Journal Ledger Journal Entry

ACCOUNTING CYCLE
ACCOUNTING CYCLE
• The accounting cycle is a step-by-step process to record

business activities and events to keep financial records
up to date.
• The process occurs over one accounting period and will
begin the cycle again in the following period.
• A period is one operating cycle of a business, which could
be a month, quarter, or year.
ACCOUNTING CYCLE
• The accounting cycle starts with recording every

company transaction individually and ends with a
comprehensive report of the company’s activities for the
designated cycle timeframe.
• Many companies use accounting software to automate
the accounting cycle. This allows accountants to program
cycle dates and receive automated reports.
The 10 Steps of the Accounting Cycle
• Step 1: Identify and Analyze Transactions
• Step 2: Record Transactions in a Journal
• Step 3: Posting
• Step 4: Unadjusted Trial Balance
• Step 5: Adjusting Entries
• Step 6: Adjusted Trial Balance
• Step 7: Prepare Financial Statements
• Step 8: Closing Entries
• Step 9: Post-Closing Trial Balance
• Step 10: Reversing Entries (Optional)
Accounting Cycle
These first four steps set the foundation for the

recording process.
Q1- SERVICE TYPE OF BUSINESS

Q2- MERCHANDISNG TYPE OF BUSINESS
STEP 1: Identify and Analyze Transactions
• This takes information from original sources or

activities and translates that information into
usable financial data. An original source is a
traceable record of information that
contributes to the creation of a business
transaction.
• All business Transactions should have a
documents to prove their validity.
Step 2: Record Transactions in a Journal
• This takes analyzed data from step 1 and organizes it into
a comprehensive record of every company
transaction.
• A transaction is a business activity or event that has an
effect on financial information
• The information to record a transaction comes from an
original source.
• A journal (also known as the book of original entry or
general journal) is a record of all transactions.
• You need to choose what accounts represent

this transaction, whether or not this
transaction will increase or decreases the
accounts, and how that impacts the
accounting equation before you can record
the transaction in the journal. You need to do
this process for every transaction occurring
during the period.
JOURNAL
• Book of original or prime entry as business transactions
are recorded at the first instance.
• Transactions recorded in the order in which they occur, i.e. in
chronological order.
• The process of entering or recording the transaction in the
journal is called Journalising.
• Record of each transaction in the journal is called Journal
Entry.
JOURNAL
L.F:-
It stands for Ledger Folio which
means page of the ledger. This
column is used to record the page
numbers on which the various
accounts appear in the ledger.
HOW TO MAKE JOURNAL ENTRY
DATE PARTICULARS L.F. DEBIT CREDIT
Jan. 1, 2019 CASH 1 P 10,000.00

SERVICE REVENUE P 10, 000.00
(To record the revenue
received from rendering of
service)
1. DETERMINE WHAT ACCOUNTS

(specific) ARE AFFECTED.
2. ANALYZE THE EFFECTS IF THE
ACCOUNTS ARE INCREASED OR
DECREASED
3. DEBIT OR CREDIT THE ACCOUNTS
AFFECTED
• On Sept. 3, 2020, Pacioli Parlor purchased on account a
computer to automate their business for P30,000.00.
1. Accounts Affected
Office Equipment
Liability
2. Effects on Account
Office Equipment INCREASE
Liability INCREASE
3. Debit or Credit the Accounts Affected
RULES ON DEBIT AND CREDIT
• DEBIT- the left side of the entry

• CREDIT- the right side of the entry
• Came from Latin book of Pacioli Debere (to
owe) and Credere (to entrust); hence the
acrnonym Dr for debit and Cr for credit
• BALANCE SHEET • INCOME STATEMENT
• ASSET= LIABILITIES + • REVENUE AND
OWNER'S EQUITY EXPENSES
ASSETS LIABILITIES CAPITAL REVENUES EXPENSES
DEBIT INC DEBIT DEC DEBIT DEC DEBIT DEC DEBIT INC
CREDIT DEC CREDIT INC CREDIT INC CREDIT INC CREDIT DEC
ACCOUNTS/ EFFECTS INCREASE DECREASE

ASSET, WITHDRAWAL, EXPENSES
DEBITED CREDITED
(AWE)
LIABILITIES, CAPITAL(INVESTMENT),
CREDITED DEBITED
REVENUES, ALLOWANCES (LICRA)
• On Sept. 3, 2020, Pacioli Parlor purchased on account a
computer to automate their business for P30,000.00.
1. Accounts Affected
Office Equipment
Liability
2. Effects on Account
Office Equipment INCREASE
Liability INCREASE
3. Debit or Credit the Accounts Affected
On Sept. 3, 2020, Pacioli Parlor purchased on account a computer to automate their

business for P30,000.00.

