Accounting 9

Step
1
Step Step
10 2
Step Step
9 3
ACCOUNTING
Step
CYCLE Step
8 4
Step Step
7 5
Step
6
ACCOUNTING CYCLE
Step Analyze business Step Prepare adjusted trial
1 6
transactions balance
Step Journalize business Step Preparation of Financial
2 7
transactions Statements
(Journalizing)
Step Post journal entries to Step Journalize and post
3 8
the ledger (Posting) closing journal entries
Step Preparation of Trial Step Prepare post-closing
4 9
Balance trial balance
Step Journalize and Post Step Journalize and post
5 10
adjusting journal entries reversing journal entries
LESSON
9:
Step 1 Analyze business transactions
Journalize business
Step 2
transactions (Journalizing)
JOURNALIZING
• The act of recording business transactions
in the Journal
• The entry that is made in the Journal
• Journal entry may be simple or compound
SIMPLE JOURNAL ENTRY
• A journal entry with one debit item with
one debit amount; and one credit item with
one credit amount.
20xx
Particulars F Debit Credit
Month Day
March 1 Cash GL-1 P 100,000.00
Santos, Capital GL-10 P 100,000.00
To record initial
investment
COMPOUND JOURNAL ENTRY
• A journal entry that may have one or more
than one debit item and may have one or
more than one credit item
20xx
Month Day
March 31 Rent Expense GL-17 P 10,000.00
Utilities Expense GL-18 15,000.00
Salary Expense GL-16 5,000.00
Cash GL-1 P 30,000.00
To record payment
of expenses
Step
1 Analyze business transactions Step
2
Journalize business transactions Illustrative
(Journalizing) Problem: Service
Davao Laundry Service
Business
March 1:
Mr. Severo Santos opens a current account with Allied
Banking Corporation in the amount of P850,000 to
start with his laundry business under the trade name
“Davao Laundry Service” INVESTMENT BY THE
OWNER
20xx
Month Day
March 1 Cash GL-1 P 850,000.00
Santos, Capital GL-10 P 850,000.00
To record initial
investment
Step
2
Business
March 2:
Purchased laundry supplies on account, P90,000 from
the following suppliers:
SM City - Da va o P 35,000.00
Ga isa no Ma ll 25,000.00
Xentro Ma ll 30,000.00
Total Payable P 90,000.00
PURCHASE OF SUPPLIES ON
CREDIT
Step
2
Business
PURCHASE OF EQUIPMENT FOR
March 3: CASH
Purchased laundry machine for cash, P150,000
SERVICES RENDERED FOR
March 4: CREDIT
Rendered laundry services on account, P80,000 to the
following customers: Apo View Hotel
Gra nd Men Seng Hotel
P 5,000.00
35,000.00
The Ma rco Polo Hotel 30,000.00
Roya l Ma nda ya Hotel 10,000.00
Total Receivable P 80,000.00
Step
2
Business
PAYMENT OF TAXES, LICENSES, AND OTHER
March 10: GOVERNMENT DUES
Paid taxes and licenses due to the government, P4,000
WITHDRAWAL OF CASH BY THE

March 12: OWNER
Mr. Severo Santos withdrew P10,000 cash from the
business for his personal use.
Step
2
Business
ISSUANCE OF A NOTE FOR BORROWED

March 17: MONEY
The business borrowed money from Allied Banking
Corporation, P100,000 by issuing a 15-day note. It was
deposited to the amount of Davao Laundry Services by
way of a Credit Advice issued by the bank.
Step
2
Business
PARTIAL COLLECTION OF ACCOUNTS
March 21: RECEIVABLE
Received cash of P45,000 representing collection from
the following customer’s account:
Gra nd Men Seng Hotel P 30,000.00

The Ma rco Polo Hotel 10,000.00
Roya l Ma nda ya Hotel 5,000.00
Total Receivable P 45,000.00
Step
2
Business
PARTIAL PAYMENT OF ACCOUNTS
March 21: PAYABLE
Partial payment of account, P60,000 to the following
suppliers:
SM City - Da va o P 25,000.00
Ga isa no Ma ll 20,000.00
Xentro Ma ll 15,000.00
Step
2
Business
PAYMENT OF
March 30: EXPENSES
The following expenses were paid by Davao Laundry
Services for the month of March 20XX
Spa ce Renta l P 5,000.00
Telephone, Light a nd Wa ter 12,000.00
Sa la ries of Employees (contra ctua l) 10,000.00
Journalize business
Step 2
Step
2
JM Photocopying Center
Business
July 1: Mr. Mercado invested cash of P30,000

in his business to be known as JM
Photocopying Center.
July 2: Mr. Mercado invested a photocopying
machine amounting to P30,000.
Step
2
Business
July 1: Mr. Mercado invested the following in

