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COMPETENCY BASED LEARNING MATERIAL
Sector:
HEALTH, SOCIAL AND OTHER COMMUNITY DEVELOPMENT SERVICES
Qualification:
BOOKKEEPING NC III
Unit of Competency:
JOURNALIZE TRANSACTIONS
Module Title:Journalizing Transactions Institution: PUERTO PRINCESA SCHOOL OF ARTS AND TRADES (PPSAT)
Date Developed: Bookkeeping NC III
TESDA PPSAT
Journalize Transactions
July 17, 2015 Prepared by: MARINA C PERIA
Document No. Revision No. 2 Issued by:
Page 1 of 48
HOW TO USE THIS COMPETENCY- BASED LEARNING MATERIAL (CBLM) Welcome to the competency-based learning material for the module: Journalizing Transactions. This module contains training materials and activities for you to accomplish. The unit of competency, "Journalize Transactions", contains the knowledge, skills and attitudes required for a TVET trainer to possess. You are required to go through a series of learning activities in order to complete each learning outcomes of the module. In each learning outcome, there are instructional sheets (Information Sheets, Self-Checks, Operation Sheets and Task/Job Sheets) for further reading to help you better understands the required activities. Follow the activities at your own pace and answer the self-check at the end of each learning outcome. If you have questions, please feel free to ask for assistance of your trainer/facilitator. This module was prepared to help you achieve the required competency: JournalizeTransactions. This willbe the source of information for you to acquire the knowledge and skills in this particular module with minimum supervision or help from your trainer. With the aid of this material, you will acquire the competency independently and at your own pace.Remember to: Work through all the information and complete the activities in each section. Do what is asked in the INSTRUCTIONAL SHEET (TASK SHEET, JOB SHEET) and complete the SELF-CHECK. Suggested referencesare included to supplement the materials provided in this module. Most probably, your trainer will also be your supervisor or manager. He is there to support you and show you the correct way to do things. Ask for help. You will be given plenty of opportunities to ask questions and practice on the job. Make sure you practice your new skills during regular work shifts. This way, you will improve your speed, memory and your confidence. Use the Self-Check questions at the end of each section to test your own progress. When you feel confident that you have had sufficient practice, ask your Trainer to evaluate you. The result of your assessment/evaluation will be recorded in ACHIEVEMENT CHART AND PROGRESS CHART. You need to be competent in this module before you can move to the next competency. A CERTIFICATE OF ACHIEVEMENT will be awarded to you after passing the Institutional Competency Evaluation.
Date Developed: Bookkeeping NC III
TESDA PPSAT
Journalize Transactions
July 17, 2015 Prepared by: MARINA C PERIA
Document No. Revision No. 2 Issued by:
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BOOKKEEPING NC III List of Core Competencies
No.
Unit of Competency
Module Title
Code
1
Journalize Transactions
2
Post Transactions
Posting Transactions
HCS412302
3
Prepare Trial Balance
Preparing Trial Balance
HCS412303
4
Prepare Financial Reports
Preparing Financial Reports HCS412304
5
Review Internal Control
J Journalizing Transactions
Reviewing Internal Control
System
HCS412305
System
Date Developed: Bookkeeping NC III
TESDA PPSAT
HCS412301
Journalize Transactions
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Document No. Revision No. 2 Issued by:
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MODULE CONTENT
QUALIFICATION
:
BOOKKEEPING NC III
UNIT OF COMPETENCY :
JOURNALIZE TRANSACTIONS
MODULE TITLE
JOURNALIZING TRANSACTIONS
:
MODULE DESCRIPTOR : This unit covers the knowledge, skills and attitudes in logging/recording business transactions in an accounting journal.
NOMINAL DURATION
:
48 HOURS
LEARNING OUTCOMES:
At the end of this module, you must be able to: LO1. Prepare Chart of Accounts LO2. Analyze documents LO3. Prepare Journal Entry
ASSESSMENT CRITERIA:
Nature of business is determined based on client information.
List of asset, liability, equity, income, and expense account titles are prepared in accordance with industry practices.
Accounting manual is prepared in accordance with industry practice.
Documents gathered, checked and verified in accordance with verification and validation processes.
Account titles are selected in accordance with standard selection processes. Date Developed: Bookkeeping NC III
TESDA PPSAT
Journalize Transactions
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Journals are prepared in accordance with industry practice and generally accepted accounting principles/Philippine Financial Reporting Standards for transactions and events.
Debit account titles are determined in accordance with chart of accounts
Credit account titles are determined in accordance with chart of accounts.
Explanation to journal entry is prepared in accordance with the nature of transaction.
Journal entries are prepared with 100% accuracy.
COMPETENCY SUMMARY Date Developed: Bookkeeping NC III
TESDA PPSAT
Journalize Transactions
July 17, 2015 Prepared by: MARINA C PERIA
Document No. Revision No. 2 Issued by:
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Qualification
Bookkeeping NC III
Unit of Competency
Journalize Transactions
Module Title
Journalizing Transactions
Introduction: Journal - known as the "book of original entry,” is an accounting record in which the economic transactions and events are initially recorded. It provides a chronological record of transactions with explanations and clear references. The accounting record written in the journal is called Journal Entry. It maybe classified as a simple journal entry (One debit and one credit) or a Compound journal entry (More than one debit or more than one credit or both). Learning Outcomes At the end of this module, you must be able to: LO1. Prepare chart of accounts LO2. Analyze documents LO3. Prepare journal entry
ASSESSMENT CRITERIA: 1. Nature of business is determined based on client information. 2. List of Asset, liability, equity, income & expense account titles are prepared in accordance with industry procedure. 3. Accounting manual is prepared in accordance with industry practice.
LEARNING OUTCOME SUMMARY Learning Outcome 1 PREPARE CHART OF ACCOUNTS Date Developed: Bookkeeping NC III
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Contents:
Definition and functions of bookkeeping & accounting
Types of business organizations
Types of business activities
Basic Accounting equation
Chart of accounts
Assessment Criteria:
List of asset, liability, equity, income and expense account titles are prepared in accordance with Generally Accepted Accounting Principles Chart of Accounts is coded according to industry practice.
Condition: The trainees must be provided with the following: Tools, supplies and materials:
Pencil Pencil Eraser Ruler Learning materials Journal Stapler Calculator Pencil Sharpener
ASSESSMENT METHOD:
Written test Practical/performance test
LEARNING EXPERIENCES Date Developed: Bookkeeping NC III
TESDA PPSAT
Journalize Transactions
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Document No. Revision No. 2 Issued by:
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Learning Outcome # 1 PREPARE CHART OF ACCOUNTS
Learning Activities
Special Instructions
1. ReadInformation Sheet 1.1-1 Preparing Chart of Accounts 2. Answer Self-Check 1.1-1
3. Perform Job Sheet 1.1-1
. Compare answers with the answer key, 1.1-1 You are required to get all answers correct. If not, read the information sheets again to answer all questions correctly.
Evaluate your own work using the Performance Criteria Present your work to your trainer for evaluation and recording.
INFORMATION SHEET 1.1-1 Date Developed: Bookkeeping NC III
TESDA PPSAT
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PREPARE CHART OF ACCOUNTS LEARNING OBJECTIVES: To explain the meaning of chart of accounts, its composition and relevance in journalizing business activities. To familiarize various account titles used in accounting.
What is Chart of Accounts? Chart of accounts is a listing of all the accounts in the general ledger, each account accompanied by a reference number. To set up a chart of accounts, one first needs to define the various accounts to be used by thebusiness. It is also considered as
group of account titles.
Each account should have a number to identify it. For very small businesses, two to three digits may suffice for the account number.Chart of Accounts is arranged according to five basic elements of accounting. That is Asset, Liability, Capital, Revenue and Expense.
Bookkeeping, Accounting & Auditing Bookkeeping is the initial activity or clerical part of accounting. It is the “how of accounting”. It enables the owner of the business to check on his financial progress. It is the recording of business transactions to its respective journals and ledgers in a prescribed manner. Accounting is broader in scope. It is the art of recording, classifying, summarizing in a significant manner and in terms of money, transactions and events which are, in part at least, of a financial character, and interpreting the results thereof. It is the developed form of bookkeeping. It usuallyanswer the question “Why.” Auditing performed after the accounting work ends. It is the criticalpart of accounting. It confirms the credibility of financial statements and protects the confidence of financial users. It verifies the Date Developed: Bookkeeping NC III
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truthfulness and compliance of financial reports with the generally accepted accounting principles. Auditing usually answers the question “how true”.
Basic Elements of Accounting
ASSETS - are resources or things of value owned by an enterprise.
“What the business owned”. It maybe tangible or intangible assets. It has a normal debit balance except for contra-account (credit balance) such as Allowance for bad debts and Accumulated depreciation. Assets are composed of Current, Non-Current and Other Assets.
LIABILITIES – are present obligations to pay cash or cash equivalents by an entity. “What
the business owed”. It has a
normal credit balance. (Current and Non-current liability)
CAPITAL/OWNER’S EQUITY – the residual amount after deducting liabilities from assets. It has a normal credit balance.
REVENUE – represents the earnings of the business from sales of goods, or services rendered. It has a normal credit balance.
EXPENSES– are costs incurred in conducting business activities It has a debit balance.
ASSETS
CURRENT ASSETS .Cash – any item on hand with monetary value that a bank will accept for deposit and all amount currently on deposit with the bank in the name of the business. . Accounts Receivable – Amount collectible on open accounts of the customers.Debtors oral promise to pay certain amount to the business and the right of the business to collect certain amount in peso. Date Developed: Bookkeeping NC III
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. Allowance for Doubtful Accounts - amount estimated uncollectible on receivable in compliance with the principle of conservatism (contra valuation account of accounts Receivable). . Notes Receivable – a promissory note received by the business from its debtors and/or Customers. . Accrued Interest Receivable – the interest earned on note receivable but not yet received in cash. . Inventories – assets held for sale in the normal operation of the business, in the process of production for sale, or supplies and materials on hand. . Prepaid Insurance – Insurance already paid but still unused for the current period. . Prepaid Rent – rent already paid but still unused for the current period. NON-CURRENT ASSETS . Land – the site owned by the business on which building is constructed. . Building – the structure owned by the business used in the operation of the business. . Furniture and Fixtures – items used by the business include store furnishings such as display racks, showcases, containers, desks, chairs, tables, cabinets. . Equipment – machinery used in a business like computers, machineries used in packaging, sorting, delivery, firefighting equipment,etc. . Vehicles - transportation used in transporting commodities, people and services. . Accumulated Depreciation – periodic costs of using a depreciable plant and equipment (Contra valuation account of property, plant &equipment). . Other Property, Plant & Equipment–are fixed assets not included above. Date Developed: Bookkeeping NC III
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INTANGIBLE ASSETS .
