THE BOOKS OF

ACCOUNTS
JOURNAL & LEDGER
Part 1

LESSON OBJECTIVES

1. Differentiate the journal from the ledger.

2. Determine the normal balance of an account.
3. Prepare journal entries to record basic business transactions using the general
and special journal.
4. Determine balances of an accounts using the t-accounts.
5.

MARIA AILEEN N. CANDELAZA, LPT BUS S211

JOSE RIZAL UNIVERSITY SHS DEPARTMENT
 MOTIVATION

How similar is the “books of accounts”

to the “book of your life”?
We all know that in a journal entry, there is “value received” – DR and a “value parted with” – CR.
These two entries make the journal balance. Balance is not only necessary in a journal entry but
in our life as well. But do you know what is among the hardest thing to balance? Time. As the old
saying goes, “time is gold, and life is precious”. Every time lost is lost opportunity to improve
ourselves and to spend time with our love ones. Our life is like a journal entry, like a diary and
every word that is written on it will become a precious memory someday. The reason why we
should only make good memories and try to balance our life and learn from every mistake that
we experience. The value parted with is time and the value we received are the lesson that will
make us stronger, and it became our competitive advantage.
MARIA AILEEN N. CANDELAZA, LPT BUS S211
JOSE RIZAL UNIVERSITY SHS DEPARTMENT
 DISCUSSION:
THE BOOK OF ACCOUNTS:
GENERAL AND SPECIAL
JOURNAL

THE GENERAL JOURNAL

In your last module, you have learned about the nature and concept of Statement of Financial
Position.
Now we will proceed with the step two in accounting cycle both in service and merchandising
business, journalizing business transactions.
JOURNALIZING is recording business transactions in the book called journal.
JOURNAL is a daily record of business transactions that shows the debit and credit effect of each
transaction on the account of business in chronological order. It also called the book of original
entry. You have learned already about the general journal in your Accounting 1 which is mostly
used in a service business.
Let us have a review on the proforma entry of a general journal, this time with a business
transaction in merchandising business.

On October 25, Pio a regular customer of Bakugou Katsuki Boutique, bought a tailor-
made suit worth P10,000. He paid 30% down-payment and promise to pay the balance
within 15 days.
Date Particulars P/R DR CR
Oct. Cash in Bank P 3,000
25 Accounts Receivable 7,000
Sales P10,000
Sold tailor-made suit, 30%
down payment, balance, n/15

You have already learned that in the accounting cycle, the first thing that you must do is to
analyze the transaction and determine the affected accounts. In this transaction, the affected
accounts are (1) Cash in Bank, (2) Accounts Receivable, and (3) Sales. The 2nd thing that you need
to do is to prepare a journal entry. A journal has 5 parts (1) Date of the transaction, (2) Particulars
– you write here the affected accounts, (3) P/R or posting reference – it indicates the number of
the accounts in the ledger, (4) Debit side or DR, and (5) Credit side or CR.
MARIA AILEEN N. CANDELAZA, LPT BUS S211
JOSE RIZAL UNIVERSITY SHS DEPARTMENT
Recalling the accrual basis of accounting, BKB earned P10,000 from the sale of the suit although
the store did not collect the full amount. In applying the rules of DR / CR, the affected accounts
are:
1. Cash in Bank will increase by P3,000 - since Pio deposited his payment worth P3,000
(P10,000 x 30%) directly to CDS account.
2. Accounts Receivable will increase by P7,000 (P10,000 – P3,000).
3. Sales will increase by P10,000
Remember the normal balance of the 5 major accounts.
On the left, is the DR side which consist of ADE (Assets, Drawing, and Expenses). On the right, is
the CR side which consist of LCR (Liabilities, Capital, and Revenue or Sales).

DEBIT CREDIT
ADE LCR

Let us have another example:

Bakugou also analyze the check voucher prepared on Oct. 26 to pay Mary Trading,
buttons, and thread supplier. It indicates that BKB pay P 5,000 cash to Mary Trading in full
payment of the account balance due.
Date Particulars P/R DR CR
Oct. Accounts Payable P 5,000
26 Cash P5,000
Full payment of accounts
with Mary Trading.

ANALYZING TRANSACTIONS
USING T-ACCOUNTS

Using the basic accounting equation, A = L + C, let us analyze the business transaction using the
T - ACCOUNTS

ASSETS = LIABILITEIS + CAPITAL

DEBIT CREDIT DEBIT CREDIT DEBIT CREDIT

FOR FOR FOR FOR FOR FOR
INCREASE DECREASE DECREASE INCREASE DECREASE INCREASE

MARIA AILEEN N. CANDELAZA, LPT BUS S211

JOSE RIZAL UNIVERSITY SHS DEPARTMENT
You all understood that journalizing is all about debits and credits which are the fundamental in
bookkeeping and it is connected to the accounting equation. It is also used to recognize the dual
effect of financial transactions of the company. DR are the value received and CR are the value
parted with. Now let us analyze the transaction of Pio using the T – ACCOUNTS.

