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ABM FABM1 AIRs LM Q3 W5 M5
ABM FABM1 AIRs LM Q3 W5 M5
Fundamentals of Accountancy,
Business and Management 1
Module 5
1
Fundamentals of Accountancy, Business and Management 1
Module 5
First Edition, 2021
Copyright © 2021
La Union Schools Division
Region I
Management Team:
2
Target
ILLUSTRATE THE FORMAT OF A GENERAL AND SPECIAL JOURNALS
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For you to understand the lesson well, let us
Jumpstart have first an exercise.
Discover
• It helps to prevent or locate errors because the debit and credit amounts for each
entry can be easily compared.
Journalizing process
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• The date of the transaction which is entered in the Date column.
• The debit account title (that is, the account to be debited) which is entered first at
the extreme left margin of the column headed “Account Titles and Explanation,”
and the amount of the debit is recorded in the Debit column.
• The credit account title (that is, the account to be credited) which is indented and
entered on the next line in the column headed “Account Titles and Explanation,”
and the amount of the credit is recorded in the Credit column.
• A brief explanation of the transaction which appears on the line below the credit
account title. A space is left between journal entries. The blank space separates
individual journal entries and makes the entire journal easier to read.
• The column titled Ref. (which stands for Reference which is left blank when the
journal entry is made. This
column is used later when the journal entries are transferred to the ledger
accounts.
To illustrate the recording of transactions in the general journal, let us use the
following transactions as an example:
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Other common source documents are the following special journals;
Cash Receipt Journal. This is a book of original entry where all cash receipt
transactions are recorded such as cash investment, loans, cash sales, collections of
customers’ accounts and cash refund.
Account Sundry
Sales Cash
s Acco
Receive Explanati OR Cash Disco Sale
Date F Receiva u nt D
d from on # Debit u nt s F Cr
ble Title r
Debit Cred
Credit
it
on
Ja Dan investmen Pasco, 30 50,00
file
n 1 Pasco t 50,000 Capital 1 0
Loans
on
90 day, 50,000 Payabl 20 50,00
file e
2 PNB 18% note . 2 0
CR
Custome 8,00
T
6 rs cash sales 8,000 0.
Lopez partial 00
8 Trdg collection 1 5,000 5,000
1 Chavez 00
0 Store full collect 2 4,410 90 4,500
117,,41
90.00 9500 8,000 100,00
0. . 0.
Vo Purchas Sundry
Cash
. Cash e Accounts
Date Paid to Explanation Purchas Accoun D
N Credit Discoun Payable F Cr
o. t Credit es Debit t Title r
F Dr
10 cash 2 2,500.0
Sphere purchases 0
Pasco, 3
11 cash 3 Drawin 0
Pasco withdrawal 500.00 8,000.00 g 1 500.00
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Sales Journal. Sales of merchandise are usually either on cash or on account
basis. Cash sales, for retailers like the big department stores, are rung on cash
register tapes which are summarized in a cash summary report and entered in the
sales journal based on the total amount.
Union
Oct 2 Store 101 5,000.00 5,000.00
Lopez
4 Trdg 102 7,500.00 7,500.00
Chavez
5 Store 103 4,500.00 4,500.00
Cash
6 Sales CRT 8,000.00 8,000.00
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The summary of business papers evolving finances of the business which are
used for recording and journalizing transactions.
Cash Receipts
Journal Receipts of cash CR
Cash Payments
Journal Payments of cash CP
Sales Journal Sales of merchandise on account S
Credit purchases of merchandise
Purchase Journal and other items P
Entries that do not fit with the other
General Journal journals GJ
Table 6. Summary of Special Reports
Explore
Direction: Indicate the type of source document that is likely to contain the
details of each transaction.
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Let us check how well you have understood the lessons by working on some of the enrichment activity/
Deepen
You own and operate a business that sells goods to other businesses. You allow
established customers to buy goods from you on account, meaning you let them
charge purchases and offer terms of 2/10, n/30. Record the following
transactions in the sales journal and cash receipts journal:
Great job! You have understood the lesson well! Are you now ready to take the fina
Gauge
Direction: Multiple Choice. Choose the best answer and write your answers
in a separate sheet of paper.
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4. The Person from whom the goods are purchased on credit are called:
A. Creditor B. Debtor
C. Purchaser D. Seller
6. When special journals are used, Do you still require a general journal?
A. Not needed B. Still required
C. Used only to record purchases D. Used only to record sales
7. Supplies were purchased on credit and the entry was recorded in the
Purchases Journal. When you return some of these supplies to the vendor,
What will be the journal entry for this return to be recorded in the general
journal?