Patent – assets that protect new inventions and covers how things work, what they do, how they do it, what and how they are made. . Copyright - the legal right to be the only one to reproduce, publish, and sell a book, musical recordings, videos, etc. for a certain period of time. . Goodwill - intangible asset that arises as a result of the acquisition of one company by another for a premium value. The value of a company’s brand name, good customers relations, good employee relations or proprietary technology.
LIABILITIES . Accounts Payable – an obligation or debt to creditors for money borrowed or merchandise and or assets bought on credit. . Notes Payable - a promissory note issued by the business to its creditors for money borrowed or merchandise bought on credit. . Unearned Revenue – a pre-payment received in advance for goods or services to be rendered. . Withholding Tax Payable – amount of income tax withheld from the salary of employees in behalf of BIR that the employer has to remit to BIR on the specified due date. CAPITAL/OWNER’S EQUITY Owner’s Equity – It comprises the capital contribution and withdrawals of the owner.
. Drawing – is a temporary account used to record initially the amount taken by the owner from the business. REVENUE/INCOME
Date Developed: Bookkeeping NC III
TESDA PPSAT
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. Revenue – represents the earnings of the business from sales of goods or services rendered. . Sales – an account used to summarize sale of goods of a trade or a merchandising business. . Sales Returns and Allowances – amount incurred for the defective goods returned by customers from sale. . Sales Discounts- reduction in the price of a product or service that is offered by the seller, in exchange for cash or early payment by the buyer. . Service Income – the earnings derived from service rendered by a servicing business to its customers. . Professional fees – the earnings derived from services rendered by a professional. . Interest Income - earnings representing the time value of money derived from a promissory notes received by the business. . Gain on Sale of Other Assets – the income derived from the sales of assets used in the business operation. . Miscellaneous Income – other income not specified above. COST OF SALES– the value of merchandise sold. . Purchases- is the process of acquiring or buying of goods or services which maybe in cash or credit basis. . Purchase Returns and allowances - amount incurred for the return of defective goods received from purchases.. . Freight In - amount paid for the freight of goods purchased. EXPENSES . Salaries Expense – amount paid to services rendered by the employees in the operation of the business.
Date Developed: Bookkeeping NC III
TESDA PPSAT
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. Supplies Expense – amount of supplies consumed or used by the business during the period. . Insurance Expense – amount of insurance policy incurred during the current period. . Taxes and Licenses Expense – costs of local and national taxes that are incurred and required to be paid in connection with the conduct of business. . Utilities Expense – expenses comprising electricity, water, internet for the operation of the business. . Repair and Maintenance – expenses incurred in maintaining fixed properties. . Freight Out - amount paid for the freight of goods sold. . Doubtful Accounts Expense or Bad Debts Expense – estimated amount of losses from uncollected account arising from credit sales of the current period. . Depreciation Expense – current cost for using depreciable plant assets. . Bad debts- a debt that is not collectible and therefore worthless to the creditor. . Miscellaneous Expenses – other expenses incurred not classified above.
Accounting Equation
- ASSETS = LIABILITIES + CAPITAL
Forms of Business Organization
Sole or Single Proprietorship – an entity owned by one person called a sole proprietor. Date Developed: Bookkeeping NC III
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Partnership – Owned by two or more persons called partners who agreed to contribute money, property and industry to a common fund with the intention of dividing the profits among themselves.
Corporation – A business registered as an artificial person under the operation of the law. Its existence is evidenced by its Articles of Incorporation and Corporate By-Laws registered with the Securities and Exchange Commission (SEC). A corporation that issues shares equity to shareholders is called a profit corporation and a corporation that does not issue share of entity is a nonprofit corporation.
Primary Activities of Businesses
Servicing- business renders services to clients in exchange for a fee. Ex. Schools, restaurants, shops (laundry, barber, welding, salon and repair)
Merchandising– business engaged in buying and selling of goods. Ex. Grocery stores, gasoline stations, supermarket
Manufacturing – business converts raw materials into finished goods that are to be sold at selling price. Ex. Factories (bamboo crafts, food processing, etc.)
Accounting Process Identifying– is the accounting function that is concerned in determining the economic activities affecting the basic accounting elements of the business. Date Developed: Bookkeeping NC III
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Measuring – involves assigning monetary value to the business economic activities Communicating – process of preparation and distribution of accounting reports to various interested users. Recording – putting in writing of economic transactions in chronological order after they have been identified and measured. Classifying – process of grouping into specific category of various economic transactions which are similar and identical in nature. Reporting– summarizing the total financial information for a given period in order that economic transactions can be read and understood in a condensed format. Interpreting – analytical phase of accounting.
Specialized Fields of Accounting 1. 2. 3. 4.
Private accounting Public Accounting Government Accounting Accounting Education
A. SAMPLE OF CHART OF ACCOUNTS - MERCHANDISING KATHLYN REYES MERCHANDISING Date Developed: Bookkeeping NC III
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Chart of Accounts Acct Code 110 111 112 113 114 115 116 117 118 119 120 121 122 123 124 201 202 203 204 205 206 301 302 401 402 403 404 405 501 502 503 504 606 606 607 608 609 610 611 612
Account Title Cash in Bank Cash on Hand Petty Cash Accounts Receivable Allowance for Bad Debts Notes Receivable-short term Merchandise Inventory Supplies Prepaid Rent Prepaid Insurance Land Building Accumulated Depreciation-Building Office Equipment Accumulated Depreciation – Office Equipment Accounts Payable Notes Payable-Short term Accrued Salary Payable Unearned Revenue SSS/Philhealth/GSIS/PAG-IBIG Payable Bank Loans Payable-long term Kathlyn, Capital Kathlyn, Drawings Sales Sales Returns & Allowances Sales Discounts Gain on Sale of Land, (Building, equipment, etc.) Miscellaneous Income Purchases Purchase Returns & Allowances Purchase Discounts Freight-in Salary Expense Rent Expense Utilities Expense Supplies Expense Bad Debts Depreciation Expense Freight Out Miscellaneous Expense
B. SAMPLE OF CHART OF ACCOUNTS - SERVICING NESA ROSAL ACCOUNTING FIRM Chart of Accounts Date Developed: Bookkeeping NC III
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Acct Code 110 111 112 113 114 115 117 118 119 120 121 122 123 124 201 202 203 204 205 206 301 302 401 402 403 403 501 502 503 504 505 506 507 508
Account Title Cash in Bank Cash on Hand Petty Cash Accounts Receivable Allowance for Bad Debts Notes Receivable-short term Supplies Prepaid Rent Prepaid Insurance Land Building Accumulated Depreciation-Building Office Equipment Accumulated Depreciation – Office Equipment Accounts Payable Notes Payable-Short term Accrued Salary Payable Unearned Revenue SSS/Philhealth/GSIS/PAG-IBIG Payable Bank Loans Payable-long term Nesa, Capital Nesa, Drawings Service Income Interest Income Gain on Sale of Land (Building, Furniture and Fixtures etc.) Miscellaneous Income Salary Expense Rent Expense Utilities Expense Supplies Expense Bad Debts Depreciation Expense Freight Out Miscellaneous Expense
C. SAMPLE OF CHART OF ACCOUNTS - MANUFACTURING EVA CREATION Chart of Accounts Date Developed: Bookkeeping NC III
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Acct Code 110 111 112 113 114 115 116 117 118 119 120 121 122 123 124 125 126 201 202 203 204 205 206 301 302 401 402 403 404 405 501 502 503 504 505 506 507 508
Account Title Cash in Bank Cash on Hand Petty Cash Accounts Receivable Allowance for Bad Debts Notes Receivable-short term Finished Goods Work in Process Raw Materials Supplies Prepaid Rent Prepaid Insurance Land Building Accumulated Depreciation-Building Office Equipment Accumulated Depreciation – Office Equipment Accounts Payable Notes Payable-Short term Accrued Salary Payable Unearned Revenue SSS/Philhealth/GSIS/PAG-IBIG Payable Bank Loans Payable-long term Nesa, Capital Nesa, Drawings Sales Sales Returns & Allowances Sales Discounts Gain on Sale of Land, (Building, equipment, etc.) Miscellaneous Income Salary Expense Rent Expense Utilities Expense Supplies Expense Bad Debts Depreciation Expense Freight Out Miscellaneous Expense
Chart of Accounts Composition a. b. c. d.
Name of entity Chart of Accounts (Title) Account code or account number Account titles
SELF-CHECK of 1.1-1
Date Developed: Bookkeeping NC III
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TRUE OR FALSE: Directions: Write True if the statement is true and False if the statement is false. 1. Partnership is an entity owned by one person called sole proprietor. 2. Servicing is an activity of the business which serves service to clients in exchange for a fee.
3. Liability is an accounting element which the business owned. 4. Building is an example of a current asset.
5. Land is a non-current asset that does not depreciate.
ANSWER KEY 1.1-1
Date Developed: Bookkeeping NC III
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1. FALSE 2. TRUE
3. FALSE 4. FALSE
5. TRUE
JOB SHEET 1.1-1 Title: PREPARE CHART OF ACCOUNTS Date Developed: Bookkeeping NC III
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Document No. Revision No. 2 Issued by:
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Performance Objectives: Given the tools and materials, you should be able to prepare chart of accounts. Tools, supplies and Materials:
Pencil Paper Eraser Learning materials Ruler Calculator Stapler
Steps / Procedures:
Secure a copy of an activity for this particular job sheet.
Identify each account title.
Arrange account titles according to five basic elements of accounting.
Prepare a Chart of accounts according to the prescribed format.
Check your work against the Performance Criteria Checklist on the next page.
Have the trainer critique the output.
Assessment/Evaluation Method: 1. Interview 2. Performance test 3. Written test
PERFORMANCE CRITERIA CHECKLIST Job Sheet 1.1-1 Date Developed: Bookkeeping NC III
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Trainee’s Name: _______________________________Date:_________________
Criteria
Yes
No
1.1 Are account titles properly identified each account title according to basic elements of accounting?
1.2 Are list of assets, liability, equity, income and expense account titles prepared in accordance with the industry practice?
