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Accounting Cycle of A Service Business
Accounting Cycle of A Service Business
Accounting Cycle of A Service Business
Exmple Problem :
-1 July 1, 2020 Mr. Mercado invested the following in his business to be known as JM Photocpying Center :
Cash Php 30,000.00
(1) Photocopying Equipment 30,000.00
Loans Payable 50,000.00
his loan payable of Php50,000 would be assumed by the business.
GENERAL JOURNAL
GENERAL JOURNAL
1. Date of transactions
2. Particulars (Account titles and explanation)
3. Reference (for posting reference)
4. Debit account title/s and debit amount/s
5. Credit account title/s and credit amount/s
6. An explanation
July 2, 2020 JM Photocopying Center paid Php 10,000 for the purchase of bond papers ( with sales invoice)
(2)
GENERAL JOURNAL
July 3, 2020 Mr. Mercado hired one personnel with a weekly salary of Php1,000 to look after the business (
(3)
***Dont need to journalize the transaction since this is a non business transaction which mean
effect on assets, liabilities, Equity, Revenues and expenses.
July 3, 2020 On July 3, 2020 JM photocopying Center paid for business permits and licenses amounting to
(3 A)
GENERAL JOURNAL
July 10, 2020 On July 10, 2020, Photocopying Center paid salary of the personnel for the week, Php 1,0
(4)
GENERAL JOURNAL
July 16, 2020 On July 16, 2020, JM Photocopying Center received Php 8,000 cash for services rendered
(5)
GENERAL JOURNAL
July 16, 2020 On July 16, 2020, JM Photocopying Center received Php 8,000 cash for services rendered
(6)
GENERAL JOURNAL
July 17, 2020 On July 17, 2020, JM Photocopying Center payment of weekly salary of Php1,000
(7)
DATE PARTICULARS Ref.
July 10, 2020 Salaries Expense
Cash
To record payment of salaries
July 21, 2020 On July 21, 2020, JM Photocopying Center billed a customer for services rendered during
(8)
GENERAL JOURNAL
July 24, 2020 On July 24, 2020, JM Photocopying Center payment of weekly salary of office staff
(9)
July 27, 2020 On July 27, 2020, Mr. Mercado made a Php500 cash withdrwal for personal use.
(10)
GENERAL JOURNAL
GENERAL JOURNAL
July 29, 2020 On July 29, 2020, JM Photocopying Center paid rent for two months amounting to Php10
(11)
GENERAL JOURNAL
July 30, 2020 On July 30, 2020, JM Photocopying Center received a bill from an electric company,
(11)
GENERAL JOURNAL
an electricity bill
hronological order.
JM Photocpying Center :
Debit Credit
30,000.00
30,000.00
30,000.00
30,000.00
URNAL
Debit Credit
10,000.00
10,000.00
###
URNAL
Debit Credit
2,000.00
2,000.00
###
URNAL
Debit Credit
1,000.00
1,000.00
###
Debit Credit
8,000.00
8,000.00
###
URNAL
Debit Credit
8,000.00
8,000.00
###
y salary of Php1,000
Debit Credit
1,000.00
1,000.00
###
for services rendered during the week, Php 2,000 (with billing statement)
URNAL
Debit Credit
2,000.00
2,000.00
### To record owner's personal withdrawal
Debit Credit
1,000.00
1,000.00
###
URNAL
Debit Credit
500.00
500.00
###
unt billed to a customer,
URNAL
Debit Credit
2,000.00
2,000.00
###
URNAL
Debit Credit
10,000.00
10,000.00
###
m an electric company,
URNAL
Debit Credit
2,500.00
2,500.00
###
***To summarized the transactions for July 2020 ***
GENERAL JOURNAL
DATE
2020 PARTICULARS Ref.
Jul-01 Cash 101
Equipment - Photocpying Machine 151
Loans Payable 215
Mercado's, Capital 301
To record investment of cash, photocopying equipment,
and loan payable
"July 16 Cash
Service Income - Photocopying revenues
To record cash received for services rendered
Debit Credit
30,000.00
30,000.00
50,000.00
10,000.00
10,000.00
10,000.00
2,000.00
2,000.00
1,000.00
1,000.00
8,000.00
8,000.00
1,000.00
1,000.00
2,000.00
2,000.00
1,000.00
1,000.00
500.00
500.00
2,000.00
2,000.00
10,000.00
10,000.00
2,500.00
2,500.00
1,000.00
1,000.00
SIMPLE STEPS IN ANALYZATION
STEP 3 POSTING TO THE LEDGER
a. After journalizing, the next step in the accounting cycle is posting in the general ledger.
