Journalizing for Merchandising Business

Recording Transaction to Sales Journal

Sales on account, as evidenced by a Sales Invoice, are recorded in the sales journal.
Recording to sales journal is illustrated below:

No. : 1604

Tolentino Trading
San Pablo City, Laguna

Sales Invoice

Date: 5/6/2021
Customer: H. Barias
Address: Calauan, Laguna
Telephone:

This is to bill you for the following:

Particulars Quantity Unit Price Amount

Merchandise 26,000.00

VATable Amount 26,000.00

VAT 3,120.00
Sales after VAT 22,880.00
Terms: 2/10, n/30

By:
Authorized Signature

Sales Journal
Accounts
Invoice
Date Sales Output VAT Receivable
No.
2021 Accounts Debited PR Credit Credit Debit
May 6 1604 H. Barias ₱ 22,880.00 ₱ 3,120.00 ₱ 26,000.00

Step 1: Write the Invoice Date in the date column.

Step 2: Copy the invoice number.
Step 3: In the Accounts Debited column, write the name of the customer.
Step 4: The total invoice amount is written in the Accounts Receivable column.
Step 5: Write the VAT amount at the Output VAT Column.
Step 6: The actual Sales amount is the net of Invoice Price less VAT to be written in the Sales
column.
Recording Transaction to Purchases Journal
Purchase of merchandise on account, as evidenced by a Sales Invoice, is recorded in the
purchases journal. Recording to sales journal is illustrated below:

No.: 8789

ABC Enterprises
San Pablo City, Laguna

Sales Invoice

Date: 5/6/2021
Customer: Tolentino Trading
Address: Calauan, Laguna
Telephone:

This is to bill you for the following:

Particulars Quantity Unit Price Amount

Merchandise 26,000.00

VATable Amount 26,000.00

VAT 3,120.00
Sales after VAT 22,880.00
Terms: 2/10, n/30

By:
Authorized Signature

Purchases Journal
Accounts
Invoice
Date Purchases Input Vat Payable
No.
2020 Accounts Debited PR Debit Debit Credit
May 6 8789 ABC Enterprises ₱ 22,880.00 ₱ 3,120.00 ₱ 26,000.00

Step 1: Write the Invoice Date in the date column.

Step 2: Copy the invoice number.
Step 3: In the Accounts Debited column, write the name of the supplier.
Step 4: The total invoice amount is written in the Accounts Payable column.
Step 5: Write the VAT amount at the Input VAT Column.
Step 6: The actual Purchase amount is the net of Invoice Price less VAT to be written in the
Purchases column.
Recording Transaction to Cash Receipt Journal
Only cash receipt from customers due to cash sales or collection of receivables is recorded
in the Cash Receipt Journal. Recording to Cash Receipt Journal is illustrated below:

No. : 435 No. : 436

ABC Marketing ABC Marketing

San Pablo City, Laguna San Pablo City, Laguna
536-5144 536-5144
Date: 7/15/2020 Date: 7/17/2020
Official Receipt Official Receipt

Customer: D. Masakop Customer: D. Masakop

Address: San Pablo City Address: San Pablo City
Telephone: Telephone:

Particulars Amount Particulars Amount

Merchandise 40,000.00 Merchandise 40,000.00
Discount (800.00)
SI#456

Amount Paid 40,000.00 Amount Paid 39,200.00

VAT 4,800.00 VAT
Amount after VAT 35,200.00 Amount after VAT 39,200.00
By: By:
Authorized Signature Authorized Signature

Cash Receipt Journal

Account
Invoice
Date OR NO Receivable Sales Sales Discount Output VAT Cash
No.
2020 Accounts Debited PR Credit Credit Debit Credit Debit
July 15 435 D. Masakop ₱ 35,200.00 ₱ 4,800.00 ₱ 40,000.00
17 436 456 D. Masakop ₱ 40,000.00 ₱ 800.00 39,200.00

Step 1: Write the OR date in the date column.