1.3 Is Chart of Accounts prepared and arranged according to the prescribed format of accounting?
Comments/Suggestions:
Trainer’s Name: _______________________________ Date:_________________
LEARNING OUTCOME SUMMARY Learning Outcome 2 ANALYZE DOCUMENTS Date Developed: Bookkeeping NC III
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Contents:
Types of business documents
Account Title Selection
Assessment Criteria:
Documents are gathered, checked and verified in accordance with verification and validation processes. Account titles are selected in accordance with standard selection processes.
Condition: The trainees must be provided with the following: Tools, supplies and materials: Pencil Pencil Eraser Ruler Stapler Calculator Pencil Sharpener ASSESSMENT METHOD:
Written test Practical/performance test
LEARNING EXPERIENCES
Learning Outcome # 2ANALYZE DOCUMENTS Date Developed: Bookkeeping NC III
TESDA PPSAT
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Learning Activities
Special Instructions
1. ReadInformation Sheet 1.2-1 Analyzing documents . Compare answers with the answer key, 1.2-1 You are required to get all answers correct. If not, read the information sheets again to answer all questions correctly.
2. Answer Self-Check 1.2-1
4. Perform Job Sheet 1.2-1
Evaluate your own work using the Performance Criteria Present your work to your trainer for evaluation and recording.
INFORMATION 1.2-1 ANALYZING DOCUMENTS Learning Objective: To orient trainees on how to identify, validate and analyze source documents as bases in preparing journal entries. Date Developed: Bookkeeping NC III
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Source Documents Source documents - are the forms, evidences or legal/official papers that support to the economic transactions. These are the bases of journal transactions. Examples of common business forms: Official Receipt – written acknowledgement of something received as money or goods. Check Voucher – a document that serves to recognize a liability and authorize the disbursement of cash through the use of check. Petty Cash Voucher – a document that serves to recognize liability and authorize the disbursement of cash through the use of petty cash fund. Check – is a draft upon a bank and payable on demand signed by the maker or drawer, containing an unconditional, promise to pay a certain sum of money to the order of the payee. Promissory Note – is a promise or engagement in writing to pay a specified amount at a time therein limited to a person named. Commercial Invoice – is a written itemized statement of merchandises sold to the buyer, together with the prices and charges of merchandise sent or to be sent to him. Debit Memorandum– is a written notice given by the bank which inform client of a reduction in his account. Credit memorandum– is a notice given by the bank informing the client of an increase in his account Bank Deposit Slip– is a document which serves as evidence an act of placing money in the custody of a bank, to be withdrawn at the will of the depositor or under rules and regulations agreed upon.
Date Developed: Bookkeeping NC III
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Payroll sheet–a written list of salaries of personnel to be paid with corresponding amount due. Billing or Statement of Account– is a report issued periodically by a bank or creditor to a customer setting forth the amount billed, credits given and balance due. ATM cards/Passbook– documents given by the bank to the owner showing evidences for all the transactions made by the depositor.
ANALYZING BUSINESS TRANSACTIONS
Date Developed: Bookkeeping NC III
TESDA PPSAT
Journalize Transactions
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Transaction 1: Cash Received per Official Receipt amounting P250,000 dated December 5, 2012 for Michael initial investment. Analysis: Value received:
Cash
Accounting element affected:
Asset
Account to be debited:
Cash on hand
Amount to be debited:
P250,000
Value parted with:
Claim of the owner in the business
Accounting element affected:
Owner’s Equity
Account to be credited:
Michael, Capital
Amount to be credited:
P250,000
Transaction 2: Cash deposited per deposit slip, P250,000 dated December 6, 2012. Analysis: Value received:
Cash
Accounting element affected:
Asset
Account to be debited:
Cash in Bank
Amount to be debited:
P250,000
Value parted with:
Cash
Accounting element affected:
Asset
Account to be credited:
Cash on Hand
Amount to be credited:
P250,000
Transaction 3: Cash payment per Check Number 0055 for supplies amounting P5,000 dated December 8, 2012. Analysis:
Date Developed: Bookkeeping NC III
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Value received:
Supplies
Accounting element affected:
Expense
Account to be debited:
Supplies Expense
Amount to be debited:
P5,000
Value parted with:
Cash
Accounting element affected:
Asset
Account to be credited:
Cash in Bank
Amount to be credited:
P5,000
Transaction 4: on account.
Acquisition of Office Computer amounting P35,000
Analysis: Value received:
Computer
Accounting element affected:
Asset
Account to be debited:
Office Equipment
Amount to be debited:
P35,000
Value parted with:
obligation to pay
Accounting element affected:
Liability
Account to be credited:
Accounts Payable
Amount to be credited:
P35,000
Rules of Debit and Credit The rules of debit and credit are based on the normal balance of an accounting element or account . Normal balance of an account refers to the usual position of an account in the T – account.
Date Developed: Bookkeeping NC III
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Rule 1 – Assets: Debit to increase the amount of asset, Credit to decrease its amount. Rule 2 – Liability: Credit to increase the amount of liability, Debit to decrease its amount. Rule 3 – Owner’s Equity: Credit to increase the capital account, Debit to decrease its amount. Rule 4 – Revenue: Credit to increase the revenue account, Debit to decrease its amount. Rule 5 – Expenses: Debit to increase expense account, Credit to decrease its amount.
Normal Balance of Accounts DEBIT- Assets, Expenses, Drawings, Sales Returns & Allowances, sales Discount CREDIT -
Liabilities, Revenue, Capital, Allowance for Bad Debts, Accumulated depreciation, Purchase Returns & Allowances, Purchase discounts
SELF-CHECK of 1.2-1 Date Developed: Bookkeeping NC III
TESDA PPSAT
Journalize Transactions
July 17, 2015 Prepared by: MARINA C PERIA
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Completion Test Direction: Provide the answer of the following 1. A written itemized statement of merchandises sold to the buyer, together with the prices and charges of merchandise is______________________ 2. A draft upon a bank and payable on demand signed by the maker or drawer, containing an unconditional, promise to pay a certain sum of money to the order of the payee_________________ 3. Written acknowledgement of something received as money or goods_________________________________. 4. Document that serves to recognize a liability and authorize the disbursement of cash through the use of check_______________. 5. Document that serves to recognize liability and authorize the disbursement of cash through the use of petty cash fund___________________. 6. Written notice given by the bank which inform client of a reduction in his account is_____________________________. 7. Informs the client of an increase in his account from the bank_________________________ 8. A promise or engagement in writing to pay a specified amount at a time therein limited to a person named_____________________. 9. A document which serves as evidence an act of placing money in the custody of a bank, to be withdrawn at the will of the depositor or under rules and regulations agreed upon______________________. 10. Report issued periodically by a bank or creditor to a customer setting forth the amount billed, credits given and balance due___________________________.
ANSWER KEY 1.2-1 Date Developed: Bookkeeping NC III
TESDA PPSAT
Journalize Transactions
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Commercial Invoice
Check
Official Receipts Check voucher Petty Cash Voucher Debit memorandum Credit memorandum Promissory note Bank deposit slip Billing statement of account
JOB SHEET 1.2-1 Date Developed: Bookkeeping NC III
TESDA PPSAT
Journalize Transactions
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Title: ANALYZE DOCUMENTS Performance Objectives: Given the tools and materials, you should be able to analyze documents from the source documents presented. Supplies and Materials:
Pencil Paper Eraser Ruler Calculator Stapler
Steps / Procedures:
Ask the trainer for a copy of source documents for this particular job sheet.
Identify and arrange each document (official receipts, deposit slips, vouchers, or statement of accounts.)
Arrange and analyze each document.
Determine each document according to what account title they belong.
Check your work against the Performance Criteria Checklist on the next page.
Have the trainer critique the output.
Assessment/Evaluation Method: 1. Interview 2. Performance test
PERFORMANCE CRITERIA CHECKLIST Date Developed: Bookkeeping NC III
TESDA PPSAT
Journalize Transactions
July 17, 2015 Prepared by: MARINA C PERIA
Document No. Revision No. 2 Issued by:
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Job Sheet 1.2-1
Trainee’s Name: _______________________________Date:_________________
Criteria
Yes
1. Are documents gathered, checked and verified in accordance with verification and validation processes?
2. Account titles are selected in accordance with standard selection processes.
Comments/Suggestions:
Trainer’s Name: ____________________________ Date:_________________
LEARNING OUTCOME SUMMARY Date Developed: Bookkeeping NC III
TESDA PPSAT
Journalize Transactions
July 17, 2015 Prepared by: MARINA C PERIA
Document No. Revision No. 2 Issued by:
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No
Learning Outcome 3 PREPARE JOURNAL ENTRY Contents:
Generally Accepted Accounting Principles
Accounting Equation
Assessment Criteria: .Journals are prepared in accordance with industry practice and generally accepted accounting principles for transactions and events. .Debit and Credit account titles are determined in accordance with chart of accounts. .Explanation to journal entry is prepared in accordance with the nature of transactions. . Journal entries are prepared with 100% accuracy. Condition: The trainees must be provided with the following: Tools, supplies and Materials:
Pencil Paper Eraser Journal forms Ruler Calculator Stapler
ASSESSMENT METHOD:
Practical/performance test Written exam Work-related projects LEARNING EXPERIENCES Date Developed: Bookkeeping NC III
TESDA PPSAT
Journalize Transactions
July 17, 2015 Prepared by: MARINA C PERIA
Document No. Revision No. 2 Issued by:
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Learning Outcome # 3PREPARE JOURNAL ENTRIES
Learning Activities
Special Instructions
1. ReadInformation Sheet 1.3-1 Prepare Journal Entries 2. Answer Self-Check 1.3-1
3. Perform Job Sheet 1.3-1
. Compare answers with the answer key, 1.3-1 You are required to get all answers correct. If not, read the information sheets again to answer all questions correctly.
Evaluate your own work using the Performance Criteria Present your work to your trainer for evaluation and recording.
LEARNING OUTCOME NO. 3 – PREPARE JOURNAL ENTRY Date Developed: Bookkeeping NC III
TESDA PPSAT
Journalize Transactions
July 17, 2015 Prepared by: MARINA C PERIA
Document No. Revision No. 2 Issued by:
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LEARNING OBJECTIVE: To orient trainees on the process of journalizing entries based on the source documents analyzed for the given period.
Classification of a Journal 1. General Journal–is a book of original entry where journal entries are recorded in chronological order by debiting and crediting all accounts. 2. Special Journals - are journals intended for a specified activity only. Ex. Purchase Journal, sales journal, cash disbursements journal cash receipts journal, check disbursements journal
2.1
Purchase Journal – a journal in which all incoming merchandise invoices or purchases on account are recorded.
