Basic Accounting General Journal Format

Definition of Accounting Date Account Title and Reference Debit Credit

Explanation Number
Accounting is a process of identifying, recording and
communicating economic information that is useful in making
economic decisions.
Accounting Equation Journal entry is the format used to write on the journal.
Writing on the journal is called “journalizing”
Asset = Liabilities + Owner’s Equity
General Ledger
Basic Accounting Elements/ Accounts
The general ledger. Also known as the book of accounts,
Asset accounts – Properties or economic resources owned maintain at least one sheet per account.
by business.
General Ledger Format
Expense accounts – Outflows of assets resulting from cash Account Title
spend or liability incurred in order to generate revenue. Date Ref Debit Credit Balance
Liability accounts – Amounts owed by business.
Equity accounts – Owner’s interest or claim in the asset of
the business. Writing on the ledger referred to as “posting”. Journal entries
are “posted” in the General Ledger.
Income accounts – Inflows of asset resulting from the sale
Journal Entry
of goods or services.
Debit and Credit • The journal entry should always be “balanced”

A debit is an accounting entry that either increases an asset • A journal entry is “balanced” if the total amount on
or expense account. Or decreases a liability or equity account. the debit side is equal to the total amount on the
It is positioned on the left in an accounting entry. credit side.

A credit is an accounting entry that increases either • The last component of the Journal entry is the brief
a liability or equity account. Or decreases an asset or expense explanation of the transaction
account. It is positioned on the right in an accounting entry. Step 1. Analyzed the transaction and determine which
Increase Decrease accounts are affected and the direction of the effect.
Asset Debit Credit Step 2. Determine how to effect the direction identified in
Liability Credit Debit step #1 based on the normal balances of the accounts
Income/Revenue Credit Debit
Expense Debit Credit - If a journal entry has only one debit and one credit,
Equity/Capital Credit Debit it is called SIMPLE ENTRY.
Owner’s Drawing Debit Credit - If a journal entry has two or more debit or credit, it
is called COMPOUND ENTRY.

NOTE: The totals of the debits and credits for any

transaction must always equal each other so that an Accounting Cycle
accounting transaction is always said to be in balance. Thus,
the use of debits and credits in a two column transaction 1. Journalizing – this is the process of recording the business
recording format is the most essential of all controls over transaction in the journals or book of original entry.
accounting accuracy. This is how debit and credit find their 2. Posting – transferring the entries in the journal to the
use. ledger.
General Journal
3. Preliminary Trial Balance – this is prepared to check the
The general journal refers to a book of original entries, in accuracy of posting and to prove the equality of debits and
which accountants and bookkeepers record business credistatets.
transactions.
4. Adjusting Entries – these are prepared at the end of
accounting period to update the books.
Chiyeona Notes – Basic Accounting. NOTE: Example from the book (own answer) + definitions from books.
5. Worksheet – to facilitate the preparation of the financial General Journal

statements. This is accomplished by showing the adjustments Date Account Title Ref. Debit Credit
Dec 1 Cash 101 200,000
in the worksheet and then classifying all the accounts into Twice, Capital 301 200,000
real accounts (balance sheet) and nominal accounts (income 1 Rent Expense 501 16,500
Cash 101 16,500
statement). Worksheet is optional. 1 Office Supplies Expense 502 15,500
Cash 101 15,500
6. Financial Statement – accounting reports prepared at 1 Office Equipment 104 80,000
Cash 101 40,000
the end of accounting period. Income statement, Statement Notes Payable 202 40,000
of changes in owner’s equity, Balance sheet, and Statement of 2 Furniture and Fixture 104 12,500
Cash 101 12,500
cash flows. 2 Cash 101 5,500
Service Revenue 401 5,500
7. Closing Entries – These are entries prepared in the 3 Light and Water Expense 503 4,000
Cash 101 4,000
general journal at the end of accounting period to close all 4 Accounts Receivable 102 38,000
the nominal accounts. Service Revenue 401 38,000

8 Cash 101 20,000

8. Post-Closing Trial Balance – only the real accounts will Loan Payable 203 20,000
be shown in this trial balance. 10 Note Receivable 103 12,000
Service Revenue 401 12,000
15 Salaries Expense 504 16,500
9. Ruling the ledger – getting the total debits and credits Cash 101 16,500
of all the account and then double ruling or double lining the 15 Twice, Drawing 302 10,000
Cash 101 10,000
totals. 18 Furniture and Fixture 104 15,000
Accounts Payable 201 15,000
10. Opening Entry – basis is the post-closing trial balance. 20 Office Equipment 105 32,000
Note Payable 202 32,000
31 Taxes and Licenses Expense 505 3,000
11. Reversing Entries – some adjusting entries prepared at Cash 101 3,000
the end of accounting period which need to be reversed at 31 Salaries Expense 504 14,500
Cash 101 14,500
the start of the new accounting period. 31 Cash 101 12,500
Accounts Receivable 102 12,500
Accounting Cycle – Example

