Financial Acctg Reporting 1 Chapter 9

TABLE OF CONTENTS
Chapter 1 Accounting: Its Development and Basic Concepts 1
Chapter 2 Business Transactions and the Related Accounting Values or 25
Elements Chapter 3 The Accounting Equation, The Theory of Debits and Credits 43
and
Financial Statements 67
Chapter 4 Accounting Cycle for Service 119
Company Chapter 5 The Adjustment Process 136
179
Chapter 6 Completion of the Accounting Cycle
234
Chapter 7 Accounting for Merchandising
241
Business Chapter 8 Imprest Cash System
268
Chapter 9 Recording Transactions in Special
Journals Chapter 10 Accounting for Receivables and

284
Payables
299
Chapter 11 Adjusting the Accounts and Preparation of Worksheet and Financial
305
Statements
314
Chapter 12 Voucher System
Chapter 13 Manufacturing
Operations Bibliography
Reuploading these educational materials on the internet is prohibited.

CHAPTER 9
RECORDING TRANSACTIONS IN SPECIAL JOURNALS
This chapter deals with the recording of business transactions using special journals.
It focuses on the type of business transaction and the corresponding special journal to be
used. It emphasizes the procedures from recording of business transactions in the special
journals and posting of accounts from the special journals to the general and subsidiary
ledgers. It also includes the preparation of trial balance and financial statements.
Learning Objectives:
The students are expected to:

 Understand the nature and use of control accounts and subsidiary ledgers.
 Differentiate the special journal from general journal.
 Enumerate different types of special journals and identify the corresponding business
transactions to be recorded.
 Identify the documents which serve as the basis for recording transactions in the
journal.
 Journalize business transactions using special journals.
 Describe the relationship between a controlling account and subsidiary accounts.
 Prepare a trial balance, worksheet and financial statements.
 Honestly solve problems on special journals.
The previous chapters discussed the recording of business transactions in a two-

column general journal. All the transactions were recorded chronologically and
systematically. However, most of the transactions were repetitive and occurred many times
during the period such as sales on account, purchases on account, cash sales, cash purchases,
and many others. Postings to the general ledgers were as many as the transactions. Due to
this impracticality and tiresome work, special journals were developed. The use of special
journals is very convenient, practical, minimizes the postings, and most of all answers
immediately many questions usually asked in business organizations. (cash sales, credit sales,
collections, disbursements, etc.)
Journal
Business transactions are recorded in the journal. Transactions are analyzed based on
source documents as the basis in recording to the respective journals. Journals may be
classified as general journal or special journals.
General Journal
General Journal is a book of original entry wherein all kinds of business transactions
are recorded. It contains a chronological record of all the transactions and the events that
compose the financial listing of the economic entity.
The firm may use the general journal alone in recording all of their business
transactions.Reuploading
However, if these educational
the company usesmaterials on the internet
special journals, is prohibited.
the general journal should only
241
be used for transactions that could not be recorded in the special journals. Examples of
transactions that will be recorded in the general journal are sales returns, purchases returns,
adjusting entries, correcting entries, amortizations, and investments other than cash.
Disadvantages of not using special journals:
1. Only one person can use the books at a time.

2. There are numerous postings from the journal to the general ledgers of similar
transactions.
3. Information needed is difficult to obtain immediately.
4. More works to be done compared with the use of special journals.
Special Journal
Special Journal is a book of original entry that records only one kind of transaction.
This transaction is repetitive or occurs several times during the course of business operations.
Special journals are used to record specific transactions only, and in tabular form. The
general journal will be used for the recording of business transactions that do not fit in the
special journals.
Types of Special Journals

5. Sales Journal or Sales Book
6. Purchases Journal or Purchases Book
7. Cash Receipts Journal or Cash Receipts Book
8. Cash payments Journal or Cash Disbursements Book
Advantages of using the special journals

1. Permits division of labor.
2. Reduces recording time. The format of the special journal simplifies the
recoding process.
3. Posting of entries from the journal to the ledger is minimal. Transactions are
grouped together and posting is done per total.
4. Information needed, can easily be obtained.
5. More economical since the time spent is reduced.
6. Tracing of transactions is faster and easier.
7. Easy to analyze.

242
Journals and their uses
Journals Transactions Supporting Documents
Special Journals
Sales Journal Sales on account Sales invoice
Purchases Journal Purchases on account Sales Invoice/Charge

Invoice/Delivery Receipt of
the suppliers, Purchase
Order, and Receiving Report
Cash Receipts Journal All cash receipt or collections Official Receipts (OR)
including cash sales
Cash Payments Journal All cash payments including Cash Voucher or Check
cash purchases Voucher, Check, Other
Supporting Documents
(contract, delivery receipt,
receiving report)
General Journal Investments other than cash Journal Voucher, DM, CM,
(merchandise, equipment, land Others (SI, OR, Check, etc.)
and other properties)
Adjusting entries
Closing Entries
Reversing Entries
Returning of goods purchased
Returning of goods sold
Bounced check: DAIF(Drawn
Against Insufficient Fund) or
NSF (No Sufficient Fund)
Others( all other transactions
that cannot be recorded on the
special journals)