2.2
Sales Journal – a journal in which all outgoing merchandise or sales on account are recorded.
2.3
Cash Receipts Journal – is a books used to record all collections made in cash.
2.4
Check Disbursement Journal – a journal which all outgoing check disbursements are recorded.
2.5
Cash disbursement journal – journal which all cash disbursements are recorded.
Composition of a Journal Date Developed: Bookkeeping NC III
TESDA PPSAT
Journalize Transactions
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a. The date column is for recording the date on which the transaction is journalized. b. The description column is for recording the account titles to be debited and credited and the explanation identifying the source documents and nature of transactions. b.1 Leave one blank line between each journal entry. b.2 The credit account title should be indented from the debit title . c. PR stands for Posting Reference. It is used to cross-reference the account to the General Ledger. It is the account code from the General Ledger. d. The debit and credit money columns are used to record the amount of the transaction. d.1 The single vertical line represents the decimal point. d.2 The decimal point and comma are never recorded in the general journal (GL) If you will use columnar sheet. e. The Page Number is preprinted to cross-reference the account to the GL page.
Format of a journal
Debit – (Dr) is the value received in a business. The place of debit in the equation is on the left-hand side. Credit – (Cr) is the corresponding value parted with of the debit. The place of credit on the equation is on the right – hand side
Date Developed: Bookkeeping NC III
TESDA PPSAT
Journalize Transactions
July 17, 2015 Prepared by: MARINA C PERIA
Document No. Revision No. 2 Issued by:
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Double-Entry Bookkeeping The double-entry bookkeeping system is based on the dual aspect concept which says that in every transaction, two effects of recording are to be made – the value received (debit) and the value parted with (credit) Example 1 Initial capital given by KRYSTAL Enterprises on December 1, 2010 P300,000.
GENERAL JOURNAL 2010 Dec 1
DESCRIPTIONS
PR
Cash
DEBIT P
CREDIT
300,000.00
KRYSTAL, Capital
P
300,000.00
To record initial capital of Krystal Enterprises
The transaction regarding the initial capital of the owner is recorded twice in the general journal – One is Cash (debit side) which represents the value received by the business, and the other is the Capital (credit side), the value parted with or the obligation of the business to hold in trust the investment of the owner. Example 2 On December 3, the enterprise sold goods P80,000 on account .
GENERAL JOURNAL 2010 Dec 3
DESCRIPTIONS
PR
Accounts Receivable
DEBIT P
80,000.00
Sales To record goods sold on account.
Date Developed: Bookkeeping NC III
TESDA PPSAT
Journalize Transactions
July 17, 2015 Prepared by: MARINA C PERIA
CREDIT
P 80,000.00
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The transaction regarding the goods sold on account is recorded as Accounts Receivable (debit side) which represents the value received by the business, and the other is the Sales (credit side), the value parted with for the goods sold on account. Example 3 On December 5, the enterprise sold P110,000 , on cash basis..
GENERAL JOURNAL 2010 Dec 5
DESCRIPTIONS
PR
Cash
DEBIT P
CREDIT
110,000.00
Sales To record sales on cash basis
P
110,000.00
Cash (debit side) which represents the value received by the business. The other is the Sales (credit side), the value parted with or the revenue for the above transaction. Example 4 December 10, Krystal withdrew P10,000 for personal use.
GENERAL JOURNAL 2010 Dec 10
DESCRIPTIONS
PR
Krystal, Drawings
DEBIT P
Cash To record drawings of Krystal.
CREDIT
10,000.00 P
Krystal, Drawings (debit side) which represents the value received by the business. The credit side is the Cash, thevalue parted with or the cash withdrawn by Krystal.
Date Developed: Bookkeeping NC III
TESDA PPSAT
Journalize Transactions
July 17, 2015 Prepared by: MARINA C PERIA
Document No. Revision No. 2 Issued by:
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10,000.00
Example 5 December 15, supplies purchased on account P50,000.
GENERAL JOURNAL 2010 Dec 15
DESCRIPTIONS
PR
Salon supplies
DEBIT P
CREDIT
50,000.00
Accounts Payable To record purchased of supplies on account.
P
50,000.00
Enterprise supplies (debit side) which represents the value received by the business. The credit sideAccounts Payable, thevalue parted with.. Example 6 December 25, The enterprise acquired service vehicle amounting P125,000 on account.
GENERAL JOURNAL 2010 Dec 25
DESCRIPTIONS
PR
Service Vehicle
DEBIT P
CREDIT
125,000.00
Accounts Payable To record acquisition of service vehicle on account.
P
125,000.00
Service Vehicle (debit side) which represents the value received by the business. The credit side is Accounts Payable, thevalue parted with or the obligation to pay for the service vehicle acquired on account. Example 7 December 31, The enterprise paid salaries for the employees amounting 5,000.00.
GENERAL JOURNAL 2010 Dec 31
DESCRIPTIONS
PR
Salaries Expense
DEBIT P
Cash To record payment of salaries.
Date Developed: Bookkeeping NC III
TESDA PPSAT
Journalize Transactions
July 17, 2015 Prepared by: MARINA C PERIA
CREDIT
5,000.00 P
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5,000.00
Salaries Expense (debit side) which represents the value received by the business. The normal balance of an expense is in debit side. The credit side is Cash, thevalue parted with or the payment of salaries of employees. To summarize the data of Krystal Enterprises based from 7 examples above, the General Journal of Krystal Enterprises would be :
GENERAL JOURNALPage No. 1 DATE 1-Dec
DESCRIPTIONS
PR
Cash
DEBIT P
CREDIT
300,000.00
KRYSTAL, Capital To record initial capital of Krystal Enterprises 3-Dec
5-Dec
10-Dec
15-Dec
25-Dec
Accounts Receivable Sales To record sales of goods on account. Cash Sales To record sales on cash basis.
80,000.00
110,000.00 110,000.00
10,000.00
Enterprise supplies Accounts Payable To record purchased of supplies on account.
50,000.00
Service Vehicle Accounts Payable To record purchased of Vehicle on account
125,000.00
10,000.00
Date Developed: Bookkeeping NC III
Journalize Transactions
300,000.00
80,000.00
KRYSTAL, Drawings Cash To record Krystal drawing
31-Dec Salaries Expense Cash To record payment of salaries
TESDA PPSAT
P
July 17, 2015 Prepared by: MARINA C PERIA
50,000.00
125,000.00
5,000.00 5,000.00
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SELF-CHECK 1.3-1 IDENTIFICATION OF ACCOUNTING ELEMENTS: Instruction: Classify the items below to what element they belong to: Asset, Liability, Owner’s Equity, Revenue or Expense
1. Accounts Receivable 2. Store Building 3. Land 4. Prepaid Rent 5. Owner’s Drawings 6. Interest Income 7. Accumulated Depreciation 8. Used Supplies 9. Bad Debts 10. Accounts Payable
Date Developed: Bookkeeping NC III
TESDA PPSAT
Journalize Transactions
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ANSWER KEY 1.3-1
1. 2. 3. 4. 5. 6. 7. 8. 9. 10.
Asset Asset Asset Asset Owner’s Equity Revenue Asset Expense Expense Liability
Date Developed: Bookkeeping NC III
TESDA PPSAT
Journalize Transactions
July 17, 2015 Prepared by: MARINA C PERIA
Document No. Revision No. 2 Issued by:
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JOB SHEET 1.3-1 Title: Prepare Journal Entry Performance Objectives: Given the tools and materials, you should be able to prepare journal entries from the source documents analyzed and verified. Supplies and Materials:
Pencil Paper Eraser General Journal form Ruler Calculator Stapler
Steps / Procedures:
Ask the trainer for copies of analyzed and verified source documents (photocopied) for this particular job sheet.
Identify what account title to be used for debit and credit columns.
Arrange documents according to the date of transaction.
Enter the date, debit account title and amount to their respective columns.
Enter the credit account title and amount to their respective columns.
Give the explanation of each journal transactions.
Check your work against the Performance Criteria Checklist on the next page.
Have the trainer critique the output.
Date Developed: Bookkeeping NC III
TESDA PPSAT
Journalize Transactions
July 17, 2015 Prepared by: MARINA C PERIA
Document No. Revision No. 2 Issued by:
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Assessment/Evaluation Method: 1. 2. 3. 4.
Interview Performance Criteria Checklist Work related project Written examination
Date Developed: Bookkeeping NC III
TESDA PPSAT
Journalize Transactions
July 17, 2015 Prepared by: MARINA C PERIA
Document No. Revision No. 2 Issued by:
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PERFORMANCE CRITERIA CHECKLIST Job Sheet 1.3-1
Trainee’s Name: _______________________________Date:_________________
Criteria
Yes
1.
Are journals prepared in accordance with industry practice and generally accepted accounting principles?
2.
Are debit account titles determined in accordance with chart of accounts?
3.
Are credit account titles determined in accordance with chart of accounts?
4.
Is explanation to journal entry prepared in accordance with the nature of transactions?
5.
Are Journal entries prepared with 100% accuracy?
