CHAPTER 3

JOURNALIZING, POSTING, and TRIAL BALANCE

JOURNALIZING BUSINESS TRANSACTIONS (First Step)

Double-Entry System of Recording

The double entry system of recording business transactions recognizes the two-fold effects of a
transaction; the value received and the value given up. This justifies the equality of debit and credit
amounts. Because of the two-fold effect recognition, both sides of the fundamental equation are always
equal.

Book of Accounts
The records that are used and kept by the business in storing all of the accounting data are called
Books of Accounts. These books are with ready or prepared designed to fit the need of the business and
also to provide convenience for the users in pursuing the primary objective of accounting which in
“communication” through the Financial Statements.

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 wherein transactions are
recorded for the first time. The book of final entry is called LEDGER wherein transactions that were
recorded in the Journal are transferred for final recording.

General Journal
Shown below is a sample form of a General Journal. It has the columnar heading with specific
uses.

Date Particulars F Debit Credit

DATE COLUMN - shows the date when the transactions occur.

PARTICULARS - shows the accounts debited and credited as a result of transaction

analysis as well as a brief or concise explanation of the transaction.

FOLIO - shows the number of an account in a ledger or page or page of the

ledger to which it was transferred. Folio is a latin word for page.
It is also called reference.

DEBIT COLUMN - this is the 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 given
up in a transaction.

17
General Ledger
A General Ledger will group items of accounts of the same kind, class or nature. Each item or
account is being provided with a ledger. Shown below is a sample form of a General Ledger.

Account No. __
Year Particulars F Debit Credit Balance

DATE COLUMN - shows the date of the transaction that occurred as recorded in the
General Journal;

PARTICULARS - shows a brief but a concise explanation of the transaction as shown

in the General Journal;

FOLIO - shows the page number of a Journal where entries are taken from;

DEBIT COLUMN - this is the money column showing the peso amounts that are
transferred from the debit of the Journal;

CREDIT COLUMN - this is the money column showing the amounts that are transferred
from the credit of the journal;

BALANCE - this is the money column showing the running balance of the item
or account.

RECORDING PROCESS

Recording is the first phase of accounting. This involves the writing down of business
transaction in a systematic manner and in order of their occurrence in the book of original entry called
Journal. The act of recording business transactions in the Journal is called JOURNALIZING which is
the first step in the accounting of the accounting cycle. The entry that is made in the Journal is called
JOURNAL ENTRY. A Journal entry may SIMPLE or COMPOUND.

A simple journal entry is one that has one debit item with a debit amount and one credit item
with one credit amount.

A compound journal entry is one that may have 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 in both sides.

Procedures in Filling up the Journal

1. The date column is divided into two sub-columns. Enter in the first sub-column, the month and
the year. The year is written in a small figure above the month in the same space of the first line.
In each leaf of a Journal, the year and the month is written in the front page but not repeated in
the back page. Enter in the second sub-column the date when the transactions occurred.

18
 2. The Particulars Column – after analyzing a transaction and have ably determined the value
received and the value given up as well, record this transaction in a form of Journal Entry. Enter
the debit items first in the same line (first line) with the transaction date and the corresponding
peso amount in the debit money column of the debit item. The amount of the debit must equal
with the amount of the credit. In the case of a compound journal entry, debit items are entered in
block form occupying the first, second or third line depending on the number of items debited.
An indention is made and then enters the credit items which will also be in block form in case of
two or more items are credited.

A complete journal entry should have an explanation. The explanation must state the briefly
but concisely the nature of the transaction. The first word of the explanation should be indented
with a reasonable distance from the first letter of the account or item credited.

3. Leave a vacant space before recoding the next transaction. Write only the date in the second
sub-column of the date column and the same procedure is followed.

Remember the following indentions made in preparing the Journal Entry:

a. The credit item is indented from the debit item;

b. The first word of the explanation is indented from the credit item.

Example: On July 1, 2023, the owner made cash investment of ₱50,000 for the business.

Journal Entry:

2021 Particulars F Debit Credit

July 1 Cash 50 000 -
Owner’s Capital 50 000 -
To record initial investment of the owner.

Take note on how peso amounts were written in both debit and credit money columns. The
money columns of the Journal provide the segregation of digits for the million, thousands,
hundreds, pesos and centavos. These results to the following observations:

a. the use of comma for million and thousands and the decimal point for the centavos are
eliminated;
b. the use of peso sign (₱) is also eliminated because the debit and the credit columns are
understood to be money columns and that peso is used as its valuation;
c. the use of “dash” (-) indicates that there is no centavo in the amount. The “double-zero”
(00) may also be used.

50000 -
1 2 5 3 2 5 0 50
2 5 0 00

An Opening Entry
The first entry made in the general journal is called and opening entry. This constitute either the
recording of initial investments of the proprietor who is engaged in the business for the first time or the
recording of the beginning balances of accounts in preparation for the nest annual accounting period.
19
Charts of Accounts
If there are exchanges of values arising from business operations, such events must be recorded
in the book of the business. A list of account titles are prepared in advance to guide the bookkeeper of
what specific account titles are to be used in describing such transaction. This list of account titles is
called Chart of Accounts.

Shown below is the chart of accounts of Maranding Hauling Services, a hauling business that is
own and managed by Khym Jesryl Laguna.