243
The Sales Journal
Sales Journal is a special journal designed to record sales on account. Most of the
companies at present are extending credit to the customers to increase sales. A Sales Invoice
is issued to the customer as an evidence of the transaction. Sales Invoices are pre-numbered
documents printed with the approval by the BIR (Bureau of Internal Revenue). Sales invoice
contains serial number, date of issuance or date of sale, item sold, quantity, model, item,
selling price or amount and signed by the seller and the buyer.
The Cash Receipts Journal
Cash Receipts Journal is a special journal wherein all collections including cash
sales are recorded. An Official Receipt (OR) is issued every time the business firm receives
cash. Examples of cash receipts transactions are: collection of receivables from customers
due to sales on accounts, cash sales, investment of the owner, proceeds of loans from lending
institutions or banks, collections from employees, donations, and others.
The Cash Payments Journal
A special journal designed to record all types of cash disbursements is called a cash
payments journal. Examples of cash payments are expenses, cash purchases, payment to
creditors, and withdrawal of cash by the owner. The source document used for cash payment
is the cash voucher or check voucher.
Cash voucher is a pre-numbered form in which a cash disbursement transaction is

described and analyzed. It must be verified and approved by the authorized signatories before
payment will be made. Once approved, payment and recording may be done. Payment may
be in a form of cash or check.
The Purchases Journal
Purchases Journal is a special journal where purchases on account are recorded.

Purchases on account include merchandise, supplies, equipment, furniture and fixtures and
others. They are evidenced by a Purchase Order, Charge Invoice, Delivery Receipts, Bill of
Lading and other documents secured in the course of the purchase transactions.
General Journal
Transactions that cannot be recorded in the four preceding special journals are
recorded in the General Journal. These transactions may be classified as current transactions
which cannot be entered in any special journals like sales returns and allowances and
purchases returns and allowances, correcting journal entries, adjusting, closing and reversing
journal entries.

244
Recording of Business Transactions in the Special Journals and General Journal.
To illustrate:
The transactions of Hope Trading for the month of October, 2021 were as follows:
October 1 Hope established a business named Hope Trading with a cash investment
of P150,000. Issued OR # 0001.
1 Hope invested merchandise worth P20,000.
1 Paid rent for store space for six (6) months P30,000 to ABC Co.. Issued
Check No. 23351.
1 Paid business permits and other taxes required to start the business, P5,500
to Iloilo City Treasurer’s Office. Issued Check #23352.
3 Bought furniture and office equipment from Narra Company, P5,000 and
P8,000, respectively. Terms: 2/10, n/30.
6 Purchased merchandise on account from Atis Co., P102,000. Supplier’s
Terms: 2/15, n/30.
6 Sold merchandise to Rubi, P51,000. Issued Invoice No. 1. Terms: 2/15,
n/30, P51,000.
8 Cash sales, P25,000. Issued OR# 0002.
8 Purchased merchandise for cash P4,000 from Apple Enterprise. Issued
Check No. Check # 23353.
9 Paid telephone expenses P1,500 to PLDT. Issued Check # 23354.
11 Sold on account to Saphire, Invoice No. 2, P35,000. Terms: 1/10,
n/20.
15 Paid wages of employees, P20,000. Issued Check # 23355.
17 Purchased merchandise on account from Cherry Co. P32,000, n/60.
17 Paid LBC, P2,000 for the delivery of the purchases from Cherry Co. Issued
Check # 23356.
17 Received Credit Memo No. 66 from Atis Co., P2,000, for the merchandise
returned to them.
18 Paid in full the account due to Atis Co. Issued Check # 23357.
18 Bought office supplies, P2,500 from Olive Trading. Terms: 2/10, n/30.
20 Issued Credit Memo No. 1 to Rubi, P1,000, for merchandise returned.
21 Paid in full the account due Narra Company, Issued Check # 23358.
22 Collected in full the account due from Rubi. Issued OR # 0003.
23 Hope, withdrew P5,000 for her personal use. Issued Check # 23359.
22 Cash Sales, P30,000. Issued OR # 0004.
25 Sold on account to Rubi, Invoice No. 3; P40,000. Terms: 1/10, n/30
25 Sold on account to Emerald, Invoice No. 4; P54,200. Terms: 2/10, n/30.
26 Purchased store supplies from Pine store, P1,500. Terms: n/30.
27 Sold merchandise on account to Emerald, P68,000. Invoice No. 5. Terms:
n/30.
29 Paid Olive Trading for the amount due. Issued Check # 23360.
30 Paid wages of employees, P15,000. Issued Check # 23361.
31 Paid one year insurance premium starting November 1, 2021 P12,000.
Issued Check # 23362.