his business to be known as JM Photocopying
Center: Cash, P30,000; and Photocopying
Equipment, P30,000 (with sales invoice). In
addition, his Loan Payable of P50,000 would
be assumed by the business.
Step
2
Business
July 3: JM Photocopying Center paid P10,000

for the purchase of bond papers (with sales
invoice)
July 4: Mr. Mercado hired one personnel with
a weekly salary of P1,000 to look after the
business (with employment contract)
Step
2
Business
July 5: JM Photocopying Center paid salary of

the personnel for the week, P1,000 (with
payroll sheet)
July 6: JM Photocopying Center received
P8,000 cash for services rendered (with official
receipt)
Step
2
Business
July 7: JM Photocopying Center billed a

customer for services rendered during the
week, P2,000 (with billing statement)
July 8: Mr. Mercado made a P500 cash
withdrawal for personal use.
Step
2
Business
July 9: JM Photocopying Center collected the

amount billed to a customer, P2,000 (with
official receipt)
July 10: JM Photocopying Center paid rent for
two months amounting to P10,000 (with
statement of account)
Step
2
Business
July 11: JM Photocopying Center received a

bill from an electric company, P2,500 (with
statement of account)
Step
2
Business
2018 Particulars Debit Credit 2018 Particulars Debit Credit
Jul 1 Cash ₱ 30,000.00 Jul 7 Accounts Receivable ₱ 2,000.00
Mercado, Capital ₱ 30,000.00 Service Revenue ₱ 2,000.00
To record initial cash investment To record services rendered on account
2 Photocopying Machine ₱ 30,000.00 8 Mercado, Withdrawal ₱ 500.00

Mercado, Capital ₱ 30,000.00 Cash ₱ 500.00
To record cash withdrawal made by the owner
To record investment of machine
9 Cash ₱ 2,000.00
3 Supplies
Unused Supplies ₱ 10,000.00
Accounts Receivable ₱ 2,000.00
Cash ₱ 10,000.00 To record payment of customer on account
To record purchase of supplies
10 Rent Expense ₱ 10,000.00
4 NO ENTRY Cash ₱ 10,000.00
To record payment for rent
5 Salary Expense ₱ 1,000.00
Cash ₱ 1,000.00 11 Utility Expense ₱ 2,500.00
To record payment of salary Accounts Payable ₱ 2,500.00
To record electric bill
6 Cash ₱ 8,000.00
Service Revenue ₱ 8,000.00
To record revenue
Journalize business
Step 2
Step 3
Post journal entries to the
ledger (Posting)
Step 4 Preparation of Trial Balance

Step
Post journal entries to the ledger Step
Preparation of Trial Balance
Illustrative
3 4
(Posting) Problem: Service
Business
Jul 1 Cash ₱ 30,000.00 Jul 7 Accounts Receivable ₱ 2,000.00
Mercado, Capital ₱ 30,000.00 Service Revenue ₱ 2,000.00
To record initial cash investment To record services rendered on account
2 Photocopying Machine ₱ 30,000.00 8 Mercado, Withdrawal ₱ 500.00

Mercado, Capital ₱ 30,000.00 Cash ₱ 500.00
9 Cash ₱ 2,000.00
3 Supplies ₱ 10,000.00
Cash ₱ 10,000.00 To record payment of customer on account
4 NO ENTRY Cash ₱ 10,000.00
Cash ₱ 1,000.00 11 Utility Expense ₱ 2,500.00
To record payment of salary Accounts Payable ₱ 2,500.00
6 Cash ₱ 8,000.00
To record revenue
Step
Illustrative
3 4
2018 Particulars Debit Credit JM Photocopying Center
Business
Jul 1 Cash ₱ 30,000.00
Mercado, Capital ₱ 30,000.00
To record initial cash investment
2 Photocopying Machine ₱ 30,000.00

Mercado, Capital ₱ 30,000.00
3 Supplies ₱ 10,000.00
Cash ₱ 10,000.00
4 NO ENTRY

Cash ₱ 1,000.00
To record payment of salary
6 Cash ₱ 8,000.00
To record revenue
Step
Illustrative
3 4
Business
2018 Particulars Debit Credit
Jul 7 Accounts Receivable ₱ 2,000.00
To record services rendered on account
8 Mercado, Withdrawal ₱ 500.00

Cash ₱ 500.00
9 Cash ₱ 2,000.00
To record payment of customer on account

Cash ₱ 10,000.00
11 Utility Expense ₱ 2,500.00

Accounts Payable ₱ 2,500.00
Step Analyze business Step Post journal entries to
1 transactions 3 the ledger (Posting)
Step Journalize business Step Preparation of