Maranding Hauling Services

Chart of Accounts

Balance Sheet Accounts Income Statement Accounts

Account Account
Number Account Titles Number Account Titles
ASSETS REVENUE
100 Cash in Bank 400 Hauling Income
105 Petty Cash Fund 600 Interest Income
110 Accounts Receivable
EXPENSES
110-A Allowance for Bad Debts
120 Notes Receivable 500 Truck Supplies Expense
130 Prepaid Rent 505 Tires Used
140 Truck Supplies 510 Salaries and Wages
150 Tires Inventory 515 Taxes and Licenses
160 Furniture and Fixtures 520 Rent Expense
160-A Accum. Depreciation – F&F 525 Advertising Expense
170 Office Equipment 530 Utilities Expense
170-A Accum. Depreciation – OE 535 Bad Debts Expense
180 Hauling Truck 540 Miscellaneous Expense
180-A Accum. Depreciation - HT 545 Truck Repairs and Maintenance
550 Gasoline and Fuel Expense
LIABILITIES
560 Depreciation Expense – F&F
200 Accounts Payable 561 Depreciation Expense – OE
210 Accrued Gasoline and Fuel 562 Depreciation Expense – HT
220 Accrued Interest 700 Interest Expense
250 Notes Payable
OWNER’S EQUITY
300 KJ Laguna, Capital
310 KJ Laguna, Drawing
320 Income & Expense Summary

The chart of accounts shows account titles with the account numbers which are arranged
according to the following: ASSETS, LIABILITES, OWNER’S EQUITY, REVENUE and
EXPENSES. As mentioned earlier, the account titles are used to describe the transaction in the manual
bookkeeping. However, in a computerized bookkeeping, the account number will facilitate the grouping
of the account titles.

20
 Illustrative Problem
Maranding Hauling Services
(Complete Accounting Process for Service Concern)

************************************************************************************
Investment by Owner
2023
July 1 Mr. Khym Jesryl Laguna opens a current account with Allied Banking Corporation in the
amount of ₱650,000 to start with his hauling business under the name of “Maranding Hauling
Service”.
Analysis: There is an increase in Asset-Cash in Bank, ₱650,000 and Owner’s Equity-KJ
Laguna, Capital, ₱650,000.

Journal Entry:
2023 Particulars F Debit Credit
July 1

To record initial investment on the owner.

************************************************************************************
Advance Payment of Rental
2023
July 2 Paid advance rental for the office ₱9,000.
Analysis: There is an increase in Asset-Prepaid Rent, ₱9,000 and a decrease in another form
of Asset-Cash in Bank, ₱9,000.

Journal Entry:
2023 Particulars F Debit Credit
July 2

To record advance payment of rental.

************************************************************************************
Payment for Taxes, Licenses, and other Government Requirements
2023
July 3 Paid business permits in the amount of ₱1,920.
Analysis: There is a decrease in Owner’s Equity-KJ Laguna, Capital, ₱1,920 due to increase
in taxes expense, and a corresponding decrease in Asset-Cash in Bank, ₱1,920.

Journal Entry:
2023 Particulars F Debit Credit
July 3

To record payment for taxes, licenses

and other government requirements.

21
************************************************************************************
Purchase of Hauling Truck for Cash
2023
July 4 Purchased 2 hauling truck for cash with the total amount of ₱540,000.
Analysis: There is an increase in one form of Asset-Hauling Truck, ₱540,000 and a decrease
in another form of Asset-Cash in Bank, ₱540,000.

Journal Entry:
2023 Particulars F Debit Credit
July 4

To record purchase of hauling truck for

cash.

************************************************************************************
Purchase of Furniture and Fixtures on Credit
2023
July 5 Purchased office furniture and Fixtures on account from Carding Maloloy-on Wood and
Carving, ₱42,000.
Analysis: There is an increase in Asset-Furniture and Fixtures, ₱42,000 and a corresponding
increase in Liability-Accounts Payable, ₱42,000.

Journal Entry:
2023 Particulars F Debit Credit
July 5

To record acquisition of furniture and

fixtures on account.

************************************************************************************
Additional Cash Investment as Petty Cash Fund
2023
July 5 The owner, Mr. Khym Jesryl Laguna, made additional investment of ₱5,000 to be used as
revolving fund.
Analysis: There is an increase in one form of Asset-Petty Cash Fund, ₱5,000 and an increase
in Owner’s Equity-KJ Laguna, Capital, ₱5,000.

Journal Entry:
2023 Particulars F Debit Credit
July 5

To record additional cash investment as

revolving fund.

22
************************************************************************************
Purchase of Truck Supplies for Cash
2023
July 6 Bought truck supplies for cash, ₱1,200.

Analysis: There is an increase in Asset-Truck Supplies, ₱1,200 and a decrease in another form
of Asset-Cash in Bank, ₱1,200.

Journal Entry:
2023 Particulars F Debit Credit
July 6

To record purchase of truck supplies for

cash.

************************************************************************************
Rendered Services for Cash
2023
July 8 Received cash from a customer for services rendered ₱10,200.
Analysis: There is an increase in Asset-Cash in Bank, ₱10,200 and a corresponding increase
in Owner’s Equity-KJ Laguna, Capital, ₱10,200 due to the increase in income.

Journal Entry:
2023 Particulars F Debit Credit
July 8

To record cash received from a customer

for services rendered.

