MODULE #1

INFORMATION SHEET 1.1-1

JOURNALIZE AND POST TRANSACTIONS

Learning Objectives:
After reading this INFORMATION SHEET, YOU MUST be able to:
1. Know the importance of the Journal
2. Identify the types of Accounting Journal
3. Explain each type of journal

What is a Journal Entry?

Journal entries are the first step in the accounting cycle and are used to record
all business transactions and events in the accounting system. As business
events occur throughout the accounting period, journal entries are recorded in
the general journal to show how the event changed in the accounting equation.
For example, when the company spends cash to purchase a new vehicle, the cash
account is decreased or credited and the vehicle account is increased or debited.
Types of Journal
Introduction:
A JOURNAL is often defined as the book of original entry. It is a record of
financial transactions in order or by date. The journal entry can consist of
several recordings, each of which is either a debit or a credit. The total of
the debits must equal the totals of the credits or the journal entry is said
to “unbalanced”.

There are seven (7) types of JOURNALS in accounting:

1. Purchase Journal- is used for recording purchase of merchandise on
credit or on account. Entries on this journal are made on the basis on
invoice received from the supplier at the time of purchase of
merchandise.
2. Sales Journal- is used to record all of the company sales on credit.
3. Cash Receipts Journal- is referred to as the main entry book used in
an accounting system to keep tract of the sales of items when cash is
received, by crediting sales and debiting cash and transactions related
to receipts.
4. Cash Payment/Disbursement Journal- used to record and track all
cash payments or disbursements by a company. All cash outflows are
recorded in this journals
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5. Purchase Return Journal- used to record goods returned to the

supplier.
6. Sales Return Journal- used to record the actual return by a costumer
of merchandise he/she previously bought from the business.

7. Journal Proper/General Journal- is the master journal that all

company transactions or journal entries are recorded

Journalizing is the process of recording a business transaction in the

accounting records. This activity only applies to the double-entry bookkeeping
system.
The steps involved in journalizing are as follows:

1. Examine each business transaction to determine the nature of the

transaction. For example, the receipt of a supplier invoice means that an
obligation has been incurred. Or, throwing out obsolete inventory means that
the inventory asset will be reduced.

2. Determine which accounts will be affected. This calls for the identification of
the general ledger accounts that will be altered as a result of the transaction.
For example, recording a supplier invoice could mean that the office supplies
expense account will be increased, as well as the offsetting accounts payable
account.

3. Prepare a journal entry. This involves not just entering the transaction in the
accounting system, but also documenting it sufficiently so that someone
reviewing the entry later will understand why it was created. Ideally, the entry
should note the impacted accounts, the debits and credits entered, a journal
entry number, and a narrative comment.

Journalizing can result in entries to the general ledger or to subsidiary

ledgers. An entry is made to a subsidiary ledger when it involves a high

volume transaction that management has decided to summarize separately

from the general ledger.

SELF- CHECK 1.3.1

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Fill in the blanks: Write on the space provided, the correct Type of Journal that
is being described. Write your answers in full.

___________1. This journal is where returns from costumers are being recorded.

___________2. Is used to keep track of the sale items wherein the entry made is
by crediting sales and debiting transactions related to receipts.

___________3. Is the master journal wherein all transactions are recorded.

___________4. Is used to record purchases on credit.

___________5. Is used to record goods returned to supplier

___________6. Is where all cash outflows are recorded

___________7. Is where all of the company sales are recorded.

___________8. Is the process of recording a business transaction in the

accounting records.
___________9. This involves not just entering the transaction in the accounting
system, but also documenting it sufficiently so that
someone reviewing the entry later will understand why it
was created
___________10. It is said the total of the debits must equal the totals of the credits
or the journal entry.

ANSWER KEY 1.3.1

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1. Sales Return Journal

2. Cash Receipts Journal

3. Journal Proper/General Journal

4. Purchase Journal

5. Purchase Return Journal

6. Cash Payment/ Disbursements Journal

7. Sales Journal

8. Journalizing

9. Journal Entry

10. “unbalanced”.
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MODULE # 2
INFORMATION SHEET 3.1-1
PREPARE TRIAL BALANCE AND FINANCIAL REPORTS

Trial Balance
A trial balance is a bookkeeping worksheet-like account that reflects all the credit
and debit balances of all the ledger accounts. Once we prepare this statement, we
can prepare the final accounts of the company on the basis of this trial balance.