245
The Chart of Accounts
Cash Account No.

Accounts Receivable 11
Inventory 12
Office Supplies 14
Store Supplies 15
Prepaid Rent 16
P repaid Insurance 17
Furniture & Fixtures 18
Office Equipment 21
Accounts Payable 22
Hope, Capital 31
Hope, Drawing 41
Sales 42
Sales Returns and Allowances 51
Sales Discounts 52
Purchases 53
Purchase Returns and Allowances 61
Purchase Discount 62
Freight In 63
Salary Expense 64
Rent Expense 71
Telephone Expense 72
Utilities Expense 73
Insurance Expense 74
Taxes and Licenses 75
76

246
Based on the transactions given the entries in the special journals and general journal are as
follows:
SALES JOURNAL
Page 1
Invoice Accounts Receivable (Dr)
Date No. Accounts Debited Terms PR Sales (Cr)
2021
Oct 6 0001 Rubi 2/15, n/30  51,000
11 0002 Saphire 1/10, n/30  35,000
25 0003 Rubi 1/10, n/30  40,000
25 0004 Emerald 2/10, n/30  54,200
30 0005 Emerald n/30  68,000
248,200
======
(12) (51)
Cash Receipts Journal

Page 1
Sundry Accounts Sales

Date Accounts Credited OR # Account Rec. Sales Discount Cash
(Cr) (Cr) (Dr)

(Cr) (Dr)
2021
Oct 1 Hope, Capital 0001 150,000 150,000
8 Cash Sales 0002 25,000 25,000
21 Rubi 0003 50,000 1,000 49,000
22 Cash Sales 0004 30,000 30,000
150.000 50,000 55,000 1,000 254,000

====== ===== ===== ==== ======
(31) (12) (51) (53) (11)

185
247
Purchases Journal
Date Accounts Terms F Accounts Purchases Sundry Account (Dr)
Credited Payable
Cr Dr Acct title F Amount
2021 Fur and Fixture 21 5,000

Oct 1 Narra Co. 2/10,n/30  13,000 Office Equipt 22 8,000
3 Atis Co. 2/15,n/30  102,000 102,000
8 Cherry Co. n/60  32,000 32,000
18 Olive Co. 2/10,n/30  2,500 Office Supplies 15 2,500
27 Pine Store n.30  1,500 Store Supplies 16 1,500
151,000 134,000 9,500

===== ==== ====
(31) (61) ()
Cash Payments Journal
Sundry Accounts Purchase

Date Check Accounts Debited F Account Payable Purchases Disc. Cash
No.
(Dr) (Dr) (Dr) (Cr)
(Cr)
2021
Oct 1 23351 Prepaid Rent 17 30,000 30,000
1 23352 Taxes and Licenses 76 5,500 5,500
8 23353 Cash Purchases  4,000 4,000
9 23354 Telephone Expenses 73 1,500 1,500
15 23355 Salary Expenses 71 20,000 20,000
17 23356 Freight In 64 2,000 2,000
18 23357 Atis Company  100,000 2,000 98,000
21 23358 Narra Company  13,000 13,000
22 23359 Hope, Drawing 42 5,000 5,000
31 23360 Olive Trading  2,500 2,500
31 23361 Salary Expenses 71 15,000 15,000
31 23362 Prepaid Insurance 18 12,000 12,000
91,000 115,500 4,000 2,000 208,500
() (31) (61) (63) (11)

248
GENERAL JOURNAL
Date Description F Debit Credit

2021
Oct 1 Inventory 14 20,000
Hope, Capital 41 20,000
Investment of Hope.
17 Accounts Payable-Atis 31/ √ 2,000

Purchase Returns and Allowances 62 2,000
Returned merchandise to Atis.
20 Sales Returns and Allowances 52 1,000

Accounts Receivable-Rubi 12/√ 1,000
Received merchandise from Rubi.
Posting of Entries from the Journals to the General Ledger and Subsidiary Ledgers
The General Ledger and Subsidiary Ledgeres
All accounts in the chart of accounts are general ledger accounts. The general ledgers
are also called controlling account. The controlling accounts’ balances should be supported
with schedules or subsidiary ledgers. Example: Accounts Receivable as general ledger or
controlling account. All transactions related to Accounts Receivable should be posted to the
general ledger “Accounts Receivable” and at the same time should be recorded to the specific
customers’ ledger called subsidiary ledgers. Thus the sum of all balances in the subsidiary
ledgers of receivables will be equal to the balance of the Accounts Receivable which is the
general ledger or controlling account. The same process will be applied to Accounts Payable
and other controlling accounts. In this chapter, we will focus only in two controlling accounts,
the Accounts Receivable and Accounts Payable.
Controlling Account is a general ledger account which shows the summary of the
same information shown in detail in the subsidiary ledger.
Subsidiary ledger is a group of accounts showing in detail the same information

shown in summary by the controlling accounts.