b. A ledger contains all the accounts (assets, Liabilities, Owner's equity, revenues and expenses) maintained by
c. It is for the reason that ledge is the so called "Book of Final Entry"
GENERAL LEDGER
Account Title CASH
Date EXPLANATION REF DEBIT DATE
2020
Jul-01 Cash Investment 1 30,000.00 Jul-02
16 Services Rendered 2 8,000.00 3
28 Collection of Account 3 2,000.00 10
17
24
27
29
31
40,000.00
GENERAL LEDGER
Account Title ACCOUNTS RECEIVABLE
Date EXPLANATION REF DEBIT DATE
2020 2020
Jul-21 Services rendered 3 2,000.00 Jul-28
Dr Php 2000
Cr Php 2000
RESULT IS ZERO
GENERAL LEDGER
Account Title UNUSED SUPPLIES
Date EXPLANATION REF DEBIT DATE
2020 Purchase of supplies 1 2,000.00
GENERAL LEDGER
Account Title EQUIPMENT (PHOTOCOPY MACHINE)
Date EXPLANATION REF DEBIT DATE
Jul-01 Investment of photocopying machine 1 30,000.00
GENERAL LEDGER
Account Title ACCOUNTS PAYABLE
Date EXPLANATION REF DEBIT DATE
2020
30
GENERAL LEDGER
Account Title LOANS PAYABLE
Date EXPLANATION REF DEBIT DATE
2020
Jul-01
GENERAL LEDGER
Account Title MERCADO'S CAPITAL
Date EXPLANATION REF DEBIT DATE
2020
Jul-01
GENERAL LEDGER
Account Title MERCADO'S DRAWING
Date EXPLANATION REF DEBIT DATE
2020
Jul-27 Owner's Personal Use 3 500.00
GENERAL LEDGER
Account Title SERVICE INCOME - PHOTOCOPYING REVENUES
Date EXPLANATION REF DEBIT DATE
2020
Jul-16
21
GENERAL LEDGER
Account Title TAXES AND LICENSES
Date EXPLANATION REF DEBIT DATE
2020
Jul-03 Business Permits and licenses 1 2,000.00
GENERAL LEDGER
Account Title SALARIES EXPENSE
Date EXPLANATION REF DEBIT DATE
2020
Jul-10 Payment of salary 1 1,000.00
17 Payment of salary 2 1,000.00
24 Payment of salary 3 1,000.00
31 Payment of salary 3 1,000.00
GENERAL LEDGER
Account Title ACCRUED EXPENSE -UTILITIES EXPENSE
Date EXPLANATION REF DEBIT DATE
2020
Jul-30 Receipt of electricity bill 3 2,500.00
GENERAL LEDGER
Account Title PREPAID RENT
Date EXPLANATION REF DEBIT DATE
2020
Jul-29 Rent for two months 3 10,000.00
general ledger.
venues and expenses) maintained by the business.
GER
Account No. 101
EXPLNATION REF CREDIT
40,000.00
GER
EIVABLE Account No. 112
EXPLNATION REF CREDIT
GER
PLIES Account No. 122
EXPLNATION REF CREDIT
GER
OPY MACHINE) Account No. 151
EXPLNATION REF CREDIT
GER
YABLE Account No. 201
EXPLNATION REF CREDIT
GER
BLE Account No. 215
EXPLNATION REF CREDIT
GER
APITAL Account No. 301
EXPLNATION REF CREDIT
GER
AWING Account No. 302
EXPLNATION REF CREDIT
GER
OPYING REVENUES Account No. 401
EXPLNATION REF CREDIT
GER
ENSES Account No. 501
EXPLNATION REF CREDIT
GER
ENSE Account No. 502
EXPLNATION REF CREDIT
GER
LITIES EXPENSE Account No. 504
EXPLNATION REF CREDIT
GER
NT Account No. 504
EXPLNATION REF CREDIT