ASSET, WITHDRAWAL, EXPENSES (AWE) DEBITED CREDITED
LIABILITIES, CAPITAL(INVESTMENT), REVENUES,

CREDITED DEBITED
ALLOWANCES (LICRA)
DATE PARTICULARS L.F DEBIT CREDIT

.
Sept. 3, 2020 Office Equipment P 30,000.00
Accounts Payable P 30, 000.00
(To record purchase of
computer on account)
JOURNALIZE THE FOLLOWING TRANSACTIONS
Journalize the following transactions for January 2008 & post them to ledger
1. Mr. Kotler started carwash business with cash P100,000
2. Proceeds from bank loan P 40,000
3. Purchased Store Supplies for P6,000
7. Received P30,000 from Big Company for services rendered on their company cars.
9. Rendered services to Ms. Maarte on account for P2,000
12. Purchased cleaning machine from Mr. Nanda P 20,000
15. Paid salary of service boy P 3,000
25. Bought cleaning materials on account for P4,000
27. Paid the bank P15,000.
30. Ms. Maarte paid us P1,000 from Jan 9 transaction
31. Mr. Kotler withdrew 5,000 for personal use.
1. Mr. Kotler started carwash business with cash P100,000
COUNTS AFFECTED:
CASH / INC
KOTLER, CAPITAL/ INC
JOURNAL ENTRY: Jan. 1, 2008 Cash P100,000
Kotler, Capital P100,000


CREDITED DEBITED
ALLOWANCES (LICRA)
2. Proceeds from bank loan P 40,000
ACCOUNTS AFFECTED: 1. CASH INC 2. LOANS PAYABLE INC
JE: 1/2/2008 Cash 40,000
Loans Payable 40,000
(To record proceeds from bank)


CREDITED DEBITED
ALLOWANCES (LICRA)
3. Purchased Store Supplies for P6,000
ACCOUNTS AFFECTED: 1. CASH DEC 2. STORE SUPPLIES INC
JE: 1/3/2008 Store Supplies 6,000
Cash 6,000
(To record purchase of supllies)


CREDITED DEBITED
ALLOWANCES (LICRA)
7. Received P30,000 from Big Company for services rendered on their company cars.
ACCOUNTS AFFECTED: 1. CASH INC 2. SERVICE REVENUE INC
JE: 1/7/2008 Cash 30,000
Service Revenue 30,000
(To record cash revenue)


CREDITED DEBITED
ALLOWANCES (LICRA)
9. Rendered services to Ms. Maarte on account for P2,000
ACCOUNTS AFFECTED: 1. Accounts Receivable INC 2. Service Revenue INC
JE: 1/9/2008 Accounts Receivable 2,000
Service Revenues 2,000
(To record revenue on account)


CREDITED DEBITED
ALLOWANCES (LICRA)
12. Purchased cleaning machine from Mr. Nanda P 20,000
ACCOUNTS AFFECTED: 1. CASH DEC 2. CLEANING EQUIPMENT INC
JE: 1/12/2008 Cleaning Equipment20,000
Cash 20,000
(to record purchase of machine)


CREDITED DEBITED
ALLOWANCES (LICRA)
15. Paid salary of service boy P 3,000
ACCOUNTS AFFECTED: 1. CASH DEC 2. SALARIES EXPENSE INC
JE: 1/15/2008 Salaries Expense 3,000
Cash 3,000
(To record salary)


CREDITED DEBITED
ALLOWANCES (LICRA)
25. Bought cleaning materials on account for P4,000
ACCOUNTS AFFECTED: 1. Store Supplies INC 2. Accounts Payable INC
JE: 1/25/2008 Store Supplies 4,000
Accounts Payable 4,000
(To record purchase on account)


CREDITED DEBITED
ALLOWANCES (LICRA)
27. Paid the bank P15,000.
ACCOUNTS AFFECTED: 1. CASH DEC 2. LOANS PAYABLE DEC
JE: 1/27/2008 Loans Payable 15,000
Cash 15,000
(To record payment of loan)


CREDITED DEBITED
ALLOWANCES (LICRA)
30. Ms. Maarte paid us P1,000 from Jan 9 transaction
ACCOUNTS AFFECTED: 1. CASH INC 2. ACCOUNTS RECEIVABLE DEC
JE: 1/30/2008 Cash 1,000
Accounts Receivable 1,000
(To record payment of customer)