On October 25, Pio a regular customer of Bakugou Katsuki Boutique, bought a tailor-
made suit worth P10,000. He paid 30% down-payment and promise to pay the balance
within 15 days.
CASH A/R SALES

DEBIT DEBIT CREDIT

P7,000 P3,000 P10,000
INCREASE INCREASE INCREASE

THE SPECIAL JOURNAL

SPECIAL JOURNALS are often used in merchandising business where in:
• These are book of accounts used to journalize similar repetitive transactions to facilitate
efficient recording
• It is used when a business has voluminous similar transactions.
• They contain special columns labeled with corresponding account titles which are
frequently used by business recurring transactions.
• Also called Multi-column Journal

FOUR TYPES OF SPECIAL JOURNAL

Take note that all transactions that cannot be recorded in these special journals are recorded in
the general journal including adjusting entries, correcting entries, closing entries, and reversing
entries.

SALES JOURNAL PURCHASE JOURNAL CASH RECEIPTS CASH PAYMENTS

(SJ) (PJ) JOURNAL (CRJ) JOURNAL (CPJ)
Use to records all sales Use to records all Use to records all Use to records all
of merchandise only purchases of cash collections cash payments
(meaning inventories merchandise only including cash on including cash
that are intended for (meaning inventories sales. purchases.
sales) on pure that are intended for
accounts, no down sales) on account, no
payment made. down payment made.

MARIA AILEEN N. CANDELAZA, LPT BUS S211

JOSE RIZAL UNIVERSITY SHS DEPARTMENT
 THIS IS HOW YOU PREPARE
YOUR SPECIAL JOURNAL

1. SALES JOURNAL (SJ)

DATE INVOICE CUSTOMER’S NAME REFERENCE A/R (DR)
# SALES (CR)
6/1 1234 Tenten P 2,000
P 2,000
NOTE: in special journal, there is no need to write DR and CR because it is already indicated in
the journal title which is DR – A/R and CR - Sales

June 1 – BKB sold 4 dresses to Tenten worth P2,000 on account with an official receipt #1234
REMEMBER that SJ is only use if there is a sale of merchandise only on pure account and no
down payment has made. Reference is the same with “P/R” or posting reference.

2. PURCHASE JOURNAL (PJ)

DATE OR # SUPPLIER’S NAME REFERENCE PURCHASES (DR)

A / P (CR)
6/2 4321 Yalex P 3,000
P 3,000
NOTE: in special journal, there is no need to write DR and CR because it is already indicated in
the journal title which is DR – Purchases and CR – Accounts Payable

June 2 – BKB bought 3 dozen of ready-made shirts on account worth P3,000 from Yalex with
an OR #4321
REMEMBER that PJ is only use if there is a purchase of merchandise only on pure account and
no down payment made. If supply is bought on pure account, it should not be recorded on PJ
because this type of account is not intended for sales but for either office or store use, it is
recorded on general journal. Reference is the same with “P/R” or posting reference.

MARIA AILEEN N. CANDELAZA, LPT BUS S211

JOSE RIZAL UNIVERSITY SHS DEPARTMENT
 3. CASH RECEIPT JOURNAL (CRJ)
DATE OR# RECEIVED REF. CASH A/R MERC. STORE STORE A/P S/D O.E. SALES PRA
FROM DR DR INV. SUP. EQUIP. CR DR CR CR CR
(CR) DR CR CR
6/3 100 Guia P5,000 P5,000 P 10,000
6/12 Guia 4,800 (5,000) 200

June 3 – BKB sold 50 pieces of shirts to Guia worth P10,000. Guia made 50% down payment,
balance on account. Term 2/10, n/15. OR #100
June 12 – Guia paid in full.
NOTE: As you notice, this type of special journal has multiple column so there is no need for
you to make a repetitive journal entry like what you have doing in your general journal for
service business. Just take note of the enclosed accounts, meaning that these are to be
credited as well as the equality of debit and credit.
TERMS on the other hand, pertains to the sales discount given by the seller if the buyer will
pay on time base on the indicated agreements: 2% within 10 days and no discounts beyond
10 days. In this example, Guia paid within 10 days so she got a 2% discount of P200.

S/D means Sales Discounts, PRA means Purchase Return and Allowances. Take note also that
PRA account is only use if the returned item is a merchandise not a supplies, if damaged
supplies is used, the entry will be DR – Cash and CR - Supplies

4. CASH PAYMENT JOURNAL (CPJ)

DATE CV# PAID REF. CASH STORE EQUIP- A/P SRA PUR- P/D F/out EXPEN-
TO CR SUP- MENT DR DR CHASES CR DR SES
PLIES DR (CR) DR DR
DR
6/7 001 ABC P5,000 20,000 (16,000) 1,000
6/12 Goody 1,000 1,000

June 7 – BKB purchased equipment to ABC worth P20,000, made a 20% down payment and
paid freight worth P1, 000. CR #001
June 12 – Goody, one of BKB’s customer, returned P1,000 worth of merchandise due to
wrong specification.
NOTE: SRA stands for Sales Return and Allowances, P/D for Purchase Discount, and F/out for
Freight Out (you have already learned these accounts in your SCI)
You will only use SRA account if the returned item is a “merchandise” and not “supplies”.