One other important use of the trial balance is that it can determine the
arithmetic accuracy of the accounts. So if both columns of the trial balance tally,
we can be reasonably assured of the accuracy of the accounts. It does not ensure
that the accounts are free of all errors but it can at least establish mathematical
accuracy.

Preparation of Trial Balance

Preparation of trial balance is the third step in the accounting process. First, we
record the transactions in the journal. And then we post them in the general ledger.
Then we prepare a trial balance to verify that the debit totals equal to the credit
totals. Let us take a look at the steps in the preparation of trial balance.

1. To prepare a trial balance we need the closing balances of all the ledger
accounts and the cash book as well as the bank book. So firstly every ledger
account must be balanced. Balancing is the difference between the sum of all
the debit entries and the sum of all the credit entries.
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2. Then prepare a three column worksheet. One column for the account name
and the corresponding columns for debit and credit balances.

3. Fill out the account name and the balance of such account in the appropriate
debit or credit column

4. Then we total both the debit column and the credit column. Ideally, in a
balanced error-free Trial balance these totals should be the same

5. Once you compare the totals and the totals are same you close the trial
balance. If there is a difference we try and find and rectify errors. Here are
some cases that cause errors in the trial balance

 A mistake in transferring the balances to the trial balance

 Error in balancing an account

 The wrong amount posted in the ledger

 Made the entry in the wrong column, debit instead of credit or vice versa

Mistake made in the casting of the journal or subsidiary book


Rules for Preparation of Trial Balance
While preparation of trial balances we must take care of the following rules/points

1] The balances of the following accounts are always found on the debit column of
the trial balance

 Assets

 Expense Accounts

 Drawings Account

 Cash Balance

 Bank Balance

 Any losses
2] And the following balances are placed on the credit column of the trial balance

 Liabilities

 Income Accounts

 Capital Account

 Profits
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SELF CHECK
 Activity I. Prepare Preliminary trial balance.
 Instruction: Prepare a preliminary trial balance with the given data below.

 GELOU ENTERPRISES
 As of DECEMBER 31, 2017

GENERAL LEDGER

Account Title: Cash

Account No. 101

Post Balance
Date Remarks Debit Credit
Ref. Debit Credit

Jan-01 175,000 175,000

Jan-01 GJ1 700 174,300

Jan-02 GJ1 15,000 189,300

Jan-03 GJ1 400 188,900

Jan-06 GJ1 18,000 170,900

Jan-10 GJ1 22,246 148,654

Jan-11 GJ1 1,800 146,854

Jan-11 GJ1 28,000 118,854

Jan-13 GJ2 12,740 131,594

Jan-17 GJ2 1,000 132,594

Jan-18 GJ2 6,000 126,594

Jan-19 GJ2 8,000 118,574

Jan-20 GJ2 60,000 178,594

Jan-22 GJ2 2,500 176,094

Jan-25 GJ2 25,500 201,594

Jan-26 GJ2 1,300 200,294

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Jan-29 GJ2 1,200 199,094

Jan-30 GJ2 6,500 192,594

Jan-30 GJ3 24,500 217,094

Account Title: Accounts Receivable

Account No. 112

Post Balance
Date Remarks Debit Credit
Ref. Debit Credit

Jan-05 13,000 13,000

Jan-14 GJ1 26,000 3,900

Jan-15 GJ1 13,000 26,000

Jan-16 GJ2 1,500 24,500

Jan-30 GJ2 24,500 -

Jan-31 GJ3 3,500 3,500

Account Title: Merchandise Inventory

Account No. 120

Post Balance
Date Remarks Debit Credit
Ref. Debit Credit
Jan-02
GJ1 24,000 24,000
Jan-03
GJ1 700 24,700
Jan-04
GJ1 800 16,700
Jan-05
GJ1 7,500 9,200
Jan-07
GJ1 1,300 7,900
Jan-11
GJ1 454 7,446
Jan-13
GJ1 28,000 35,446
Jan-14
GJ2 12,700 22,746
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Jan-17
GJ2 1,000 21,746