249
Posting procedures from Sales Journal to the General Ledger and Accounts
Receivable Ledger are as follows:
1. Customers’ accounts are posted individually to the subsidiary ledger after each entry
in the sales journal. A check mark () is placed on the column of the Sales Journal to
indicate that the amount has been posted to the customer’s account in the accounts
receivable subsidiary ledger.
2. At the end of the month, after the individual customers’ accounts have been posted,
the column is totaled and the total amount is posted to the General Ledger as a debit to
the Accounts Receivable account and a credit to the Sales account. Posting is done
only once at the end of the accounting period. A summary of accounts receivable total
should be equal to the balance of the controlling account (Accounts Receivable).
Notice that by the use of the General Journal, there would be as many postings to the
Sales account as there are entries in the journal during the month. In the Sales Journal
procedures, only one posting is made.
Posting procedures from the Cash Receipts Journal to the Ledger are as follows:
3. Accounts credited placed under Sundry Account debit column are posted to the ledger
individually and a check mark () is placed under the columns total.
4. For Cash Sales appearing in the Accounts Credited column, amount of which shown
under the Sales column, a check mark () is placed in the Folio column immediately
upon recording to avoid double posting of the amount.
5. The Accounts Receivable (Cr.), Sales (Cr.), Sales Discount (Dr.) and Cash (Dr.) columns
are totaled and posted only once, at the end of the month.
6. Customer’s name that appear in the Accounts Credited column, whose account placed
under Accounts Receivable column are posted to the subsidiary ledger individually and a
check mark () is placed in the Folio column after posting.
Posting Procedures from the Purchases Journal to the Ledger
1. Each entry in the purchases journal crediting Accounts Payable must be posted daily
and individually to the accounts payable subsidiary ledger. The daily posting keeps
the creditor’s account balance up to date at all times. The completion of posting is
indicated by a check mark () in the folio column of the purchases journal.
2. At the end of the month, the purchases journal is totaled and ruled. The column total
of Accounts Payable credit, Purchases debit, Office Supplies debit, Store Supplies
debit, are posted to the general ledger and after posting, the corresponding account
number of each column account must be placed under each column heading to
indicate that such total had been posted.
3. For each account that appears under Sundry Account debit, individual entry should
be posted to the general ledger and not by column total. After all postings are made,
a check mark () is placed under the total of the Sundry Account column.
250
Posting Procedures from Cash Payments Journal to the Ledger
1. Each entry in the Cash Payments Journal debiting Accounts Payable must be
posted daily and individually to the accounts payable subsidiary ledger. The daily
posting keeps each creditor’s account balance up-to-date at all times. The
completion of posting is indicated by a check mark () in the folio column of the
cash payments journal.
2. For cash purchases appearing in the Account Debited column, amount of which is
shown in the Purchases column, a check mark () is placed in the folio column
immediately upon recording to avoid double posting of the amount.
3. At the end of the month, the Cash Payments Journal is totaled and ruled. The
column totals Accounts Payable debit, Purchase debit, Purchase Discounts credit
and Cash credit, are posted to the general ledger, and after posting, the
corresponding account number of each column account must be placed under
each column heading to indicate that such total had been posted.
4. For each account that appears under Sundry Account debit, individual entry
should be posted to the general ledger, not by column total. After all postings are
made, a check mark () is placed under the total of the Sundry Account column.

251
SALES JOURNAL
Page 1
Invoice Accounts Receivable (Dr)
Date No. Accounts Debited Terms PR Sales (Cr)
2021
Oct 6 0001 Rubi 2/15, n/30  51,000
11 0002 Saphire 1/10, n/30  35,000
25 0003 Rubi 1/10, n/30  40,000
25 0004 Emerald 2/10, n/30  54,200
30 0005 Emerald n/30  68,000
248,200
======
(12) (51)
Accounts Receivable No. 12

Date Items Folio Debit Credit Balance
2021
Oct 31 Sales on acct SJ – 1 248,200 248,200
31 Sales Returns GJ – 1 1,000 247,200
31 Collections CRJ – 1 50,000 197,200
Sales No. 41
2021
Oct 31 Sales on acct SJ - 1 248,200 248,200
31 Cash sales CRJ – 1 55,000 303,200
Accounts Receivable – Subsidiary Ledger
Emerald
2021
Oct 25 merchandise SJ - 1 54,200 54,200
30 merchandise SJ - 1 68,000 122,200
RUBI
2021
20 Returns GJ – 1 1,000 50,000
21 Collection CRJ-1 50,000 0
25 merchandise SJ – 1 40,000 40,000

252
Cash Receipts Journal
Page 1
Sundry Accounts Sales
Date Accounts Credited F Account Rec. Sales Discount Cash
(Cr) (Cr) (Dr)

(Cr) (Dr)
2021
Oct 1 Hope, Capital 31 150,000 150,000
8 Cash Sales 25,000 25,000
21 Rubi  50,000 1,000 49,000
22 Cash Sales 30,000 30,000
150.000 50,000 55,000 1,000 254,000

====== ===== ===== ==== ======
GENERAL LEDGER(12) (51) (53) (11)
Cash No. 11
2021
Oct 31 Collections CRJ-1 254,000 254,000
31 Payments CPJ-1 208,500 45,500

2021
31 Sales Returns GJ – 1 1,000 247,200
31 Collections CRJ – 1 50,000 197,200
Hope, Capital No. 41

2021
Oct 1 investment GJ-1 20,000 20,000
31 Investment CRJ-1 150,000 170,000

Rubi
2021
20 Returns GJ – 1 1,000 50,000
25 merchandise SJ – 1 40,000 40,000
253
The general ledgers and subsidiary ledgers after posting journal entries from special journals
(sales journal, cash receipts journal, cash payments journal, and purchases journal) and
general journal are as follows:
Accounts Receivable – Subsidiary Ledgers

Emerald
2021
30 merchandise SJ - 1 68,000 122,200
Rubi
2021
20 Returns GJ – 1 1,000 50,000
25 merchandise SJ – 1 40,000 40,000
Saphire
2021
Oct 11 Merchandise SJ - 1 35,000 35,000
Accounts Payable – Subsidiary Ledgers
Atis Company
2021
Oct 3 merchandise PJ - 1 102,000 102,000
17 Returned goods GJ-1 2,000 100,000
18 payment SJ - 1 100,000 0
Cherry Company
2021
Oct 6 merchandise PJ - 1 32,000 32,000
Narra Company
2021
Oct 1 Fur and equipt. PJ - 1 13,000 13,000
21 Payment CPJ 13,000 0
254
Olive Company
2021
Oct 18 Office supplies PJ – 1 2,500 2,500
31 Payment CPJ-1 2,500 0
Pine Company
2021
Oct 27 Store supplies PJ - 1 1,500 1,500
GENERAL LEDGER
Cash No. 11
2021
31 Payments CPJ-1 208,500 45,500