CREDITED DEBITED
ALLOWANCES (LICRA)
31. Mr. Kotler withdrew 5,000 for personal use.
ACCOUNTS AFFECTED: 1. CASH DEC 2. KOTLER, DRAWING INC
JE: 1/31/2008 Kotler, Drawings 5,000
Cash 5,000
( To record withdrawal of Kotler)


CREDITED DEBITED
ALLOWANCES (LICRA)
GENERAL JOURNAL

2008, JAN. 1 Cash P 100,000.00
Kotler, Capital P 100,000.00
To record initial capital
2 Cash 40,000.00
Loans Payable 40,000.00
To record loan from bank
3 Store Supplies 6,000.00

Cash 6,000.00
To record purchase of store supplies
GENERAL JOURNAL

7 Cash 30,000.00
Service Revenue 30,000.00
To record cash revenue
9 Accounts Receivable 2,000.00

To record revenue on account
12 Cleaning Equipment 20,000.00

Cash 20,000.00
To record purchase of cleaning equipment
GENERAL JOURNAL

15 Salaries Expense 3,000.00
Cash 3,000.00
To record salary
25 Store Supplies 4,000.00

Accounts Payable 4,000.00
To record purchase of store supplies on account
27 Loans Payable 15,000

Cash 15,000
To record payment of loan
30 Cash 1,000.00
Accounts Receivable 1,000.00
To record payment of customer
31 Kotler, Withdrawal 5,000.00

Cash 5,000.00
To record withdrawal
Step 3: Posting
• Posting takes all transactions from the journal during a
period and moves the information to a general ledger,
or ledger.
• As you’ve learned, account balances can be represented
visually in the form of T-accounts.
Step 3: Posting
• LEDGER
• Book of secondary entry
• Transactions recorded in the journal are finally
carried to the ledger.
• Contains all the accounts of a business whether
real, or nominal.
Step 3: Posting
LEDGER
Also called T-account
DR CASH CR
DATE PARTICULARS J.F. AMOUNT AMOUNT J.F. PARTICULARS DATE
Step 3: Posting
Step 3: Posting- From Journal to Ledger
Step 3: Posting
Step 3: Posting EXAMPLE
Step 4: Preparing Unadjusted Trial Balance
• To determine the equality of debits and credits as recorded
in the general ledger, an unadjusted trial balance is
prepared.
• This step takes information from the general ledger and
transfers it onto a document showing all account balances,
and ensuring that debits and credits for the period balance
(debit and credit totals are equal).
• It is a way to investigate and find the fault or prove the
correctness of the previous steps before proceeding to the
next step.
Step 4: Preparing Unadjusted Trial Balance
HEADING
ASSETS
LIABILITIES
CAPITAL
REVENUE
EXPENSES
POSTING KOTLER CARWASH
ASSET LIABILITIES OWNER'S EQUITY
DR CASH CR DR LOAN PAYABLE CR DR KOTLER'S CAPITAL CR
1/1 Initial investment P 100, 000 P 6,000 Purchase supplies 1/3 1/27 loan paid 15,000 40,000 Loan 1/2 100,000 Initial Capital 1/1
1/2 Proceeds from loan 40,000 20,000 Cleaning equipment 1/12
1/7 Cash revenue 30,000 3,000 Salary 1/15 TOTAL 15,000 40,000 TOTAL 100,000
1/30 Payment of customer 1,000 15,000 Payment loan 1/27 BALANCE 25,000
5,000 Drawing 1/31 DR KOTLER'S DRAWING CR
TOTAL 171,000 49,000 DR ACCOUNTS PAYABLE CR 1/31 withdrawal 5,000
BALANCE P 122,000 4,000 supplies 1/25
TOTAL 5,000
TOTAL 4,000
DR STORE SUPPLIES CR REVENUES
1/3 Purchase supplies 6,000
1/25 supplies on account 4,000 DR SERVICE REVENUE CR
TOTAL 10,000 30,000 cash revenue 1/7
2,000 service on account 1/9
DR ACCOUNTS RECEIVABLE CR TOTAL 32,000
1/9 Service on account 2,000 1,000 Customer paid 1/30
TOTAL 2,000 1,000
BALANCE 1,000 EXPENSES
DR SALARIES EXPENSE CR
DR CLEANING EQUIPMENT CR 1/15 Payment of salary 3,000
1/12 Purchase cleaning equipment 20,000
TOTAL 20,000 TOTAL 3,000

