COLLEGE OF ACCOUNTANCY

C-AE13: Financial Accounting and Reporting

First Semester | AY 2020-2021

Module 5

A. Course Code – Title : C-AE13: Financial Accounting and Reporting

B. Module No – Title : M05 – Recording Transactions in the Journal
C. Time Frame : 1 week (Week 5) – 6 hrs
D. Materials : Course Syllabus

1. Overview
This learning material provides a discussion and illustration on how transactions
are recorded in the two-column general journal following the rules of debit and credit.
You should read clearly and understand well the topics explained herein. Please
read Chapter 3 of your text book. It is also expected that you answer the assigned
problems and exercises.

2. Desired Learning Outcomes

At the end of the learning session, you should be able to:
a) Record properly the transactions in the two-column general journal.

3. Content/Discussion

Lesson 1 – Journalization
After the transactions have been analyzed and properly measured based on the
source documents, the effects of each transaction on the accounting elements should be
determined, following the rules of debit and credit. Then the next step, recording of the
transaction in the journal or journalization, will now be performed.
How is journalization or the recording of transactions in the journal done? What
does a two-column general journal look like?
Following is an illustration on how transactions are recorded in the two-column
general journal: (Only a few transactions in June of the current year are given for
illustration purposes.)

June 1 – The owner, Ms. Di Gong, invested cash of P400,000 and a computer set valued
at P50,000 that she personally owns in her business, Express Delivery.
3 – Bought office supplies for cash, P5,000.
5 – Purchased a second-hand delivery van, P880,000, paying P130,000 cash and the
balance to be paid in 12 monthly installments of P62,500 payable at the end of
each month starting June 30.
9 – Received P9,500 cash for delivery services rendered.

Faculty: SISINIA T. QUIZON 1 | Page

 COLLEGE OF ACCOUNTANCY
C-AE13: Financial Accounting and Reporting
First Semester | AY 2020-2021

In recording transactions in the two-column journal, it is well to remember that

you have to make a journal entry, which is composed of: a) the date, b) the debit account/s
and amount/s, c) the credit account/s and amount/s, and d) the explanation.
There are two kinds of journal entries:
a) Simple journal entry – has only one debit account and only one credit account.
Ex: the June 3 & 9 journal entries
b) Compound journal entry – has more than one debit accounts and/or more than
one credit accounts. Ex: the June 1 & 5 journal entries

Note: You have to indicate the column headings first before recording the first transaction.

The column at the extreme left is where the date is recorded; therefore, the column
heading is Date.
The widest column is where you record the account/s debited and credited as well as a
brief explanation of why such accounts were debited and credited. So, the column heading
is Account Titles and Explanation. Other headings used are: Particulars, Description or only
Explanation.
The next small column to the right is used to indicate the account number of the debit and
credit accounts. The title of this column is PR for posting reference or others use F for folio,
a Latin term, which means page. This column will be used when the journal entries have
been posted. The posting process will be illustrated in the next module.

Faculty: SISINIA T. QUIZON 2 | Page

 COLLEGE OF ACCOUNTANCY
C-AE13: Financial Accounting and Reporting
First Semester | AY 2020-2021