Comments/Suggestions:
Trainer’s Name: ___________________________ Date:_________________
Date Developed: Bookkeeping NC III
TESDA PPSAT
Journalize Transactions
July 17, 2015 Prepared by: MARINA C PERIA
Document No. Revision No. 2 Issued by:
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No
REFERENCES BOOKS Edwin G. Valencia, Gregorio F Roxas (2009-2010). Basic Accounting, Concepts, Principles, Procedures and Applications 3rd Edition. Edwin G. Valencia, Gregorio F Roxas, Darrel Joe O Asuncion (2009-2010) Partnership and Corporation Accounting, 3rd Edition. Conrado T. Valix & Jose F. Peralta (2004). Financial Accounting, Volume 1. Training Regulations, Bookkeeping NC III – TESDA Central Office
Date Developed: Bookkeeping NC III
TESDA PPSAT
Journalize Transactions
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Document No. Revision No. 2 Issued by:
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Sector:
HEALTH, SOCIAL AND OTHER COMMUNITY DEVELOPMENT SERVICES
Qualification:
BOOKKEEPING NC III
Unit of Competency:
JOURNALIZE TRANSACTIONS
Module Title:Journalizing Transactions Institution: PUERTO PRINCESA SCHOOL OF ARTS AND TRADES (PPSAT)
Date Developed: Bookkeeping NC III
TESDA PPSAT
Journalize Transactions
July 17, 2015 Prepared by: MARINA C PERIA
Document No. Revision No. 2 Issued by:
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HOW TO USE THIS COMPETENCY- BASED LEARNING MATERIAL (CBLM) Welcome to the competency-based learning material for the module: Journalizing Transactions. This module contains training materials and activities for you to accomplish. The unit of competency, "Journalize Transactions", contains the knowledge, skills and attitudes required for a TVET trainer to possess. You are required to go through a series of learning activities in order to complete each learning outcomes of the module. In each learning outcome, there are instructional sheets (Information Sheets, Self-Checks, Operation Sheets and Task/Job Sheets) for further reading to help you better understands the required activities. Follow the activities at your own pace and answer the self-check at the end of each learning outcome. If you have questions, please feel free to ask for assistance of your trainer/facilitator. This module was prepared to help you achieve the required competency: JournalizeTransactions. This willbe the source of information for you to acquire the knowledge and skills in this particular module with minimum supervision or help from your trainer. With the aid of this material, you will acquire the competency independently and at your own pace.Remember to: Work through all the information and complete the activities in each section. Do what is asked in the INSTRUCTIONAL SHEET (TASK SHEET, JOB SHEET) and complete the SELF-CHECK. Suggested referencesare included to supplement the materials provided in this module. Most probably, your trainer will also be your supervisor or manager. He is there to support you and show you the correct way to do things. Ask for help. You will be given plenty of opportunities to ask questions and practice on the job. Make sure you practice your new skills during regular work shifts. This way, you will improve your speed, memory and your confidence. Use the Self-Check questions at the end of each section to test your own progress. When you feel confident that you have had sufficient practice, ask your Trainer to evaluate you. The result of your assessment/evaluation will be recorded in ACHIEVEMENT CHART AND PROGRESS CHART. You need to be competent in this module before you can move to the next competency. A CERTIFICATE OF ACHIEVEMENT will be awarded to you after passing the Institutional Competency Evaluation.
Date Developed: Bookkeeping NC III
TESDA PPSAT
Journalize Transactions
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BOOKKEEPING NC III List of Core Competencies
No.
Unit of Competency
Module Title
Code
1
Journalize Transactions
2
Post Transactions
Posting Transactions
HCS412302
3
Prepare Trial Balance
Preparing Trial Balance
HCS412303
4
Prepare Financial Reports
Preparing Financial Reports HCS412304
5
Review Internal Control
J Journalizing Transactions
Reviewing Internal Control
System
HCS412305
System
Date Developed: Bookkeeping NC III
TESDA PPSAT
HCS412301
Journalize Transactions
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MODULE CONTENT
QUALIFICATION
:
BOOKKEEPING NC III
UNIT OF COMPETENCY :
JOURNALIZE TRANSACTIONS
MODULE TITLE
JOURNALIZING TRANSACTIONS
:
MODULE DESCRIPTOR : This unit covers the knowledge, skills and attitudes in logging/recording business transactions in an accounting journal.
NOMINAL DURATION
:
48 HOURS
LEARNING OUTCOMES:
At the end of this module, you must be able to: LO1. Prepare Chart of Accounts LO2. Analyze documents LO3. Prepare Journal Entry
ASSESSMENT CRITERIA:
Nature of business is determined based on client information.
List of asset, liability, equity, income, and expense account titles are prepared in accordance with industry practices.
Accounting manual is prepared in accordance with industry practice.
Documents gathered, checked and verified in accordance with verification and validation processes.
Account titles are selected in accordance with standard selection processes. Date Developed: Bookkeeping NC III
TESDA PPSAT
Journalize Transactions
July 17, 2015 Prepared by: MARINA C PERIA
Document No. Revision No. 2 Issued by:
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Journals are prepared in accordance with industry practice and generally accepted accounting principles/Philippine Financial Reporting Standards for transactions and events.
Debit account titles are determined in accordance with chart of accounts
Credit account titles are determined in accordance with chart of accounts.
Explanation to journal entry is prepared in accordance with the nature of transaction.
Journal entries are prepared with 100% accuracy.
COMPETENCY SUMMARY Date Developed: Bookkeeping NC III
TESDA PPSAT
Journalize Transactions
July 17, 2015 Prepared by: MARINA C PERIA
Document No. Revision No. 2 Issued by:
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Qualification
Bookkeeping NC III
Unit of Competency
Journalize Transactions
Module Title
Journalizing Transactions
Introduction: Journal - known as the "book of original entry,” is an accounting record in which the economic transactions and events are initially recorded. It provides a chronological record of transactions with explanations and clear references. The accounting record written in the journal is called Journal Entry. It maybe classified as a simple journal entry (One debit and one credit) or a Compound journal entry (More than one debit or more than one credit or both). Learning Outcomes At the end of this module, you must be able to: LO1. Prepare chart of accounts LO2. Analyze documents LO3. Prepare journal entry
ASSESSMENT CRITERIA: 1. Nature of business is determined based on client information. 2. List of Asset, liability, equity, income & expense account titles are prepared in accordance with industry procedure. 3. Accounting manual is prepared in accordance with industry practice.
LEARNING OUTCOME SUMMARY Learning Outcome 1 PREPARE CHART OF ACCOUNTS Date Developed: Bookkeeping NC III
TESDA PPSAT
Journalize Transactions
July 17, 2015 Prepared by: MARINA C PERIA
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Contents:
Definition and functions of bookkeeping & accounting
Types of business organizations
Types of business activities
Basic Accounting equation
Chart of accounts
Assessment Criteria:
List of asset, liability, equity, income and expense account titles are prepared in accordance with Generally Accepted Accounting Principles Chart of Accounts is coded according to industry practice.
Condition: The trainees must be provided with the following: Tools, supplies and materials:
Pencil Pencil Eraser Ruler Learning materials Journal Stapler Calculator Pencil Sharpener
ASSESSMENT METHOD:
Written test Practical/performance test
LEARNING EXPERIENCES Date Developed: Bookkeeping NC III
TESDA PPSAT
Journalize Transactions
July 17, 2015 Prepared by: MARINA C PERIA
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Learning Outcome # 1 PREPARE CHART OF ACCOUNTS
Learning Activities
Special Instructions
1. ReadInformation Sheet 1.1-1 Preparing Chart of Accounts 2. Answer Self-Check 1.1-1
3. Perform Job Sheet 1.1-1
. Compare answers with the answer key, 1.1-1 You are required to get all answers correct. If not, read the information sheets again to answer all questions correctly.
Evaluate your own work using the Performance Criteria Present your work to your trainer for evaluation and recording.
INFORMATION SHEET 1.1-1 Date Developed: Bookkeeping NC III
TESDA PPSAT
Journalize Transactions
July 17, 2015 Prepared by: MARINA C PERIA
Document No. Revision No. 2 Issued by:
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PREPARE CHART OF ACCOUNTS LEARNING OBJECTIVES: To explain the meaning of chart of accounts, its composition and relevance in journalizing business activities. To familiarize various account titles used in accounting.
What is Chart of Accounts? Chart of accounts is a listing of all the accounts in the general ledger, each account accompanied by a reference number. To set up a chart of accounts, one first needs to define the various accounts to be used by thebusiness. It is also considered as
group of account titles.
Each account should have a number to identify it. For very small businesses, two to three digits may suffice for the account number.Chart of Accounts is arranged according to five basic elements of accounting. That is Asset, Liability, Capital, Revenue and Expense.
Bookkeeping, Accounting & Auditing Bookkeeping is the initial activity or clerical part of accounting. It is the “how of accounting”. It enables the owner of the business to check on his financial progress. It is the recording of business transactions to its respective journals and ledgers in a prescribed manner. Accounting is broader in scope. It is the art of recording, classifying, summarizing in a significant manner and in terms of money, transactions and events which are, in part at least, of a financial character, and interpreting the results thereof. It is the developed form of bookkeeping. It usuallyanswer the question “Why.” Auditing performed after the accounting work ends. It is the criticalpart of accounting. It confirms the credibility of financial statements and protects the confidence of financial users. It verifies the Date Developed: Bookkeeping NC III
TESDA PPSAT
Journalize Transactions
July 17, 2015 Prepared by: MARINA C PERIA
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truthfulness and compliance of financial reports with the generally accepted accounting principles. Auditing usually answers the question “how true”.
Basic Elements of Accounting
ASSETS - are resources or things of value owned by an enterprise.
“What the business owned”. It maybe tangible or intangible assets. It has a normal debit balance except for contra-account (credit balance) such as Allowance for bad debts and Accumulated depreciation. Assets are composed of Current, Non-Current and Other Assets.
LIABILITIES – are present obligations to pay cash or cash equivalents by an entity. “What
the business owed”. It has a
normal credit balance. (Current and Non-current liability)
CAPITAL/OWNER’S EQUITY – the residual amount after deducting liabilities from assets. It has a normal credit balance.
REVENUE – represents the earnings of the business from sales of goods, or services rendered. It has a normal credit balance.
EXPENSES– are costs incurred in conducting business activities It has a debit balance.
ASSETS
CURRENT ASSETS .Cash – any item on hand with monetary value that a bank will accept for deposit and all amount currently on deposit with the bank in the name of the business. . Accounts Receivable – Amount collectible on open accounts of the customers.Debtors oral promise to pay certain amount to the business and the right of the business to collect certain amount in peso. Date Developed: Bookkeeping NC III
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Journalize Transactions
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. Allowance for Doubtful Accounts - amount estimated uncollectible on receivable in compliance with the principle of conservatism (contra valuation account of accounts Receivable). . Notes Receivable – a promissory note received by the business from its debtors and/or Customers. . Accrued Interest Receivable – the interest earned on note receivable but not yet received in cash. . Inventories – assets held for sale in the normal operation of the business, in the process of production for sale, or supplies and materials on hand. . Prepaid Insurance – Insurance already paid but still unused for the current period. . Prepaid Rent – rent already paid but still unused for the current period. NON-CURRENT ASSETS . Land – the site owned by the business on which building is constructed. . Building – the structure owned by the business used in the operation of the business. . Furniture and Fixtures – items used by the business include store furnishings such as display racks, showcases, containers, desks, chairs, tables, cabinets. . Equipment – machinery used in a business like computers, machineries used in packaging, sorting, delivery, firefighting equipment,etc. . Vehicles - transportation used in transporting commodities, people and services. . Accumulated Depreciation – periodic costs of using a depreciable plant and equipment (Contra valuation account of property, plant &equipment). . Other Property, Plant & Equipment–are fixed assets not included above. Date Developed: Bookkeeping NC III
TESDA PPSAT
Journalize Transactions
July 17, 2015 Prepared by: MARINA C PERIA
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INTANGIBLE ASSETS .