2 transactions (Journalizing) 4 Trial Balance
Solving Exercises:
Service Business
Step
1
Step
2
Step Step Solving Exercises:
3 4
Service Business
Medina Graphics Design
Leopoldo Medina decided to establish a sole

proprietorship business and named it as Medina Graphics
Design.
During March 2013, the first month of operations, the
following financial transactions took place:
March 1:
Medina started his new business by depositing P350,000 in a
bank account in the name of Medina Graphics Design at BPI
Poblacion Branch
Step
1
Step
2
3 4
Service Business
March 1:
Medina started his new business by depositing P350,000 in a
bank account in the name of Medina Graphics Design at BPI
Poblacion Branch
Mar 1 Cash ₱350,000.00
Medina, Capital ₱ 350,000.00
To record initial cash investment
Step
1
Step
2
3 4
Service Business
March 5:
Computer equipment costing P145,000 is acquired on cash basis.

Mar 5 Computer Equipment ₱145,000.00
Cash ₱ 145,000.00
To record purchased equipment in cash
Step
1
Step
2
3 4
Service Business
March 9:
Computer supplies in the amount of P25,000 are purchased on account

Mar 9 Computer Supplies ₱ 25,000.00
To record purchased supplies on account
Step
1
Step
2
3 4
Service Business
March 11:
Medina Graphics Design collected P88,000 in cash for designing
interactive web sites for two exporters based inside the Davao Ecozone.
Mar 11 Cash ₱ 88,000.00
To record revenue
Step
1
Step
2
3 4
Service Business
March 16:
Medina paid P18,000 to Bills Express, a one-top bills payment service
company, for the semi-monthly utilities.
Mar 16 Utilities Expense ₱ 18,000.00
Cash ₱ 18,000.00
To record utilities paid
Step
1
Step
2
3 4
Service Business
March 17:
The entity has service agreements with several Netpreneurs to maintain
and update their web sites weekly. Medina billed these clients P35,000
for services already rendered during the month.
Mar 17 Accounts Receivable ₱ 35,000.00
To record revenues on account
Step
1
Step
2
3 4
Service Business
March 19:
Medina made a partial payment of P17,000 for March 9 purchase on
account
Mar 19 Accounts Payable ₱ 17,000.00
Cash ₱ 17,000.00
To record partial payment on purchased supplies on account (Mar 9)
Step
1
Step
2
3 4
Service Business
March 20:
Checks totaling P25,000 were received from clients for billings dated
March 17
Mar 20 Cash ₱ 25,000.00
To record received payment from various customer accounts (Mar 17)
Step
1
Step
2
3 4
Service Business
March 21:
Medina withdrew P20,000 from the business for his personal use.
Mar 21 Medina, Withdrawal ₱ 20,000.00
Cash ₱ 20,000.00
To record owner's withdrawal
Step
1
Step
2
3 4
Service Business
March 27:
Loqueloque Publishing submitted a bill to Medina for P8,000 worth of
newspaper advertisements for this month. Medina will pay this bill next
month.
Mar 27 Advertising Expenses ₱ 8,000.00
To record received billing for advertisement
Step
1
Step
2
3 4
Service Business
March 31:
Medina paid his assistant designer salaries of P15,000 for the month.
Mar 31 Salaries Expense ₱ 15,000.00
Cash ₱ 15,000.00
To record payment of salaries
Step
1
Step
2
3 4
Service Business
Mar 1 Cash ₱350,000.00 Mar 19 Accounts Payable ₱ 17,000.00
Medina, Capital ₱350,000.00 Cash ₱ 17,000.00
To record initial cash investment To record partial payment on purchased supplies on account (Mar 9)
5 Computer Equipment ₱145,000.00 20 Cash ₱ 25,000.00

Cash ₱145,000.00 Accounts Receivable ₱ 25,000.00
To record received payment from various customer accounts (Mar 17)
To record purchased equipment in cash
9 Computer Supplies ₱ 25,000.00 21 Medina, Withdrawal ₱ 20,000.00

Cash ₱ 20,000.00
To record owner's withdrawal
To record purchased supplies on account
27 Advertising Expenses ₱ 8,000.00
11 Cash ₱ 88,000.00
Service Revenue ₱ 88,000.00 To record received billing for advertisement
To record revenue
31 Salaries Expense ₱ 15,000.00
16 Utilities Expense ₱ 18,000.00 Cash ₱ 15,000.00
Cash ₱ 18,000.00 To record payment of salaries
To record utilities paid
17 Accounts Receivable ₱ 35,000.00

