X Car Repair Center

Chart of Accounts

Account Normal How to How to When to Increase When to Decrease

Type Balance Increase Decrease
Acc# Account Title
1000 Cash • Investment of owner • Withdrawal of owner
• Service performed for • Payment of bill/ expense
Asset Debit Debit Credit
Cash • Purchase of asset
• Collection of an account • Payment of Liability
1010 Accounts Receivable • service performed on • collection made from
Asset Debit Debit Credit
account customer on account
1015 Allowance for Doubtful Accounts Contra You will learn about this when we discuss Accounts
Credit Credit Debit
Asset Receivable (Finals)
1020 Service Supplies • Purchase/bought/acquire • Used/consumed/expired
Asset Debit Debit Credit supplies in cash or on supplies
account
1030 Prepaid Expenses • Paid expenses in advance • Recognition of the
Asset Debit Debit Credit expense/consumed
portion
1040 Land • Purchase / • Sale of PPE
1050 Building acquired/bought a PPE.
Asset Debit Debit Credit
1060 Furniture and Fixtures • Investment of owner of
1070 Service Equipment any PPE
1055 Accumulated Depreciation – Building • may happen if • allocation of
1065 Accumulated Depreciation – Furniture and adjustments are needed depreciation on the PPE
Contra
Fixtures Credit Credit Debit
Asset
1075 Accumulated Depreciation – Service
Equipment
2000 Accounts Payable • Payment of an account • Purchase/Acquisition of
• Note is issued for the an asset on account
accounts payable • Received a bill and did
Liabilities Credit Credit Debit not immediately pay
• Purchase
goods/merchandise on
account
 • Record unpaid expenses
2010 Notes Payable • Payment made on the • Issued a Note for an
Liabilities Credit Credit Debit
Notes account
2020 Unearned Revenues • Recognition of a revenue • Received an advance
Liabilities Credit Credit Debit
earned payment for a service
3000 X, Capital • Permanent withdrawal of • Investment of owner
Equity Credit Credit Debit owner • Additional Investment
• Net Loss • Net Profit
3010 X, Drawing • Payment of a personal
Contra expense
Debit Debit Credit
Equity • Withdrawal of Cash for
personal use
3999 Income Summary • To close revenues/gains • To close
• To close to capital expenses/losses
account (if credit • To close to capital
balance) account (if debit
balance)
4000 Service Revenue • Performance of a service
Income Credit Credit Debit whether for cash or on
account
4010 Interest Income Income Credit Credit Debit • • Interest is earned
4005 Service Discount Contra- • Record discount for
Debit Debit Credit
Income services rendered
5000 Salaries Expense • Bill received for cash or
5010 Rent Expenses on account
5020 Service Supplies Expense • Recognition of an
5030 Utilities Expense expense for it was
5040 Interest Expense Expense Debit Debit Credit consumed, expired
5050 Insurance Expense
5060 Depreciation Expense – Building
5070 Depreciation Expense – Furniture and Fixtures
5080 Depreciation Expense – Service Equipment

How to Journalize?
1. Analyze the transaction if it is accountable or not.
2. Determine the accounts affected by the transaction.
3. Analyze the effect of the transaction to the identified accounts.
 4. Apply the rules of debit and credit.
5. Record the transaction.
a. Start with the date of the transaction. Journal entries are arranged chronologically.
b. Then, list the account titles starting with all the account to be debited. If multiple accounts are to be debited, arranged them using
their account numbers.
c. Indicate account number of the accounts on the Post Reference (PR) column.
d. Write the corresponding effect (amount) on the debit side of the journal.
e. List the accounts to be credited (indented). If multiple accounts are to be credited, arranged them using their account numbers.
f. Indicate account number of the accounts on the Post Reference (PR) column.
g. Write the corresponding effect (amount) on the credit side of the journal.
h. Make sure that the total debit entries is equal to total credit entries since we follow the principle of equilibrium (equality).
i. Lastly, make a brief description of the transaction.

Illustration: On January 3, 2018, Mr. X started a business by investing P100,000 cash and a service equipment costing P50,000.
1. Analyze. Is the transaction accountable? Yes, because it involves atleast one element of financial statement.
2. Determine. The accounts involved are cash, service equipment (assets) and even not stated the word ‘investing’ means capital (owner’s equity)
is involved.
3. Effect. Since there is an addition to cash, equipment and capital, all of them will increase.
4. Rules of Debit and Credit. To increase assets, we debit it and to increase equity we credit it. Therefore, we debit cash and equipment and
credit capital.
Account Numbers based on Chart of
5. Journalize. Accounts

Brief description Check if total debit is

of transaction equal to total credit