************************************************************************************
Services Rendered on Account
2023
July 9 Rendered hauling services on account ₱6,000 to the following customers:
Mercy Dacayana ₱2,500
Mario Manto 700
Roger Espra 800
Victor Rebucas 2,000
Analysis: There is an increase in Asset-Accounts Receivable, ₱6,000 and an increase in
Owner’s Equity-KJ Laguna, Capital, ₱6,000.due to the increase in income.

Journal Entry:
2023 Particulars F Debit Credit
July 9

To record services rendered on account.

23
************************************************************************************
Asset Investment
2023
July 9 The owner invested his personal computer valued at ₱15,000 to the business. This is to be used
in a computerized business bookkeeping.
Analysis: There is an increase in Asset-Office Equipment, ₱15,000 and an increase in
Owner’s Equity-KJ Laguna, Capital, ₱15,000.

Journal Entry:
2023 Particulars F Debit Credit
July 9

To record additional investment in a

form of equipment.

************************************************************************************
Payment for Minor Truck Repairs
2023
Jul 10 Paid ₱250 to truck mechanic for minor repairs. The amount is taken from the revolving fund.
Analysis: There is a decrease in Owner’s Equity-KJ Laguna, Capital, ₱250 due to increase
in repairs expenses and a decrease in Asset-Petty Cash Fund, ₱250.

Journal Entry:
2023 Particulars F Debit Credit
July 10

To record payment for minor repairs

of truck taken from petty cash fund.

************************************************************************************
Payment of Fuel Bill
2023
Jul 15 Paid the fuel bill for the first half of the month, ₱9,800.
Analysis: There is a decrease in Owner’s Equity-KJ Laguna, Capital, ₱9,800 due to
increase in fuel and gasoline expenses and a decrease in Asset-Cash in bank,
₱9,800.

Journal Entry:
2023 Particulars F Debit Credit
July 15

To record payment for fuel and

gasoline expense.

24
************************************************************************************
Partial payment of Accounts Payable and Issuance of Notes Payable for the Balance
2023
Jul 15 Paid cash ₱12,000 to Carding Maloloy-on Wood and Carving, then issue a 30-day, 2% note for
the balance of ₱30,000.
Analysis: There is a decrease in Liability-Accounts Payable, ₱42,000; and a decrease in
Asset-Cash in Bank, ₱12,000 and the creation of new Liability-Notes Payable,
₱30,000.

Journal Entry:
2023 Particulars F Debit Credit
July 15

To record partial payment of account

and the issuance of notes for the balance.

************************************************************************************
Purchase of Tires on Account
2023
Jul 18 Purchase tires on account from Good Year, ₱22,000.
Analysis: There is an increase in Asset-Tires Inventory, ₱22,000 and a decrease in Liability-
Accounts Payable, ₱22,000.

Journal Entry:
2023 Particulars F Debit Credit
July 18

To record purchase of tires on account.

************************************************************************************
Partial Collection of Customers Account and Acceptance of Interest-Bearing Note for the Balance.
2023
Jul 19 Received cash of ₱3,500 from a customer’s account on July 9, and accepted the 10-day, 2%
note from Mercy Dacayana.
Analysis: There is an increase in Asset-Cash in Bank, ₱3,500; decrease in another form of
Asset-Accounts Receivable, ₱6,000 and the creation of new Asset-Notes
Receivable, ₱2,500.

Journal Entry:
2023 Particulars F Debit Credit
July 19

To record partial collection of accounts

and acceptance of note for the balance.
25
************************************************************************************
Services Rendered on Account
2023
Jul 23 Rendered hauling services on account ₱8,000 to the following customers:
Victor Rebucas ₱2,000
Mario Manto ₱5,700
Danilo Macabugto ₱300
Analysis: There is an increase in Asset-Accounts Receivable, ₱8,000 and an increase in
Owner’s Equity-KJ Laguna, Capital, ₱8,000 due to the increase in income.
Journal Entry:
2023 Particulars F Debit Credit
July 23

To record services rendered on account.

************************************************************************************
Withdrawal of Cash by the Owner
2023
Jul 25 The Owner, Khym Jesryl Laguna, withdrew cash ₱5,000 for his personal use.
Analysis: There is a decrease in Owner’s Equity-KJ Laguna, Capital, ₱5,000 due to cash
withdrawal of the owner and a decrease in Asset-Cash in Bank, ₱5,000.
Journal Entry:
2023 Particulars F Debit Credit
July 25

To record withdrawal of cash by the

owner from the business.

************************************************************************************
Collection of Customer’s Notes with the Interest
2023
Jul 29 Received cash from Mercy Dacayana ₱2,550 as full payment of the account due plus the
interest.
Analysis: There is an increase in Asset-Cash in Bank, ₱2,550; decrease in another form of
Asset-Notes Receivable, ₱2,500 and an increase in Owner’s Equity-KJ Laguna,
Capital, ₱50 due to the interest income received.
Journal Entry:
2023 Particulars F Debit Credit
July 29

To record full collection of customer’s

note with the interest due.

26
************************************************************************************
Payment of Expenses
2023
Jul 31 Paid salaries to drivers and truckmen, ₱15,600; and light and water bills, ₱2,700.
Analysis: There is a decrease in Owner’s Equity-KJ Laguna, Capital, ₱18,300 due to
increase in salaries and utilities expenses and a decrease in Asset-Cash in Bank,
₱18,300.

