Recording Transactions

Prof Rogelio Paran, Jr.

 T-Accounts / Journal Entries

Cash Magpantay, Capital

Debit Credit Debit Credit Debit Credit Debit Credit
Oct350,000
 T-Accounts / Journal Entries

Cash (A) Pre-paid Rent (A) Photography Equipment (A) Magpantay, Capital (OE)
Debit Credit Debit Credit Debit Credit Debit Credit
1 350,000 3 40,500 3 40,500 5 129,000 1 350,000
5 129,000
 T-Accounts / Journal Entries

Cash Pre-paid Rent Photography Equipment Magpantay, Capital

Debit Credit Debit Credit Debit Credit Debit Credit
1 350,000 3 40,500 3 40,500 5 129,000 1 350,000
5 129,000

Debit Credit
 T-Accounts / Journal Entries

Cash (A) Pre-paid Rent (A) Photography Equipment (A) Magpantay, Capital (OE)
Debit Credit Debit Credit Debit Credit Debit Credit
1 350,000 3 40,500 3 40,500 5 129,000 1 350,000
8 54,000 10 75,000 5 129,000
10 75,000

Of ce Equipment (A)
Debit Credit
8 54,000
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 T-Accounts / Journal Entries

Cash Pre-paid Rent Photography Equipment Magpantay, Capital

Debit Credit Debit Credit Debit Credit Debit Credit
1 350,000 3 40,500 3 40,500 5 129,000 1 350,000
8 54,000 10 75,000 5 129,000
10 75,000
Of ce Equipment
Debit Credit Debit Credit Debit Credit
8 54,000

Debit Credit Debit Credit Debit Credit

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 T-Accounts / Journal Entries

Cash (A) Pre-paid Rent (A) Photography Equipment (A) Magpantay, Capital (OE)
Debit Credit Debit Credit Debit Credit Debit Credit
1 350,000 3 40,500 3 40,500 5 129,000 1 350,000
13 11,400 8 54,000 10 75,000 5 129,000
10 75,000
Of ce Equipment (A) Photography Supplies (A) Portraits Revenue (OE)
Debit Credit Debit Credit Debit Credit
8 54,000 12 21,000 13 11,400
17 22,500

Accounts Receivable (A) Accounts Payable (L)

Debit Credit Debit Credit Debit Credit
17 22,500 12 21,000
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 T-Accounts / Journal Entries

Cash (A) Pre-paid Rent (A) Photography Equipment (A) Magpantay, Capital (OE)
Debit Credit Debit Credit Debit Credit Debit Credit
1 350,000 3 40,500 3 40,500 5 129,000 1 350,000
13 11,400 8 54,000 10 75,000 5 129,000
10 75,000
Of ce Equipment (A) Photography Supplies (A) Portraits Revenue (OE)
Debit Credit Debit Credit Debit Credit
8 54,000 12 21,000 13 11,400
17 22,500

Accounts Receivable (A) Accounts Payable (L)

Debit Credit Debit Credit Debit Credit
17 22,500 12 21,000
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 T-Accounts / Journal Entries

Cash (A) Pre-paid Rent (A) Photography Equipment (A) Magpantay, Capital (OE)
Debit Credit Debit Credit Debit Credit Debit Credit
1 350,000 3 40,500 3 40,500 5 129,000 1 350,000
13 11,400 8 54,000 10 75,000 5 129,000
10 75,000
19 10,500 Of ce Equipment (A) Photography Supplies (A) Portraits Revenue (OE)
25 3,600 Debit Credit Debit Credit Debit Credit
26 2,100 8 54,000 12 21,000 13 11,400
17 22,500

Accounts Receivable (A) Accounts Payable (L) Utilities Expense (OE)

Debit Credit Debit Credit Debit Credit
17 22,500 19 10,500 12 21,000 25 3,600
26 2,100
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 T-Accounts / Journal Entries

Cash (A) Pre-paid Rent (A) Photography Equipment (A) Magpantay, Capital (OE)
Debit Credit Debit Credit Debit Credit Debit Credit
1 350,000 3 40,500 3 40,500 5 129,000 1 350,000
13 11,400 8 54,000 10 75,000 5 129,000
10 75,000
19 10,500 Of ce Equipment (A) Photography Supplies (A) Portraits Revenue (OE)
25 3,600 Debit Credit Debit Credit Debit Credit
26 2,100 8 54,000 12 21,000 13 11,400
17 22,500

Accounts Receivable (A) Accounts Payable (L) Utilities Expense (OE)

Debit Credit Debit Credit Debit Credit
Debit Credit 17 22,500 19 10,500 12 21,000 25 3,600
26 2,100
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 T-Accounts / Journal Entries

Cash (A) Pre-paid Rent (A) Photography Equipment (A) Magpantay, Capital (OE)
Debit Credit Debit Credit Debit Credit Debit Credit
1 350,000 3 40,500 3 40,500 5 129,000 1 350,000
13 11,400 8 54,000 10 75,000 5 129,000
28 7,500 10 75,000
19 10,500 Of ce Equipment (A) Photography Supplies (A) Portraits Revenue (OE)
25 3,600 Debit Credit Debit Credit Debit Credit
26 2,100 8 54,000 12 21,000 13 11,400
29 12,000 17 22,500

