OBJECTIVES

1. Define Chart of Accounts (COA), posting, ledger

CHART
2. Explain the importance of COA. OF
ACCOUNTS
3. Prepare chart of accounts. And
POSTING
4. Post journal entries to ledger.
THIRD QUARTER - MODULE 4

CHART OF ACCOUNTS
CHART OF ACCOUNTS
It is a listing of the names of the accounts that a
company has identified and made available for
recording transactions in its general ledger.

It is just like a map of business that will guide

you in preparing your ledger.
 CHART OF ACCOUNTS
Its purpose is to segregate expenditures, revenue, assets
and liabilities so it can quickly get a sense of a company’s
financial health.
Each account in the chart is typically assigned a name
and a unique number by which it can be identified and
used as references in the Post Reference (PR). Assigned
reference number for each account depends on the
company, but, in this module, we will be using a three-
digit assigned number in alignment to TESDA
Bookkeeping Assessment.
 ASSETS (101)
Current Assets
Fixed /Non-Current Assets
LIABILITIES (201)
Current Liabilities
Long Term
CAPITAL (301)
ACCOUNTS ARE Investment
USUALLY LISTED IN Withdrawal
ORDER OF THEIR REVENUE/INCOME(401)
APPEARANCE IN Sales
THE FINANCIAL Sales Returns and Allowances
Sales Discount
STATEMENTS,
STARTING WITH PURCHASES (501)
THE BALANCE Purchases
SHEET AND Purchase Returns and Allowances
CONTINUING WITH Purchase Discount
THE INCOME Freight In
STATEMENT. Freight Out
EXPENSES (601)
Rent Expense In order of
Salaries appearance in the
Utilities journal
1. Define Chart of Accounts, posting, ledger;

2. Prepare COA;

3. Post journal entries to ledger;

EXAMPLE OF COA OF A MERCHANDISING BUSINESS:
Oct. 2016 - Mr. P. Nakamura established a sole proprietorship business named P.
Nakamura Merchandise and completed the following transactions:
1- Invested cash P 500,000 to start the merchandising business
2 – Bought equipment on credit, P 15,000.
3 - Purchased merchandise, P 30,000 to Gong Enterprise Terms: 2/10, n/30.
5- Paid P1,000- freight on merchandise purchased on October 3.
6 – Purchased supplies for cash, P 17,000.
7 -Returned merchandise to Gong Enterprise at list price of P5,000.
8- Sold merchandise to Sayonato Trading, P 45,000. Terms: 1/15, n/30.
11 - Paid the account due to Gong Trading.
12 -Sold merchandise for P 60,000-for cash.
14 - Paid P3,000- freight on merchandise sold on Oct. 12.
15 – Sayonato Trading returned defective goods worth 4,200.
20 - The owner withdrew money from the business, P 1,500.
22 – Sayonato Trading paid in full.
25 - Paid expenses for the month: Salary P6,000-, Rent P2,000- and Electricity
P2,500-.
FORMS OF LEDGERS:
1. Two-money column ledger (conventional type of ledger)
 2. Three-money column ledger
A three-money column ledger Account Title: ________________________________ Account No. _______________
account provides information on
the balance on the account after
Date Items PR Debit Credit Balance
each debit or credit
entry has been posted, for this
reason it is often known as
the running balance method. A
familiar example of this form of
account is a bank statement
issued periodically by banks to
their account holders. The major
advantage of this form is that it
shows the latest account balance
at a glance. This form of account
has six columns.
3. 4-MONEY COLUMN LEDGER.
Cross Referencing or
Indexing
It is the placing of the account
number of the ledger account in the
general journal and the general
journal page number in the ledger
account. It serves two other
purposes: It indicates completion of
the posting process and facilitates
tracing of entries from the journal to
the ledger.
Account: Cash Account No.: 101
Balance
Date Item PR Debit Credit Debit Credit
2017 1 Initial investment GJ1 P600,000- P600,000-
Dec. 1 Paid rent GJ1 P4,000- 596,000-
3 Purchases on cash GJ1 200,000- 396,000-

Footing
6 Cash sales GJ1 110,000- 506,000-
7 Paid freight on goods bought GJ1 3,000- 503,000-
9 Paid freight on goods sold GJ1 200- 502,800-
10 Paid utilities GJ1 9,000- 493,800-
12 Cash sales GJ2 120,000- 613,800-
13 Withdrawal GJ2 6,000- 607,800-
13 Payment with discount GJ2 88,200- 519,600-
14 Collection on account
15 Paid salaries
GJ2
GJ2
58,200-
10,000-
577,800-
567,800-
It is the process
16 Cash sales
16 Paid advertising
GJ2
GJ2
40,000-
4,000-
607,800-
603,800-
of vertically
22 Paid account
22 Cash sales
GJ3
GJ3 80,000-
18,000- 585,800-
665,800- adding a money
25 Paid utilities
27 Paid account with discount
GJ3
GJ3
3,000-
158,400-
662,800-
504,400- column.
31 Paid salaries GJ3 10,000- 494,400-
31 Cash sales GJ3 40,000- P534,400-
P1,048,200- P513,800-
 Account: Accounts Receivable Account No.: 102
Balance
Ledger with debit balance: If
Date Item PR Debit Credit Debit Credit
2019
August 18 Cash sales GJ2 P23,000- P23,000- the amount of debit is more
24 Received merchandise GJ2 P760- P22,240- than the amount of credit.

Account: Sales Account No.: 401

Balance
Date Item PR Debit Credit Debit Credit Ledger with credit balance:If
2019 the amount of credit is more
August
5 Cash sales GJ1 P15,000- P15,000-
than the amount of debit.
18 Cash sales GJ2 23,000- P38,000-
Account: Accounts Payable Account No.: 201
Balance
Date Item PR Debit Credit Debit Credit Ledger with zero balance or
2019
August 2 Purchases GJ1 P20,000- P20,000- closed account: if debit
7 Returned defective mdse. GJ1 P600- 19,400- amount is equal to credit
12 Full payment GJ1 19,400- 0 amount.