2021
31 Sales Returns GJ – 1 1,000 247,200
31 Collections CRJ – 1 50,000 197,200
Inventory No. 14
2021
Oct 31 Investment GJ-1 20,000 20,000
Office Supplies No. 15

2021
Oct 31 PJ-1 2,500 2,500

255
Store Supplies No. 16
2021
Oct 31 PJ-1 1,500 1,500
Prepaid Rent No. 17

2021
Oct 31 CPJ-1 30,000 30,000
Prepaid Insurance No. 18

2021
Oct 31 CPJ-1 12,000 12,000
Furniture and Fixtures No. 21

2021
Oct 31 PJ-1 5,000 5,000
Office Equipment No. 22

2021
Oct 31 PJ-1 8,000 8,000
Accounts Payable No. 31

2021
Oct 31 Purchases PJ-1 151,000 151,000
31 Returns GJ-1 2,000 149,000
31 Payments CPJ-1 115,500 33,500

256
Hope, Capital No. 41
2021
Oct 1 investment GJ-1 20,000 20,000
31 Investment CRJ-1 150,000 170,000
Hope, Drawing No. 42

2021
Oct 1 CPJ-1 5,000 5,000
Sales No. 51
2021
Oct 31 Sales on acct SJ-1 248,200 248,200
31 Cash sales CRJ-1 55,000 303,200
Sales Returns and Allowances No. 52

2021
Oct 20 Sales ret. GJ-1 1,000 1,000
Sales Discounts No. 53

2021
Purchases No. 61
2021
Oct 31 On account PJ-1 134,000 134,000
31 Cash purchases CPJ-1 4,000 138,000

257
Purchases Returns and Allowances No. 62
2021
Oct 17 Returns GJ-1 2,000 2,000
Purchases Discount No. 63

2021
Oct 17 CRJ-1 2,000 2,000
Freight In No. 64
2021
Oct 31 CPJ-1 2,000 2,000
Salary Expense No. 71

2021
Oct 31 CPJ-1 35,000 35,000
Rent Expense No. 72

2021
Telephone Expense No. 73

2021
Oct 31 CPJ-1 1,500 1,500

258
Utilities Expense No. 74
2021
Insurance Expense No. 75

2021
Taxes and Licenses No. 76

2021
Oct 31 CPJ-1 5,500 5,500
The Trial Balance

After posting entries from journals to the general and subsidiary ledgers, the account
balances will be computed and summarized. A trial balance is prepared. It is a list of all open
accounts. It only proves the equality of debits and credits but does not guarantee the
correctness of the accounts.
The schedule of accounts receivable and accounts payable will also be prepared. The
subsidiary ledgers will be the basis in preparing the schedules. The list of the customers with
account balances will be listed and the total amount of receivables in the schedule must be the
same with the balance of accounts receivable per general ledger. The general is the control
account. The schedule of accounts payable will also be the same with the control account
(general ledger – accounts payable)

259
HOPE TRADING
TRIAL BALANCE
October 31, 2021
DEBIT CREDIT
Cash…………………………………….. 45,500
Accounts Receivable…………………… 197,200
Inventory……………………………….. 20,000
Office Supplies…………………………. 2,500
Store Supplies…………………………... 1,500
Prepaid Rent …………………………… 30,000
Prepaid Insurance………………………. 12,000
Furniture and Fixtures………………….. 5,000
Office Equipment………………………. 8,000
Accounts Payable………………………. 33,500
Hope, Capital………………………….. 170,000
Hope, Drawing………………………… 5,000
Sales…………………………………….. 303,200
Sales Returns and Allowances………….. 1,000
Sales Discounts…………………………. 1,000
Purchases………………………………... 138,000
Purchase Returns and Allowances……… 2,000
Purchase Discounts……………………... 2,000
Freight In………………………………... 2,000
Salary Expense………………………….. 35,000
Telephone Expense……………………... 1,500
Taxes and Licenses……………………… 5,500
Total 510,700 510,700

======== ========

260
HOPE TRADING
Schedule of Accounts Receivable
October 31, 2021
Emerald P122,200
Rubi
Saphire 40,000
35,000
Total P197,200
=======
HOPE TRADING
Schedule of Accounts Payable
October 31, 2021
Cherry Company P32,000

Pine Company 1,500
Total P33,500
=======

261
Exercise 9-1 Multiple Choice. Encircle the letter of the correct answer.
1. The type of transaction that would appear in the sales journal would be a sale of
a. equipment for cash c. merchandise on account
b. equipment in exchange for a note d. supplies for cash
2. Which of the following items would be recorded in the purchase journal?