Business Transactions: General Ledger

Dec 1 – Twice invested P200,000 of cash as initial investment. Cash (101)

1 – Paid Office Rent, P16,500 Date Exp. Debit Date Exp. Credit
Dec 1 Investment 200,000 Dec 1 Rent 16,500
1 – Bought Office Supplies for cash P15,500 Dec 2 Service 5,500 Dec 1 Supplies 15,500
Dec 8 Loan 20,000 Dec 1 DP equip. 40,000
1 – Bought computer from JYP P80,000, paying 50% as down payment Dec 31 Partial 12,500 Dec 1 Fur & Fix 12,500
and the balance is payable in 90-days Dec 3 L&W 4,000
Dec 15 Salaries 16,500
2 – Office tables and chairs were purchased for cash, P12,500 Dec 15 Drawing 10,000
Dec 31 T&L 3,000
2 – Received cash from Got7 for services rendered P5,500 Dec 31 Salaries 14,500
Total 238,000 Total 132,500
3 – Paid electricity and water bill, P4,000 Balance 105,500
4 – Billed several clients for service rendered P38,000
Account Receivable (102)
8 – Borrowed money from BDO bank, P20,000
Date Exp. Debit Date Exp. Credit
10 – Receive a 60-day note from a client for service rendered, P12,000 Dec 4 Service 38,000 Dec 31 Partial 12,500
Balance 25,500
15 – Paid salaries P16,500

15 – Twice withdraw P10,000 cash for personal use Note Receivable (103)

18 – Bought cabinets from YG P15,000 on credit Date Exp. Debit Date Exp. Credit
Dec 10 Service 12,000
20 – Issued a promissory note to SM corp P32,000 for printing machine Balance 12,000

31 – Paid Municipal license P3,000

Furniture and Fixture (104)
31 – Paid salaries P14,500
Date Exp. Debit Date Exp. Credit
31 – Partial collection of the accounts of clients P12,800 Dec 2 Expense 12,500
Dec 18 Expense 15,000
Balance 27,500

Chiyeona Notes – Basic Accounting. NOTE: Example from the book (own answer) + definitions from books.
 Office Equipment (105) Salaries Expense (504)

Date Exp. Debit Date Exp. Credit Date Exp. Debit Date Exp. Credit
Dec 1 Expense 80,000 Dec 15 Salaries 16,500
Dec 20 Expense 32,000 Dec 31 Salaries 14,500
Balance 112,000 Balance 31,000

Accounts Payable (201) Taxes and Licenses Expense (505)

Date Exp. Debit Date Exp. Credit Date Exp. Debit Date Exp. Credit
Dec 18 F&F 15,000 Dec 31 T&L 3,000
Balance 15,000 Balance 3,000

Note Payable (202) Preliminary Trial Balance

Date Exp. Debit Date Exp. Credit Twice Printing Shop

Dec 1 Equip. 40,000 Preliminary Trial Balance
Dec 20 Equip. 32,000 December 31, 200E
Balance 72,000
Accounts Debit Credit
Cash 105,500
Loan Payable (203) Account Receivable 25,500
Note Receivable 12,000
Date Exp. Debit Date Exp. Credit Furniture and Fixture 27,500
Dec 8 Bank 20,000 Office Equipment 112,000
Balance 20,000 Account Payable 15,000
Note Payable 72,000
Loan Payable 20,000
Twice Capital (301)
Twice Capital 200,000
Date Exp. Debit Date Exp. Credit Twice Drawing 10,000
Dec 1 Investment 200,000 Service Revenue 55,500
Balance 200,000 Rent Expense 16,500
Office Supplies Expense 15,500
Light and Water Expense 4,000
Twice Drawing (302) Salaries Expense 31,000
Taxes and License Expense 3,000
Date Exp. Debit Date Exp. Credit TOTALS: 362,500 362,500
Dec 15 Drawing 10,000
Balance 10,000
Adjusting Entries

Service Revenue (401) 1. Bad Debts (Impairment Loss), P500

Date Exp. Debit Date Exp. Credit Debit Bad Debts P500
Dec 2 Income 5,500
Dec 4 Income 38,000 Credit Allowance for Bad Debts P500
Dec 10 Income 12,000
2. Depreciation on the furniture and fixture is estimated to be P 1,200.
Balance 55,500
Debit Depreciation – Furniture and Fixture P1,200
Rent Expense (501) Credit Accumulated Depreciation – Furniture and Fixture P1,200
Date Exp. Debit Date Exp. Credit 3. The office equipment should be depreciated by 10%.
Dec 1 Rent 16,500
Balance 16,500 Debit Depreciation – Printing Equipment P11,200

