22 - AE - 111 - Module - 3 - Recording - Business - Transactions

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MODULE 3 PACKET
AE 111 – FINANCIAL ACCOUNTING & REPORTING
MODULE 3 OVERVIEW:
Welcome to Module 3 – RECORDING BUSINESS TRANSACTIONS
In this module, we will discuss how to journalize transactions, post entries from the journal to the
ledger and prepare the trial balance.
CONSULTATION HOURS:
Phone or Messenger:
Virtual time: Class Schedule
MODULE 3 LEARNING OBJECTIVES:

By the end of this module, the students will be able to:
1. Enumerate and explain the steps in the accounting cycle.
2. Develop a chart of accounts.
3. Identify the general journal as the book of original entry.
4. Apply the rules of debit and credit in analyzing business transactions.
5. Journalize transactions in proper form.
6. Describe a general ledger and understand the purpose it serves.
7. Post entries from the general journal to the general ledger.
8. Prepare and explain the use of trial balance.
9. Perform steps in locating and correcting errors.
2022-2023 Module Packets for AE 111 (Financial Accounting & Reporting) | College of Commerce |
University of San Agustin, Iloilo City, 5000, Philippines Page 1 of 23
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COURSE CONTENT FOR MODULE 3:

RECORDING BUSINESS TRANSACTIONS
ACTIVITY DESCRIPTION TIME TO COMPLETE
Lecture discussions Recording Business Transactions 40 minutes
Activity 3-1 Journalizing, Posting & Trial Balance 40 minutes
Activity 3-2 Comprehensive Problem 40 minutes
Quiz Summative Quiz for Module 3 60 minutes
LECTURE DISCUSSIONS
THE ACCOUNTING CYLE

The accounting cycle refers to series of sequential steps or procedures performed to
accomplish the accounting process. This cycle is repeated each accounting period. The first
three steps (i.e. collection of business documents, journalizing, posting) are accomplished during
the period. The fourth to ninth steps (preparation of trial balance, adjusting entries, working
paper, financial statements, closing entries and post-closing trial balance) generally occur at the
end of the period. The last step – preparation of reversing entries is optional and occurs at the
beginning of the next period.
The discussion in this module will focus on the first four steps. Steps 5 to 10 will be
discussed in the succeeding modules.
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CHART OF ACCOUNTS
A listing of all accounts and their account numbers in the ledger is known as the chart of
accounts. The chart is arranged in the financial statement order, that is, assets first, followed by
liabilities, owner’s equity, income and expenses. The accounts should be numbered in a flexible
manner to permit indexing and cross-referencing.
When analyzing transactions, the accountant refers to the chart of accounts to identify the
pertinent accounts to be increased and decreased. If an appropriate account title is not listed in
the chart, an additional account may be added. Presented below is the chart of accounts for the
illustration:
Del Mundo Landscape Specialist