Journal Entry:
2023 Particulars F Debit Credit
July 31

To record payment of salaries and

utilities expenses.

************************************************************************************

27
POSTING TO THE LEDGER (Second Step)

After recording the transactions in the Journal, the entries will then be transferred to another
book called “LEDGER” for final recording. The process of transferring the entries from the Journal to
the Ledger is called Posting which is the second step in the accounting process.

The transfer of entries from the Journal to the Ledger is actually the sorting process which means
putting each value in a certain place according to each king, class or nature. This refers to the
classifying phase of accounting.

Procedures in Posting Journal Entries to the Ledger

In a computer-based system of recording a three-money column general ledger is used. Each
item or account is provided with a ledger. The account in the Ledger is arranged and placed with an
account number or page number according the sequence of listing of account titles in the Chart of
Accounts.

Using the illustrative problem, MARANDING HAULING SERVICES, the following are the
steps in posting the Journal entries to the Ledger:

Step 1 - As the first account in the General Journal entry is Cash in Bank, turn the ledger to
the page where the account Cash in Bank is located;

Step 2 - In the ledger of the account Cash in Bank enter the date column at the left side of the
said ledger the date when the transaction occurred as shown in the journal;

Step 3 - In the particular column of the ledger, state briefly the nature of the transaction, how
cash existed in the record;

Step 4 - In the folio (F) column of the ledger, write down the page of the journal where the
account Cash in Bank entry was taken from and simultaneously, write down in the
folio column of the journal the account or page number assigned to the account Cash
in Bank. This is called cross-referencing or cross-indexing.

Step 5 - Enter in the debit money column of the ledger Cash in Bank the amount then extend
the same amount in the Balance column. The same procedure is followed in posting
the next account and subsequent journal entries.

Note: It is very necessary to familiarize the normal balance of each account because every time
you enter amount in the debit or credit column, it represents addition or a deduction
form the balance, depending on the normal balance of the account, to get the running
balance.

To illustrate, let us summarized the journal entries of Maranding Hauling Services in the
following pages then we will use it the posting process of accounting. Let us assume that the journal
entries are recorded in pages 1 and 2 to illustrate how to fill up the folio columns in both books of
accounts.

28
 GENERAL JOURNAL
Page 1
2023 Particulars F Debit Credit
July 1 Cash in Bank 650 000 -
KJ Laguna, Capital 650 000 -
To record initial investment of the owner.

2 Prepaid Rent 9 000 -

Cash in Bank 9 000 -
To record advance payments of rental

3 Taxes and Licenses 1 920 -

Cash in Bank 1 920 -
To record payment of taxes, licenses and other
government requirements.

4 Hauling Truck 540 000 -

Cash in Bank 540 000 -
To record purchase of hauling truck for cash.

5 Furniture and Fixtures 42 000 -

Accounts Payable 42 000 -
To record purchase of furniture and fixtures on
accounts.

6 Petty Cash Fund 5 000 -

KJ Laguna, Capital 5 000 -
To record additional cash investment to be used
as revolving fund.

6 Truck Supplies 1 200 -

Cash in Bank 1 200 -
To record purchase of supplies for cash.

8 Cash in Bank 10 200 -

Hauling Income 10 200 -
To record cash collections from services rendered.

9 Accounts Receivable 6 000 -

Hauling Income 6 000 -
To record services rendered on account.

9 Office Equipment 15 000 -

KJ Laguna, Capital 15 000 -
To record additional investment in a form of
equipment.

10 Truck Repairs and Maintenance 250 -

Petty Cash Fund 250 -
To record payment for minor repairs of truck.

29
 GENERAL JOURNAL
Page 2
2021 Particulars F Debit Credit
July 15 Gasoline and Fuel Expense 9 800 -
Cash in Bank 9 800 -
To record payment for fuel and gasoline expense.
Gasoline and Fuel Expense

15 Accounts Payable 42 000 -

Cash in Bank 12 000 -
Notes Payable 30 000 -
To record partial payment of account and the
issuance of notes for the balance.

18 Tires Inventory 22 000 -

Accounts Payable 22 000 -
To record purchase of tires on account.

19 Cash in Bank 3 500 -

Notes Receivable 2 500 -
Accounts Receivable 6 000 -
To record partial collection of accounts and
acceptance of note for the balance.

23 Accounts Receivable 8 000 -

Hauling Income 8 000 -
To record services rendered on account.

25 KJ Laguna, Drawing 5 000 -

Cash in Bank 5 000 -
To record withdrawal of cash by the owner from
the business.

29 Cash in Bank 2 550 -

Interest Income 50 -
Notes Receivable 2 500 -
To record full collection of customer’s note with
the interest due.

31 Salaries and Wages 15 600 -

Utilities Expense 2 700 -
Cash in Bank 18 300 -
To record payment of salaries and utilities
expenses.