a. equipment purchased on account c. supplies purchased on account
b. merchandise purchased on account d. all of the preceding
3. Infrequent sales returns would be recorded in -

a. cash payments journal c. general journal
b. cash receipts journal d. sales journal
4. When merchandise is returned or a price adjustment is granted, the entry is made in the
a. Cash receipts journal c. purchases journal
b. general journal d. sales journal
5. A firm that uses special journals acquired merchandise for P5,000, giving a P5,000
note payable. Which journal would the transaction be recorded?
a. cash receipts journal c. general journal
b. cash payments journal d. purchases journal
6. A special journal containing columns for cash, purchases discounts, and accounts
payable is
a. cash payments journal c. purchase journal
b. cash receipts journal d. sales journal
7. The controlling account in the general ledger that summarizes the individual accounts
with creditors in a subsidiary ledger is called
a. accounts payable c. purchases
b. accounts receivable d. sales returns and allowances
8. The individual amounts in the accounts payable column of the purchases journal are
posted to the appropriate account in the
a. accounts payable ledger c. general journal
b. accounts receivable ledger d. general ledger
9. The classification and normal balance of the sales discount would be

a. contra revenue and debit c. expense and debit
b. contra revenue and credit d. expenses and credit
10. Each time an entry is recorded in the purchases journal, the credit would be entered in
a. accounts payable column c. purchases column
b. accounts receivable column d. supplies column
262
Exercise 9-2 Jude Enterprises, engaged in selling beauty products, completed the following
transactions during March of the current year:
March 02 Purchased merchandise on account from April Co., P30,500.

14 Purchased store supplies on account from May Co., P23,000.
16 Purchased office supplies on account from June Trading, P8,750.
22 Purchased equipment on account from July Enterprises, P45,500.
26 Purchased merchandise on account from August Corp., P40,000.
30 Purchased store supplies on account from May Co. P3,000.
Required:
1. Record the transactions in the purchases journal.
2. Post the individual items from the purchases journal to the T-accounts in
the general and accounts payable ledgers. Indicate that each item has been
posted by placing a checkmark on an account number in the appropriate
Post. Ref. column of the purchases journal.
3. Post the totals of the purchases journal to the general ledger.
4. Insert the appropriate account numbers in the journal under the amount
posted.
5. Determine that the balances of the individual accounts payable controlling
account in the general ledger by completing the following summary form:
April Co. P
August Corp.
May Co.
July Enterprises
June Trading
Total Accounts Payable P

=============

263
Problem 9-1. LJ Co. was established in January of the current year. Its sales of
merchandise on account and related returns and allowances during the remainder of the
month are described below. Terms of all sales were n/30, FOB destination.
Jan 5 Sold merchandise on account to Berl Corp., Invoice No. 1, P51,000.

6 Sold merchandise on account to Dave Co., Invoice No. 2, P47,500.
10 Sold merchandise on account to Lance Co., Invoice No. 3, P40,000.
11 Issued Credit Memorandum No. 1 for P2,500 to Dave Co., for merchandise returned.
22 Sold merchandise on account to Love Co. Invoice No. 4, P30,000.
25 Sold merchandise on account to Menard, Inc. Invoice No. 5, P18,000.
26 Issued Credit Memorandum No. 2 for P1,000 to Berl Corp. for merchandise
returned.
28 Sold merchandise on account to Dave Co., Invoice No. 6, P36,000.
28 Issued credit memorandum No. 3 for P500 to Love, Co., for damages to
merchandise caused by faulty packing.
31 Sold merchandise on account to Love, Co., Invoice No. 7, P45,000.
Instructions:
1. Open the following accounts in the general ledger, using the account numbers
indicated; Accounts Receivable, 113; Sales, 411; Sales Returns and Allowances,
412.
2. Open the following accounts in the accounts receivable ledger; Berl Corp., Dave
Co., Lance Co.; Love Co.; Menard, Inc.
3. Record the transactions for January, posting to the customer’s accounts in the
receivable ledger and inserting the balance immediately after recording each
entry. Use a sales journal similar to the one illustrated and a two-column general
journal.
4. Post the general journal and the sales journal to the three accounts opened in the
general ledger inserting the account balances only after the last postings.
5. a. What is the sum of the balances of the accounts in the subsidiary ledger at
January 31?
b. What is the balance of the controlling account at January 31?

264
Problem 9-2 The following transactions of Pretty Company occurred during the month
of April of the current year. It assumed that sales are non-vatable.
April 1 Pretty made an initial investment of P500,000 per OR# 0001.