A. Debit cash and credit supplies
B. Debit supplies and credit cash
C. Debit accounts payable and credit supplies
D. Debit supplies and credit accounts payable
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Target
The learner shall be able to understand and illustrate the use of a general and
subsidiary ledger. They will be able to learn how to collect historical transaction
data from the book of the original entry called journal and enter such entries to
the book of final entry called ledger. Learners will be equipped with knowledge
necessary to classify such transactions and organizing entries by account.
Jumpstart
For you to understand the lesson well, let us do some practice drills.
Have fun!
The ledger provides the transaction history and current account balances
throughout the accounting period. It serves as the reliable source of information or
data at the end of the accounting period that serves as a basis in making the
company’s activity for the period in the firm's Revenue and Expense Accounts.
Explanations below define, explain and illustrate ledger in context with concepts,
emphasizing the following:
First, the ledger's role in the accounting cycle, the nature of posting, and
practices in "continuous accounting."
Second, how firms record and organize transactions of various kinds
through the Journal, Sub-Ledger, and General Ledger.
Third, Ledger structure and contents, including the T-account Structure
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Direction: Write TRUE if the sentence is CORRECT and FALSE if INCORRECT.
Use a separate sheet of paper for your answers.
Discover
The ledger refers to the accounting book in which the accounts and their
related amounts as recorded in the journal are posted periodically. The ledger is
also called the ‘book of final entry’ because all the balances in the ledger are
used in the preparation of financial statements. This is also referred to as the T-
Account because the basic form of a ledger is like the letter ‘T.
Posting is the process of transferring information from the journal to the
ledger.
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The age of continuous accounting
Historically, the use of journal and ledger entries are handwritten in
notebooks after every transaction or event such as sale, expense, earned revenues
and any other activities that affects/impacts the company’s operation occur.
Today, journals and ledgers data and transactions are recorded in the company’s
books through the use electronic accounting software e.g. Peachtree, Point of sales
system software. Continuous Accounting is the practice of keeping accounting
system or records up to date and ready for closing at any point in the accounting
period.
There are two kinds of ledgers, namely; the general ledger and the subsidiary
ledgers.
1. General Ledger
A grouping of the entity’s accounts is referred to as ledger. Although some
firms may use various ledgers to accumulate certain detailed information, all firms
have a general ledger. It is called the “reference book” of the accounting system
and is used to classify and summarize transactions, and to prepare data for basic
financial statements.
The Chart of Accounts present all the listings of account entries that
appears in the company’s journal and ledger accounts. All active account in the
list are to be presented in the general ledger.
Journal
Date Explanation Debit Credit Balance
Reference
2019
1-
Jan J-1 250,000 250,000
2. Subsidiary Ledger.
This is considered an individual customer’s account (in case of Accounts
Receivable Controlling Account). The individual customer accounts are the
subsidiary account. The subsidiary ledger, like the general ledger, may simply be a
group of accounts in a binder, or it may be a file card arrangement. In either case,
the order is either numerical by customer number or alphabetical by customer
name. The sum of all the individual balances in the subsidiary ledger must equal
the balance in the control account in the general ledger. For every amount posted
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to the general ledger controlling account, must be posted to one or more of the
customers’ accounts in the subsidiary ledger.
Name: A. Gray
Address: 1234 Wilson St. San Juan
Jan
24 SA No. 01 J2 16,000.00 16,000.00
30 OR No. 81 J2 8,000.00 8,000.00
Two Main Subsidiary Ledgers that are used in double entry bookkeeping
T- Account
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To Illustrate:
Account Title
DEBIT CREDIT
Assets Liabilities
Expenses Income
Dec.in Liabilities Capital
Inc. in Assets Inc. in
Liabilities Losses Dec. In Assets
Explore
Activity:
Problem Solving: Read the problem carefully and execute what is
required. Post it in a ledger using the T-Account. Use a separate sheet of
paper for your answer.
Below is the journal entry of JTN Company for the month of March 2019.
Post the journal entries to the ledger using the T-Accounts. Use the
following account codes: Cash (101), Accounts Receivable (110), Office Supplies
(121), Furniture and Fixtures (132), Equipment (141), Accounts Payable (201), Notes
Payable (202), Jenna, Capital (300), Professional Fees (401), Salaries Expense
(510), Rent Expense (515), Utilities Expense (520), and Taxes (525).