Chart of Accounts
Balance Sheet Accounts Income Statement Accounts

Assets Income
110 Cash 410 Landscaping Revenues
120 Accounts Receivable 420 Lawn Cutting Revenues
130 Supplies
140 Prepaid Rent Expenses
150 Prepaid Insurance 510 Salaries Expense
160 Vehicles 520 Supplies Expense
165 Accumulated Depreciation- Vehicles 530 Rent Expense
170 Equipment 540 Insurance Expense
175 Accumulated Depreciation- Equipment 550 Gas Expense
560 Advertising Expense
Liabilities 570 Depreciation Expense - Vehicles
Depreciation Expense-
210 Notes Payable 580 Equipment
220 Accounts Payable 590 Interest Expense
230 Salaries Payable
240 Interest Payable
250 Unearned Revenues
Owner's Equity
310 Del Mundo, Capital
320 Del Mundo, Withdrawals
330 Income Summary
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JOURNALIZING TRANSACTIONS
Accountants use special forms called journals to keep track of their business transactions. A
journal is where information is entered first into the accounting system. A journal is often referred
to as the book of original entry because it is the place the information originally enters into the
system. A journal keeps a historical account of all recordable transactions with which the
company has engaged. In other words, a journal is similar to a diary for a business. When you
enter information into a journal, we say you are journalizing the entry. Journaling the entry is the
second step in the accounting cycle. Here is a picture of a journal.
Here is a picture of a journal.
PR
You can see that a journal has columns labeled debit and credit. The debit is on the left side,
and the credit is on the right. Let us look at how we use a journal.
When filling in a journal, there are some rules you need to follow to improve journal entry
organization.
Formatting When Recording Journal Entries
• Include a date of when the transaction occurred. The year and month are not rewritten for every
entry unless the year or month changes or a new page is needed.
• The debit account title(s) always come first and on the left.
• The credit account title(s) always come after all debit titles are entered, and on the right.
• The titles of the credit accounts will be indented below the debit accounts.
• You will have at least one debit (possibly more).
• You will always have at least one credit (possibly more).
• The posting reference (PR) will be used when the entries are posted, i.e. until the amounts are
transferred to the related ledger accounts.
• The peso value of the debits must equal the peso value of the credits or else the equation will go
out of balance.
• You will write a short description after each journal entry.
• Skip a space after the description before starting the next journal entry.
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An example journal entry format is as follows. It is not taken from previous examples but is
intended to stand alone.
PR
Cash
Del Mundo, Capital
Received cash investment from owner.
Note that this example has only one debit account and one credit account, which is considered
a simple entry. A compound entry is when there is more than one account listed under the debit
and/or credit column of a journal entry (as seen in the following).
PR
Cash
Supplies
Santos, Capital
Received cash and supplies as investment from owner.
Notice that for this entry, the rules for recording journal entries have been followed. There is a
date of April 1, 2018, the debit account titles are listed first with Cash and Supplies, the credit
account title of Santos, Capital is indented after the debit account titles, there are at least one
debit and one credit, the debit amounts equal the credit amount, and there is a short description
of the transaction.
Let us now look at a few transactions from Printing Plus and record their journal entries.
Recording Transactions
We now return to our company example of Del Mundo Landscape Specialist. We will analyze
and record each of the transactions for the business and discuss how this impacts the financial
statements.
1. On November 1, 2019, the owner invested P450,000 cash into the business.
2. On November 1, 2019 rented office space and paid three month’s rent in advance, P21,000.
3. On November 2, 2019, purchases used truck paying P300,000 in cash and signing P100,000
note payable which is due in eighteen months.
4. On November 3, 2019 Del Mundo purchases mechanical lawn mowers for P54,000 in cash.
5. On November 4, 2019 Del Mundo purchases P1,500 worth of gasoline.
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6. On November 5, 2019 Del Mundo pays P24,000 for a one-year insurance contract that protects
his business from November 1 until October 31 of the following year.
7. On November 8, 2019, purchases supplies on account for P1,000, payment due within three
months
8. On November 14, 2019, the Del Mundo Landscape Specialists cut grass for seven customers,
receiving P2,500 from each.
9. On November 20, 2019, receives P13,500 cash in advance from a customer for six future
maintenance visits.
10. On November 22, 2019, provides P2,500 in services to eight customer who asks to be billed for
the services.
11. On November 26, 2019, paid P4,000 cash in salaries expense to employees.
12. On November 28, 2019, Del Mundo pays P1,750 to print advertising fliers.
13. On November 29, 2019, Del Mundo withdraws P5,000 for personal use.
14. On November 30, 2019, five of the eight customers billed last November 22 each pay P2,500.
Transaction 1: On November 1, 2019, the owner invested P450,000 cash into the business.
Analysis: Assets increased. Owner’s equity increased.
Rule: Increases in assets are recorded by debits. Increases in owner’s equity are recorded by
credits.
Dr. Cr.
Cash 450,000
Del Mundo Capital 450,000
Initial investment.
Transaction 2: On November 1, 2019 rented office space and paid three month’s rent in
advance, P21,000.
Analysis: An asset increased. Another asset decreased.
Rule: Increases in assets are recorded by debits. Decreases in assets are recorded by credits.
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Dr. Cr.
Prepaid Rent 21,000
Cash 21,000
Payment of 3 months rent in advance
Transaction 3: On November 2, 2019, purchases a P300,000 used truck, paying P200,000 in