*****(Space for Adjusting Entries)*****

30
 GENERAL LEDGER

Cash in Bank Account No. 100

2023 Particulars F Debit Credit Balance (DR)
July 1 Initial investment JE1 650 000 - 650 000 -
2
3
4
6
8
15
15
19
25
29
31

Petty Cash Fund Account No. 105

2023 Particulars F Debit Credit Balance (DR)
July 6
10

Accounts Receivable Account No. 110

2023 Particulars F Debit Credit Balance (DR)
July 9
19
23

Notes Receivable Account No. 120

2023 Particulars F Debit Credit Balance (DR)
July 19
29

Prepaid Rent Account No. 130

2023 Particulars F Debit Credit Balance (DR)
July 2

Truck Supplies Account No. 140

2021 Particulars F Debit Credit Balance (DR)
July 6

31
 Tires Inventory Account No. 150
2023 Particulars F Debit Credit Balance (DR)
July 18

Furniture and Fixtures Account No. 160

2023 Particulars F Debit Credit Balance (DR)
July 5

Office Equipment Account No. 170

2023 Particulars F Debit Credit Balance (DR)
July 9

Hauling Truck Account No. 180

2023 Particulars F Debit Credit Balance (DR)
July 4

Accounts Payable Account No. 200

2023 Particulars F Debit Credit Balance (CR)
July 5
15
18

Notes Payable Account No. 250

2023 Particulars F Debit Credit Balance (CR)
July 15

KJ Laguna , Capital Account No. 300

2023 Particulars F Debit Credit Balance (CR)
July 1
6
9

KJ Laguna, Drawing Account No. 310

2023 Particulars F Debit Credit Balance (DR)
July 25

32
 Hauling Income Account No. 400
2023 Particulars F Debit Credit Balance (CR)
July 8
9
23

Interest Income Account No. 310

2023 Particulars F Debit Credit Balance (CR)
July 29

Salaries and Wages Account No. 510

2023 Particulars F Debit Credit Balance (DR)
July 31

Taxes and Licenses Account No. 515

2023 Particulars F Debit Credit Balance (DR)
July 3

Utilities Expense Account No. 530

2023 Particulars F Debit Credit Balance (DR)
July 31

Truck Repairs and Maintenance Account No. 545

2023 Particulars F Debit Credit Balance (DR)
July 10

Gasoline and Fuel Expense Account No. 550

2023 Particulars F Debit Credit Balance (DR)
July 15

33
TRIAL BALANCE PREPARTION (Third Step)

Generally, a trial balance is defined as a statement listing the debit and credit balances of
accounts in the General Ledger that are remaining open at the end of the accounting period.

After getting the running balance of each account in the general ledger, a summary of their
respective balances is listed down, this can either be a debit or credit balances. When this summary of
account balances is presented in a report form, it becomes a Trial Balance.

A trial balance has the following headings:

a. Name of the business of proprietor

b. Title of the report
c. Period covered by the report

Procedures in Preparing the Trial Balance

Step 1 - Use a two-column general journal then write a three-line heading as mentioned in
previous section.

Step 2 - List down all accounts in the General Ledger with open balances following the
sequence of filling the accounts in the ledger and simultaneously write down the
amounts in the debit or credit column of the trail balance depending on what account
balance they may have. No indentions are made in listing the account titles.

Step 3 - Draw a single line across the two amount columns and foot the debit and credit
money columns. The single line drawn is called single rule.

Step 4 - As the debit and credit totals are equal, draw a double line under the totals of both
columns. The double line drawn is called Double Rule.

Let use the General Ledgers of MARANDING HAULING SERVICES to complete to illustrate
on how to complete a trial balance. Shown on the next page is the trial balance format of
MARANDING HAULING SERVICES.

34
 Maranding Hauling Services
Trial Balance
July 31, 2023

Account Titles Debit Credit

Cash in Bank
Petty Cash fund
Accounts Receivable
Prepaid Rent
Truck Supplies
Tires Inventory
Furniture and Fixtures
Office Equipment
Hauling Truck
Accounts Payable
Notes Payable
KJ Laguna, Capital
KJ Laguna, Drawing
Hauling Income
Interest Income
Salaries and Wages
Taxes and Licenses
Utilities Expense
Truck Repairs and Maintenance
Gasoline and Fuel Expense
Total

35
Exercise Problems:

Problem 3-1
The transactions below are taken from the operations of Xandy Beauty Shop, owned and
managed by Kythe Xandrn Reyes for the month of July 2023.

2023
July 1 Kythe Xandrn invested ₱20,000 cash to start the operations of her beauty shop.
3 Paid advance rental for the month, ₱2,400.
4 Bought parlor equipment for cash, ₱12,000.
5 Bought parlor supplies from Realistic Shop on account, ₱2,500.
6 Purchased furniture and fixtures for cash ₱4,000.
7 Paid ₱250 for the window sign (Advetising).
8 Income from services rendered, ₱480.
9 Kythe Xandrn made additional investment as follows:
Cash, ₱4000
Parlor Equipment, ₱4,280.
10 Home service rendered to Mary Pancho on account, ₱250.
11 Paid Sanitary Laundry for washing the parlor linen, ₱290.
12 Bought additional parlor supplies from Roxas Shop, ₱1,200, on credit.
13 Cash service income, ₱800.
15 Paid the salary of the parlor operators for the first half of the month, ₱1,200.
16 Paid the account with realistic Shop in full.
17 Home service rendered to Perla Enriquez on account, ₱100.
19 Paid telephone bill for the month, ₱180.
20 Service income in cash, ₱750.
21 Kythe Xandrn took ₱1,500 cash from the business for her personal use.
23 Paid the bill of Sanitary Laundry for washing the parlor linen, ₱200.
24 Paid the light and water bills, ₱450.
25 Home service rendered to Mary Pancho on account, ₱120.
26 Collected ₱370 from Mary Pancho in full payment of her account.
27 Bought parlor supplies from Realistic Shop on account, ₱800.
28 Cash service income, ₱1,250.
30 Paid the salary of the parlor operators for the second half of the month, ₱1,200.