Accounts Receivable (A) Accounts Payable (L) Utilities Expense (OE)

Salaries Expense (OE) Debit Credit Debit Credit Debit Credit
Debit Credit 17 22,500 28 7,500 19 10,500 12 21,000 25 3,600
29 12,000 26 2,100
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 Cash (A) Pre-paid Rent (A) Accounts Payable (L) Magpantay, Capital (OE)
Debit Credit Debit Credit Debit Credit Debit Credit
1 350,000 3 40,500 3 40,500 19 10,500 12 21,000 1 350,000
13 11,400 8 54,000 5 129,000
28 7,500 10 75,000
19 10,500 Of ce Equipment (A) Portraits Revenue (OE)
25 3,600 Debit Credit Debit Credit
26 2,100 8 54,000 13 11,400
29 12,000 17 22,500

Accounts Receivable (A) Utilities Expense (OE)

Photography Equipment (A) Debit Credit Debit Credit Debit Credit
Debit Credit 17 22,500 28 7,500 25 3,600
5 129,000 26 2,100
10 75,000
Photography Supplies (A) Salaries Expense (OE)
Debit Credit Debit Credit Debit Credit
12 21,000 29 12,000
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 Cash (A) Pre-paid Rent (A) Accounts Payable (L) Magpantay, Capital (OE)
Debit Credit Debit Credit Debit Credit Debit Credit
1 350,000 3 40,500 3 40,500 19 10,500 12 21,000 1 350,000
13 11,400 8 54,000 5 129,000
28 7,500 10 75,000
30 1,500 19 10,500 Of ce Equipment (A) Portraits Revenue (OE)
25 3,600 Debit Credit Debit Credit
26 2,100 8 54,000 13 11,400
29 12,000 17 22,500
31 16,000
Accounts Receivable (A) Unearned Portraits Revenue (OE) Utilities Expense (OE)
Photography Equipment (A) Debit Credit Debit Credit Debit Credit
Debit Credit 17 22,500 28 7,500 30 1,500 25 3,600
5 129,000 26 2,100
10 75,000
Photography Supplies (A) Magpantay, Drawing (OE) Salaries Expense (OE)
Debit Credit Debit Credit Debit Credit
12 21,000 31 16,000 29 12,000
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 Cash (A) Pre-paid Rent (A) Accounts Payable (L) Magpantay, Capital (OE)
Debit Credit Debit Credit Debit Credit Debit Credit
1 350,000 3 40,500 3 40,500 19 10,500 12 21,000 1 350,000
13 11,400 8 54,000 5 129,000
28 7,500 10 75,000 10,500 479,000
30 1,500 19 10,500
25 3,600 Of ce Equipment (A) Portraits Revenue (OE)
26 2,100 Debit Credit Debit Credit
29 12,000 8 54,000 13 11,400
31 16,000 17 22,500
370,400 213,700 33,900
156,700
Accounts Receivable (A) Unearned Portraits Revenue (OE) Utilities Expense (OE)
Photography Equipment (A)
Debit Credit Debit Credit Debit Credit
Debit Credit 17 22,500 28 7,500 30 1,500 25 3,600
5 129,000 26 2,100
10 75,000 15,000 5,700
204,000
Photography Supplies (A) Magpantay, Drawing (OE) Salaries Expense (OE)
Debit Credit Debit Credit Debit Credit
12 21,000 31 16,000 29 12,000

P491,200 = P10,500 + P480,700

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 Journal

The journal is a chronological record of the entity’s

transactions.

A journal entry shows all the effects of a business

transaction in terms of debits and credits.

A journal is called the book of original entry.

The general journal is the simplest journal.

 Journal
Simple entry - one debit, one credit required

Compound entry - three or more accounts are required

 Cash (A) Pre-paid Rent (A) Photography Equipment (A) Magpantay, Capital (OE)
Debit Credit Debit Credit Debit Credit Debit Credit
1 350,000 3 40,500 3 40,500 5 129,000 1 350,000
5 129,000

2020 Ref Debit Credit

Oct 1 Cash 350,000
Magpantay, Capital 350,000
Original investment

3 Pre-Paid Rent 40,500

Cash 40,500
1 month advance, 2 months deposit

5 Photography Equipment 129,000

Magpantay, Capital 129,000
 Cash (A) Pre-paid Rent (A) Photography Equipment (A) Magpantay, Capital (OE)
Debit Credit Debit Credit Debit Credit Debit Credit
1 350,000 3 40,500 3 40,500 5 129,000 1 350,000
8 54,000 10 75,000 5 129,000
10 75,000

Of ce Equipment (A)
Debit Credit
8 54,000

2020 Ref Debit Credit

Oct 8 Of ce Equipment 54,000
Cash 54,000

10 Photography Equipment 75,000

Cash 75,000
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 Cash (A) Pre-paid Rent (A) Photography Equipment (A) Magpantay, Capital (OE)
Debit Credit Debit Credit Debit Credit Debit Credit
1 350,000 3 40,500 3 40,500 5 129,000 1 350,000
13 11,400 8 54,000 10 75,000 5 129,000
10 75,000
Of ce Equipment (A) Photography Supplies (A) Portraits Revenue (OE)
Debit Credit Debit Credit Debit Credit
8 54,000 12 21,000 13 11,400
17 22,500

