Republic of the Philippines

Department of Education GRADE

11
REGION V
DIVISION OF MASBATE
CATAINGAN NATIONAL HIGH SCHOOL
Cataingan, Masbate

I. What I need to know?

This module was designed and written with you in mind. It is here to help you identify
business and nonbusiness transactions, enumerate the types of business documents, recite the rules
of debit and credit, and apply these concepts in simple cases.

II. What you are expected to learn?

After going through this module, you are able and expected to:
1. Describe the nature of transactions in a service business;
2. Identify the parts of a journal; and
3. Record transactions of a service business in the general journal.
4. . Identify the parts of the ledger;
5. Transfer debit and credit amounts to the ledger account; and
6. Compute for the balance of each account after posting entries to the ledger.

Journalizing Transaction
The journal is the accountant’s tool in recording the day-to-day transactions. It is called the book
of original entry, where the accountant records first the business transactions that occurred in the
business. The recording of business transactions is in sequential form.
Format
The journal consists of the following information:
1. Date. Enter the date when the transaction occurred. The year and month may be omitted if
the transaction occurred in the same year and month.
2. Account Titles and Explanation. First, enter the account to be debited. It must be located at
the extreme left of the first line, while the account to be credited must be located at the next
line which is slightly indented. A brief description of the transaction is usually made on the
line below the credit. Generally, skip the line after each entry.
3. P.R. (Posting Reference). The chart of accounts provides account numbers for each account
title. The accountant will enter those account numbers in this column once the account titles
are used in a journal entry.
4. Debit. The amount to be debited is entered in this column.
5. Credit. The amount to be credited is entered in this column.

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A simple journal entry is a journal entry which has one debit account and one credit account. The example
below shows a simple journal entry.

A compound journal entry is a journal entry with more than one debit account or more than one credit
account, or both. The example below is a compound journal entry.

After the identification and measurement of the transactions or events, the next step is to record them
in a journal. The chart of accounts will be provided for reference in P.R. portion of the journal. For you to
better understand the lesson, an analysis is provided below.

Always remember that for each journal entry, two or more accounts are always affected by each
transaction. The sum of the debits must be equal to the sum of the credits for each transaction and the
equality of the accounting equation must always be maintained.
For better understanding, look at these examples:

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The transaction covered the month of July 2019 of Pamilya Services, a photocopying business by Mahal
K. Pamilya.

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 Posting of Transactions in the Ledger
After journalizing, the next step in the accounting cycle is posting. If journalizing is done in the
journal, posting is done in the ledger
After recording transactions in the journal, the next step is to transfer them to the general ledger.
You must post every transaction from your journal into the ledger.
The ledger is the book of final entry. It is used to organize and classify transactions on which the
journal entries will be transferred into their specific account. The line items are called ledger entries.
From the journal, the debit and credit amounts will be transferred to the ledger account. Next is
to compute the balance of each account after posting entries to the ledger. Read the following:
 Calculate the running balance of each transaction in the ledger account by adding if the
amounts are in the same column and subtracting if the amounts are in different columns.
 After all the transactions have been posted, the last running balance will be the ending
balance.

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Each title in the chart of accounts has its own ledger. The ledger shows all the movements of transactions
(increase and decrease) in each account which were initially reflected in the journal as journal entries.
Here are the simple steps in posting journal entries to the ledger:
1. Choose the proper column from which you will enter the information. If the journal entry for the
particular account is debited, then you have to fill in the debit side of the ledger.
2. Fill in these necessary data:
 Date of the journal entry
 Explanation (explanation written on the journal entry)
 J.R. or Journal Reference (the page number of the journal from which the journal entry
was entered)
 Amount (amount of the transaction)
3. After you posted all the journal entries, the account balance will be determined by transferring
the amount to the balance column. If the amount of the succeeding transactions is in the same
column, you have to add it to the balance. If the amount of the succeeding transaction is in the
other column, you must subtract the amount to the balance.

For a deeper knowledge regarding the posting of transactions in the ledger, we will take Pamilya Services
as an example.
The illustration below shows the journal entries.

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Make sure that you have posted all the transactions in the general journal. This will ensure that you will
have a balanced amount in the trial balance.

What’s New?
Directions: Record the following transactions in the general journal and post it in the ledger
also make your chart of account.

TRANSACTION

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Prepared by:
JAZER B. LEUTERIO
Teacher II

Checked/ Validated:

JANICE A. MARTIN
Assistant Principal II

Noted:
JESUS P. DELA PEÑA
Principal IV

CONGRATULATIONS
FOR COMPLETING THIS MODULE!

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