Jan-17 GJ2 14,500 7,246

Jan-25 GJ2 12,000 19,246

Jan-31 GJ3 1,400 17,846

Account Title: Supplies

Account No. 126

Post Balance
Date Remarks Debit Credit
Ref. Debit Credit
Jan-11 GJ1 1800 1800

Account Title: Equipment

Account No. 155

Post Balance
Date Remarks Debit Credit
Ref. Debit Credit
Jan-01
GJ1 130,000 130,000
Jan-10
GJ1 18,000 148,000

Jan-19 GJ1 8,000 156,000

Account Title: Accounts Payable

Account No. 201

Post Balance
Date Remarks Debit Credit
Ref. Debit Credit
Jan-02
GJ1 24,000 24,000
Jan-07 1300
GJ1 22,700
Jan-11 22700
GJ1 -
Jan-31
GJ1 12,000 12,000

Account Title: Notes Payable

Account No. 210
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Post Balance
Date Remarks Debit Credit
Ref. Debit Credit

Jan-20 GJ2 60,000 60,000

Account Title: W. Solis Capital

Account No. 301

Post Balance
Date Remarks Debit Credit
Ref. Debit Credit
Jan-01 GJ1 305000 305000

Account Title: W. Solis Drawing

Account No. 310

Post Balance
Date Remarks Debit Credit
Ref. Debit Credit

Jan-18 GJ2 6,500 6,500

Account Title: Sales

Account No. 401

Post Balance
Date Remarks Debit Credit
Ref. Debit Credit
Jan-04
GJ1 15,000 15,000
Jan-05
GJ1 13,000 28,000
Jan-14
GJ2 26,000 54,000
Jan-25
GJ2 25,500 79,500
Jan 31 GJ3
3,500 83,000

Account Title: Sales Returns & Allowances

Account No. 412

Post Balance
Date Remarks Debit Credit
Ref. Debit Credit
Jan-16
GJ2 1,500 1,500

Jan-29 GJ2 1,200 2,700

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Account Title: Sales Discount

Account No. 420

Post Balance
Date Remarks Debit Credit
Ref. Debit Credit
Jan-15 GJ2 260 260

Account Title: Cost of Goods Sold

Account No. 520

Post Balance
Date Remarks Debit Credit
Ref. Debit Credit
Jan-04
GJ1 8,000 8,000
Jan-05
GJ1 7,500 15,500
Jan-14
GJ2 12,700 28,200
Jan-25
GJ2 14,500 42,700
Jan-31
GJ3 1,400 44,100

Account Title: Advertising Expense

Account No. 601

Post Balance
Date Remarks Debit Credit
Ref. Debit Credit
Jan-26
GJ2 1,300 1,300

Account Title: Freight Out

Account No. 644

Post Balance
Date Remarks Debit Credit
Ref. Debit Credit
Jan-06
GJ1 400 400

Account Title: Salaries

Account No. 701

Post Balance
Date Remarks Debit Credit
Ref. Debit Credit
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Jan-30
GJ2 6,500 6,500

Account Title: Utilities

Account No. 720

Post Balance
Date Remarks Debit Credit
Ref. Debit Credit
Jan-22
GJ2 2,500 2,500

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 ANSWER KEY 3.3-1




 Activity II. Prepare preliminary trial balance.


GELOU ENTRERPRISES
Preliminary Trial Balance
December 31, 2017

Account No. Account Titles Debit Credit

101 Cash 217,094
112 Account Receivable 3,500
120 Merchandise Inventory 17,846
126 Supplies 1,800
155 Equipment 156,000
201 Accounts Payable 12,000
212 Notes Payable 60,000
301 W. Solis, Capital 305,000
310 W. Solis, Drawing 6,000
401 Sales 83,000
412 Sales Returns & Allowances 2,700
420 Sales Discounts 260
520 Cost of Goods Sold 44,100
601 Advertising Expense 1,300
644 Freight Out 400
701 Salaries 6,500
720 Utilities 2,500
460,000 460,000
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