Chapter 4

Journalizing
Lesson Objectives
1. Define accounting terms related to journalizing
transactions.
2. Identify accounting concepts and practices related
to journalizing transactions.
3. Record in a general journal transactions to set up a
business.
4. Record in a general journal transactions to buy
insurance for cash and supplies on account.
5. Record in a general journal transactions that affect
owner’s equity and receiving cash on account.
6. Start a new journal page.
A Recap
• As described in the previous lessons,
transactions are analyzed into debit and credit
parts before information is recorded.
What is a Journal?
• It is a book of accounts where transactions of the
business firm is recorded for the first time.
• A form for recording transactions in
chronological order is called a journal.
• Recording transactions in a journal is called
journalizing.
• Each business uses the kind of journal that best
fits the needs of that business.
Parts of a Journal
Date Particulars F Debit Credit
M D
i. Date: The date on which the transaction has taken place is
recorded here.
ii. Particulars: The two aspects of a transaction are recorded in
this column. A brief explanation of the transaction known as
narration is written below the account titles of the transaction.
iii. Folio: This column records the page number in the ledger in
which the accounts in the particulars column are posted.
iv. Debit Amount (Debit): The debit amount is recorded in the
debit amount column opposite to the title of the account being
debited.
v. Credit Amount (Credit): The credit amount is recorded in
the credit amount column opposite to the title of the account
being credited.
 Example:
• On December 21, 2018, Ms. Quintos invested three million
pesos to put up her transportation business named Quintos
Transport Company.
• The Value Received here is the Asset Account “Cash” and the
Value Parted with is the Owner’s Equity account “Quintos,
Capital.”
Date Particulars F Debit Credit
Dec
21 Cash on Hand and in Banks #101 PhP3,000,000
Ms. P. Quintos, Capital #301 PhP3,000,000
To record the initial
investment of Ms. Quintos
Cash Vs. Accrual Basis of Accounting
• Under Cash Basis, income is recorded only
when Cash is actually received. Likewise,
expenses are recorded only when actually paid.
• On the other hand, Accrual Basis records
income even cash is not received yet as for as
long as it is earned. Likewise, expense are
recorded even no payments has been made yet
for as long as they are incurred,
The Double-Entry System of Accounting
• The double-entry system of bookkeeping
recognizes the two-fold effects of a transaction;
the value received and the value parted with.
This justifies the equality of debit and credit
amounts.
• Because of the two-fold effects recognition, both
sides of fundamental equation always be equal.
The Books 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 design
to fit the need of the business and also provide
convenience for the accountants in pursuing the
primary objective of accounting which is
“communication” through the Financial
Statements.
The Books of Accounts
There are two sets of books that used by the
business. They are the “Book of Original
Entry” and the “Book of Final Entry.”
• Book of Original Entry – This book is where
transactions are recorded for the first time. Other
terms is JOURNAL.
• Books of Final Entry – This book is where
transactions that were recorded in the Journal
are transferred for final recording. Also called
LEDGER
 Chart of Accounts