1 Issued check # 25001 for store equipment, P71,000 to Citi Hardware.
2 Purchased merchandise P30,000 on account from Marsh Co., invoice # 1501,
terms 2/10, n/30.
3 Issued check # 25002 P 12,000 to Philam Insurance Co. for one year
insurance premium effective April 1, 2021 (the company uses asset method)
4 Returned merchandise to Marsh Co. P2,000 due to damage.
5 Sold merchandise on account to Lucky Bird P16,500, sales invoice # 0001,
terms 2/10, n/30.
6 Bought office equipment on account from Apple Co. P50,000, terms n/30.
7 Issued credit memo # 001for the merchandise returned by Lucky Bird
P1,500.
8 Cash sales P25,000 per OR# 0002.
9 Issued check # 25003 P30,000 for merchandise purchased from George Co.
10 Issued
Term: check
COD. # 25004 to Marsh Co. as settlement of the account due.
11 Issued check # 25005 to Janjan P8,000 for store rental for the month.
12 Purchased merchandise from Marsh Co., P24,000; terms 2/10,n/30.
13 Issued check # 25006 to Iloilo City Treasurer’s Office, P5,000 for the business
permit.
14 Purchased merchandise from Fonz Co. P25,000. Terms 2/10,n/30.
15 Sold merchandise to Cobra P30,000 per sales invoice # 0002. Terms
2/10,n/30.
16 Collected the amount due from Lucky Bird. Issued OR# 0003. 17
Issued check # 25007 to Nonok Store P12,500 for office supplies
purchased.
17 Purchased merchandise on account P40,000 from Morz Co. Terms 2/10,n/30.
20 Received cash from Cobra as settlement of the account. Issued OR# 0004.
20 Sold merchandise on account to Doña Aurora P25,000 per sales invoice #
0003. Terms 2/10, n/30.
21 Sold merchandise to Lucky Bird P15,000 per sales invoice # 0004. Terms
2/10,n/30.
22 Sold merchandise to Daisy P35,000 per sales invoice # 0005.
Terms 1/15,n/30.
22 Sold merchandise to Gumamela P14,000. Issued OR# 0005.
22 Sold merchandise to Cobra P9,500 per sales invoice # 0006. Terms 2/10,n/30.
23 Sold merchandise to Daisy P8,900 per sales invoice # 0007. Terms 2/10,n/30.
31 Collected from Gumamela as settlement of the account per invoice #0005.
Issued OR# 0006.
31 Sold merchandise to Daisy P7,000 per sales invoice # 0008. Terms n/30.
31 Sold merchandise to Doña Aurora P27,000 per sales invoice #0009. Terms
n/30.
31 Sold merchandise to Spider P13,000. Issue OR# 0007.

265
31 Issued check #25008 to Rose Borres representing salaries for the month
P30,000.
Required:
1. Record the transactions in the respective special journals and general journal.
2. Post entries to accounts receivable and accounts payable subsidiary ledgers.
3. Post entries at the end of the month from journals to the general ledgers.
4. Prepare trial balance.
5. Prepare schedule of accounts receivable and accounts payable as of April 30,
2021.
JR Company
Chart of Accounts
Account No.
Cash 11
Accounts Receivable 12
Office Supplies 15
Store Supplies 16
Prepaid Insurance 17
Store Furniture 20
Store Equipment 21
Accounts Payable 31
JR, Capital 41
Sales 51
Sales Returns and Allowances 52
Sales Discounts 53
Purchases 61
Purchase Returns and Allowances 62
Purchase Discounts 63
Salaries Expense 71
Taxes and Licenses 72
Rent Expense 73
Utilities Expense 74

266
Problem 9-3. The following are the transactions of Alice Trading during the month of July,
2021:
July 1 Alice began a general merchandising business by investing P500,000 cash per OR#0001.
2 Purchased store equipment from Fely Commercial, P50,000, term: 1/10, n/30.
3 Paid rent for the store space to Nards, P10,000. Issued Check No. 2001.
6 Purchased merchandise from Rose Trading, P56,300, term: 1/15, n/30.
7 Purchased merchandise for cash from Nora, P80,000. Issued Check No. 2002.
9 Received a credit memo for P4,300 for defective merchandise
returned to Rose Trading.
9 Sold merchandise to Gold, P15,000. Term: 2/10, n/30, Invoice No. 01.
10 Sold merchandise to Silver, P28,000. Term: 2/10, n/30, Invoice No. 02.
11 Issued a credit memo to Silver for defective merchandise returned,
P5,000.
16 Paid Fely Commercial in full. Issued Check No. 2003.
17 Collected the amount of Gold in full. Issued OR# 0002.
17 Sold merchandise to Diamond, P50,000. Term 2/10, n/30, Invoice
No. 03.
19 Purchased office supplies, P6,000, and store supplies, P4,000 from
Sunflower Enterprises. Term: n/30
19 Paid Rose Trading in full. Issued Check No. 2004.
20 Purchased store furniture from Fely Commercial, P24,000. Term : 1/10, n/30.
20 Collected the amount of Silver in full. Issued OR# 0003
24 Received a credit memo for P4,000 from Fely Commercial for the allowance due to damages
in paints of the display cabinets.
25 Cash sales, P100,000. Issued OR# 0004
27 Purchased merchandise from Rose Trading, P80,000. Term: 1/15, n/30.
30 Sold merchandise to Gold, P50,000. Term: 2/10, n/30, Invoice No. 04.
30 Received P20,000 from Diamond as partial payment of her account. Issued OR# 0005
31 Paid the salaries of employees for the month, P30,000. Issued Check No.2005.
31 Paid utilities expense, P3,000. Issued Check No. 2006.
Required: Account Account

1. Open ledger accountsAccount
by usingTitle Account
No.and account titles
the account numbers givenTitle
below: No.
Cash 11 Sales 41
Accounts Receivable 12 Sales Returns and Allowances 42
Office Supplies 15 Sales Discounts 43
Store Supplies 16 Purchases 51
Store Furniture 17 Purchase Returns & Allow 52
Store Equipment 18 Purchase Discounts 53
Accounts Payable 21 Rent Expense 61
Alice, Capital 31 Salaries Expense 62
Utilities 63
Expense
2. Record the transactions in the appropriate journals
3. Post entries to the Accounts Receivable Ledger and the Account Payable Ledger immediately
after the transaction.
4. Post entries to the general ledger.
5. Prepare a trial balance.
6. Prepare a schedule of accounts receivable and schedule of accounts payable as of July 31,
2021.

