FAR- (Accounting Cycle) 1-2-3 Journalizing, Posting, Trial Balance PDF

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Chapter 5 JOURNALIZING TRANSACTIO RANSACTIONS NS (1st Step of Accounting Process)

SINGLE- ENTRY VERSUS DOUBLE-ENTRY SYSTEM OF BOOKKEEPING The single-entry bookkeeping system is usually used by small business enterprises. Under this system, only transactions involving cash and personal accounts are recognized. The double-entry system of bookkeeping recognizes the two-fold effects of a transaction: the value received, and the value parted with. This justifies the equality of debit and credit amounts. Because of the two-fold effects recognition, both sides of the fundamental equation will always be equal.

BOOKS OF ACC ACCOUNTS OUNTS There are two sets of books that are used by the business. They are the "book of original entry" and the "book of final entry". The book of original entry is called "journal" which is of two kinds, the general journal and the special journal. This is called the book of original entry because it is in this book where transactions are recorded for the first time. The book of final entry is called the "ledger" which is also of two kinds: yhr general ledger and the subsidiary ledger. This is called book of final entry because it is in this book where transactions that were recorded in the journal are transferred in the ledger for final recording.

BOOK OF OR ORIGINAL IGINAL ENTRY-JOURNA ENTRY-JOURNAL L General Journal A general journal can that be a "loose-leaf" or "book-bound " form. It has the following columnar headings:  

 



Date column- shows the date when the transactions took place Particulars-shows the item or the accounts debited and credited as a result of a transaction analysis as well as a brief or concise explanation of what transaction is about Folio- shows the number of an account in a ledger to which it was transferred Debit column- this is a money column showing the peso amount of the value received in a transaction Credit column- this is the money column showing the amount of the value parted with in a transaction

The entry that is made in the Journal is called journal entry. A journal entry may be "simple" or "compound". A simple journal entry is one that has one debit item with a debit amount and one credit item with a credit amount. Year Month Day

Particulars Debit item Credit item

F

Debit

Credit

Explanation of the nature of transactions

A compound journal entry is one that has one debit item and two or more credit items: two or more debit items and one credit item: or may have two or more items on both sides. Year Month Day

Particulars

F

Debit

Credit

Debit item Debit item Credit item Credit item Explanation of the nature of transactions.

BOOK OF FI FINAL NAL ENTRY General Ledger A general ledger can that also be of a "loose leaf" or "book-bound" form. This book will group items or accounts of the same kind, class, or nature. Each item or account is being provided with a leaf of a ledger.    

Date column- show the date of the transaction that occured as recorded in the journal Particulars- shows a brief but a concise explanation of the transaction as shown in journa Folio- shows the page number of a journal where entries are taken form Money columns- the debit money column and credit money column

2020 Jan 01

Particulars

F

Debit

2020 Jan 01

Particulars

F

Credit

T-account is used in lieu of a general ledger. It is an accounting device that most of the bookkeepers and accountants used in summarizing the effect of changes in assets, liabilities, and equity in a fast and expedient manner.

CHART OF ACCOUNTS The chart of accounts shows account titles which are arranged in this order: Assets, Liabilities, Owner's Equity, Income, and Expenses. DAVAO LAUNDRY SERVICES Chart of Accounts Statement of Financial Position Accounts

Statement of Comprehensive Income

ASSETS Page No. 1 2 3 4 5 6 7 8 9 10

Acct. No. 111 112 112-A 113 114 114-A

Cash in Bank Accounts Receivable Est. uncollectible Accts. Laundry Supplies Inv. Laundry Equipment Accumulated Dep'n LIABILITIES 221 Notes Payable 222 Accounts Payable 223 Accrued Advertising OWNER'S EQUITY 331 S. Santos, Capital

INCOME Page No. 13

Acct. No. 441

14 15 16 17 18

551 552 553 554 555

Laundry Income

EXPENSES Uncollectible Accounts Depreciation Expense Salaries Expense Rent Expense Utilities Expense L

d

S

li

E

12

333

Income&Expense Summary.

20 21 22

557 558 559

Taxes and Licenses Advertising Expense Interest Expense

Illistrative Problem Problem:: Cotabato Laundry Services (Complete Accounting Pr Process ocess for Service Concern)



March 1- Mr. Santos opens a current account with Allied Banking Corporation in the amount of P850,000 to start with his laundry shop business under the trade name Cotabato Laundry Services.



March 2- Purchased laundry supplies inventory on account, P90,000, from the ff. suppliers: SM City Cotabato- P35,000 Gaisano Mall- P25,000 NCCC Mall- P30,000



March 3- Purchase of laundry machine for cash, P150,000.



March 4- Rendered laundry service on account, P80,000 to the ff: Apo View Hotel- P5,000 Grand Men Seng Hotel- P35,000 The Marco Polo Hotel- P30,000 Royal Mandaya Hotek-P10,000



March 10- Paid taxes and licenses due to government, P4,000.



March 12- Mr. Santos withdrew P10,000 cash from the business for his personal use.



March 17- The business borrowed money from Land Bank of the Philippines, P100,000 by issuing a 15-day note.



March 17- The bank issued a debit memo, P1,000 for interest and bank charges.



March 21- Received cash of P45,000 representing collection from customer's account: Grand Men Seng Hotel- P30,000 The Marco Polo Hotel- P10,000 Royal Mandaya Hotel- P5,000



March 25- Partial payment of accounts on, P60,000 to the ff. suppliers: SM City Cotabato- P25,000 Gaisano Mall- P20,000 NCCC Mall- P15,000



March 30- The ff: expenses were paid by Cotabato Laundry Services for the month of March 2020: Space rental- P5,000 Telephone, light and water- P12,000 Salaries of employees- P10,000

GENERAL JOURNAL 2020 March 1

2

3

4

10

12

17

21

25

30

Particulars Cash in bank S. Santos, Capital Initial investment

F GL-1 GL-10

Laundry supplies inventory Accounts Payable Purchased supplies on account

GL-4 GL-8

Laundry Equipment Cash in bank Purchased equipment for cash

GL-5 GL-13

150,000

Accounts Receivable Laundry Income Rendered service on account

GL-2 GL-13

80,000

Taxes and Licenses Cash in Bank Paid taxes and licenses

GL-20 GL-1

4,000

S. Santos, Drawing Cash in bank Withdrawal by owner

GL-11 GL-1

10,000

Cash in bank Notes Payable Issued a 15-day note for money borrowed

GL-1 GL-7

Interest expense Cash in bank Bank interest payment

GL-22 GL-1

1,000

Cash in bank Accounts Receivable Partial collection of accounts

GL-1 GL-2

45,000

Accounts Payable Cash in bank Partial payment of account

GL-8 GL-1

60,000

Rent expense Utilities expense Salaries expense Cash in bank

GL-17 GL-18 GL-16 GL-1

5,000 12,000 10,000

(Space for adjusting entries)

Debit 850,000

Credit 850,000

90,000 90,000

150,000

80,000

4,000

10,000

100,000 100,000

1,000

45,000

60,000

27,000...