SACRED HEART OF JESUS MONTESSORI SCHOOL

J.R. Borja Extension, Gusa, Cagayan de Oro City

Montessori-Based Learning
Learning Instructional Packets (LIPs)_Week 07
Accounting
S.Y 2021-2022_Week 07_November 6, 2021

Name: ________________________________________________ Date submitted: ________________

Grade & Section: ______________________________________ Teacher: _______________________

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Content Standard:
• The students will understand the process of journalizing business transactions and events.

Performance Standard:
• The students can explain the process of journalizing business transactions and events.

I. LEARNING COMPETENCY
• The students will be able to describe the process of journalizing business transactions and events.

Objectives:
1. Understand the proper use of general journals.
2. Enter transactions into journal sheets.

II. LEARNING CONTENT

Lesson :
• Journalizing business transactions and events.

Materials:
1. LIPs

References:
1. K to 12 Curriculum Guide
2. Accounting
By: Atty. Graciano B. Neri, Jr.
Second Edition
3. Accounting for Non-Accountants
By: Michael P. Cañares, CPA
2018 Edition

III. LESSON PRESENTATION

Journalizing business transactions and events.

As discussed in our previous lesson, accounting is a process towards a particular objective, which is the
preparation of financial statements that reflects the results of operations, financial condition and cash flows of a particular
entity, as of or within a given period of time. As a process, it consists of a series of steps to attain the objectives.

Accounting is composed of at least four phases. The recording phase involves recording transactions in the
journal, hence the term journalizing. The subsequent phase, classifying, involves posting the recorded transactions in the
ledger. The summarizing phase involves the preparation of the worksheet, the recording of adjusting entries and the
drafting of financial statements. Finally, the interpreting phase involves the analysis of financial statements to allow a
more meaningful reading of prepared financial stataments.
 The focus of our lesson this week is on journalizing, the second step in the accounting processing cycle.
Journalizing is the process of recording business transactions in the accounting journal, expressed in terms of debit and
credit. A journal is a permanent chronological record of the debits and credits of the business transactions, with
explanation. It is also known as the book of original entry.

A journal sheet with a sample entry looks like the one presented below:

Date Particulars F Debit Credit

10 01 Cash 2 0 0 0 0 25

Loans Payable 2 0 0 0 0 25

(Bank Loan)

The journal has at least six distinct components. These are the following:

• Date – the column where one enters the date at which the transaction occurred. This is on a month-day
format. In the first column we enter the month either in number or abbreviated words (e.g. 01 or Jan). In the
second column, we enter the day. In the illustration above, the date column reads as October 1.
• Particulars – this is the column where we enter the account titles affected by the transaction. In a journal
entry, there is at least one debit and one credit. The debited account will be written directly after the border.
The credited account is indented from the debit position. An explanation for the transaction is also presented,
indented a few spaces from the credit entry.
• Folio (F) – This is the reference column, normally the page of the ledger where the entry is posted. We will
get back to this in the next lesson.
• Debit – for the debit amounts. This is written starting from the rightmost part which is the place for centavos.
Each column represents a place (ones, tens, hundreds, etc.), starting from the rightmost portion. Thus, the
debit amount above shows P 20,000.25. In the journal, there is no need to put commas and decimal points as
the place where the numbers are written determine its value.
• Credit – for the credit amounts, this is written in the same manner as the debit column.

As such, journalizing involves the process of entering transactions in the journal after we have carefully analyzed
them. The analysis points discussed above will be our guide in entering the transactions into the journal. To know what
account titles we need to use in recording the transactions in the journal, we need to refer to the organization’s chart of
accounts.

An organization’s chart of accounts is a listing of all account titles that the business will use in its accounting
operations and in financial statement preparation. An example of a Charts of Accounts is shown below.

Code Account Title

101 Cash
102 Accounts Receivable
103 Supplies
` 104 Equipment
105 Office Furniture/Fixtures
201 Accounts Payable
302 Withdrawal
401 Service Income
501 Salaries Expenses
502 Taxes and Licenses
503 Rent Expense
504 Advertising Expense
505 Light and Water

Thus, when one records a transaction, he makes use of the account titles that are indicated in the Chart of
Accounts. Thus, Taxes and Licenses will be used instead of Permits and Taxes. Office Furniture will be used instead of
Furnitures and Fixtures, if this is what is used by the business as indicated in its Charts of Accounts.

Steps in journalizing:
1. Examine each business transaction to determine the nature of the transaction.
2. Determine which accounts will be affected.
 3. Prepare the journal entry.

A Sample of Transactions recorded in a Journal

Transactions:

August 25 - Mr. Silva invested P 75,000 in cash to open a pet shop.

-He also bought a computer for P 15,000, paid in cash.
26 -Purchased pet supplies amounting to 20,000, per credit invoice 185.
27 -Paid in advance the rental of the shop amounting to P 10,000.
29 -Received P 18,000 for payment of one pet dog bought by a customer.
-He paid P 1,750 as salary for five (5) days of his pet shop assistant.
  -Bought a printer for office use worth P 7,000 in cash.
30 -Paid the 20,000 pet supplies bought on credit last August 26.

The Chart of Accounts are presented:

Code Account Title

101 Cash 102 Accounts Receivable
103 Supplies 104 Equipment
105 Office Furniture 201 Accounts Payable
301 Capital 401 Sales Income
501 Salaries Expense 503 Rent Expense
505 Light and Water

Date Particulars F Debit Credit

08 25 Cash 7 5 0 0 0 00

Capital 7 5 0 0 0 00
(Mr. Silva)
Equipment (computer) 1 5 0 0 0 00

Cash 1 5 0 0 0 00
(Equipment for
cash)
26 Supplies 2 0 0 0 0 00

Accounts Payable 2 0 0 0 0 00
(Supplies on
Account)
27 Rent Expense 1 0 0 0 0 00

Cash 1 0 0 0 0 00
(Rental-Shop)
29 Cash 1 8 0 0 0 00

Sales Income 1 8 0 0 0 00
(Cash from sales-
dog)
Salaries Expense 1 7 5 0 00

Cash 1 7 5 0 00
(Cash for salary)
Equipment(printer) 7 0 0 0 00

Cash 7 0 0 0 00
(Equipment for cash)
30 Accounts payable 2 0 0 0 0 00

Cash 2 0 0 0 0 00
(Cash for payment of
supplies)