cash and signing a note payable for the balance which is due in eighteen months .
Analysis: An asset increased. Another asset decreased. Liabilities increased.
Increases in liabilities are recorded by credits.
Dr. Cr.
Vehicles 300,000
Cash 200,000
Notes Payable 100,000
Acquisition of truck.
Transaction 4: On November 3, 2019 Del Mundo purchases mechanical lawn mowers for
P54,000 in cash.
Dr. Cr.
Equipment 54,000
Cash 54,000
Purchase of mechanical lawn mowers for cash.
Transaction 5: On November 4, 2019 Del Mundo purchases P1,500 worth of gasoline for cash.
Analysis: Assets decreased. Owner’s equity decreased.
Rule: Decreases in assets are recorded by credits. Decreases in owner’s equity are recorded by
debits.
Dr. Cr.
Gas Expense 1,500
Cash 1,500
Purchase of gasoline for cash.
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Transaction 6: On November 5, 2019 Del Mundo pays P24,000 for a one-year insurance
contract that protects his business from November 1 until October 31 of the following year.
Dr. Cr.
Prepaid insurance 24,000
Cash 24,000
Payment for a one-year insurance contract for the business.
Transaction 7: On November 8, 2019, purchases supplies on account for P1,000, payment due
within three months.
Analysis: Assets increased. Liabilities increased.
Rule: Increases in assets are recorded debits. Increases in liabilities are recorded by credits.
Dr. Cr.
Supplies 1,000
Accounts Payable 1,000
Purchase of supplies on account.
Transaction 8: On November 14, 2019, the Del Mundo Landscape Specialists cut grass for
seven customers, receiving P2,500 from each.
credits.
Dr. Cr.
Cash 17,500
Lawn Cutting Revenues 17,500
To record lawn cutting revenues.
Transaction 9: On November 20, 2019, receives P13,500 cash in advance from a customer for
six future maintenance visits.
Analysis: Assets increased. Liabilities increased.
Rule: Increases in assets are recorded by debits. Increases in liabilities are recorded by credits.
COLLEGE OF COMMERCE
Dr. Cr.
Cash 13,500
Unearned Revenues 13,500
To record cash advance from a customer.
Transaction 10: On November 22, 2019, provides P2,500 in services to eight customer who
asks to be billed for the services.
credits.
Dr. Cr.
Accounts Receivable 20,000
Lawn Cutting Revenues 20,000
To record services to customers on account.
Transaction 11: On November 26, 2019, paid P4,000 cash in salaries expense to employees.
debits.
Dr. Cr.
Salaries Expense 4,000
Cash 4,000
Payment of salaries to employees.
Transaction 12: On November 28, 2019, Del Mundo pays P1,750 to print advertising fliers.
debits.
Dr. Cr.
Advertising Expense 1,750
Cash 1,750
Payment to print advertising fliers.
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Transaction 13: On November 29, 2019, Del Mundo withdraws P5,000 for personal use.
debits.
Dr. Cr.
Del Mundo, Withdrawals 5,000
Cash 5,000
To record the owner’s withdrawal of cash.
Transaction 14: On November 30, 2019, five of the eight customers billed last November 22
each pay P2,500.
Dr. Cr.
Cash 12,500
Accounts Receivable 12,500
Collection of receivable from 5 customers.
POSTING TO THE LEDGER
A grouping of entity’s accounts is referred to as the ledger. A general ledger is the reference
book of the accounting system and is used to classify and summarize transactions, and to
prepare data for the financial statements. The general ledger is a record of each account and its
balance. Reviewing journal entries individually can be tedious and time consuming. The general
ledger is helpful in that a company can easily extract account and balance information. Here is a
small section of a general ledger.
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You can see at the top is the name of the account “Cash,” as well as the assigned account
number “101.” Remember, all asset accounts will start with the number 1. The date of each
transaction related to this account is included, a possible description of the transaction, and a
reference number if available. There are debit and credit columns, storing the financial figures
for each transaction, and a balance column that keeps a running total of the balance in the
account after every transaction.
Posting means transferring the amounts from the journal to the appropriate accounts in the
ledger. The steps are illustrated on the next page.
1. Transfer the date of the transaction from the journal to the ledger.
2. Transfer the page number from the journal to the reference column of the ledger.
3. Post the debit figure from the journal as a debit figure in the ledger and the credit figure
from the journal as a credit figure in the ledger.
4. Enter the account number in the posting reference column of the journal once the figure
has been posted in the ledger.
PR
Cash
Santos, Capital
Received cash investment from owner
Investment of owner
Santos, Capital
Investment of owner
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As you can see, there is one ledger account for Cash and another for Santos, Capital. Cash is
labeled account number 101 because it is an asset account type. The date of January 3, 2019 is
in the far-left column, and a description of the transaction follows in the next column. Cash had a
debit of P20,000 in the journal entry, so P20,000 is transferred to the general ledger in the debit
column. The balance in this account is currently P20,000, because no other transactions have
affected this account yet.
Santos, Capital has the same date and description. Santos, Capital had a credit of P20,000 in
the journal entry, and that information is transferred to the general ledger account in the credit
column. The balance at that time in the Santos, Capital ledger account is P20,000.
Some companies would use the basic format of the T-account for its ledger. Compared to a
journal, a ledger organizes information by account.
The accounts in the general ledger are classified into two general groups:
1. Balance sheet or permanent accounts/ real accounts (assets, liabilities, equity)
2. Income statement or temporary accounts/ nominal accounts (income and expenses).