Required:
1. Use the chart of accounts in the next page to record the above transactions in the journal form
provided in the following pages.
36
 Xandy Beauty Shop
Chart of Accounts
ASSETS REVENUE
100 Cash 400 Service Income
110 Accounts Receivable
EXPENSES
120 Parlor Supplies
130 Parlor Equipment 500 Rent Expense
140 Furniture and Fixtures 505 Advertising Expense
510 Laundry Expenses
LIABILITIES
515 Salaries Expense
200 Accounts Payable 520 Communication Expense
525 Utilities Expense
OWNER’S EQUITY
300 KX Reyes, Capital
310 KX Reyes, Drawing

2. Post the journal entries in general ledger provided in the following pages.
3. Complete the trial balance in the form provided.

37
 GENERAL JOURNAL
Page 1
2023 Particulars F Debit Credit
July 1

10

11

12

13

15

38
 GENERAL JOURNAL
Page 2
2023 Particulars F Debit Credit
July 16

17

19

20

21

23

24

25

26

27

28

30

39
 GENERAL LEDGER

Cash on Hand Account No. ___

2023 Particulars F Debit Credit Balance (DR)

Accounts Receivable Account No. ___

2023 Particulars F Debit Credit Balance (DR)

Parlor Supplies Account No. ___

2023 Particulars F Debit Credit Balance (DR)

Parlor Equipment Account No. ___

2023 Particulars F Debit Credit Balance (DR)

Furniture and Fixtures Account No. ___

2023 Particulars F Debit Credit Balance (DR)

Accounts Payable Account No. ___

2023 Particulars F Debit Credit Balance (CR)

KX Reyes, Capital Account No. ___

2023 Particulars F Debit Credit Balance (CR)

40
 KX Reyes, Drawing Account No. ___
2023 Particulars F Debit Credit Balance (DR)

Service Income Account No. ___

2023 Particulars F Debit Credit Balance (CR)

Rent Expense Account No. ___

2023 Particulars F Debit Credit Balance (DR)

Advertising Expense Account No. ___

2023 Particulars F Debit Credit Balance (DR)

Laundry Expense Account No. ___

2023 Particulars F Debit Credit Balance (DR)

Salaries Expense Account No. ___

2023 Particulars F Debit Credit Balance (DR)

Communication Expense Account No. ___

2023 Particulars F Debit Credit Balance (DR)

Utilities Expense Account No. ___

2023 Particulars F Debit Credit Balance (DR)

41
 Xandy Beauty Shop
Trial Balance
July 31, 2023

Account Titles Debit Credit

42
Problem 3-2
Luz Real, owner of Tubod Beauty Salon has requested your assistance to do and prepare the
following or her operation in April 2023.

a. Record the transactions below in the 2-column general journal. Use the account number of the
accounts found in the chart below.

Page No. Page No.

1 Cash in Bank 14 Real, Capital
3 Accounts Receivable 15 Real, Drawing
5 Shop Supplies Inventory 16 Service Income
6 Furniture and Fixtures 17 Taxes and Licenses
8 Shop Equipment 20 Rental Expense
11 Account Payable 22 Commission Expense

b. Post the journal entries to the general ledger.

c. Prepare the trial balance.

Transactions for the month of April:

1 She made the following investments:

Cash ₱150,000
Furniture and Fixtures ₱25,000
Shop Equipment ₱35,000
2 Paid business permits and licenses, ₱2,050.
9 Bought some beauty products and supplies on account, ₱15,000.
14 Revenue for the week:
Cash ₱5,000
On account ₱6,000
15 Partial payment of April 9 account, ₱9,000.
21 Revenue for the week, ₱10,000.
25 Payment of rental for the month, ₱5,000.
27 Revenue for the week:
Cash ₱4,000
On account ₱7,000
28 Withdrew cash from the business for personal use, ₱3,000.
30 Paid commission to beautician, ₱11,000.

43
 GENERAL JOURNAL
Page 1
2023 Particulars F Debit Credit
1

14

15

21

27

28

30

44
 GENERAL LEDGER

Cash in Bank Account No. ___

2023 Particulars F Debit Credit Balance (DR)

Accounts Receivable Account No. ___

2023 Particulars F Debit Credit Balance (DR)

Shop Supplies Inventory Account No. ___

2023 Particulars F Debit Credit Balance (DR)

Furniture and Fixtures Account No. ___

2023 Particulars F Debit Credit Balance (DR)

Shop Equipment Account No. ___

2023 Particulars F Debit Credit Balance (DR)

Accounts Payable Account No. ___

2023 Particulars F Debit Credit Balance (CR)

Real, Capital Account No. ___

2023 Particulars F Debit Credit Balance (CR)

Real, Drawing Account No. ___

2023 Particulars F Debit Credit Balance (DR)

Service Income Account No. ___

2023 Particulars F Debit Credit Balance (CR)

Taxes and Licenses Account No. ___

2023 Particulars F Debit Credit Balance (DR)

45
 Rental Expense Account No. ___
2023 Particulars F Debit Credit Balance (DR)

Commission Expense Account No. ___

2023 Particulars F Debit Credit Balance (DR)

Tubod Beauty Salon

Trial Balance
April 30, 2023

Account Titles Debit Credit

46
Problem 3-3
Alex Morta opens a laundry shop business in Ozamiz City. The following were the transactions
on the July 2023, its first month of operation:

July 1 Open an account with Union Bank, ₱150,000.

