Activity: Journalizing

and Posting
 Activity 1: Journalizing and Posting
Illustration:
Leonard Mercado decided to establish a sole proprietorship
business and named it as Mercado Graphics Design. Mercado is
a graphic designer who has extensive experience in drawing,
layout, lettering diagramming and photography.
Mercado Graphics Design can do the layout and production
design of newspapers, magazines, corporate reports, journals
and other publications. He also enters into agreements with
clients for the progressive development and maintenance of
their websites. His initial revenue stream comes from web
designing.
The owner, Leonard Mercado, makes the business decisions.
The assets of the company belong to Mercado and all obligations
of the business are his responsibility. Any income that the entity
earns belongs solely to Mercado.
During March 2019, the first month of operations, various financial
transactions took place. These transactions are described and
analysed as follows:

April 1. Mercado started his new business by investing P500,000 to

his business Medina Graphics Design.

April 5. Computer Equipment amounting P 215,000 is acquired on

cash basis.

April 9. Computer Supplies in the amount of P38,000 are purchased

on account.
April 17. The entity has service agreements with several
entrepreneurs to maintain and update their websites weekly.
Mercado billed these clients P45,000 for services already rendered
during the month.

April 19. Mercado made a partial payment of P22,000 for April 9

purchased on account.

April 20. Cash totalling P28,000 were received from clients for billings
dated April 17.

April 21. Mercado made an additional investment in the company

amounting P22,000.

April 31. Mercado paid his assistant designer salaries of P17,000 for
the month.
 SAMPLE
General Journal
Date Account Title & Explanation Ref Debit Credit

Apr-01 Cash 330,000

Medina's Capital 330,000
To record Medina’s investments

Figure 1. General Journal

 SAMPLE
Cash z NO.
101

Date Explanation Ref Debit Credit Balance

Apr-01 To record Mercado investments 500,000 500,000

Apr-05 To record purchased Equipment 215,000 285,000

Apr-19 To record partial payment 22,000 263,000

Apr-20 To record the collected cash 28,000 291,000

Figure 2. General Ledger