Temporary or nominal accounts are used to gather information for a particular accounting
period. At the end of the period, the balances of these accounts are transferred to a
permanent owner’s equity account.
Calculating Account Balances
When calculating balances in ledger accounts, one must take into consideration which side of
the account increases and which side decreases. To find the account balance, you must find the
difference between the sum of all figures on the side that increases and the sum of all figures on
the side that decreases.
For example, the Cash account is an asset. We know from the accounting equation that assets
increase on the debit side and decrease on the credit side. If there was a debit of P5,000 and a
credit of P3,000 in the Cash account, we would find the difference between the two, which is
P2,000 (5,000 – 3,000). The debit is the larger of the two sides (P5,000 on the debit side as
opposed to P3,000 on the credit side), so the Cash account has a debit balance of P2,000.
Another example is a liability account, such as Accounts Payable, which increases on the credit
side and decreases on the debit side. If there were a P4,000 credit and a P2,500 debit, the
difference between the two is P1,500. The credit is the larger of the two sides (P4,000 on the
credit side as opposed to P2,500 on the debit side), so the Accounts Payable account has a
credit balance of P1,500.
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Illustration: The ledger accounts of Del Mundo Landscape Specialist after posting are shown
next page. The account numbers are purposely omitted. The balance of each account has been
determined.
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Cash Notes Payable

Nov. 1 450,000 Nov. 1 21,000 Nov. 2 100,000
14 17,500 2 200,000 Balance 100,000
20 13,500 3 54,000
30 12,500 4 1,500
5 24,000 Accounts Payable
26 4,000 Nov. 8 1,000
28 1,750 Balance 1,000
29 5,000
493,500 311,250
Balance 182,250 Unearned Revenues
Nov. 20 13,500
Balance 13,500
Accounts Receivable
Nov.22 20,000 Nov. 30 12,500
Balance 7,500 Del Mundo, Capital
Nov. 1 450,000
Balance 450,000
Supplies
Nov.8 1,000
Balance 1,000 Del Mundo, Withdrawals
Nov.29 5,000
Balance 5,000
Prepaid Rent
Nov.1 21,000
Balance 21,000 Lawn Cutting Revenues
Nov. 14 17,500
22 20,000
Prepaid Insurance Balance 37,500
Nov.5 24,000
Balance 24,000
Salaries Expense
Nov.26 4,000
Vehicles Balance 4,000
Nov.2 300,000
Balance 300,000
Gas Expense
Nov.4 1,500
Equipment Balance 1,500
Nov.3 54,000
Balance 54,000
Advertising Expense
Nov.28 1,750
Balance 1,750
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TRIAL BALANCE
The trial balance is a list of all accounts with their respective debit or credit balances. It is
prepared to verify the equality of debits and credits in the ledger at the end of each accounting
period or at any time the postings are updated. It is a control device that helps minimize
accounting errors. When the totals are equal, the trial balance is in balance, but it does not
signify the absence of errors. For example, if the bookkeeper failed to record rent, the trial
balance columns are equal but, the accounts are incorrect since rent expense is understated
and cash is overstated.
The procedures in the preparation of a trial balance follow:

1. List the account tiles in numerical order
2. Obtain the account balance of each account from the ledger and enter the debit balances
in the debit column and the credit balances in the credit column.
3. Add the debit and credit columns.
4. Compare the totals.
The trial balance for Del Mundo Landscape Specialist follows:

Del Mundo Landscape Specialist
Trial Balance
November 30, 2019
Acct No. Account Title Dr Cr

110 Cash ₱ 182,250
120 Accounts Receivable 7,500
130 Supplies 1,000
140 Prepaid Rent 21,000
150 Prepaid Insurance 24,000
160 Vehicles 300,000
170 Equipment 54,000
210 Notes Payable ₱ 100,000
220 Accounts Payable 1,000
250 Unearned Revenues 13,500
310 Del Mundo, Capital 450,000
320 Del Mundo, Withdrawals 5,000
420 Lawn Cutting Revenues 37,500
510 Salaries Expense 4,000
550 Gas Expense 1,500
560 Advertising Expense 1,750
₱ 602,000 ₱ 602,000
COLLEGE OF COMMERCE
LOCATING ERRORS
An inequality in the totals of the debits and credits would automatically signal the presence of an
error. These errors include:
1. Error in posting a transaction to the ledger.
• An erroneous amount was posted to the account
• A debit entry was posted as a credit or vice versa
• A debit or credit posting was omitted.
2. Error in determining the account balances.

• A balance was incorrectly computed
• A balance was entered in the wrong balance column
3. Error in preparing the trial balance

• One of the columns of the trial balance was incorrectly added.
• The amount of an account balance was incorrectly recorded in the trial balance.
• A debit was recorded on the trial balance as a credit or vice versa, or a balance
was omitted entirely.
What is the most efficient approach in locating an error? The following procedures may be done
in locating errors.
1. Prove the addition of the trial balance columns by adding these columns in the opposite
direction.
2. If the amount does not lie in addition, determine the exact amount by which the trial
balance is out of balance
If the discrepancy is divisible by 9, this suggests either a transposition (reversing the

order of numbers) error or a slide (moving of the decimal point) error.
Example of transposition error: The cash account balance is 21,750 was transposed and
written as 21,570. The resulting error is 180 which is divisible by 9.
Example of slide error: 21,750 was copied as 2,175. The resulting discrepancy in the trial
balance will also be an amount divisible by 9.
Assume that office equipment has a debit balance of 42,000 but was erroneously listed in
the credit column of the trial balance. This will cause a discrepancy of two times 42,000 or
84,000 in the trial balance totals. It is advisable to scan the columns for an amount equal
to exactly one-half of the discrepancy.
COLLEGE OF COMMERCE
It is also advisable to look over the transactions for an item of the exact amount of the
discrepancy. An error may have been made by recording the debit side of the transaction
and forgetting to enter the credit side.
3. Compare the accounts and amounts in the trial balance with that in the ledger. Be certain
that no account is omitted.
4. Recompute the balance of each ledger account.
5. Trace all postings from the journal to the ledger accounts.
Note that even when a trial balance is in balance, the accounting records may still contain
errors. A balanced trial balance simply proves that, as recorded, debits equal credits. The
following errors are not detected by a trial balance:
1. Failure to record or post a transaction.
2. Recording the same transaction more than once.
3. Recording an entry but with the same erroneous debit and credit amounts.
4. Posting a part of a transaction correctly as a debit or credit but to the wrong account.
COLLEGE OF COMMERCE
Activity 3-1 Journalizing, Posting & Trial Balance

Required: (a) Prepare the journal entries for the September transactions.
(b) Post all the journal entries in the ledger using T-accounts.
(c) Prepare a trial balance.
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Activity 3-2 Comprehensive Problem