2 Acquired Laundry Equipment costing P75,000, paying cash of ₱25,000 and issued a note
for the balance.
5 Bought a second-hand delivery van on account, ₱65,000

9 Bought laundry supplies for cash, ₱25,000.

15 Rendered laundry services to various hotels in the city and received cash, ₱30,000 and on
account ₱15,000.
17 Paid utilities expenses, ₱6,000.
19 Partial payment of laundry equipment, ₱25,000.
21 Withdraw cash of ₱5,000 for her personal use.
28 Collected ₱10,000 from customer’s account of July 15.
31 Paid salaries for the month, ₱8,000.

Required:
1. Prepare the journal entries using the 2-column general journal provided in the next page. Use the
following list of account titles:

Cash in Bank; Accounts Receivable; Laundry Supplies; Laundry Equipment; Delivery

Equipment; Accounts Payable; Notes Payable; Morta, Capital; Morta, Drawing; Laundry
Revenue; Utilities Expense; Rental Expense and Salaries Expense.

2. Post the journal entries in the general ledger provided in the succeeding pages.

3. Prepare the trial balance.

47
 GENERAL JOURNAL
Page 1
2023 Particulars F Debit Credit
July 1

15

17

19

21

25

28

31

48
 GENERAL LEDGER

Cash in Bank Account No. ___

2023 Particulars F Debit Credit Balance (DR)

Accounts Receivable Account No. ___

2023 Particulars F Debit Credit Balance (DR)

Laundry Supplies Account No. ___

2023 Particulars F Debit Credit Balance (DR)

Laundry Equipment Account No. ___

2023 Particulars F Debit Credit Balance (DR)

Delivery Equipment Account No. ___

2023 Particulars F Debit Credit Balance (DR)

Accounts Payable Account No. ___

2023 Particulars F Debit Credit Balance (CR)

Notes Payable Account No. ___

2023 Particulars F Debit Credit Balance (CR)

Morta, Capital Account No. ___

2023 Particulars F Debit Credit Balance (CR)

Morta, Drawing Account No. ___

2023 Particulars F Debit Credit Balance (DR)

49
 Laundry Revenue Account No. ___
2023 Particulars F Debit Credit Balance (CR)

Utilities Licenses Account No. ___

2023 Particulars F Debit Credit Balance (DR)

Rental Expense Account No. ___

2023 Particulars F Debit Credit Balance (DR)

Salaries Expense Account No. ___

2023 Particulars F Debit Credit Balance (DR)

__________________________
____________________
____________________________

Account Titles Debit Credit

50
Problem 3-4
Mr. Calixto Moran is the owner of Mindanao Fast Delivery Services, a cargo forwarded that is
based in General Santos City but operates within Mindanao-Visayas territory. The transactions for the
month of August, 2023 follow:

Aug. 2 Deposited the Bank of Philippine Islands the amount of ₱400,000 as initial investment.

4 Purchase supplies on account, ₱5,000.

6 Acquired a second-hand service vehicle for delivery costing ₱100,000, paying ₱25,000 in
cash and issued a note for the balance.
10 Paid advance rental for the month, ₱7,000.
15 Received cash from a customer, ₱18,000 for delivery services.
17 Paid utilities expenses, ₱9,000.
20 Billed a customer for delivery service on account, ₱20,000.
24 Partial payment of August 4 account, ₱2,000.
28 Withdrew ₱5,000 cash from his business for his personal use.
30 Paid salaries for the month, ₱10,000.

Required:
1. Prepare the journal entries using the 2-column general journal provided in the next page. Use the
following list of account titles:

Cash in Bank; Accounts Receivable; Supplies Inventory; Delivery Equipment; Accounts

Payable; Notes Payable; Moran, Capital; Moran, Drawing; Delivery Income; Utilities Expense;
Rental Expense and Salaries Expense.