Credit Accumulated Depreciation – Office Equipment P11,200

Office Supplies Expense (502)
4. Unused Supplies, P 12,400.
Date Exp. Debit Date Exp. Credit
Dec 1 Supplies 15,500 Debit Unused Supplies P8,500
Balance 15,500
Credit Office Supplies Expense P8,500

Light and Water Expense (503) 5. Accrued interest on the notes receivable, P1,000

Date Exp. Debit Date Exp. Credit Debit Interest Receivable P1,000
Dec 3 L&W 4,000
Balance 4,000 Credit Interest Revenue P1,000

6. Accrued interest on the notes payable, P 2,000.

Debit Interest Expense P2,000

Credit Interest Payable P2,000

Chiyeona Notes – Basic Accounting. NOTE: Example from the book (own answer) + definitions from books.
 Adjusted Trial Balance Balance Sheet

Twice Printing Shop Twice Printing Shop

Adjusted Trial Balance Balance Sheet
December 31, 200E December 31, 200E

Accounts Debit Credit Assets Liabilities

Cash 105,500 Current Assets: Current Liabilities:
Account Receivable 25,500 Cash 105,500 Account Payable 15,000
Bad Debts 500 Account Receivable 25,500 Note Payable 72,000
Note Receivable 12,000 (Allow. For Bad Debt) (500) Interest Payable 2,000
Interest Receivable 1,000 Note Receivable 12,000 Total Current 89,000
Furniture and Fixture 27,500 Interest Receivable 1,000
Depreciation – Furniture and 1,200 Unused Supplies 8,500 Non-Current Liabilities:
Fixture Total Current Assets: 152,000 Loan Payable 20,000
Office Equipment 112,000
Depreciation – Office 11,200 Non-Current Assets: Total Liabilities 109,000
Equipment Furniture and Fixture 27,500
Unused Supplies 8,500 (Accum. Dep. F&F) (1,200) Owner’s Equity:
Allowance for Bad Debts 500 Office Equipment 112,000 Twice, Capital 170,100
Account Payable 15,000 (Accum. Dep Off. Equip.) (11,200)
Note Payable 72,000 Total Non-Current: 127,100 Total Liabilities and Equity 279,100
Interest Payable 2,000 TOTAL ASSETS 279,100
Loan Payable 20,000
Twice Capital 200,000
Twice Drawing 10,000 Closing Entry
Service Revenue 55,500
Interest Revenue 1,000 Date Account Title Debit Credit
Accumulated Depreciation – 1,200 Dec 31 Service Revenue 55,500
Furniture and Fixture Interest Revenue 1,000
Accumulated Depreciation – 11,200 Income and Expense Summary 56,500
Office Equipment
Rent Expense 16,500 - Income and Expense Summary 76,400
Office Supplies Expense 7,000 Rent Expense 16,500
Light and Water Expense 4,000 Office Supplies Expense 7,000
Salaries Expense 31,000 Light and Water Expense 4,000
Interest Expense 2,000 Salaries Expense 31,000
Taxes and License Expense 3,000 Interest Expense 2,000
TOTALS: 378,400 378,400 Taxes and License Expense 3,000
Dep. Furniture and Fixture 1,200
Dep. Office Equipment 11,200
Income Statement Bad Debts 500

Twice Printing Shop - Twice, Drawing 19,900

Income Statement Income and Expense Summary 19,900
For the Month Ended December 31, 200E
- Twice, Capital 170,100
Service Revenue P 55,500 Twice, Drawing 170,100
Interest Revenue 1,000
Total Income P 56,000
Less: Operating Expenses
Rent Expense 16,500
Office Supplies Expense 7,000
Light and Water Expense 4,000
Salaries Expense 31,000
Interest Expense 2,000
Taxes and License Expense 3,000
Dep. – Furniture and Fixture 1,200
Dep. – Office Equipment 11,200 (75,900)
Net Loss (19,900)

Statement of Changes in Owner’s Equity

Twice Printing Shop

Statement of Changes in Owner’s Equity
For the Month Ended December 31, 200E

Beginning Capital 200,000

Add: Net Loss (19,900)
Total 180,100
Less: Drawing (10,000)
Ending Capital 170,100
Chiyeona Notes – Basic Accounting. NOTE: Example from the book (own answer) + definitions from books.