The last two columns are identical. These are the money columns where the debit and
credit amounts are recorded. The money column at the left is for debit amounts; hence,
the title of the column is Debit. The money column on the right is where you record the
credit amounts; hence, the title of this column is Credit.
If you count carefully the number of columns within each money column, you will notice
that there are eight sub-columns. Each of these eight sub-columns has a particular
purpose. Let us start with the wider sub-column at the extreme right. This is used to record
centavos. The first of the six smaller sub-columns starting from the right is where you
record ones, going to the left, the next is for recording tens, then hundreds, followed by
thousands, then ten thousands, and the last for hundred thousands. The wider sub-
column at the extreme left is where you record millions or more.
Note: You do not need to indicate commas or decimal points when you record the debit
and credit amounts, because these are built-in in the money columns. Observe closely in
the illustration how the debit and credit amounts are recorded in the money columns.
So, again, how are transactions recorded in the two-column journal now that the column
headings are already indicated?
Fill up the Date column. The year is written in small figures on the space right below the
heading Date. Below the year, write the month, and on the same line or space, write the
day beside the month.
Note: The same year and the same month are written on the same journal page only once.
Needless to say, therefore, on every journal page, you must always indicate the year and
the month. However, the same day is written for as many times as the number of journal
entries made to record transactions occurring on the same day. In other words, there is no
limit as to the number of times that the same day may be indicated on the same journal
page.
Write the debit account at the extreme left of the Explanation column. If there is more than
one debit account, allot one line or one space in the journal for every debit account. Then
indicate the amount of the debit account in the debit money column on the same line or
space as the debit account.
Next, write the credit account in the Explanation column below the last debit account, but
indent it so as to distinguish it from the debit account/s. Again, if there is more than one
credit account, each credit account is allotted one space or one line in the journal. The
credit accounts should have the same indention. Then, record the amount of the credit
account in the credit money column on the same line or space as the credit account.
After you have recorded the last credit account, give a very brief explanation of why you
debited and credited these accounts. You may refer to the transaction recorded for your
explanation. So as not to mislead, you must farther indent the explanation to distinguish
it from the credit account/s.

Faculty: SISINIA T. QUIZON 3 | Page

 COLLEGE OF ACCOUNTANCY
C-AE13: Financial Accounting and Reporting
First Semester | AY 2020-2021

Note: If a journal entry cannot be accommodated completely on the remaining space of

the journal page, please write it completely on the next page.

4. Progress Check
a) What is journalization?
b) Enumerate the parts of a journal entry? Briefly describe each part.
c) Differentiate a simple journal entry from a compound journal entry.
d) Discuss how a transaction is recorded in the journal.

5. Assignment (Optional)
Answer end-of- Chapter 3 problems 13 – 15, requirement # 1 only. Use two-column
journal sheets, please.

6. Assessment
Answer end-of-Chapter 3 problem # 16, requirement # 1 only. Submit your
answers in a two-column journal, please.

7. References

Manuel, Zenaida Vera-Cruz (2018) 21st Century Accounting Process, Basic Concepts and
Procedures, Manila, Philippines: Zenaida Vera-Cruz Manuel.

Ballada, Win. (2020) Basic Financial Accounting and Reporting, Cavite, Philippines:
Dom Dane Publishers & Made Easy Books.

Cabrera, Ma. Elenita B. & Cabrera, Gilbert Anthony B. (2018) Financial Accounting and
Reporting,Manila, Philippines: GIC Enterprises & Co., Inc.

Ferrer, Rodiel C. & Millan, Zeus Vernon B. (2017) Fundamentals of Accountancy,

Business and Management, Part 1, Baguio City, Philippines: Bandolin Enterprise.

Warren, Carl S., Reeve, James M., & Duchac, Jonathan E. ((2015) Accounting 25th
Edition, Pasig City, Philippines: Cengage Learning Asia Pte Ltd (Philippine Branch).

Gilbertson, Claudia B., Lehman, Mark W., & Gentene, Debra H. (2017) Century 21
Accounting Multi-column Journal 10th Edition, Boston, MA 02210 USA: Cengage
Learning.

Wild, John; Kwok, Winston; Venkatesh, Sundar; Shaw, Ken W. & Chiappetta,

Faculty: SISINIA T. QUIZON 4 | Page

 COLLEGE OF ACCOUNTANCY
C-AE13: Financial Accounting and Reporting
First Semester | AY 2020-2021

Barbara. (2016) Fundamental Accounting Principles 2nd Edition, 2 Penn Plaza, New York:
McGraw-Hill Education.

Faculty: SISINIA T. QUIZON 5 | Page