2. Post the journal entries in the general ledger provided in the succeeding pages.

3. Prepare the trial balance.

51
 GENERAL JOURNAL
Page 1
2023 Particulars F Debit Credit
2

10

15

17

20

22

24

28

30

52
 GENERAL LEDGER

Cash in Bank Account No. ___

2023 Particulars F Debit Credit Balance (DR)

Accounts Receivable Account No. ___

2023 Particulars F Debit Credit Balance (DR)

Supplies Inventory Account No. ___

2023 Particulars F Debit Credit Balance (DR)

Delivery Equipment Account No. ___

2023 Particulars F Debit Credit Balance (DR)

Accounts Payable Account No. ___

2023 Particulars F Debit Credit Balance (CR)

Notes Payable Account No. ___

2023 Particulars F Debit Credit Balance (CR)

Dizon, Capital Account No. ___

2023 Particulars F Debit Credit Balance (CR)

Dizon, Drawing Account No. ___

2023 Particulars F Debit Credit Balance (DR)

Delivery Income Account No. ___

20223 Particulars F Debit Credit Balance (CR)

53
 Utilities Licenses Account No. ___
2023 Particulars F Debit Credit Balance (DR)

Rental Expense Account No. ___

2023 Particulars F Debit Credit Balance (DR)

Salaries Expense Account No. ___

2023 Particulars F Debit Credit Balance (DR)

__________________________
____________________
____________________________

Account Titles Debit Credit

54
Problem 3-5
Kapatagan Trucking Services, owned and managed by Magdalena Poncho has started its
operation in 2022. Her bookkeeper has made the following opening entry in General Journal on January
1, 2023 based on the ending balance of the following accounts on December 31, 2022.
2023
Jan. 1 Cash in Bank 610,000
Petty Cash Fund 1,000
Tires and Tubes 9,800
Spareparts Inventory 1,500
Hauling Trucks 1,680,000
Accounts Payable 10,000
SSS Premium Payable 1,885
Philhealth Premium Payable 200
Pag-ibig Premium Payable 400
Withholding Tax Payable 350
M. Poncho, Capital 2,289,465
To take up the opening entry.
Her completed transactions for the month of January 2023 are as follows:
Jan. 3 Withdrew cash of ₱15,000 from the business for personal use.
6 Bought various spareparts on account, ₱8,000.
7 Paid taxes including with that of the Land Transportation Office ₱8,300.
10 Made Remittance of the following:
SSS Premium ₱1,885
Philhealth Premium ₱500
Pag-ibig Premium ₱400
Withholding Tax ₱350
12 Partial payment of accounts, ₱10,000.
15 Paid the following expenses:
Diesoline and Oil ₱6,800
Repairs and Maintenance ₱4,000
19 Rendered trucking services.
Cash ₱20,000
Promissory Note ₱17,000
21 Bought a brand new truck, ₱950,000. Paid ₱300,000 down payment and issued a note for
the balance of ₱650,000 payable during the year.
23 Rendered trucking services for cash, ₱20,000.
25 Partial collection of the note, ₱10,000.
30 Paid salaries and wages for the month.
Salaries and wages ₱25,000.00
Less: Deductions:
SSS Premium ₱533.20
Philhealth Premium 100.00
Pag-ibig Premium 200.00
Withholding Tax 350.00 1,183.20
Net Payroll ₱23,816.80
30 Employer’s share on SSS, ₱1,351.80; Philhealth, ₱100; and Pag-ibig, ₱200.
55
Required:
1. Create the general ledger of the following accounts:

Assets Owner’s Equity

Cash in Bank M. Poncho, Capital
Petty Cash Fund M. Poncho, Drawing
Account Receivable
Notes Receivable Revenue
Tires and Tubes Inventory Trucking Income
Spareparts Inventory
Hauling Trucks Expenses
Salaries and Wages
Liabilities Diesoline and Oil
Account Payable Repairs and Maintenance
Notes Payable SSS Contribution
SSS Premium Payable Philhealth Contribution
Philhealth Premium Payable Pag-ibig Contribution
Pag-ibig Premium Payable Taxes and Licenses
Withholding Tax Payable

2. Post the opening journal entry to their respective ledger accounts and January 1 – Beginning
Balance.

3. Record the January 2022 transactions in the general journal.

4. Post the journal entries to the general ledger.

5. Prepare a Trial Balance.

GENERAL JOURNAL
Page 1

56
 GENERAL JOURNAL
Page 2

10

12

15

19

21

23

25

30

30

57
 GENERAL LEDGER

Cash in Bank Account No. ___

2023 Particulars F Debit Credit Balance (DR)

Notes Receivable Account No. ___

2023 Particulars F Debit Credit Balance (DR)

Accounts Receivable Account No. ___

2023 Particulars F Debit Credit Balance (DR)

Tires and Tubes Account No. ___

2023 Particulars F Debit Credit Balance (DR)

Spareparts Inventory Account No. ___

2023 Particulars F Debit Credit Balance (DR)

Hauling Truck Account No. ___

2023 Particulars F Debit Credit Balance (DR)

Accounts Payable Account No. ___

2023 Particulars F Debit Credit Balance (CR)

Notes Payable Account No. ___

2023 Particulars F Debit Credit Balance (CR)

SSS Premium Payable Account No. ___

2023 Particulars F Debit Credit Balance (CR)

58
 Philhealth Premium Payable Account No. ___
2023 Particulars F Debit Credit Balance (CR)

Pag-ibig Premium Payable Account No. ___

2023 Particulars F Debit Credit Balance (CR)

Withholding Tax Payable Account No. ___

2023 Particulars F Debit Credit Balance (CR)

C. Abeto, Capital Account No. ___

2023 Particulars F Debit Credit Balance (CR)

C. Abeto, Drawing Account No. ___

2023 Particulars F Debit Credit Balance (DR)

Trucking Income Account No. ___

2023 Particulars F Debit Credit Balance (CR)

Salaries and Wages Account No. ___

2023 Particulars F Debit Credit Balance (DR)

Diesoline and Oil Account No. ___

2023 Particulars F Debit Credit Balance (DR)

Repairs and Maintenance Account No. ___

2023 Particulars F Debit Credit Balance (DR)

SSS Contribution Account No. ___

2023 Particulars F Debit Credit Balance (DR)

59
 Philhealth Contribution Account No. ___
2023 Particulars F Debit Credit Balance (DR)

Pag-ibig Contribution Account No. ___

2023 Particulars F Debit Credit Balance (DR)

Taxes and Licenses Account No. ___

2023 Particulars F Debit Credit Balance (DR)

__________________________
____________________
____________________________

Account Titles Debit Credit

60