. Cash in Bank account was credited

a. Increased
b. Decreased

14. Professional Income account was credited

a. Increased
b. Decreased

15. Notes Payable account was credited

a. Increased
b. Decreased

16. Accumulated Depreciation account was debited

a. Increased
b. Decreased

17. Building account was debited

a. Increased
b. Decreased

18. Intangible Assets account was credited

a. Increased
b. Decreased

19. Depreciation Expense account was credited

a. Increased
b. Decreased

20. Unused Office Supplies account was credited

a. Increased
b. Decreased

21. Sales account was credited

a. Increased
b. Decreased

22. Accrued Liabilities account was credited

a. Increased
b. Decreased

23. Mortgage Payable account was credited

a. Increased
b. Decreased

24. Interest Payable account was debited

a. Increased
b. Decreased

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 25. Salaries and Wages Expense account was debited
a. Increased
b. Decreased

Lesson 3
Preparation of the Trial Balance

EXTEND
Name: ________________________________________ Time: ___________________

The following problem is a continuation to Lesson 2. Use your solutions to

made in Lesson 2. Do requirement no. 3 for this lesson:

John Karlo Dalangin, a dentist, established Dalagan Clinic. The following

transactions occurred during June of this year:

a. Dalangin deposited P280,000 in a bank account in the name of the

business.
b. Bought a 3-in-1 office equipment from Pitular Equipment for P4,950
paying P1,000 in cash and the balance on account.
c. Bought waiting room chairs and a table, paying cash, P12,300.
d. Bought office intercom on account from NE office Supply, P2,750.
e. Received and paid the telephone bill, P1,080.
f. Performed professional services on account, P12,940.
g. Received and paid the electric bill, P1,850.
h. Received and paid the bill for the Regional Dental Convention,
P3,500.
i. Performed professional services for cash, P17,650.
j. Partially settled accounts with NE Office Supply, P1,000.
k. Paid rent for the month, P8,400.
l. Paid salaries of the part-time receptionist, P3,500.
m. Dalangin withdrew cash for personal use, P8,500.
n. Received P5,500 on account from patients who were previously billed.

Required:

1. Establish the following accounts in the Ledger: Cash; Accounts

Receivable; Office Equipment; Office Furniture; Accounts Payable;
Dalangin, Capital; Dalangin, Withdrawals; Professional Fees; Salaries
Expense; Rent Expense; Utilities Expense and Miscellaneous Expense.

2. Record the transactions directly into the Ledger using the alphabets
to identify each transaction. Use the sample format below.

3. Prepare the trial balance. (use the blank journal paper in lesson 1)

EVALUATE
Name: ________________________________________ Time: ___________________

Presented below is a trial balance of Elenita Dedumo which was prepared by

an unexperienced bookkeeper:

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 Tagum Autocare
Trial Balance
November 30, 2019

Account Titles Debit Credit

Cash in Bank 25,000
Accounts Receivable 20,000
Supplies Inventory 10,000
Tools 5,000
Shop Equipment 30,000
Accounts Payable 5,000
Notes Payable 8,000
E. Dedumo, Capital 48,000
E. Dedumo, Withdrawals 2,000
Repairs Income 40,000
Utilities Expense 3,000
Salaries and Wages 5,000
Taxes and Licenses 1,000
Total 101,000 101,000

It was learned that there were no errors in both posting and footing
processes. It was further gleaned from the General Ledger that all of the
above account balances were all in its normal balances. The inexperienced
bookkeeper, however, believed his works are correct because the trial
balance appeared to be “in-balance”.

Required: Prepare a correct trial balance.

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Post Assessment
Name: ________________________________________ Time: ___________________

Black Diamond Pawnshop

Trial Balance
June 30, 2020

Cash in Bank 210,000.45

Petty Cash Fund 999.55
Loan Pledge Receivable 218,000.00
Furniture and Fixtures 85,000.00
Vaults and Other Equipment 110,000.00
Accounts Payable 20,000.00
SSS Premium Payable 1,888.00
Philhealth Premium Payable 550.00
B. Pozon, Capital 518,639.80
B. Pozon, Withdrawals 10,000.00
Interest Income 79,113.00
Service Fee 1,056.00
Interest Past Due 32,015.65
Liquidated Damage 28,074.35
Miscellaneous Income 2,000.00
Gain on Auction Sale 15,000.00
Taxes and Licenses 4,576.00
Postage and Communication 2,325.00
Salaries Expense 22,000.00
Rent Expense 29,000.00
Utilities Expense 5,000.00
SSS Contribution Expense 1,154.80
Philhealth Contributions Expense 275.00

Required: Prepare a trial balance

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