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To record the purchase of supplies on
account
10 Equipment 141 35,000.00
Cash 101 5,000.00
Notes Payable 202 30,000.00
To record the purchase of equipment
11 Furniture and Fixtures 132 23,500.00
Accounts Payable 201 23,500.00
To record the purchase of tables and
chairs on account
12 Cash 101 25,000.00
Professional Fees 401 25,000.00
To record service income from
profession
18 Cash 101 28,000.00
Notes Payable 202 28,000.00
To record borrowings from a bank
22 Accounts Receivable 110 35,000.00
Professional Fees 401 35,000.00
To record service Income from on
account
30 Cash 101 35,000.00
Accounts Receivable 110 35,000.00
To record the amount collected from
March 22 transaction
31 Salaries Expense 510 20,000.00
Rent Expense 515 10,420.00
Utilities Expense 520 4,568.34
Cash 101 34,988.34
To record operating expenses
Deepen
Let us check how well you have understood the lessons by working on some of the enrichment activi
Good luck!
Problem Solving Activity
Activity:
Direction: Analyze the following transactions for journalizing and posting.
Post it in a ledger using table (General Ledger).
July 1. Owner invested Php 500,000.00 cash along with computer equipment that
had a market value of php.120,000.00 two years ago but was now worth
Php. 100,000.00 only.
July 4. Purchased php.12,000.00 of additional equipment on credit (due within
30 days).
July 8. Completed a work for a client and immediately collected the
php.32,000.00 cash.
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July 10. Completed work for a client and sent a bill for php.27,000.00 to be paid
within 30 days.
July 12. Purchased additional equipment for php.8,000.00 in cash.
July 18. Collected php.15,000.00 on the amount owed by the client last Juy 10.
July 25. Paid php. 12,000.00 cash to settle the liability on the equipment
purchased on July 4.
July 31. Paid salary of assistant php.700.00
July 31. Received PLDT bill, php.1,800 and Meralco bill php. 3,800.00.
Chart of Accounts
100 Cash 400 Accounts Payable
101 Account Receivable 500 Capital
102 Equipment
200 Salaries and Wages
201 Utilities
300 Service Income
Great job! You have understood the lesson well! Are you now ready to take the final a
Gauge
Direction : Choose the best answer and write the letter of your answer in a
separate sheet of paper.
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5. Debits are what side of the T-Account??
A. Left B. Middle C. Right D. Top
6. The total of the sales on account is posted to the nominal ledger by?
A. Debit Cash, Credit Sales
B. Debit Accounts Recievable, Credit Sales
C. Debit Sales, Credit Cash
D. Debit Accounts Receivable, Credit Cash
7. Christina withdraws Php30,000 from her business bank account for petty
cash. How should this be recorded in the general ledger? Bank
A. Debit Bank, Credit Petty Cash B. Debit Petty Cash, Credit
C. Debit Petty Cash, Credit Capital D. No record is necessary
8. If both sides of the T account are equal then it will show?
A. Credit Balance B. Debit balance
C. Opening balance D. Zero Balance
9. What process is involved when you transfer data from the journal book to the
ledger?
A. Analysis of Transaction B. Journalizing
C. Posting D. Trial balance
10. If debit side of an account is in excess of the credit side, then it shows?
A. Credit balance C. Debit balance
C. Negative Balance D. Zero balance
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References
Aliling, Leonardo E. (2013). Fundamentals of Basic Accounting. ISBN:
9789712365256. Rex Bookstore Incorporated. Sampaloc, Manila.
Ballada, Win Lu (2010). Basic Accounting Made Easy. 15th Edition. ISBN:
978- 971-94493-8-6. Chapters 1-15 DomDane Publishers and Made Easy Books.
Sampaloc, Manila
Manuel, Zenaida Vera Cruz (2007). 21st Century Accounting Process – Basic
Concepts and Procedures. International Edition. ISBN: 978-971-93680-0-7.
Raintree Trading and Publishing Incorporated. Quezon City.
https://opentextbc.ca/principlesofaccountingv1openstax/chapter/analyze-and-
journalize-transactions-using-special-journals/
https://quizizz.com/admin/quiz/56e08a3bf261eadb7beb009d/accounting-7-
posting-journal-entries-to-the-general-ledger
https://www.playaccounting.com/mcqs/sj-mcqs/
https://tools.mheducation.ca//college/larson10/student/olc/10fal_mc_08.html
https://www.myaccountingcourse.com/accounting-dictionary/accounts-
receivable-ledger
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