Step 2: Copy the OR number.
Step 3: For collection of receivables: get the referenced invoice number and write it in the Invoice
Number column.
For cash sales: Invoice Number column is left blank.
Step 4: Write the name of the customer in the Accounts Debited column
Step 5: Write the cash collected in the Cash column.
Step 6: For collection of receivables: write the amount of discount (if any) in the discount column.
For cash sales: write the VAT amount in the Output VAT Column.
Step 7: For collection of receivables: write the receivable amount (Cash received + Discount
Amount, if any) in the Accounts Receivable column.
For cash sales: write the Sales amount (net of Cash received less VAT) in the Sales column.
Note: To identify whether the Official Receipt was issued for cash sales or for collection of
receivables, check if there is a VAT reflected. IF VAT is reflected, then it is a cash receipt out of
sales.

Recording Transaction to Cash Disbursement Journal

All cash payments are recorded in the Cash Disbursement Journal. Remember that the
design of the special journal varies in every company. Following the standard format of
Cash Disbursement Journal below, amount paid is recorded in the Cash column. The other
column affected will depend on what is being paid in the transaction as follow.
Cash Disbursement Journal
SSS, PH, Pag
Check
Check Sundry Salaries Pay With. Tax Accounts Purchase
Voucher
Date No. Debit Purchases Expense Debit Payable Debit Payable Discount Cash
No.
2020 Accounts Debited PR (Credit) Debit Debit (Credit) (Credit) Debit Credit Credit

Step 1: Write the date of transaction in the Date column.

Step 2: Write the voucher number in the Check Voucher column
Step 3: Write the check number if check is issued.

Source Document Description and Accounts/Columns Affected

Purchase of goods or merchandise.

Step 4: Write the cost of goods purchased (net of
No.:2125
Cash Paid less VAT) in the Purchases column.
ABC Merchandising (P8,800)
San Pablo City, Laguna
536-5144
Step 5: Since there is no column to enter the Input
VAT, write the VAT amount in the Sundry
Date: 5/20/2020
Check Voucher
Paid to: B. Maningas Column. (P1,200)
PARTICULARS Amount
Inventories 8,800.00 Step 6: In the Accounts Debited Column, write Input
VAT 1,200.00
VAT.

Amount Paid 10,000.00

Step 7: Write the amount paid in the Cash column.
Check No. 100061 (P10,1000)
Approved for Payment:
Received Payment:
Note: Notice the VAT associated with
inventories/merchandise – an indicator of
purvhase of goods for sale.
 Purchase of Supplies
No.:2125
Step 4: Since there is no column for supplies in the
ABC Merchandising
San Pablo City, Laguna CRJ, write the cost of supplies (net of amount
536-5144
paid less VAT) in the Sundry column
Check Voucher
Date: 5/20/2020
(P1,760); and on the Account Debited
Paid to: B. Maningas column, write Supplies (asset method) or
PARTICULARS Amount Supplies Expense (expense method).
Supplies 1,760.00
VAT 240.00
Step 5: On the succeeding line, write the VAT amount
also in the Sundry column and “Input VAT” in
Amount Paid
Check No. 100061
2,000.00
the Account Debited column. (P240)
Approved for Payment:
Received Payment: Step 6: Write the amount paid in the Cash column
adjacent to the Input VAT entry. (P2,000)

No.:2125
Purchase of Asset (Office Equipment)
ABC Merchandising Step 4: Write the asset cost (net of amount paid less
San Pablo City, Laguna
536-5144
VAT) in the Sundry column (P13,200) and the
Date: 5/20/2020
account title of asset purchased (Office
Check Voucher Equipment) in the Account Debited column.
Paid to: ABC Supplies and Equipment
PARTICULARS Amount Step 5: On the succeeding line, write the VAT amount
Office Equipment
VAT
13,200.00
1,800.00
also in the Sundry column and “Input VAT” in
the Account Debited column. (P1,800)
Amount Paid 15,000.00 Step 6: Write the amount paid in the Cash column
adjacent to the Input VAT entry. (P15,000)
Check No. 100061
Approved for Payment:
Received Payment:

Payment of Payables
No.:2125 Step 4: In the Account Debited column, write the
ABC Merchandising
name of supplier where the amount is paid to.
San Pablo City, Laguna
536-5144 Step 5: Write the payable amount in the Accounts
Date: 5/20/2020 Payable column. (P15,000)
Check Voucher
Paid to: XYZ Enterprises Step 6: Write the discount amount (if any) in the
PARTICULARS Amount Purchase Discount column (P300)
Inventories 15,000.00
Discount
(Invoie #2356)
300.00
Step 7: Write the amount paid (net of payable
amount less discount, if any) in the Cash
Amount Paid
Check No. 100061
14,700.00 column
Approved for Payment:
Received Payment:
Note: Notice that there is no associated VAT with
inventories/merchandise – an indicator of a
payment of payables.
 No.:2125
Payment of Utilities
ABC Merchandising Step 4: If coming from a previous accounting period,
San Pablo City, Laguna
536-5144
in the Accounts Debited column write
Date: 5/20/2020
“Utilities Payable” otherwise, write “Utilities
Check Voucher Expense.”
Paid to: Meralco
PARTICULARS Amount Step 5: In the Sundry column, write the amount
Electric Bill
for the month of April
2,500.00
(P2,500).
Step 6: Also write the amount in the Cash column
Amount Paid 2,500.00 (P2,500).
Check No. 100061
Approved for Payment:
Note: check on the account title for the correct
Received Payment:
account to be used.

Payment of Rent
Step 4: Write “Rent Expense” in the Accounts
Debited column.
No.:2125
Step 5: In the Sundry column write the rent amount
ABC Merchandising (P15,000).
San Pablo City, Laguna
536-5144
Step 6: (Only if there is Expanded Withholding Tax).
Check Voucher
Date: 5/20/2020
Write the EWHT amount - enclosed in a
Paid to: Lina Building parenthesis since it is a credit entry “(1,000)”
PARTICULARS Amount in the Expanded Withholding Tax Payable
Monthly Rentals 15,000.00
EWHT 1,000.00 column.
Step 7: Write in the Cash column the amount paid
Amount Paid
Check No. 100061
14,000.00 (P14,000).
Approved for Payment:
Received Payment:
Remember: Expanded Withholding Tax is paid by
the landlord. If agreed that the tenant will be
the one to remit the tax to BIR, then the
amount is deducted from the Rent and is
payable to BIR.
 Payment of Salaries (Payroll)
Step 4: In the Salaries Expense column write the
No.:2125
Gross Amount (P30,000).
ABC Merchandising
San Pablo City, Laguna
Step 5: Write the SSS, PH and Pagibig Deduction (if
536-5144 any) at the SSS, PH and Pagibig Payable
Date: 5/20/2020 column “(1,600)”.
Check Voucher
Paid to: Payroll Step 6: Write the WTax amount in the Withholding
Gross Pay
PARTICULARS Amount
30,000.00 Tax Payable column “(900)”.
SSS, PH and Pagibig Deduction 1,600.00
Wtax 900.00 Step 7: Write the Net Pay in the Cash column
(27,500).
Amount Paid 27,500.00
Check No. 100061
Approved for Payment:
Remember: Withholding Tax and SSS, PH and
Received Payment: Pagibig Deduction are recorded enclosed in a
parenthesis since they are credit entries.

No.:2125 Remittance to BIR

ABC Merchandising Step 4: In the Accounts debited column, write “BIR”.
San Pablo City, Laguna

Step 5: Write the tax remitted in its appropriate

536-5144

column at the Cash Disbursement Journal

Date: 5/20/2020
Check Voucher
Paid to: BIR (P900 and P1,000). No parenthesis since
Exp. With. Tax
PARTICULARS Amount
1,000.00
they are debit entry.
W. Tax 900.00
Step 6: Write the total amount paid in the Cash
column (P1,900).
Amount Paid 1,900.00
Check No. 100061
Approved for Payment:
Received Payment:

No.:2125 Remittance to SSS, PhilHealth and Pagibig

ABC Merchandising  If coming from a previous accounting period
San Pablo City, Laguna
536-5144

Date: 5/20/2020 Step 4: In the Accounts Debited column write

Check Voucher “SSS, PH and Pagibig”.
Paid to: BIR
PARTICULARS Amount Step 5: Write in the SSS, PH and Pagibig Payable
Employees' Share
Employer's Share
1,600.00
3,200.00
column the total amount (P4,800).
Step 6: Write the in the Cash column the total
Amount Paid 4,800.00
amount paid) P4,800).
Check No. 100061
Approved for Payment:
Received Payment:
 Not coming from a previous accounting period
 Step 4: In the Accounts Debited column write
“SSS, PH and Pagibig Contribution”.
Step 5: In the Sundry column, write the amount
of employer’s share (P3,200).
Step 6: Write in the SSS, PH and Pagibig Payable
column the employees’ share (P1,600).
Step 6: Write the in the Cash column the total
amount paid (P4,800).

