The Bookkeeping

Equation
Assets= Liabilities +
Owner’s Equity
 The Accounting Cycle

the uniform procedures

done to accomplish the
accounting process.
 Steps in the Accounting Cycle
1. Identifying & analyzing the events to be
recorded.
2. Recording transactions in the journal
3. Posting journal entries to the ledger
4. Preparing the trial balance
5. Preparing the worksheet and the adjusting
entries
6. Preparing the financial statements
 Steps in the Accounting Cycle
7. Journalizing ang posting of adjusting journal
entries
8. Journalizing and posting of closing journal
entries.
9. Preparing the post-closing trial balance
10. Journalizing and posting of reversing entries.
 Journal
The chronological record of events or business
transactions showing all the effects pf each
transaction in terms of debits and credits.
The book of original entry.
The simplest journal
Contents of a Journal
1. Date
2. Accounts Titles and Explanation
3. P.R.(Posting Reference
4. Debit
5. Credit
Chart of Accounts
 is a list of all account titles used by the
company with the corresponding account
number.
 Accounts titles are arranged in financial
statement order
 The accounts are so numbered for
purposes of indexing and cross
referencing.
 Wedding J. Yu
Chart of Accounts
 
Balance Sheet Accounts Income Statement Accounts
Assets
Account Account Income
Number Titles
110 Cash 410 Consulting Revenues

120 Accounts Receivable 420 Referral Revenues

130 Supplies
140 Prepaid Rent Expenses
150 Prepaid Insurance 510 Salaries Expense
160 Service Vehicle 520 Supplies Expense
170 Office Equipment 540 Insurance Expense
Liabilities 550 Interest Expense
210 Accounts Payable 560 Utilities Expense
210 Notes Payable 580 Miscellaneous Expense
230 Salaries Payable
240 Utilities Payable

Owner’s Equity
310 Yu, Capital
320 Yu, Withdrawal
330 Income Summary
Jeany Cruz recently established a business that will operate
as Beauty Laundry Services. On June 1, 2018 she opened
Beauty Laundry Services by investing laundry equipment
valued at P 20,000, P100,000 cash in the business. The
following accounts are available in the records.
110Cash; 120 Accounts Receivable;130 Laundry
Supplies; 140 Prepaid Insurance; 150 Laundry
Equipment; 160 Service Vehicle; 200 Notes Payable,
210 Accounts Payable; 310 Cruz, Capital; 320 Cruz,
Withdrawals, 330 Income Summary, 410 Laundry
Revenues; 510 Salaries Expense; 520 Rent Expense;
530 Advertising Expense .
Required: Prepare the Chart of Accounts of Accounts
Account - a detailed record of the increases,
decreases and the balance of each element in the
financial statement.
Account Title
Debit Credit

Transaction:

June 1, 2017:
Owner, Mr. Cruz purchase computer equipment
amounting to P 20,000 on
cash.
Accounting is based on a double entry
system which means that the dual
effects of a business transaction is
recorded. A debit entry must have a
corresponding credit entry. Total
debits for a transaction must always
equal to the total credits.
 Double-entry System
 basis of recording transactions in accounting.

 transaction has a dual effect which means that

every transaction affects at least two accounts.
 For every debit, there is always a corresponding
credit where the total amount of accounts
debited must equal the total amount credited.
An account is debited when an amount is entered
on the left side of the account and credited when
the amount is entered on the right side.

The Rules of Debit and Credit:

1. Increases in assets are recorded debits while
decreases in assets are recorded credits.
2. Increases in liabilities and owner’s equity are
recorded by credits and decreases in liabilities
and owner’s equity are recorded debits.
Sample:
1. Mr. Cruz purchase Computer Equipment on
cash amounting to P 21,000.00.

2. Mr. Cruz invested P 100,000 to start his JC

Catering Services business.
Cash P 21,000
Computer Equipment P 21,000
Purchase of equipment.

Cash 100,000
Cruz, Capital 100,000
Initial investment.
Jeany Cruz recently established a business that will operate
as Beauty Laundry Services. On June 1, 2018 she opened
Beauty Laundry Services by investing laundry equipment
valued at P 20,000, P100,000 cash in the business. The
following accounts are available in the records.
110Cash; 120 Accounts Receivable;130 Laundry
Supplies; 140 Prepaid Insurance; 150 Laundry
Equipment; 160 Service Vehicle; 200 Notes Payable,
210 Accounts Payable; 310 Cruz, Capital; 320 Cruz,
Withdrawals, 330 Income Summary, 410 Laundry
Revenues; 510 Salaries Expense; 520 Rent Expense;
530 Advertising Expense .
Required:
Journalize the transactions.
June 3 Acquired additional Laundry supplies on account, P 12, 000.
6 Acquired a service vehicle costing P 57,000 for the business
paying P 15,000 cash, and financing the balance by issuing a
note.
7 Paid rent for the month, P 7,000.
9 Received P 38,000 cash for laundry services rendered.
12 Paid for the insurance for the next six months, P 4,000.
15 Paid for a newspaper advertisement, P 1,500.
15 Paid P 12,000 for the account last June 3.
16 Billed customers P 28,000 for laundry services rendered.
18 Paid salaries, P 5,500.
22 Received P 9,000 from customers billed on June 16.
25 Paid amount due on the notes payable, P 2,500.
28 Billed customers for laundry services rendered, P 22,000.
30 Withdrew P 5,000 for personal use.