Required: (a) Prepare the journal entries for the July transactions.
(b) Post all the journal entries in the ledger using T-accounts.
(c) Prepare a trial balance.
Juan de la Cruz began professional practice as a system analyst on July 1. He plans to prepare
a monthly financial statement. During July, the owner completed these transactions :
1. July 1 Juan de la Cruz invested cash P500,000 along with computer equipment that had a
market value of P120,000 two years ago but was now worth P100,000 only
2. July 2 Paid P15,000 for the rent of office space for the month
3. July 4 Purchased P12,000 of additional computer equipment on credit (due within 30

days)
4. July 8 Completed work for a client and immediately collected P32,000 cash
5. July 10 Completed work for a client and sent a bill for P27,000 to be paid within 30 days
6. July 12 Purchased additional equipment for P8,000 in cash.
7. July 15 Paid an assistant for P6,200 cash as payment for wages for 15 days
8. July 18 Collected P15,000 on the amount owed by the client
9. July 25 Paid P12,000 cash to settle the liability on the equipment purchased
10. July 28 Owner withdrew P500 cash for personal use.
11. July 31 Received PLDT bill P1,800 and Meralco bill P3,000.
12. The balance of Cash in the ledger of Juan De la Cruz on July 31, 2020 is
a. 500,500
b. 505,300
c. 600,000
d. None of these
13. The balance of Accounts Receivable in the ledger of Juan De la Cruz on July 31, 2020 is
a. 12,000
b. 15,000
c. 27,000
d. None of these
COLLEGE OF COMMERCE
14. The balance of Accounts Payable in the ledger of Juan De la Cruz on July 31, 2020 is
a. 12,000
b. 4,800
c. 0
d. None of these
15. The balance of Service Revenue on July 31, 2021 is

a. 27,000
b. 32,000
c. 59,000
d. None of these
16. The balance of Salaries Expense

a. 6,200
b. 4,800
c. 15,000
d. None of these
17. Marco Cruz opened a frame shop and completed these transactions:
1. Marco started the shop by investing P40,000 cash and equipment valued at
P18,000.
2. Purchased P70 of office supplies on credit.
3. Paid P1,200 cash for the receptionist's salary.
4. Sold a custom frame service and collected P1,500 cash on the sale.
5. Completed framing services and billed the client P200.
What was the balance of the cash account after these
transactions were posted?
a. P300.
b. P41,500.
c. P40,300.
d. P38,500.
e. P38,700.
18. During the month of March, Eric's Computer Services made purchases on account
totaling P43,500. Also during the month of March, Eric was paid P8,000 by a customer for
services to be provided in the future and paid P36,900 of cash on its accounts payable
balance. If the balance in the accounts payable account at the beginning of March was
P77,300, what is the balance in accounts payable at the end of March?
a. P83,900.
b. P91,900.
c. P6,600.
d. P75,900.
e. P4,900.
COLLEGE OF COMMERCE
Activity 3-3 Summative Quiz for Module 3
REFERENCES:
Aliling, Leonardo E. (2013). Fundamentals of basic

accounting. Quezon City: Rex Printing Company, Inc.
Ballada, Win Lu, Susan Ballada (2019). Basic

financial accounting & reporting. Manila, Philippines:
Made Easy & Domdane Publisher.
Cabrera, Ma. Elenita B., Cabrera, Gilbert Anthony B.

(2019) Financial accounting and reporting
fundamentals.. Manila, Philippines: GIC Enterprises
& Co., Inc.
Cabrera, Ma. Elenita B. (2018). Financial accounting

and reporting -comprehensive edition.
Printed Learning Resources Manila, Philippines: GIC Enterprises & Co. Inc.
Mroczkwowski, Nicholas, David Flanders. (2015).

Accounting basic reports. 10th ed. Australia: Cengage
Learning Australia.
Valix, Conrado T., Christian Aris M. Valix. (2017).

Theory of accounts. Manila, Philippines: GIC
Enterprises & Co.
Weygandt, Jerry J., Paul D. Kimmek Donald E.

Kieso. (2016) Accounting principles. International
Student Version. 12th ed. Hoboken, NJ: John Wiley &
Sons.
Wild, John, et al. (2015) Principles of accounting.