Accounts Receivable (A) Accounts Payable (L)

Debit Credit Debit Credit Debit Credit
17 22,500 12 21,000

2020 Ref Debit Credit

Oct 12 Photography Supplies 21,000
Accounts Payable 21,000
13 Cash 11,400
Portraits Revenue 11,400
17 Accounts Receivable 22,500
Portraits Revenue 22,500
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Oct 19 Supplies 10,500
Accounts Payable 10,500
25 Utilities Expense 3,600
Cash 3,600
26 Utilities Expense 2,100
Cash 2,100
28 Cash 7,500
Accounts Receivable 7,500
29 Salaries Expense 12,000
Cash 12,000
30 Cash 1,500
Unearned Photography Revenue 1,500
31 Magpantay, Drawing 16,000
Cash 16,000
TOTALS 756,600 756,600
 Eternal Images
General Journal
For The Year Ending in 2020

2020 Ref Debit Credit

Oct 1 Cash 350,000
Magpantay, Capital 350,000
3 Pre-Paid Rent 40,500
Cash 40,500
5 Photography Equipment 129,000
Magpantay, Capital 129,000
8 Of ce Equipment 54,000
Cash 54,000
10 Photography Equipment 75,000
Cash 75,000
12 Photography Supplies 21,000
Accounts Payable 21,000
13 Cash 11,400
Portraits Revenue 11,400
17 Accounts Receivable 22,500
Portraits Revenue 22,500
19 Supplies 10,500
Accounts Payable 10,500
25 Utilities Expense 3,600
Cash 3,600
26 Utilities Expense 2,100
Cash 2,100
28 Cash 7,500
Accounts Receivable 7,500
29 Salaries Expense 12,000
Cash 12,000
30 Cash 1,500
Unearned Photography Revenue 1,500
31 Magpantay, Drawing 16,000
Cash 16,000
TOTALS 756,600 756,600
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 Ledger

Ledger is a grouping of the entity’s account

A general ledger is the “reference book” of the

accounting system and is used to classify and
summarize transactions, and to prepare data for basic
financial statements.
 Accounts in a Ledger
1. Balance sheet or permanent accounts (assets,
liabilities, and owner’s equity)

2. Income statement or temporary accounts (income

and expenses). Temporary or nominal accounts are
used to gather information for a particular
accounting period. At the end of the period, the
balances of these accounts are transferred to a
permanent owner’s equity account.
 Chart of Accounts
A listing of all the accounts and their numbers in the
ledger is known as the chart of accounts.

The chart is arranged in the financial statement

order, that is, assets, liabilities, owner’s equity,
followed by income and expenses.

The accounts should be numbered in a flexible

manner to permit indexing and cross-referencing.
 Posting

Posting means transferring the amounts from the

journal to the appropriate accounts in the ledger.

Debits in the journal are posted as debits in the

ledger, and credits in the journal as credits in the
ledger
Posting
 Account: Cash Account No. 110
Date Explanation J.R. Debit Credit Balance
2020 Ref Debit Credit
2020
Oct 1 Cash 110 350,000
Oct 1 J-1 350,000 350,000
Magpantay, Capital 310 350,000
3 J-1 40,500 309,500

3 Pre-Paid Rent 130 40,500

Account: Photography Equipment Account No. 120
Cash 110 40,500 Date Explanation J.R. Debit Credit Balance
2020
5 Photography Equipment 120 129,000 Oct 5 J-1 129,000 129,000
Magpantay, Capital 310 129,000

Account: Pre-paid Rent Account No. 130

Cash (A) Pre-paid Rent (A) Date Explanation J.R. Debit Credit Balance
Debit Credit Debit Credit 2020
1 350,000 3 40,500 3 40,500 Oct 3 J-1 40,500 40,500

Account: Magpantay, Capital Account No. 310

Photography Equipment (A) Magpantay, Capital (OE)
Date Explanation J.R. Debit Credit Balance
Debit Credit Debit Credit
2020
5 129,000 1 350,000
Oct 1 J-1 350,000 350,000
5 129,000
5 J-1 129,000 479,000
 Trial Balance

Trial balance is a list of all accounts with their

respective debit or credit balances.

Prepared to verify the equality of debits and credits

in the ledger at the end of each accounting period or
at any time the postings are updated.
Trial Balance
 Common Errors

Error in posting a transaction to the ledger.

Error in determining the account balances.

Error in preparing the trial balance.

 Approaches in Locating
Errors
1. Prove the addition of the trial balance columns by adding these columns
in the opposite direction

2. Determine the exact amount by which the trial balance is out of balance.

3. Compare the accounts and amounts in the trial balance with that in the
ledger.

4. Recompute the balance of each ledger account.

5. Trace all postings from the journal to the ledger accounts.