Patent – assets that protect new inventions and covers how things work, what they do, how they do it, what and how they are made. . Copyright - the legal right to be the only one to reproduce, publish, and sell a book, musical recordings, videos, etc. for a certain period of time. . Goodwill - intangible asset that arises as a result of the acquisition of one company by another for a premium value. The value of a company’s brand name, good customers relations, good employee relations or proprietary technology.
LIABILITIES . Accounts Payable – an obligation or debt to creditors for money borrowed or merchandise and or assets bought on credit. . Notes Payable - a promissory note issued by the business to its creditors for money borrowed or merchandise bought on credit. . Unearned Revenue – a pre-payment received in advance for goods or services to be rendered. . Withholding Tax Payable – amount of income tax withheld from the salary of employees in behalf of BIR that the employer has to remit to BIR on the specified due date. CAPITAL/OWNER’S EQUITY Owner’s Equity – It comprises the capital contribution and withdrawals of the owner.
. Drawing – is a temporary account used to record initially the amount taken by the owner from the business. REVENUE/INCOME
Date Developed: Bookkeeping NC III
TESDA PPSAT
Journalize Transactions
July 17, 2015 Prepared by: MARINA C PERIA
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. Revenue – represents the earnings of the business from sales of goods or services rendered. . Sales – an account used to summarize sale of goods of a trade or a merchandising business. . Sales Returns and Allowances – amount incurred for the defective goods returned by customers from sale. . Sales Discounts- reduction in the price of a product or service that is offered by the seller, in exchange for cash or early payment by the buyer. . Service Income – the earnings derived from service rendered by a servicing business to its customers. . Professional fees – the earnings derived from services rendered by a professional. . Interest Income - earnings representing the time value of money derived from a promissory notes received by the business. . Gain on Sale of Other Assets – the income derived from the sales of assets used in the business operation. . Miscellaneous Income – other income not specified above. COST OF SALES– the value of merchandise sold. . Purchases- is the process of acquiring or buying of goods or services which maybe in cash or credit basis. . Purchase Returns and allowances - amount incurred for the return of defective goods received from purchases.. . Freight In - amount paid for the freight of goods purchased. EXPENSES . Salaries Expense – amount paid to services rendered by the employees in the operation of the business.
Date Developed: Bookkeeping NC III
TESDA PPSAT
Journalize Transactions
July 17, 2015 Prepared by: MARINA C PERIA
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. Supplies Expense – amount of supplies consumed or used by the business during the period. . Insurance Expense – amount of insurance policy incurred during the current period. . Taxes and Licenses Expense – costs of local and national taxes that are incurred and required to be paid in connection with the conduct of business. . Utilities Expense – expenses comprising electricity, water, internet for the operation of the business. . Repair and Maintenance – expenses incurred in maintaining fixed properties. . Freight Out - amount paid for the freight of goods sold. . Doubtful Accounts Expense or Bad Debts Expense – estimated amount of losses from uncollected account arising from credit sales of the current period. . Depreciation Expense – current cost for using depreciable plant assets. . Bad debts- a debt that is not collectible and therefore worthless to the creditor. . Miscellaneous Expenses – other expenses incurred not classified above.
Accounting Equation
- ASSETS = LIABILITIES + CAPITAL
Forms of Business Organization
Sole or Single Proprietorship – an entity owned by one person called a sole proprietor. Date Developed: Bookkeeping NC III
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Document No. Revision No. 2 Issued by:
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Partnership – Owned by two or more persons called partners who agreed to contribute money, property and industry to a common fund with the intention of dividing the profits among themselves.
Corporation – A business registered as an artificial person under the operation of the law. Its existence is evidenced by its Articles of Incorporation and Corporate By-Laws registered with the Securities and Exchange Commission (SEC). A corporation that issues shares equity to shareholders is called a profit corporation and a corporation that does not issue share of entity is a nonprofit corporation.
Primary Activities of Businesses
Servicing- business renders services to clients in exchange for a fee. Ex. Schools, restaurants, shops (laundry, barber, welding, salon and repair)
Merchandising– business engaged in buying and selling of goods. Ex. Grocery stores, gasoline stations, supermarket
Manufacturing – business converts raw materials into finished goods that are to be sold at selling price. Ex. Factories (bamboo crafts, food processing, etc.)
Accounting Process Identifying– is the accounting function that is concerned in determining the economic activities affecting the basic accounting elements of the business. Date Developed: Bookkeeping NC III
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Measuring – involves assigning monetary value to the business economic activities Communicating – process of preparation and distribution of accounting reports to various interested users. Recording – putting in writing of economic transactions in chronological order after they have been identified and measured. Classifying – process of grouping into specific category of various economic transactions which are similar and identical in nature. Reporting– summarizing the total financial information for a given period in order that economic transactions can be read and understood in a condensed format. Interpreting – analytical phase of accounting.
Specialized Fields of Accounting 1. 2. 3. 4.
Private accounting Public Accounting Government Accounting Accounting Education
A. SAMPLE OF CHART OF ACCOUNTS - MERCHANDISING KATHLYN REYES MERCHANDISING Date Developed: Bookkeeping NC III
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Chart of Accounts Acct Code 110 111 112 113 114 115 116 117 118 119 120 121 122 123 124 201 202 203 204 205 206 301 302 401 402 403 404 405 501 502 503 504 606 606 607 608 609 610 611 612
Account Title Cash in Bank Cash on Hand Petty Cash Accounts Receivable Allowance for Bad Debts Notes Receivable-short term Merchandise Inventory Supplies Prepaid Rent Prepaid Insurance Land Building Accumulated Depreciation-Building Office Equipment Accumulated Depreciation – Office Equipment Accounts Payable Notes Payable-Short term Accrued Salary Payable Unearned Revenue SSS/Philhealth/GSIS/PAG-IBIG Payable Bank Loans Payable-long term Kathlyn, Capital Kathlyn, Drawings Sales Sales Returns & Allowances Sales Discounts Gain on Sale of Land, (Building, equipment, etc.) Miscellaneous Income Purchases Purchase Returns & Allowances Purchase Discounts Freight-in Salary Expense Rent Expense Utilities Expense Supplies Expense Bad Debts Depreciation Expense Freight Out Miscellaneous Expense
B. SAMPLE OF CHART OF ACCOUNTS - SERVICING NESA ROSAL ACCOUNTING FIRM Chart of Accounts Date Developed: Bookkeeping NC III
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Acct Code 110 111 112 113 114 115 117 118 119 120 121 122 123 124 201 202 203 204 205 206 301 302 401 402 403 403 501 502 503 504 505 506 507 508
Account Title Cash in Bank Cash on Hand Petty Cash Accounts Receivable Allowance for Bad Debts Notes Receivable-short term Supplies Prepaid Rent Prepaid Insurance Land Building Accumulated Depreciation-Building Office Equipment Accumulated Depreciation – Office Equipment Accounts Payable Notes Payable-Short term Accrued Salary Payable Unearned Revenue SSS/Philhealth/GSIS/PAG-IBIG Payable Bank Loans Payable-long term Nesa, Capital Nesa, Drawings Service Income Interest Income Gain on Sale of Land (Building, Furniture and Fixtures etc.) Miscellaneous Income Salary Expense Rent Expense Utilities Expense Supplies Expense Bad Debts Depreciation Expense Freight Out Miscellaneous Expense
C. SAMPLE OF CHART OF ACCOUNTS - MANUFACTURING EVA CREATION Chart of Accounts Date Developed: Bookkeeping NC III
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Acct Code 110 111 112 113 114 115 116 117 118 119 120 121 122 123 124 125 126 201 202 203 204 205 206 301 302 401 402 403 404 405 501 502 503 504 505 506 507 508
Account Title Cash in Bank Cash on Hand Petty Cash Accounts Receivable Allowance for Bad Debts Notes Receivable-short term Finished Goods Work in Process Raw Materials Supplies Prepaid Rent Prepaid Insurance Land Building Accumulated Depreciation-Building Office Equipment Accumulated Depreciation – Office Equipment Accounts Payable Notes Payable-Short term Accrued Salary Payable Unearned Revenue SSS/Philhealth/GSIS/PAG-IBIG Payable Bank Loans Payable-long term Nesa, Capital Nesa, Drawings Sales Sales Returns & Allowances Sales Discounts Gain on Sale of Land, (Building, equipment, etc.) Miscellaneous Income Salary Expense Rent Expense Utilities Expense Supplies Expense Bad Debts Depreciation Expense Freight Out Miscellaneous Expense
Chart of Accounts Composition a. b. c. d.
Name of entity Chart of Accounts (Title) Account code or account number Account titles
SELF-CHECK of 1.1-1
Date Developed: Bookkeeping NC III
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TRUE OR FALSE: Directions: Write True if the statement is true and False if the statement is false. 1. Partnership is an entity owned by one person called sole proprietor. 2. Servicing is an activity of the business which serves service to clients in exchange for a fee.
3. Liability is an accounting element which the business owned. 4. Building is an example of a current asset.
5. Land is a non-current asset that does not depreciate.
ANSWER KEY 1.1-1
Date Developed: Bookkeeping NC III
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1. FALSE 2. TRUE
3. FALSE 4. FALSE
5. TRUE
JOB SHEET 1.1-1 Title: PREPARE CHART OF ACCOUNTS Date Developed: Bookkeeping NC III
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Performance Objectives: Given the tools and materials, you should be able to prepare chart of accounts. Tools, supplies and Materials:
Pencil Paper Eraser Learning materials Ruler Calculator Stapler
Steps / Procedures:
Secure a copy of an activity for this particular job sheet.
Identify each account title.
Arrange account titles according to five basic elements of accounting.
Prepare a Chart of accounts according to the prescribed format.
Check your work against the Performance Criteria Checklist on the next page.
Have the trainer critique the output.
Assessment/Evaluation Method: 1. Interview 2. Performance test 3. Written test
PERFORMANCE CRITERIA CHECKLIST Job Sheet 1.1-1 Date Developed: Bookkeeping NC III
TESDA PPSAT
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Trainee’s Name: _______________________________Date:_________________
Criteria
Yes
No
1.1 Are account titles properly identified each account title according to basic elements of accounting?
1.2 Are list of assets, liability, equity, income and expense account titles prepared in accordance with the industry practice?