KOTLER'S CARWASH
UNADJUSTED TRIAL BALANCE
AS OF JANUARY 31, 2008
ACCOUNT TITLE DEBIT CREDIT

Cash P122,000.00
Accounts Receivable 1,000.00
Store Supplies 10,000.00
Cleaning Equipment 20,000.00
Accounts Payable 4,000.00
Loans Payable 25,000.00
Kotler's Capital 100,000.00
Kotler's Drawing 5,000.00
Salaries Expense 3,000.00
TOTAL P161,000.00 P161,000.00
Jan 1- Purchase merchandise for 50,000 with terms 3/10,
N/30
ACCT AFFECTED 1. INVENTORY INC 2. ACCOUNTS
PAYABLE INC
Inventory 50,000
AP 50,000
Jan 5 Paid 50,000 merchandise
ACCT AFFECTED 1. CASH DEC 2. AP DEC 3. PD
PD= (.03*50,000)= 1500
• JE: AP 50,000
CASH 48,500
PURCHASE DISCOUNT 1,500

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ACCOUNTING CYCLE

• The accounting cycle is a step-by-step process to record

• The accounting cycle starts with recording every

These first four steps set the foundation for the

Q1- SERVICE TYPE OF BUSINESS

• This takes information from original sources or

• You need to choose what accounts represent

DATE PARTICULARS L.F. DEBIT CREDIT

Jan. 1, 2019 CASH 1 P 10,000.00

1. DETERMINE WHAT ACCOUNTS

• DEBIT- the left side of the entry

ACCOUNTS/ EFFECTS INCREASE DECREASE

On Sept. 3, 2020, Pacioli Parlor purchased on account a computer to automate their

ACCOUNTS/ EFFECTS INCREASE DECREASE

LIABILITIES, CAPITAL(INVESTMENT), REVENUES,

DATE PARTICULARS L.F DEBIT CREDIT

ACCOUNTS/ EFFECTS INCREASE DECREASE

LIABILITIES, CAPITAL(INVESTMENT), REVENUES,

ACCOUNTS/ EFFECTS INCREASE DECREASE

LIABILITIES, CAPITAL(INVESTMENT), REVENUES,

ACCOUNTS/ EFFECTS INCREASE DECREASE

LIABILITIES, CAPITAL(INVESTMENT), REVENUES,

ACCOUNTS/ EFFECTS INCREASE DECREASE

LIABILITIES, CAPITAL(INVESTMENT), REVENUES,

ACCOUNTS/ EFFECTS INCREASE DECREASE

LIABILITIES, CAPITAL(INVESTMENT), REVENUES,

ACCOUNTS/ EFFECTS INCREASE DECREASE

LIABILITIES, CAPITAL(INVESTMENT), REVENUES,

ACCOUNTS/ EFFECTS INCREASE DECREASE

LIABILITIES, CAPITAL(INVESTMENT), REVENUES,

ACCOUNTS/ EFFECTS INCREASE DECREASE

LIABILITIES, CAPITAL(INVESTMENT), REVENUES,

ACCOUNTS/ EFFECTS INCREASE DECREASE

LIABILITIES, CAPITAL(INVESTMENT), REVENUES,

ACCOUNTS/ EFFECTS INCREASE DECREASE

LIABILITIES, CAPITAL(INVESTMENT), REVENUES,

ACCOUNTS/ EFFECTS INCREASE DECREASE

LIABILITIES, CAPITAL(INVESTMENT), REVENUES,

DATE PARTICULARS L.F. DEBIT CREDIT

3 Store Supplies 6,000.00

DATE PARTICULARS L.F. DEBIT CREDIT

9 Accounts Receivable 2,000.00

12 Cleaning Equipment 20,000.00

DATE PARTICULARS L.F. DEBIT CREDIT

25 Store Supplies 4,000.00

27 Loans Payable 15,000

31 Kotler, Withdrawal 5,000.00

DR CASH CR DR LOAN PAYABLE CR DR KOTLER'S CAPITAL CR

1/2 Proceeds from loan 40,000 20,000 Cleaning equipment 1/12

5,000 Drawing 1/31 DR KOTLER'S DRAWING CR

TOTAL 171,000 49,000 DR ACCOUNTS PAYABLE CR 1/31 withdrawal 5,000

BALANCE P 122,000 4,000 supplies 1/25

DR STORE SUPPLIES CR REVENUES

1/3 Purchase supplies 6,000

1/25 supplies on account 4,000 DR SERVICE REVENUE CR

TOTAL 10,000 30,000 cash revenue 1/7

2,000 service on account 1/9

DR ACCOUNTS RECEIVABLE CR TOTAL 32,000

1/9 Service on account 2,000 1,000 Customer paid 1/30

TOTAL 2,000 1,000

BALANCE 1,000 EXPENSES

DR CLEANING EQUIPMENT CR 1/15 Payment of salary 3,000

1/12 Purchase cleaning equipment 20,000