Fundamentals of Accountancy,

Business and Management II

2nd Quarter

MR. JERALD S. FEDERIO

Instructor
Accounting Books - Journal and
Ledger
• The General Journal and Special Journal
Many businesses maintain several types of journals. The nature of the
business operations and the volume of transactions determine the type
and number of journals needed.
• The simplest type of journal is called the general journal.
• The process of recording a transaction is called journalizing the
transactions.
This type of journal is unique among journals because it may be used to
record any type of business transactions.
Examples of special journals and their use are
the following:
• Cash Receipts Journal – is used to record all cash that had been
received.
• Cash Disbursements Journal – is used to record all transactions
involving cash payments.
• Sales Journal (Sales on Account Journal) – is used to record all sales
on credit (on account)
• Purchase Journal (Purchase on Account Journal) – is used to record all
purchases of inventory on credit (or on account)
The importance of using a journal
• The journal shows all information concerning a particular transaction.
• The journal provides a chronological record of all the financial events
in the business over time.
• If we want to know about a certain transactions of years or months
back, we can trace the said transactions as long as we have the date of
the said transaction.
• The entries in the journal are arranged by date that makes it necessary
to locate a particular event.
• The Use of General Ledger
A ledger is a means of accumulating in one place all the information about changes in an asset, liability,
equity, income, and expense accounts.
T – Account
The normal balances of these accounts are listed below:
• a. Asset Accounts – Debit Balance; however the normal balance of a contra
asset account is credit. In the above chart, the contra asset accounts are:
• Allowance for Bad Debts,
• Accumulated Depreciation (Accum. Deprn.) – Store Equipment
• Accum. Deprn. – Off Eqpt
• Accum. Deprn – Trans Eqpt
• Accum. Deprn – Building
• b. Liability Accounts – Credit Balance
• c. Equity Accounts – Owner’s, Capital account has a normal balance on the
credit side while the Owner’s, Withdrawal account has a normal balance
on the debit side.
• d. Income – Credit Balance
• e. Expense – Debit Balance
Remember!
• Let’s Practice!

• On February 1, 2016, the following beginning balances were correctly

determined from previous accounting period of Mr. Auschuwitz Repair
Shop:

Cash 25,000.00 Debit Balance

Accounts Receivable 100,000.00 Debit Balance
Office Equipment 50,000.00 Debit Balance
Accounts Payable 35,000.00 Credit Balance
Vicente, Capital 140,000.00 Credit Balance
Transaction during February 2016 are:
Feb 2 Rendered service to X Company for Php15,000 and received cash
payment on same date

Feb 4 Paid Rental for the month amounting to Php3,500.00

Collected accounts receivable from Y Company amounting to Php 30,000.
Feb 5 The amount was included in the beginning balance as of February 1, 2016
stated above.

Feb 10 Rendered service to Jose on account, P18,000 to be collected on March 2016.

Feb 15 Paid salaries of staff, Php 7,000

Paid accounts payable to Marine Company amounting to P5,000. The amount

was included in the beginning balance as of February 1, 2016
Feb 18
stated above

Feb 20 Rendered service to Maria Company for P23,000, cash

 Compound Journal Entry
• An entry the involved two accounts only, one debit and
one credit is called a simple journal entry. Some
transactions, however, require more than two accounts
in journalizing. An entry that requires three or more
accounts is a compound entry.

Example: Mr. Auschuwitz Cinnaniti Supply Store acquire a

land for P800,000. Mr. A paid P300,000 cash and issued a
promissory note for the balance.
 Solution:
(1) Land 300,000
Cash 300,000
To record purchased of land by paying cash

(2) Land 500,000

Note Payable 500,000
To record purchased of land by issuing promissory note

To record the above transactions using a compound entry:

Land 800,000
Cash 300,000
Notes Payable 500,000
To record purchased of land by paying cash and issuance of a promissory note
Practice Set No. 1 (Friendly Trucking)
On April 1, 2016, Nels Ferrer organized a business called Friendly Trucking.
During April, the company entered into the following transactions:

Instructions:
a. Journalize the above transactions
b. Post to ledger using the T-account format
c. Prepare the unadjusted trial balance, as of April 30, 2016