MARIA AILEEN N. CANDELAZA, LPT BUS S211

JOSE RIZAL UNIVERSITY SHS DEPARTMENT
 LET US HAVE A FEW MORE EXAMPLES

300,000

MARIA AILEEN N. CANDELAZA, LPT BUS S211

JOSE RIZAL UNIVERSITY SHS DEPARTMENT
 6/4 – Purchase on H store supplies worth P4,000 on account.
Note: L purchase a supplies not a merchandise so we will not use the
Purchase Journal. There was no cash out as well. So we will use the
General Journal.
DATE PARTICULARS P/R DR CR
6/4 STORE SUPPLIES P4,000
ACCOUNTS PAYABLE P4,000

6/5 – Returned P400, worth of supplies purchase from H

Note: The supplies was purchased on pure account, so L will not received any
cash from H. We will use the General Journal.
6/5 ACCOUNTS PAYABLE P400
STORE SUPPLIES P400

DATE PARTICULARS P/R DR CR

6/9 ACCOUNTS PAYABLE P 3,500
EQUIPMENT P3,500

MARIA AILEEN N. CANDELAZA, LPT BUS S211

JOSE RIZAL UNIVERSITY SHS DEPARTMENT
 Owner

LINKS AND REFERRENCES FOR

ADDITIONAL LEARNING

Textbook: Aduana, N. (2017). Fundamentals of Accountancy, Business, and Management 2. Quezon City.
C & E Publishing Inc.
Reference: Rabo, J., Tugas, F., Salendrez, S. (2016). Fundamentals of Accountancy, Business and
Management 2, Quezon City, Philippines. Vibal Publishing
Robles and Empleo (2016). The Intermediate Accounting Vol. 2. Mandaluyong, Philippines
Millennium Books Inc.
Manalo, M. Learning to Succeed with Accounting 2. Quezon City. Phoenix Publishing House Inc.

MARIA AILEEN N. CANDELAZA, LPT BUS S211

JOSE RIZAL UNIVERSITY SHS DEPARTMENT
 SUMMARY

The two books of accounts are Journal and Ledger.

Journal is often called as the “book of original entry”. Preparing a journal entry is the 2nd
step in accounting cycle. We use T-Account in analyzing business transaction or the
“double-entry bookkeeping system”. It states that in every DR amount is a value received
and every CR amount is a value parted with.

Journal has two types, the General Journal, usually used for service business and the Special
Journal, used for merchandising business, also known as multi-column journal. These are
(1) Purchase Journal, (2) Sales Journal, (3) Cash Receipt Journal, and (4) Cash Payment
Journal.

ASSESSMENT: FORMATIVE

Required: Continue preparing a journal entry for L Merchandising Store, using Special and
General Journal.
June 12 - Paid the utility bill received last June 10 (CV#00)
June 13 - Purchased from B merchandise worth p15,000 terms, 2/10, n/30
June 13 - The owner invested additional merchandise worth P12,000 into the business.
- Purchased from C merchandise worth P20,000 on terms 50% down, balance
2/10, n/30 (CV#008)
June 14 - Returned P500 worth of merchandise purchased from A (OR#004)
June 15 - Retuned P1,000 worth of merchandise purchased from B
- Sold to D merchandise on cash basis, P10,000 (OR#005)
- Paid freight on merchandise sold to D, P800 (CV#009)
June 16 - Returned P1,500 worth of merchandise purchased from C
-
Sold to E merchandise worth P15,000 on terms 2/10, n/30 (SI#001)
June 17 - Paid P2,000 in partial payment of account with C (CV#010)

MARIA AILEEN N. CANDELAZA, LPT BUS S211

JOSE RIZAL UNIVERSITY SHS DEPARTMENT
 June 18 - Received the return of P500 worth of merchandise sold to D (CV#011)
June 19 - Received the return of P1,000 worth of merchandise sold to E
June 20 - Received the return of P1,000 worth of merchandise sold to F
June 21 - Collected P2,000 from F for partial payment of account (OR#007)
June 22 - Paid in full account with B (CV#012)
June 26 - Collected in full the account with E (OR#008)
June 30 - The owner withdrew merchandise worth of P6,000 for personal use
- Paid in full account with C (CV#013)
- Collected in full the account with F (OR#009)

LINKS USED IN PICTURE

Retrieved fromhttp://webcomicms.net/clipart-9346657-free-accounting-images

MARIA AILEEN N. CANDELAZA, LPT BUS S211

JOSE RIZAL UNIVERSITY SHS DEPARTMENT