To record revenues on account
Step
1
Step
2
3 4
Service Business
Calaguas Sports Rehab
Clinic
Mar 1 Cash ₱ 250,000.00 Mar 7 Accounts Payable ₱ 18,500.00
Calaguas, Capital ₱ 250,000.00 Cash ₱ 18,500.00
To record cash investment To record partial payment from
Mar 4 transaction
Cash ₱ 11,000.00 8 Utilities Expense ₱ 3,820.00
To record payment of rent Cash ₱ 3,820.00
To record payment of utilities
3 Supplies ₱ 11,700.00
Accounts Payable ₱ 11,700.00 9 Salaries Expense ₱ 11,500.00
To record purchase of supplies Cash ₱ 11,500.00
To record payment of assistant's
4 Professional Equipment ₱ 58,000.00 salary
To record purchase of equipment 10 Cash ₱ 38,000.00
5 Office Equipment ₱ 8,640.00 To record revenue from service performed

To record purchase of equipment 11 Calaguas, Withdrawal ₱ 16,000.00
Cash ₱ 16,000.00
6 Cash ₱ 48,200.00 To record owner's cash withdrawal
To record revenue from service performed
Step
1
Step
2
3 4
Service Business
Modesto’s Self-Storage
2015 Particulars Debit Credit Sep 7 Utility Expense ₱ 2,520.00
Sep 1 Cash ₱ 120,000.00 Cash ₱ 2,520.00
Modesto, Capital ₱ 120,000.00 To record payment of utilities
To record cash investment
8 Advertising Expense ₱ 4,280.00
2 Office Equipment ₱ 31,000.00 Cash ₱ 4,280.00
Accounts Payable ₱ 31,000.00 To record payment for advertisement
To record purchase of equipment on account
9 Prepaid Insurance ₱ 8,350.00
3 Rent Expense ₱ 24,000.00 Cash ₱ 8,350.00
Cash ₱ 24,000.00 To record payment for prepaid
To record payment of rent for the month insurance
4 Supplies ₱ 4,500.00 10 Accounts Receivable ₱ 33,700.00

Cash ₱ 4,500.00 Service Revenue ₱ 33,700.00
To record purchase of supplies To record revenue on account
5 Salaries Expense ₱ 9,800.00 11 Cash ₱ 23,000.00

Cash ₱ 9,800.00 Service Revenue ₱ 23,000.00
To record payment of salaries To record revenue for services rendered
6 Cash ₱ 36,000.00 12 Salaries Expense ₱ 9,900.00

Service Revenue ₱ 36,000.00 Cash ₱ 9,900.00
To record revenue for services rendered To record payment for salaries
Step
1
Step
2
3 4
Service Business
Modesto’s Self-Storage
Sep 13 Accounts Payable ₱ 11,000.00

Cash ₱ 11,000.00
To record partial payment for
equipment bought on account
14 Modesto, Drawing ₱ 12,000.00

Cash ₱ 12,000.00
To record cash withdrew by the owner

Accounting 9

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Accounting 9

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Step

WITHDRAWAL OF CASH BY THE

ISSUANCE OF A NOTE FOR BORROWED

Gra nd Men Seng Hotel P 30,000.00

July 1: Mr. Mercado invested cash of P30,000

July 1: Mr. Mercado invested the following in

July 3: JM Photocopying Center paid P10,000

July 5: JM Photocopying Center paid salary of

July 7: JM Photocopying Center billed a

July 9: JM Photocopying Center collected the

July 11: JM Photocopying Center received a

2 Photocopying Machine ₱ 30,000.00 8 Mercado, Withdrawal ₱ 500.00

Step 4 Preparation of Trial Balance

2 Photocopying Machine ₱ 30,000.00 8 Mercado, Withdrawal ₱ 500.00

2 Photocopying Machine ₱ 30,000.00

5 Salary Expense ₱ 1,000.00

8 Mercado, Withdrawal ₱ 500.00

10 Rent Expense ₱ 10,000.00

11 Utility Expense ₱ 2,500.00

Step Journalize business Step Preparation of

Leopoldo Medina decided to establish a sole

2013 Particulars Debit Credit

2013 Particulars Debit Credit

5 Computer Equipment ₱145,000.00 20 Cash ₱ 25,000.00

9 Computer Supplies ₱ 25,000.00 21 Medina, Withdrawal ₱ 20,000.00

17 Accounts Receivable ₱ 35,000.00

Accounts Payable ₱ 8,640.00

4 Supplies ₱ 4,500.00 10 Accounts Receivable ₱ 33,700.00

5 Salaries Expense ₱ 9,800.00 11 Cash ₱ 23,000.00

6 Cash ₱ 36,000.00 12 Salaries Expense ₱ 9,900.00

Sep 13 Accounts Payable ₱ 11,000.00

14 Modesto, Drawing ₱ 12,000.00

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