267
SALES JOURNAL
Page 1
Invoice
Date No. Accounts Debited Terms F Accounts Receivable (Dr)
Sales (Cr)
CASH RECEIPTS JOURNAL

Page 1
Sales Accounts
Date Name F Cash Discount Rec. Sales Capital
(Debit) (Debit) (Credit) (Credit)
(Credit)

267 a
267-
GENERAL JOURNAL
Date Description F Debit Credit

268 b
267-
Accounts Payable – Subsidiary Ledgers
GENERAL LEDGER
CASH NO. 11
DATE ITEMS PR DEBIT CREDIT BALANCE
ACCOUNTS RECEIVABLE NO. 12


269 c
267-
OFFICE SUPPLIES NO. 15
STORE SUPPLIES NO. 16

PREPAID INSURANCE NO. 17

STORE FURNITURE NO. 20

STORE EQUIPMENT NO. 21

ACCOUNTS PAYABLE NO. 31


270 d
267-
CAPITAL NO. 41
SALES NO. 51
SALES RETURNS AND ALLOWANCES NO. 52

DATE ITEMS PR DEBIT CRED IT BALANCE
SALES DISCOUNT NO. 53

PURCHASES NO. 61
PURCHASE RETURNS AND ALLOWANCES NO. 62


271e
267-
PURCHASE DISCOUNT NO. 63
SALARIES EXPENSE NO. 71

TAXES AND LICENSES EXPENSE NO. 72

RENT EXPENSE NO. 73

UTILITIES EXPENSE NO. 74

NO. 75

272 f
267-
PURCHASES JOURNAL
Accounts Office Store Store Store
Date Accounts Credited Terms F Payable Purchases Supplies Supplies Furniture Equipt
Credit Debit Debit Debit Debit Debit Debit
CASH PAYMENTS JOURNAL
Purchase Accounts Salaries Utilities Rent Freight

Date PAYEE Check F Cash Discount Payable Purchase and Expense In
No. Cr Cr Debit s Wages Expense Debit
Debit Debit Debit Debit
267- g
BIBLIOGRAPHY
Accounting Standards Council. Philippine Accounting Standards and Philippine Financial

Reporting Standards. Made Easy Books
De Leon G and De Leon, N. (2019). Cost Accounting. GIC Enterprises & Co., Inc.
Millan, Zeus Vernon B. (2019). Intermediate accounting 1a based on Philippine reporting

standards.
Valix, C, Peralta, J & Valix, C. A. (2019). Financial accounting Vol. 1. GIC Enterprises & Co.,
Inc.
Inc.
Inc.

Financial Acctg Reporting 1 Chapter 9

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Financial Acctg Reporting 1 Chapter 9

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TABLE OF CONTENTS

Chapter 1 Accounting: Its Development and Basic Concepts 1

Chapter 2 Business Transactions and the Related Accounting Values or 25

Chapter 4 Accounting Cycle for Service 119

Company Chapter 5 The Adjustment Process 136

Journals Chapter 10 Accounting for Receivables and

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RECORDING TRANSACTIONS IN SPECIAL JOURNALS

The students are expected to:

The previous chapters discussed the recording of business transactions in a two-

Disadvantages of not using special journals:

1. Only one person can use the books at a time.

Types of Special Journals

Advantages of using the special journals

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Journals Transactions Supporting Documents

Purchases Journal Purchases on account Sales Invoice/Charge

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The Cash Receipts Journal

The Cash Payments Journal

Cash voucher is a pre-numbered form in which a cash disbursement transaction is

The Purchases Journal

Purchases Journal is a special journal where purchases on account are recorded.

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Reuploading these educational materials on the internet is prohibited.

Cash Account No.

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Cash Receipts Journal

Sundry Accounts Sales

(Cr) (Cr) (Dr)

150.000 50,000 55,000 1,000 254,000

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Date Accounts Terms F Accounts Purchases Sundry Account (Dr)

2021 Fur and Fixture 21 5,000

151,000 134,000 9,500

Sundry Accounts Purchase

() (31) (61) (63) (11)

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Date Description F Debit Credit

17 Accounts Payable-Atis 31/ √ 2,000

20 Sales Returns and Allowances 52 1,000

The General Ledger and Subsidiary Ledgeres

Subsidiary ledger is a group of accounts showing in detail the same information

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Posting Procedures from the Purchases Journal to the Ledger

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Accounts Receivable No. 12

Accounts Receivable – Subsidiary Ledger

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(Cr) (Cr) (Dr)

150.000 50,000 55,000 1,000 254,000

Accounts Receivable No. 12

Hope, Capital No. 41

Accounts Receivable – Subsidiary Ledger

Accounts Receivable – Subsidiary Ledgers

Accounts Payable – Subsidiary Ledgers

Accounts Receivable No. 12

Office Supplies No. 15

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Prepaid Rent No. 17

Prepaid Insurance No. 18

Furniture and Fixtures No. 21

Office Equipment No. 22