1.3 Is Chart of Accounts prepared and arranged according to the prescribed format of accounting?
Comments/Suggestions:
Trainer’s Name: _______________________________ Date:_________________
LEARNING OUTCOME SUMMARY Learning Outcome 2 ANALYZE DOCUMENTS Date Developed: Bookkeeping NC III
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Contents:
Types of business documents
Account Title Selection
Assessment Criteria:
Documents are gathered, checked and verified in accordance with verification and validation processes. Account titles are selected in accordance with standard selection processes.
Condition: The trainees must be provided with the following: Tools, supplies and materials: Pencil Pencil Eraser Ruler Stapler Calculator Pencil Sharpener ASSESSMENT METHOD:
Written test Practical/performance test
LEARNING EXPERIENCES
Learning Outcome # 2ANALYZE DOCUMENTS Date Developed: Bookkeeping NC III
TESDA PPSAT
Journalize Transactions
July 17, 2015 Prepared by: MARINA C PERIA
Document No. Revision No. 2 Issued by:
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Learning Activities
Special Instructions
1. ReadInformation Sheet 1.2-1 Analyzing documents . Compare answers with the answer key, 1.2-1 You are required to get all answers correct. If not, read the information sheets again to answer all questions correctly.
2. Answer Self-Check 1.2-1
4. Perform Job Sheet 1.2-1
Evaluate your own work using the Performance Criteria Present your work to your trainer for evaluation and recording.
INFORMATION 1.2-1 ANALYZING DOCUMENTS Learning Objective: To orient trainees on how to identify, validate and analyze source documents as bases in preparing journal entries. Date Developed: Bookkeeping NC III
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Document No. Revision No. 2 Issued by:
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Source Documents Source documents - are the forms, evidences or legal/official papers that support to the economic transactions. These are the bases of journal transactions. Examples of common business forms: Official Receipt – written acknowledgement of something received as money or goods. Check Voucher – a document that serves to recognize a liability and authorize the disbursement of cash through the use of check. Petty Cash Voucher – a document that serves to recognize liability and authorize the disbursement of cash through the use of petty cash fund. Check – is a draft upon a bank and payable on demand signed by the maker or drawer, containing an unconditional, promise to pay a certain sum of money to the order of the payee. Promissory Note – is a promise or engagement in writing to pay a specified amount at a time therein limited to a person named. Commercial Invoice – is a written itemized statement of merchandises sold to the buyer, together with the prices and charges of merchandise sent or to be sent to him. Debit Memorandum– is a written notice given by the bank which inform client of a reduction in his account. Credit memorandum– is a notice given by the bank informing the client of an increase in his account Bank Deposit Slip– is a document which serves as evidence an act of placing money in the custody of a bank, to be withdrawn at the will of the depositor or under rules and regulations agreed upon.
Date Developed: Bookkeeping NC III
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Payroll sheet–a written list of salaries of personnel to be paid with corresponding amount due. Billing or Statement of Account– is a report issued periodically by a bank or creditor to a customer setting forth the amount billed, credits given and balance due. ATM cards/Passbook– documents given by the bank to the owner showing evidences for all the transactions made by the depositor.
ANALYZING BUSINESS TRANSACTIONS
Date Developed: Bookkeeping NC III
TESDA PPSAT
Journalize Transactions
July 17, 2015 Prepared by: MARINA C PERIA
Document No. Revision No. 2 Issued by:
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Transaction 1: Cash Received per Official Receipt amounting P250,000 dated December 5, 2012 for Michael initial investment. Analysis: Value received:
Cash
Accounting element affected:
Asset
Account to be debited:
Cash on hand
Amount to be debited:
P250,000
Value parted with:
Claim of the owner in the business
Accounting element affected:
Owner’s Equity
Account to be credited:
Michael, Capital
Amount to be credited:
P250,000
Transaction 2: Cash deposited per deposit slip, P250,000 dated December 6, 2012. Analysis: Value received:
Cash
Accounting element affected:
Asset
Account to be debited:
Cash in Bank
Amount to be debited:
P250,000
Value parted with:
Cash
Accounting element affected:
Asset
Account to be credited:
Cash on Hand
Amount to be credited:
P250,000
Transaction 3: Cash payment per Check Number 0055 for supplies amounting P5,000 dated December 8, 2012. Analysis:
Date Developed: Bookkeeping NC III
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Document No. Revision No. 2 Issued by:
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Value received:
Supplies
Accounting element affected:
Expense
Account to be debited:
Supplies Expense
Amount to be debited:
P5,000
Value parted with:
Cash
Accounting element affected:
Asset
Account to be credited:
Cash in Bank
Amount to be credited:
P5,000
Transaction 4: on account.
Acquisition of Office Computer amounting P35,000
Analysis: Value received:
Computer
Accounting element affected:
Asset
Account to be debited:
Office Equipment
Amount to be debited:
P35,000
Value parted with:
obligation to pay
Accounting element affected:
Liability
Account to be credited:
Accounts Payable
Amount to be credited:
P35,000
Rules of Debit and Credit The rules of debit and credit are based on the normal balance of an accounting element or account . Normal balance of an account refers to the usual position of an account in the T – account.
Date Developed: Bookkeeping NC III
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Document No. Revision No. 2 Issued by:
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Rule 1 – Assets: Debit to increase the amount of asset, Credit to decrease its amount. Rule 2 – Liability: Credit to increase the amount of liability, Debit to decrease its amount. Rule 3 – Owner’s Equity: Credit to increase the capital account, Debit to decrease its amount. Rule 4 – Revenue: Credit to increase the revenue account, Debit to decrease its amount. Rule 5 – Expenses: Debit to increase expense account, Credit to decrease its amount.
Normal Balance of Accounts DEBIT- Assets, Expenses, Drawings, Sales Returns & Allowances, sales Discount CREDIT -
Liabilities, Revenue, Capital, Allowance for Bad Debts, Accumulated depreciation, Purchase Returns & Allowances, Purchase discounts
SELF-CHECK of 1.2-1 Date Developed: Bookkeeping NC III
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Journalize Transactions
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Document No. Revision No. 2 Issued by:
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Completion Test Direction: Provide the answer of the following 1. A written itemized statement of merchandises sold to the buyer, together with the prices and charges of merchandise is______________________ 2. A draft upon a bank and payable on demand signed by the maker or drawer, containing an unconditional, promise to pay a certain sum of money to the order of the payee_________________ 3. Written acknowledgement of something received as money or goods_________________________________. 4. Document that serves to recognize a liability and authorize the disbursement of cash through the use of check_______________. 5. Document that serves to recognize liability and authorize the disbursement of cash through the use of petty cash fund___________________. 6. Written notice given by the bank which inform client of a reduction in his account is_____________________________. 7. Informs the client of an increase in his account from the bank_________________________ 8. A promise or engagement in writing to pay a specified amount at a time therein limited to a person named_____________________. 9. A document which serves as evidence an act of placing money in the custody of a bank, to be withdrawn at the will of the depositor or under rules and regulations agreed upon______________________. 10. Report issued periodically by a bank or creditor to a customer setting forth the amount billed, credits given and balance due___________________________.
ANSWER KEY 1.2-1 Date Developed: Bookkeeping NC III
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Document No. Revision No. 2 Issued by:
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Commercial Invoice
Check
Official Receipts Check voucher Petty Cash Voucher Debit memorandum Credit memorandum Promissory note Bank deposit slip Billing statement of account
JOB SHEET 1.2-1 Date Developed: Bookkeeping NC III
TESDA PPSAT
Journalize Transactions
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Document No. Revision No. 2 Issued by:
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Title: ANALYZE DOCUMENTS Performance Objectives: Given the tools and materials, you should be able to analyze documents from the source documents presented. Supplies and Materials:
Pencil Paper Eraser Ruler Calculator Stapler
Steps / Procedures:
Ask the trainer for a copy of source documents for this particular job sheet.
Identify and arrange each document (official receipts, deposit slips, vouchers, or statement of accounts.)
Arrange and analyze each document.
Determine each document according to what account title they belong.
Check your work against the Performance Criteria Checklist on the next page.
Have the trainer critique the output.
Assessment/Evaluation Method: 1. Interview 2. Performance test
PERFORMANCE CRITERIA CHECKLIST Date Developed: Bookkeeping NC III
TESDA PPSAT
Journalize Transactions
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Document No. Revision No. 2 Issued by:
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Job Sheet 1.2-1
Trainee’s Name: _______________________________Date:_________________
Criteria
Yes
1. Are documents gathered, checked and verified in accordance with verification and validation processes?
2. Account titles are selected in accordance with standard selection processes.
Comments/Suggestions:
Trainer’s Name: ____________________________ Date:_________________
LEARNING OUTCOME SUMMARY Date Developed: Bookkeeping NC III
TESDA PPSAT
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Document No. Revision No. 2 Issued by:
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No
Learning Outcome 3 PREPARE JOURNAL ENTRY Contents:
Generally Accepted Accounting Principles
Accounting Equation
Assessment Criteria: .Journals are prepared in accordance with industry practice and generally accepted accounting principles for transactions and events. .Debit and Credit account titles are determined in accordance with chart of accounts. .Explanation to journal entry is prepared in accordance with the nature of transactions. . Journal entries are prepared with 100% accuracy. Condition: The trainees must be provided with the following: Tools, supplies and Materials:
Pencil Paper Eraser Journal forms Ruler Calculator Stapler
ASSESSMENT METHOD:
Practical/performance test Written exam Work-related projects LEARNING EXPERIENCES Date Developed: Bookkeeping NC III
TESDA PPSAT
Journalize Transactions
July 17, 2015 Prepared by: MARINA C PERIA
Document No. Revision No. 2 Issued by:
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Learning Outcome # 3PREPARE JOURNAL ENTRIES
Learning Activities
Special Instructions
1. ReadInformation Sheet 1.3-1 Prepare Journal Entries 2. Answer Self-Check 1.3-1
3. Perform Job Sheet 1.3-1
. Compare answers with the answer key, 1.3-1 You are required to get all answers correct. If not, read the information sheets again to answer all questions correctly.
Evaluate your own work using the Performance Criteria Present your work to your trainer for evaluation and recording.
LEARNING OUTCOME NO. 3 – PREPARE JOURNAL ENTRY Date Developed: Bookkeeping NC III
TESDA PPSAT
Journalize Transactions
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Document No. Revision No. 2 Issued by:
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LEARNING OBJECTIVE: To orient trainees on the process of journalizing entries based on the source documents analyzed for the given period.
