Information Sheet No.

CHART OF ACCOUNTS

CHART OF ACCOUNTS – a listing of all the accounts and their account number in the ledger.
- the chart is arranged in the financial statement order, that is assets
first, followed by liabilities, equity, revenues and expenses.
- it should be numbered in flexible manner.
EXAMPLE:
Buenaflor Bridal Consultant
CHART OF ACCOUNTS
ASSETS
101 Cash
102 Accounts Receivables
103 Notes Receivables
104 Prepaid Insurance
105 Supplies
106 Equipment
107 Land
108 Building
109 Furniture & Fixtures
110 Service Vehicle
111 Video Tapes
LIABILITIES
201 Accounts Payable
202 Notes Payable
203 Mortgage Payable
204 Loans Payable
205 Utilities Payable
206 Taxes Payable
207 Interest Payable
208 Salaries Payable
OWNER’S EQUITY
301 Buenaflor, Capital
302 Buenaflor, Drawing
REVENUES
401 Consulting Revenues
EXPENSES
501 Salaries Expense
502 Utilities Expense
503 Rent Expense
504 Supplies Expense
505 Insurance Expense
506 Depreciation Expense
507 Interest Expense
508 Repairs and Maintenance Expense
509 Taxes & License Expense
 Information Sheet No. 7

THE JOURNAL

JOURNAL – a book of original entry where the debits and credits of each account are
recorded.

JOURNALIZATION – the process of recording in a journal.

JOURNAL ENTRY – each entry made in a journal.

 A journal entry contains the following data:

1. Date
2. The account title and the amount to be debited
3. The account title and the amount to be credited
4. Explanation

Rules to be observed in preparing a Journal

1. Column headings must be filled up completely and a page number must be placed
on the upper right hand corner.
2. The date column consists of the following: year, month and day. Year and month
is written only in the first entry per page, unless there is a change in the month.
3. The debit account and amount is entered first.
4. The credit account and amount is indented (inner margin) and entered next.
5. A short explanation which is indented from the credit margin follows.
6. The peso sign is placed only in the in the first debit and credit per page.
7. The money column consists of eight spaces where the centavos, tens, hundreds,
thousands, and millions are placed. There is no need to place a comma or period.
8. If a complete journal entry cannot be accommodated at the bottom of the page,
then transfer all data to the next page.
9. The transactions are recorded chronologically.
10. A line or space is provided in between the entries to clearly separate one from the
other.
11. If an error is committed either in figure or in words, cross out the error with one
horizontal line and write the correct figure or word above it.

SIMPLE JOURNAL ENTRY – a journal with one debit and one credit

COMPOUND JOURNAL ENTRY – a journal with more than one debit and credit.
 Information Sheet No. 8

THE LEDGER & TRIAL BALANCE

THE LEDGER

Since transactions are recorded in the journal according to their dates of

occurrences, items of similar nature are not grouped together. Information in the
general journal is spread among the various transactions recorded. If information
regarding an item is desired, for example cash, it is still necessary to gather the
information from the scattered pages of the journal. Due to this inconvenience,
there is a need for another record in which data appearing in the journal may be
summarized to show the status of each item. Each item is represented by an
account. A group of accounts constitute a ledger.

LEDGER - A grouping of entity’s account

GENERAL LEDGER – is the “reference book” of the accounting system and is used to
classify and summarize transactions, and to prepare data for
basic financial statements.

TRIAL BALANCE

TRIAL BALANCE – is a list of all accounts with their respective debit or credit
balances. It is
prepared to verify the equality of debits and credits in the ledger at
the end of each accounting period.
Example:
Buenaflor Bridal Consultant
Trial Balance
March 31, 1999
Cash P 22,200
Accounts Receivable 12,000
Supplies 18,000
Prepaid Rent 8,000
Prepaid Insurance 14,400
Service Vehicle 420,000
Office Equipment 60,000
Notes Payable P 210,000
Accounts Payable 54,400
Buenaflor, Capital 250,000
Buenaflor, Withdrawals 14,000
Consulting Revenues 72,400
Salaries Expense 13,800
Utilities Expense 4,400
________ ________
P 586,800 P 586,800
 SAMPLE PROBLEM

July 1, 2019 -Cory invested her land and building valued at P150,000 and P500,000
respectively in a lease venture.
2 - Cory paid an additional cash investment of P20,000
3 - Bought Furniture & Fixture from ABC Company on account P12,000
4 - Purchased office supplies in cash P100 from Alemars
5 - Paid insurance on building to Fireman Insurance Company P3,000
6 - Collected revenue from various store holders P7,500
10 - Paid ABC Co. P6,000 cash
15 - Billed the following lessees on account owned from July 1-15
Store # 1 Estrella Jewelry Store P1,500
Store # 2 Pearl Department Store P2,000
Store # 3 Choo – Choo JunctionP1,500
17 - Paid for taxes and licenses P1,500
20 - Pearl Barbasa paid P1,000 for store # 2 and June Estrella paid P1,500 for
store # 1
22 - Paid for telephone P300, light P400 and water P150
27 - Received cash from various store holders P7,500
29 - Billed the following lessees:
Store # 1 Estrella Jewelry Store P1,500
Store # 2 Pearl Department Store P2,000
Store # 3 Choo – Choo JunctionP1,500
30 - Collected from June Estrella for store # 1 P1, 000, Pearl Barbasa for store #
2 P2, 000, and Jim Chua for store # 3 P1,500
31 - Paid for salaries P2, 500. Cory made a cash withdrawal for personal use
P1, 000.

REQUIRED:
1. Chart of Accounts
2. Journal
3. Ledger
4. Trial Balance
5. Statement of Performance
6. Statement of Equity
7. Statement of Financial Position
 ACTIVITY

On December 1, 2004, Mateo Roa opened a videotape rental store,

Oro Video, by investing P250, 000 cash from his personal savings account.
During the month of December, the following transactions took place:

Dec. 1 acquired supplies on account, P67, 000

4 Acquired video tapes costing P235, 000 on account
5 Paid P85, 000 to creditors
8 Received P78, 000 cash from ACA Video for rental fees
11 Billed Video City for video rentals, P105, 000
16 Paid salaries, P65, 000
17 Collected P77, 000 from Video City
23 Roa withdrew P47, 000 from the business for personal use
24 Paid rent for the month, P41, 500
30 Paid utilities bill for the month, P17, 500.

REQUIRED:

1. Chart of Accounts
2. Journal
3. Ledger
4. Trial Balance
5. Statement of Performance
6. Statement of Equity
7. Statement of Financial Position