Refunds to Customers
No.:2125

ABC Merchandising
Step 4: In the Accounts Debited column, write “Sales
San Pablo City, Laguna Returns and Allowances”.
536-5144

Date: 5/20/2020 Step 5: Write the Inventories amount (net of Amount

Check Voucher paid less VAT) in the Sundry column (P440).
Paid to: Mr. X
PARTICULARS Amount Step 6: In the next line of Accounts Debited column,
Inventories 440.00
VAT 60.00 write “Output VAT”.
(defective goods)
Step 7: Write the VAT amount in the Sundry column
Amount Paid
Check No. 100061
500.00 (P60).
Approved for Payment:
Received Payment:
Step 8: Write the amount paid in the Cash column
(P500).

Payment of Other Expenses

Step 4: In the Accounts Debited column, write the account title of the expense paid.
Step 5: Write the amount at the Sundry and Cash column.

Remember: This is also documented with a voucher.

The General Journal Transactions

The following are transactions do not fit in the special journals and are journalized in the
General Journal:
 Receipt of cash from owner/partner.

Cash
X, Capital
Investment
 Receipt of cash from outside source.

Cash
Notes Payable
Loans

 Receipt of cash from suppliers as refund

Cash
Purchase Returns and Allowances
Input VAT
Returns to supplier

 Purchase of assets on account

Asset Purchased
Accounts payable
Purchase of asset

Remember:
 Check the chart of accounts for the account title of the asset purchased.
 In case where a source document bears the information below:

Inventories P12,000
Returns 2,000
Discount 200

Amount Paid P 9,800

If the above information is in an Official Receipt (own company issued), The

following accounts are affected and its corresponding amount:

Accounts Receivable P10,000 (Inventories – 12,000 less Returns – 2,000)

Sales Discount 200
Cash 9,800

If it is in a Check Voucher, then:

Accounts Payable P10,000 (Inventories – 12,000 less Returns – 2,000)

Purchase Discount 200
Cash 9,800
Journalizing for Service Business
The Revenues Journal

Statement of Account or Billing Statement is issued by the service provider for service
rendered on account. This kind of document is recorded in Revenues Journal. Journalizing
is illustrated as follows.

No. : 1525

Himzon and Associates Law Firm

San Pablo City, Laguna
536-5144

Date: 11/25/2020
Statement of Account

Customer: F. Avelino
Address: Alaminos, Laguna
Telephone:

This is to bill you for the following:

Particulars Amount
Professional Fees 30,000.00

Total Amount 30,000.00

By:
Authorized Signature

Revenues Journal
Service Accounts
Invoice
Date Revenues Receivable
No.
2020 Accounts Debited PR Credit Debit
Nov. 25 1525 F. Avelino ₱ 30,000.00 ₱ 30,000.00

Step 1: Write the date in the date column.

Step 2: Write the Invoice number in its column.

Step 3: In the Accounts Debited Column, write the name of the customer.

Step 4: Write the total amount in the Service Revenues and Accounts Receivable columns.
The Cash Receipt Journal

This journal is used to record receipt of cash from customers either for an outright service
or a collection of receivables. Official Receipt is issued for this cash collection. Recording
to Cash Receipt Journal is illustrated below.

No. : 434 No. : 435

Himzon and Associates Law Firm Himzon and Associates Law Firm
San Pablo City, Laguna San Pablo City, Laguna
536-5144 536-5144
Date: 7/15/2020 Date: 7/15/2020
Official Receipt Official Receipt

Customer: D. Masakop Customer: F. Avelino

Address: San Pablo City Address: San Pablo City
Telephone: Telephone:

Particulars Amount Particulars Amount

Professional Fees 15,000.00 Professional Fees 30,000.00
Invoice#1525

Amount Paid 15,000.00 Amount Paid 30,000.00

VAT VAT
Amount after VAT 15,000.00 Amount after VAT 30,000.00
By: By:
Authorized Signature Authorized Signature

Cash Receipt Journal

Account Service
Invoice
Date OR NO Receivable Revenues Cash
No.
2020 Accounts Debited PR Credit Credit Debit
July 15 434 D. Masakop ₱ 15,000.00 ₱ 15,000.00
15 435 1525 F. Avelino ₱ 30,000.00 30,000.00

Step 1: Write the date in the Date column.