101 – 200 Assets

201 – 300 Liabilities
301 – 400 Owner’s Equity
401 – 500 Revenues
501 – 600 Expenditures
601 – 700 Summary & Other
Accounts
 On the next slide is an example of a chart for
Quintos Transport Company owned by Ms. Paola
Quintos
Chart of Accounts
Quintos Transport Company
Chart of Accounts
Assets
101 Cash on Hand and in Banks
102 Accounts Receivable-Trade
102-A Provision of Doubtful Accounts
103 Notes Receivables-Trade
104 Accrued Interest Receivable
105 Unused Office Supplies
106 Prepaid Insurance
107 Input VAT
108 Land
Chart of Accounts
Quintos Transport Company
Chart of Accounts
Assets
109 Building
109-A Accumulated Depreciation – Building
110 Buses
110-A Accumulated Depreciation – Buses
111 Furniture and Fixtures
111-A Accumulated Depreciation – Furniture
and Fixtures
112 Machinery and Equipment
112-A Accumulated Depreciation – Machinery
and Equipment
Chart of Accounts
Quintos Transport Company
Chart of Accounts
Liabilities
201 Accounts Payable - Trade
202 Accrued Interest - Payable
203 Notes Payable - Trade
204 Output VAT
205 Unearned Fares
Owner’s Equity
301 Ms. P. Quintos Capital
Revenues
401 Fares Earned
402 Interest Earned
Chart of Accounts
Quintos Transport Company
Chart of Accounts
Expenditures
501 Office Supplies Expense
502 Gas and Oil Expense
503 Depreciation Expense - Building
504 Depreciation Expense - Buses
505 Depreciation Expense – Furniture and
Fixtures
506 Depreciation Expense – Machinery and
Equipment
507 Salaries and Wages
Chart of Accounts
Quintos Transport Company
Chart of Accounts
508 Repairs and Maintenance
509 Utilities Expense
510 Rent Expense
511 Interest Expense
512 Insurance Expense
513 Taxes and Licenses
514 Doubtful Accounts Expense
Summarizing Account
601 Revenue and Expense Summary
Illustration:
Dec 3 Purchased a piece of land costing P300,000
with a building worth P200,00 to be used as an
office. Purchases were made in Cash.
Dec 4 Purchased 3 busses each costing P550,000
(10% VAT included) paying 80% in cash and
the balance on account
Dec 5 Purchased furniture and fixtures P33,000,
computers and other office equipment
P165,000. Purchases were paid in cash 10%
VAT included.
Dec 7 Hired three drivers, three conductors and once
mechanic, each to receive P7,000 monthly
salary.
Illustration:
Dec 8 Purchased office supplies for cash P2,200, 10%
VAT included.
Dec 9 Billed Mr. Val Subas for transport services
rendered amounting to P5,500 (10% VAT
included)
Dec 10 Paid insurance premium for 1 year P30,000
cash
Dec 14 Received a P20,000 interest-bearing note from
Mr. Torres as payment for transport services
rendered. The note is payable April 15 at 18%
per annum.
Dec 15 Fares earned from passengers for the week P
120,000 plus 10% VAT.
Illustration:
Dec 17 Paid for light P 1, 600, water P 1, 000 and
telephone bills P 1, 200
Dec 19 One bus was hired by UST to ferry employees
to an outing. UST was billed for P16,000 VAT
included
Dec 20 Purchased gas and oil from Petron amounting
to P55,000 (10% VAT included). An 18%
interest bearing promissory note was issued.
The note will mature in six months.
Dec 28 P7,700 (10% VAT included) was spent for
repairs of buses.
Illustration:
Dec 29 Received advance payment of P16,500 (10%
VAT included) for transport services to be
rendered on March 1
Dec 30 Paid the salary of the driver, conductors and
mechanic
Withdrew P50,000 cash from the business for
personal use.
Date Particulars f Debit Credit
Dec 1 Cash on Hands and in Banks 101 3,000,000
Ms. P. Quintos, Capital 301 3,000,000
To record initial
investment of Ms. Quintos
3 Land 108 300,000
Building 109 200,000
Cash on Hands and in Banks 101 500,000
Purchased land and
building
4 Buses 110 1,500,000
Input VAT 107 150,000
Cash on Hands and in Banks 101 1,320,000
Accounts Payable 201 330,000
Purchased buses
Date Particulars f Debit Credit
Dec 5 Furniture and Fixtures 111 30, 000
Machinery and Equipment 112 150, 000
Input VAT 107 18, 000
Cash on Hands and in Banks 101 198, 000
Purchased furniture and
equipment for cash
8 Unused office supplies 105 2, 000
Input VAT 107 200
Cash on Hands and in Banks 101 2, 200
Purchased office supplies
9 Accounts Receivable-Trade 102 5, 500
Output VAR 204 500
Fares earned 401 5, 000
To record fares billed
Date Particulars f Debit Credit
Dec 10 Prepaid Insurance 106 30, 000
Cash on Hands and in Banks 101 30, 000
Purchased insurance
14 Notes Receivable-Trade 103 22, 000
Fares Earned 401 20, 000
Output VAT 204 2, 000
To record notes received
for fares earned
15 Cash on Hands and in Banks 101 132, 000
Fares Earned 401 120, 000
Output VAT 204 12, 000
To record fares earned
17 Utilities Expense 509 3, 800
Cash on Hands and in Banks 101 3, 800
To record utility bills paid
Date Particulars f Debit Credit
Dec 19 Accounts Receivable – Trade 102 16, 500
Fares Earned 401 15, 000
Output VAT 204 1, 500
To record receivables from
customers
20 Gas and Oil 502 50, 000
Input VAT 107 5, 000
Notes Payable – Trade 203 55, 000
To record purchased of gas
and oil on credit
28 Repairs and Maintenance 500 7, 000
Input VAT 107 700
Cash on Hands and in Banks 101 7, 700
To record payment for
repairs
Date Particulars f Debit Credit
Dec
29 Cash on Hand and in Banks 101 16, 500
Output VAT 204 1, 500
Fares Earned 401 15, 000
To record payment of
services rendered
30 Salaries and Wages 507 36, 750
Cash on Hand and in Banks 101 36, 750
To record salaries paid for
month
30 Ms. P. Quintos, Capital 301 50, 000
Cash on Hand and in Banks 101 50, 000
To record cash withdrawals
Illustration:
This problem will illustrate the steps of a
Laundry Shop business for the first time and made
the following investments in October 1, 2018
Cash PhP 75, 000
Laundry Machine 45, 000
PhP 120,000
Oct 2 – Paid business permits and other government
fees, PhP 1,350
– Bought a second-hand van (delivery use) on
account costing PhP 60,000, from Cavite
Motor Sales and made a down payment of
Php 15,000
Illustration:
Oct 12 – Bought office and laundry supplies on
account from the following:
Driveway Marketing (Office Supplies) PhP 1,050
Lourdes Commercial (Laundry Supplies) 2,700
Php 3,750

