BOOKKEEPING 101

Simple and Basic

BOOKKEEPING
Recording, Classifying and Summarizing business
transactions like; Investing, Purchasing, Buying,
Paying, Collecting, etc.
Financial Transactions are business transactions
that involves cash flows; Cash inflows and Cash
Outflows.
The Five Major Accounts
ASSETS, owned by the company with measurable benefits in
the future.
Current Assets;
Cash, Bills or Coins, monetary
Account Receivable, these are collectibles from service
rendered on account or sales on account. (Pautang ng
kumpanya na dapat singilin).
Office Supplies, these are the supplies used in the office
like Bond papers, ink, ball pens etc.
Land, Building, Machinery and Equipment are Non Current
assets that cannot be easily transfer into cash with in a year.
The Five Major Accounts
Liability, owed by the company with measurable benefits in
the future or simply OBLIGATIONS.
most common are;
Account Payable, this liability is the obligation of the
company that the payment is necessary with in a year.
Notes Payable, an obligation with in or more than a year
depending on the promissory note.
The Five Major Accounts
Capital or Owner’s Equity, this is the investment of the owner,
this is the part of account that shows the owner’s contribution
in starting the business.
like;
(Name of the Owner), Capital ; Mr. Innu Vator, Capital
Drawings, this is the portion of money that the owner
withdraw for personal used. Like; Mr. Innu Vator, Drawings.
The Five Major Accounts
Revenue, is the over all income of the company form sales or
service rendered with out deduction of operating expenses.
like;
Sales, for Manufacturing company
Service Fee, for Service business
Professional fee, used to identify payment from rendering
your specialty.
The Five Major Accounts
Expenses, These are disbursement used for the operation of
the business
like;
Advertising Expense, all promotional expenses.
Utilities Expense, for payment of water bill, electric bill,
telephone bill.
Rent Expense, used for payment of space rent.
Salary Expense, used for payment of salaries of employees.
Repairs and Maintenance, used for company’s repairs and
maintenance for building or equipment.
Normal Balances of an account;
Debit (Value Received) Credit(Value Parted With)
ASSETS LIABILITIES
EXPENSES CAPITAL
REVENUE

When asset and expenses are in their normal balances(debit) they will increase, same with
Liability, Capital and Revenue (credit).
But if an instance occur that the accounts are not in their normal balance they will decrease.

Debit (Value Received) Credit(Value Parted With)

LIABILITY ASSETS
CAPITAL EXPENSES
REVENUE
The Sides
Debit Side or the Value Receive side, is all that get in the company, all the receives.
Credit Side or the Value Parted with side, is all that the company give in for
something in return.
Examples:
Mr. Innu Vator invested 3,000,000 cash to the business.
The Debit here is Cash amounting to 3,000,000.00 and the credit is Mr. Innu
Vator, Capital amounting to 3,000,000.00
Explanation:
The account that the company received was Asset and Cash is an asset, The
normal balance of asset is debit. The account that the company give in was Capital
of Mr. Innu Vator, and Capital’s normal balance is Credit.
*There is an increased in asset and an increased in capital.
The Sides
Examples;
Purchased Equipment amounting to 200,000.00 in cash.
The Debit here is Equipment amounting to 200,000.00 because it is
the account that the company received. And The credit here is Cash
amounting to 200,000.00 because when we buy in cash we pay cash,
we give in cash. Just like when we buy candy we received the candy
then we pay.
So There was an increased in Asset and also a decreased in asset.
Debit; Equipment an asset and Credit; Cash an asset also and not in
normal balance.
The Sides
Examples;
Bought Supplies amounting to 10,000.00 on account.
The Debit here is Supplies amounting to 10,000.00 because it is the
account that the company received. And The credit here is Account
Payable amounting to 10,000.00 because an account means not yet
paid, or “ Bumili ang kumpanya pero hindi nito binayaran pa”
So There was an increased in Asset and an increased in liability.
Debit; Supplies an asset and Credit; Account Payable a liability. Both
in their normal balance.
The Sides
Examples;
Rendered service on account amounting to 40,000.00
The Debit here is Account Receivable amounting to 40,000.00
because as account means “ unpaid” but this time there is a collectible
in the part of the company. And the credit here is Service Fee
amounting to 40,000.00
Wag malilito, laging tatandaan na kapag Bought or purchased on
account, Account Payable na agad ang gagamitin at lagi itong nasa
credit side. Kapag naman ang transaction ay Sold or Rendered service
on account, Account Receivable na agad ang gamitin at lagi itong nasa
debit side.
Isa pa, ang Sales at Service Fee ay laging nasa credit side, hindi ito
maaring maging credit unless there is an adjustment.
The Sides
Examples;
Paid salary of employees amounting to 20,000.00
Debit here is Salary Expense, and Credit is Cash.
When it is PAID it means you give Cash.
Laging tandaan na ang Expenses ay laging nasa Debit side maliban
nalang kung mayroong adjustment. Mapapansin na ang Cash dito
although Asset siya at Debit and normal balance niya, siya ay naka
credit, siya ay nabawasaan dahil nagbayad ng salary ng employees.
Let’s TRY;
On May 2019, Mr. Santos invested in putting a manufacturing company Namely “ New Innovation
Manufacturing” here are the transactions all throughout the month of May;
1 Mr. Santos invested 1,000,000 Cash to the business.
2 Purchased Supplies for office used amounting to 15,000.00
3 Bought Equipment amounting to 300,000.00 on account.
4 Sold products on account amounting to 30,000.00.
5 Paid water bill and electric bill, 11,000.00.

What is the Debit Side account and the Credit Side Account?
Example: Mr. Santos invested Land to the company amounting to 1,000,000.00
May 2019 Debit Credit
6 Land (The Value Received) 1,000,000
Mr. Santos, Capital (The Value Parted With) 1,000,000.00
Answer Key:
Mr. Santos invested 1,000,000 Cash to the business.
May 2019 Debit Credit
01 Cash 1,000,000.00
Mr. Santos, Capital 1,000,000.00

Purchased Supplies for office used amounting to 15,000.00

May 2019 Debit Credit

02 Office Supplies 15,000.00
Cash 15,000.00
Answer Key:
Bought Equipment amounting to 300,000.00 on account
May 2019 Debit Credit
03 Equipment 300,000.00
Account Payable 300,000.00

Sold products on account amounting to 30,000.00.

May 2019 Debit Credit
04 Account Receivable 30,000.00
Sales 30,000.00
Answer Key:
Paid water bill and electric bill, 11,000.00.
May 2019 Debit Credit
03 Utilities Expense 11,000.00
Cash 11,000.00
Deepening
Not all “on account” stays unpaid. Like:
On May 03, 2019, Bought Equipment amounting to 300,000.00 on account the
entry will be;

Then on May 06, 2019, 60% Payment are made for May 03, 2019 transaction the
entry will be:
May 2019 Debit Credit
06 Account Payable 240,000.00
Cash 240,000.00
Deepening
Not all “on account” stays unpaid. Like:

On May 04, 2019 ; Sold products on account amounting to 30,000.00.

Then on May 07, 2019, Collected 50% of Receivables on May 04, 2019.
May 2019 Debit Credit
07 Cash 15,000.00
Account Receivable 15,000.00
Answer on your Portfolio.
Prepare Journal Entries to the following transactions of Mr. Crey Thor
using the Chart of Accounts of The Crey Thor Creations