Step 2: Write the OR number in its designated column. For collection of receivables, the
specified invoice/SOA number is written in its designated column.

Step 3: In the Accounts Debited column, write the name of the customer.

Step 4: For outright collection service rendered, write the total amount in the Service
Revenues column and Cash column.

For collection of receivables, write the total amount in the Accounts Receivable
column and Cash column.

Note: An official receipt for collection of receivables can be identified by SOA/Invoice No.,
and/or date of service earlier than collection date being stated.
The Cash Disbursement Journal
All cash payments are recorded in the Cash Disbursement Journal. Remember that the
design of the special journal varies in every company. Following the standard format of
Cash Disbursement Journal below, amount paid is recorded in the Cash column. The other
column affected will depend on what is being paid in the transaction as follow.
Cash Disbursement Journal
SSS, PH, Pag With. Tax Expanded
Check
Check Salaries Pay Payable Supplies Input With Tax
Voucher
Date No. Sundry Expense Debit Debit Expense Vat Debit Cash
No.
2021 Accounts Debited PR Debit Debit (Credit) (Credit) Debit Debit (Credit) Credit

Step 1: Write the date of transaction in the Date column.

Step 2: Write the voucher number in the Check Voucher column
Step 3: Write the check number if check is issued.

Source Document Description and Accounts/Columns Affected

No.:2125 Purchase of Supplies

ABC Merchandising Step 4: Write the name of supplier in the Accounts
San Pablo City, Laguna
536-5144 Debited column.
Step 5: Write the cost of supplies (VAT Inclusive) in
Date: 5/20/2020
Check Voucher
Paid to: B. Maningas Supplies Expense column. (P2,000)
PARTICULARS Amount
Supplies 1,760.00 Step 6: Write the amount paid in the Cash column.
VAT 240.00
(P2,000)

Amount Paid 2,000.00

Check No. 100061
Approved for Payment:
Received Payment:

No.:2125 Purchase of Asset (Office Equipment)

ABC Merchandising Step 4: Write the asset cost (VAT Inclusive) in the
San Pablo City, Laguna
536-5144 Sundry column (P15,000) and the account
Date: 5/20/2020 title of asset purchased (Office Equipment) in
Check Voucher
the Account Debited column.
Paid to: ABC Supplies and Equipment
PARTICULARS
Office Equipment
Amount
13,200.00
Step 5: Write the amount paid in the Cash column.
VAT 1,800.00 (P15,000)

Amount Paid 15,000.00

Check No. 100061
Approved for Payment:
Received Payment:
 No.:2125 Payment of Payables
ABC Merchandising Step 4: In the Account Debited column, write the
San Pablo City, Laguna
536-5144 name of supplier where the amount is paid to.
Step 5: Write the payable amount in the Accounts
Date: 5/20/2020
Check Voucher
Paid to: XYZ Enterprises Payable column. (P15,000)
PARTICULARS Amount
Inventories 15,000.00 Step 6: Write the discount amount (if any) in the
Discount 300.00
(Invoie #2356) Purchase Discount column (P300)

Amount Paid 14,700.00

Step 7: Write the amount paid (net of payable
Check No. 100061
Approved for Payment:
amount less discount, if any) in the Cash
Received Payment: column

No.:2125
Payment of Utilities
ABC Merchandising Step 4: If coming from a previous accounting period,
San Pablo City, Laguna
536-5144
in the Accounts Debited column write
Date: 5/20/2020
“Utilities Payable” otherwise, write “Utilities
Check Voucher Expense.”
Paid to: Meralco
PARTICULARS Amount Step 5: In the Sundry column, write the amount
Electric Bill
for the month of April
2,500.00
(P2,500).
Step 6: Also write the amount in the Cash column
Amount Paid 2,500.00 (P2,500).
Check No. 100061
Approved for Payment:
Note: check on the account title for the correct
Received Payment:
account to be used.