15 – Bought chairs, cabinets and display cases

from Imus Carpentry Shop costing
PhP10,000. Paid 50% down payment and
issued a note for the balance
Illustration:
Oct 17 – Rendered laundry services to the following
customers on account:
Cavite Doctors Hospital PhP 7,500
Divine Grace Hospital 8,100
Villamar Resort 5,300
Island Cove 24,000
CvSU CCC 3,600
PhP 49,300

20 – Ms. Paola Quintos withdrew cash from her

business PhP3,000
Illustration:
Oct 17 – Rendered laundry services to the following
customers on account:
Cavite Doctors Hospital PhP 7,500
Divine Grace Hospital 8,100
Villamar Resort 5,300
Island Cove 24,000
CvSU CCC 3,600
PhP 49,300

20 – Ms. Paola Quintos withdrew cash from her

business PhP3,000
Illustration:
Oct 27 – Partially collected the following customer’s
accounts:
Cavite Doctors Hospital PhP 2,500
Divine Grace Hospital 3,200
Villamar Resort 2,500
Island Cove 14,800
CvSU CCC 2,500
PhP 25,500
Illustration:
Oct 30 – Paid the following expenses:
Electric Bill (Meralco) PhP 1,370
Water Bill (Cavite Water District) 1,500
Salaries & Wages 5,800
PhP 8,670

All the transactions are recorded in the General

Journal, as shown on the preceding slides.
Date Particulars f Debit Credit
Oct 1 Cash L-1 75, 000
Laundry Equipment L-6 45, 000
P. Quintos, Capital L-15 120, 000
Initial Investment
2 Taxes and Licenses L-19 1, 350
Cash L-1 1, 350
Business Permits, etc
Delivery Equipment L-8 60, 000
Cash L-1 15, 000
Accounts Payable L-12 45, 000
Bought a delivery van
12 Office Supplies Expense L-23 1, 050
Laundry Supplies Used L-24 2, 700
Accounts Payable L-12 3, 750
Various Supplies on Account
Date Particulars f Debit Credit
Oct 17 Accounts Receivable L-2 49, 300
Laundry Income L-18 49, 300
Services Rendered on
Account
20 P. Quintos, Drawing L-16 3, 000
Cash L-1 3, 000
Owner’s Drawing
27 Cash 25, 500
Accounts Receivable L-1 25, 500
Partial Collection from L-2
customer’s accounts
30 Light and Water L-20 2, 870
Salaries and Wages L-22 5, 800
Cash L-1 8, 670
Payment of Various
Expense
Combination Journal
A combination Journal minimizes the bookkeeping
works involved in recording similar transactions that
take place several times in a given period. The double
entry is still used.
• Special Columns are usually provided for cash,
accounts receivable, accounts payable and for
transactions
• Sundry Column is provided for items seldomly
incurred in a transaction.
Unlike General Journal, a Combination Journal is
tolled at the end of every month.
 Service
Particulars Cash A/R A/P Income

Dr. Cr. Dr. Cr. Cr. Cr.

1 Initial Investments 75,000

2 Business Permits 1,350

Delivery Van 15,000 45,000

12 Various Supplies 3,750

15 Cabinet, Chairs, etc. 5,000

17 Services Rendered 49,300 49,300

20 Withdrawal 3,000
27 Partial Collection 25,500 25,500
30 Various Expenses 86,700
TOTAL 100500 33,020 49,300 25,500 48,750 49,300
 Sundries Amount
Acct. Titles Dr. Cr.
1 Laundry Equipment 45, 000
Quintos, Capital 120, 000
2 Taxes & Licenses 1, 350
Delivery Equipment 60, 000
12 Office Supplies 1, 050
Laundry Supplies 2, 700
15 Furniture and Fixture 10, 000
Notes Payable 5, 000
17
20 Quintos, Drawing 3, 000
27
30 Light and Water 2, 870
Salaries and Wages 5, 800
TOTAL 131, 770 125, 000