International edition. New York: Mc Graw Hill.
https://youtu.be/pGNB-8VN-cA
Web and other Learning Resources Journalizing. Retrieved from Filipino Accounting
Tutorial
https://www.youtube.com/watch?v=vOGuOpkpBW8
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Journal Entries are Posted in the Ledger. Retrieved

from Filipino Accounting Tutorial
https://www.youtube.com/watch?v=BFli545A4Jg
Preparation of Trial Balance. Retrieved from Filipino

Accounting Tutorial
https://www.youtube.com/watch?v=l_UfmkmlzUM
Complete Accounting Cycle for Sole Proprietor.

Retrieved from
https://www.youtube.com/watch?v=bnRY3c_KFrA
ProfAlldredge (2016). Financial Accounting for Sole

Proprietorships. Retrieved from
https://www.youtube.com/playlist?list=PL8Sg4W1XyH
vCrLMHxYeZsXBmv7DYpRzVC
Christy Lynch (2016). Journal Entries of Sole

Proprietorship. Retrieved from
https://www.youtube.com/watch?v=KWna4QjBf7A

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COLLEGE OF COMMERCE

Welcome to Module 3 – RECORDING BUSINESS TRANSACTIONS

MODULE 3 LEARNING OBJECTIVES:

COURSE CONTENT FOR MODULE 3:

THE ACCOUNTING CYLE

Del Mundo Landscape Specialist

Balance Sheet Accounts Income Statement Accounts

Here is a picture of a journal.

Formatting When Recording Journal Entries

Analysis: Assets increased. Owner’s equity increased.

Analysis: An asset increased. Another asset decreased.

Transaction 3: On November 2, 2019, purchases a P300,000 used truck, paying P200,000 in

Analysis: An asset increased. Another asset decreased. Liabilities increased.

Analysis: An asset increased. Another asset decreased.

Analysis: Assets decreased. Owner’s equity decreased.

Analysis: An asset increased. Another asset decreased.

Analysis: Assets increased. Liabilities increased.

Analysis: Assets increased. Owner’s equity increased.

Analysis: Assets increased. Liabilities increased.

Analysis: Assets increased. Owner’s equity increased.

Analysis: Assets decreased. Owner’s equity decreased.

Analysis: Assets decreased. Owner’s equity decreased.

Analysis: Assets decreased. Owner’s equity decreased.

Analysis: An asset increased. Another asset decreased.

POSTING TO THE LEDGER

1. Balance sheet or permanent accounts/ real accounts (assets, liabilities, equity)

2. Income statement or temporary accounts/ nominal accounts (income and expenses).

Calculating Account Balances

Cash Notes Payable

The procedures in the preparation of a trial balance follow:

The trial balance for Del Mundo Landscape Specialist follows:

Acct No. Account Title Dr Cr

2. Error in determining the account balances.

3. Error in preparing the trial balance

If the discrepancy is divisible by 9, this suggests either a transposition (reversing the

Activity 3-1 Journalizing, Posting & Trial Balance

Activity 3-2 Comprehensive Problem

3. July 4 Purchased P12,000 of additional computer equipment on credit (due within 30

6. July 12 Purchased additional equipment for P8,000 in cash.

8. July 18 Collected P15,000 on the amount owed by the client

10. July 28 Owner withdrew P500 cash for personal use.

15. The balance of Service Revenue on July 31, 2021 is

16. The balance of Salaries Expense

Activity 3-3 Summative Quiz for Module 3

Aliling, Leonardo E. (2013). Fundamentals of basic

Ballada, Win Lu, Susan Ballada (2019). Basic

Cabrera, Ma. Elenita B., Cabrera, Gilbert Anthony B.

Cabrera, Ma. Elenita B. (2018). Financial accounting

Mroczkwowski, Nicholas, David Flanders. (2015).

Valix, Conrado T., Christian Aris M. Valix. (2017).

Weygandt, Jerry J., Paul D. Kimmek Donald E.

Wild, John, et al. (2015) Principles of accounting.

Journal Entries are Posted in the Ledger. Retrieved

Preparation of Trial Balance. Retrieved from Filipino

Complete Accounting Cycle for Sole Proprietor.

ProfAlldredge (2016). Financial Accounting for Sole

Christy Lynch (2016). Journal Entries of Sole

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