Payment of Rent

No.:2125
Step 4: Write “Rent Expense” in the Accounts
Debited column.
ABC Merchandising
San Pablo City, Laguna Step 5: In the Sundry column write the rent amount
536-5144
(P15,000).
Date: 5/20/2020
Check Voucher
Step 6: (Only if there is Expanded Withholding Tax).
Paid to: Lina Building
PARTICULARS Amount
Write the EWHT amount - enclosed in a
Monthly Rentals
EWHT
15,000.00
1,000.00
parenthesis since it is a credit entry “(1,000)”
in the Expanded Withholding Tax Payable
column.
Amount Paid 14,000.00
Check No. 100061
Approved for Payment:
Step 7: Write in the Cash column the amount paid
Received Payment: (P14,000).
Remember: Expanded Withholding Tax is paid by
the landlord. If agreed that the tenant will be
 the one to remit the tax to BIR, then the
amount is deducted from the Rent and is
payable to BIR.

Payment of Salaries (Payroll)

Step 4: In the Salaries Expense column write the
No.:2125
Gross Amount (P30,000).
ABC Merchandising
San Pablo City, Laguna
Step 5: Write the SSS, PH and Pagibig Deduction (if
536-5144 any) at the SSS, PH and Pagibig Payable
Date: 5/20/2020 column “(1,600)”.
Check Voucher
Paid to: Payroll Step 6: Write the WTax amount in the Withholding
Gross Pay
PARTICULARS Amount
30,000.00 Tax Payable column “(900)”.
SSS, PH and Pagibig Deduction 1,600.00
Wtax 900.00 Step 7: Write the Net Pay in the Cash column
(27,500).
Amount Paid 27,500.00
Check No. 100061
Approved for Payment:
Remember: Withholding Tax and SSS, PH and
Received Payment: Pagibig Deduction are recorded enclosed in a
parenthesis since they are credit entries.

No.:2125 Remittance to BIR

ABC Merchandising Step 4: In the Accounts debited column, write “BIR”.
San Pablo City, Laguna

Step 5: Write the tax remitted in its appropriate

536-5144

column at the Cash Disbursement Journal

Date: 5/20/2020
Check Voucher
Paid to: BIR (P900 and P1,000). No parenthesis since
Exp. With. Tax
PARTICULARS Amount
1,000.00
they are debit entry.
W. Tax 900.00
Step 6: Write the total amount paid in the Cash
column (P1,900).
Amount Paid 1,900.00
Check No. 100061
Approved for Payment:
Received Payment:
 Remittance to SSS, PhilHealth and Pagibig
 If coming from a previous accounting period

Step 4: In the Accounts Debited column write

“SSS, PH and Pagibig”.
No.:2125
Step 5: Write in the SSS, PH and Pagibig Payable
ABC Merchandising
San Pablo City, Laguna
column the total amount (P4,800).
536-5144
Step 6: Write the in the Cash column the total
Check Voucher
Date: 5/20/2020
amount paid) P4,800).
Paid to: BIR
PARTICULARS Amount  Not coming from a previous accounting period
Employees' Share 1,600.00
Employer's Share 3,200.00
Step 4: In the Accounts Debited column write
“SSS, PH and Pagibig Contribution”.
Amount Paid 4,800.00
Check No. 100061
Approved for Payment:
Step 5: In the Sundry column, write the amount
Received Payment: of employer’s share (P3,200).
Step 6: Write in the SSS, PH and Pagibig Payable
column the employees’ share (P1,600).
Step 6: Write the in the Cash column the total
amount paid (P4,800).

Payment of Other Expenses

Step 4: In the Accounts Debited column, write the account title of the expense paid.
Step 5: Write the amount at the Sundry and Cash column.

Remember: This is also documented with a voucher.

The General Journal Transactions

The following are transactions do not fit in the special journals and are journalized in the
General Journal:
 Receipt of cash from owner/partner.

Cash
X, Capital
Investment
 Receipt of cash from outside source.

Cash
Notes Payable
Loans

 Purchase of assets on account

Asset Purchased
Accounts payable
Purchase of asset

Remember: Check the chart of accounts for the account title of the asset purchased.