Classification of a Journal 1. General Journal–is a book of original entry where journal entries are recorded in chronological order by debiting and crediting all accounts. 2. Special Journals - are journals intended for a specified activity only. Ex. Purchase Journal, sales journal, cash disbursements journal cash receipts journal, check disbursements journal
2.1
Purchase Journal – a journal in which all incoming merchandise invoices or purchases on account are recorded.
2.2
Sales Journal – a journal in which all outgoing merchandise or sales on account are recorded.
2.3
Cash Receipts Journal – is a books used to record all collections made in cash.
2.4
Check Disbursement Journal – a journal which all outgoing check disbursements are recorded.
2.5
Cash disbursement journal – journal which all cash disbursements are recorded.
Composition of a Journal Date Developed: Bookkeeping NC III
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a. The date column is for recording the date on which the transaction is journalized. b. The description column is for recording the account titles to be debited and credited and the explanation identifying the source documents and nature of transactions. b.1 Leave one blank line between each journal entry. b.2 The credit account title should be indented from the debit title . c. PR stands for Posting Reference. It is used to cross-reference the account to the General Ledger. It is the account code from the General Ledger. d. The debit and credit money columns are used to record the amount of the transaction. d.1 The single vertical line represents the decimal point. d.2 The decimal point and comma are never recorded in the general journal (GL) If you will use columnar sheet. e. The Page Number is preprinted to cross-reference the account to the GL page.
Format of a journal
Debit – (Dr) is the value received in a business. The place of debit in the equation is on the left-hand side. Credit – (Cr) is the corresponding value parted with of the debit. The place of credit on the equation is on the right – hand side
Date Developed: Bookkeeping NC III
TESDA PPSAT
Journalize Transactions
July 17, 2015 Prepared by: MARINA C PERIA
Document No. Revision No. 2 Issued by:
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Double-Entry Bookkeeping The double-entry bookkeeping system is based on the dual aspect concept which says that in every transaction, two effects of recording are to be made – the value received (debit) and the value parted with (credit) Example 1 Initial capital given by KRYSTAL Enterprises on December 1, 2010 P300,000.
GENERAL JOURNAL 2010 Dec 1
DESCRIPTIONS
PR
Cash
DEBIT P
CREDIT
300,000.00
KRYSTAL, Capital
P
300,000.00
To record initial capital of Krystal Enterprises
The transaction regarding the initial capital of the owner is recorded twice in the general journal – One is Cash (debit side) which represents the value received by the business, and the other is the Capital (credit side), the value parted with or the obligation of the business to hold in trust the investment of the owner. Example 2 On December 3, the enterprise sold goods P80,000 on account .
GENERAL JOURNAL 2010 Dec 3
DESCRIPTIONS
PR
Accounts Receivable
DEBIT P
80,000.00
Sales To record goods sold on account.
Date Developed: Bookkeeping NC III
TESDA PPSAT
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July 17, 2015 Prepared by: MARINA C PERIA
CREDIT
P 80,000.00
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The transaction regarding the goods sold on account is recorded as Accounts Receivable (debit side) which represents the value received by the business, and the other is the Sales (credit side), the value parted with for the goods sold on account. Example 3 On December 5, the enterprise sold P110,000 , on cash basis..
GENERAL JOURNAL 2010 Dec 5
DESCRIPTIONS
PR
Cash
DEBIT P
CREDIT
110,000.00
Sales To record sales on cash basis
P
110,000.00
Cash (debit side) which represents the value received by the business. The other is the Sales (credit side), the value parted with or the revenue for the above transaction. Example 4 December 10, Krystal withdrew P10,000 for personal use.
GENERAL JOURNAL 2010 Dec 10
DESCRIPTIONS
PR
Krystal, Drawings
DEBIT P
Cash To record drawings of Krystal.
CREDIT
10,000.00 P
Krystal, Drawings (debit side) which represents the value received by the business. The credit side is the Cash, thevalue parted with or the cash withdrawn by Krystal.
Date Developed: Bookkeeping NC III
TESDA PPSAT
Journalize Transactions
July 17, 2015 Prepared by: MARINA C PERIA
Document No. Revision No. 2 Issued by:
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10,000.00
Example 5 December 15, supplies purchased on account P50,000.
GENERAL JOURNAL 2010 Dec 15
DESCRIPTIONS
PR
Salon supplies
DEBIT P
CREDIT
50,000.00
Accounts Payable To record purchased of supplies on account.
P
50,000.00
Enterprise supplies (debit side) which represents the value received by the business. The credit sideAccounts Payable, thevalue parted with.. Example 6 December 25, The enterprise acquired service vehicle amounting P125,000 on account.
GENERAL JOURNAL 2010 Dec 25
DESCRIPTIONS
PR
Service Vehicle
DEBIT P
CREDIT
125,000.00
Accounts Payable To record acquisition of service vehicle on account.
P
125,000.00
Service Vehicle (debit side) which represents the value received by the business. The credit side is Accounts Payable, thevalue parted with or the obligation to pay for the service vehicle acquired on account. Example 7 December 31, The enterprise paid salaries for the employees amounting 5,000.00.
GENERAL JOURNAL 2010 Dec 31
DESCRIPTIONS
PR
Salaries Expense
DEBIT P
Cash To record payment of salaries.
Date Developed: Bookkeeping NC III
TESDA PPSAT
Journalize Transactions
July 17, 2015 Prepared by: MARINA C PERIA
CREDIT
5,000.00 P
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5,000.00
Salaries Expense (debit side) which represents the value received by the business. The normal balance of an expense is in debit side. The credit side is Cash, thevalue parted with or the payment of salaries of employees. To summarize the data of Krystal Enterprises based from 7 examples above, the General Journal of Krystal Enterprises would be :
GENERAL JOURNALPage No. 1 DATE 1-Dec
DESCRIPTIONS
PR
Cash
DEBIT P
CREDIT
300,000.00
KRYSTAL, Capital To record initial capital of Krystal Enterprises 3-Dec
5-Dec
10-Dec
15-Dec
25-Dec
Accounts Receivable Sales To record sales of goods on account. Cash Sales To record sales on cash basis.
80,000.00
110,000.00 110,000.00
10,000.00
Enterprise supplies Accounts Payable To record purchased of supplies on account.
50,000.00
Service Vehicle Accounts Payable To record purchased of Vehicle on account
125,000.00
10,000.00
Date Developed: Bookkeeping NC III
Journalize Transactions
300,000.00
80,000.00
KRYSTAL, Drawings Cash To record Krystal drawing
31-Dec Salaries Expense Cash To record payment of salaries
TESDA PPSAT
P
July 17, 2015 Prepared by: MARINA C PERIA
50,000.00
125,000.00
5,000.00 5,000.00
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SELF-CHECK 1.3-1 IDENTIFICATION OF ACCOUNTING ELEMENTS: Instruction: Classify the items below to what element they belong to: Asset, Liability, Owner’s Equity, Revenue or Expense
1. Accounts Receivable 2. Store Building 3. Land 4. Prepaid Rent 5. Owner’s Drawings 6. Interest Income 7. Accumulated Depreciation 8. Used Supplies 9. Bad Debts 10. Accounts Payable
Date Developed: Bookkeeping NC III
TESDA PPSAT
Journalize Transactions
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Document No. Revision No. 2 Issued by:
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ANSWER KEY 1.3-1
1. 2. 3. 4. 5. 6. 7. 8. 9. 10.
Asset Asset Asset Asset Owner’s Equity Revenue Asset Expense Expense Liability
Date Developed: Bookkeeping NC III
TESDA PPSAT
Journalize Transactions
July 17, 2015 Prepared by: MARINA C PERIA
Document No. Revision No. 2 Issued by:
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JOB SHEET 1.3-1 Title: Prepare Journal Entry Performance Objectives: Given the tools and materials, you should be able to prepare journal entries from the source documents analyzed and verified. Supplies and Materials:
Pencil Paper Eraser General Journal form Ruler Calculator Stapler
Steps / Procedures:
Ask the trainer for copies of analyzed and verified source documents (photocopied) for this particular job sheet.
Identify what account title to be used for debit and credit columns.
Arrange documents according to the date of transaction.
Enter the date, debit account title and amount to their respective columns.
Enter the credit account title and amount to their respective columns.
Give the explanation of each journal transactions.
Check your work against the Performance Criteria Checklist on the next page.
Have the trainer critique the output.
Date Developed: Bookkeeping NC III
TESDA PPSAT
Journalize Transactions
July 17, 2015 Prepared by: MARINA C PERIA
Document No. Revision No. 2 Issued by:
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Assessment/Evaluation Method: 1. 2. 3. 4.
Interview Performance Criteria Checklist Work related project Written examination
Date Developed: Bookkeeping NC III
TESDA PPSAT
Journalize Transactions
July 17, 2015 Prepared by: MARINA C PERIA
Document No. Revision No. 2 Issued by:
Page 46 of 48
PERFORMANCE CRITERIA CHECKLIST Job Sheet 1.3-1
Trainee’s Name: _______________________________Date:_________________
Criteria
Yes
1.
Are journals prepared in accordance with industry practice and generally accepted accounting principles?
2.
Are debit account titles determined in accordance with chart of accounts?
3.
Are credit account titles determined in accordance with chart of accounts?
4.
Is explanation to journal entry prepared in accordance with the nature of transactions?
5.
Are Journal entries prepared with 100% accuracy?
Comments/Suggestions:
Trainer’s Name: ___________________________ Date:_________________
Date Developed: Bookkeeping NC III
TESDA PPSAT
Journalize Transactions
July 17, 2015 Prepared by: MARINA C PERIA
Document No. Revision No. 2 Issued by:
Page 47 of 48
No
REFERENCES BOOKS Edwin G. Valencia, Gregorio F Roxas (2009-2010). Basic Accounting, Concepts, Principles, Procedures and Applications 3rd Edition. Edwin G. Valencia, Gregorio F Roxas, Darrel Joe O Asuncion (2009-2010) Partnership and Corporation Accounting, 3rd Edition. Conrado T. Valix & Jose F. Peralta (2004). Financial Accounting, Volume 1. Training Regulations, Bookkeeping NC III – TESDA Central Office
Date Developed: Bookkeeping NC III
TESDA PPSAT
Journalize Transactions
July 17, 2015 Prepared by: MARINA C PERIA
Document No. Revision No. 2 Issued by:
Page 48 of 48
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