Accounting

Books-Journal and
Ledger
Objectives

▸ Differentiate the journal from the general ledger

▸ Determine the normal balance of an account
▸ Prepare journal entries to record basic business
transaction
▸ Determine balances of accounts using the T-
account
 “
3

▸ “Accounting is the process of

IDENTIFYING, RECORDING, and
COMMUNICATING economic
events of an organization to
interested users.”
4

Two major types of books of accounts

Journal Ledger
-The journal is a -refers to the accounting
chronological record book in which the accounts
(day-by-day) of and their related amounts
business transactions. as recorded in the journal
are posted to periodically.
-book of original entry. -book of final entry
-T-Account
5
The General Journal and Special Journal
GENERAL JOURNAL
Catchall type of journal for
transactions that don’t
logically belong in one of
the special journals.
Transactions are recorded
in the general journal
via journal entries
SPECIAL ACCOUNTING JOURNALS
To speed up and simplify the
recording process, most
businesses make use of
special journals. Each special
journal is designed to record a
particular type of transaction
efficiently and quickly.
6
The General Journal and Special Journal
A general journal entry
always includes the following:
▸ Date the transaction took
place
▸ Chart of account titles and
numbers
▸ Amount of the debits and
credits
▸ Brief explanation of why the
transaction is being booked
SPECIAL ACCOUNTING JOURNALS
▸ Sales journals record all sales a business makes to
customers on account,which means no money changes
hands between the company and the customer at the
time of the sale.
▸ Cash receipts journals record cash sales, customer
payments on account, or interest and dividend payments.
▸ Cash disbursement journals show any payment the
business makes using a form of cash. These entries
include purchases transactions or payments on debt.
▸ Purchases journals show purchases a company makes
on account.
▸ Payroll journals record all payroll transactions, including
gross wages, taxes withheld, and other deductions, such
as health insurance paid by the employee, leading to net
pay, which is the amount shown on the employee’s check.
7
8
9
10
11
12
13
 “
14

▸ A subsidiary ledger is a group of

like accounts that contains the
independent data of a specific
general ledger.
15
 T-ACCOUNT
16
17

T-ACCOUNT
18

CHART OF ACCOUNTS
19

CHART OF ACCOUNTS
20

NORMAL BALANCES OF AN ACCOUNT

a. Asset Accounts – Debit Balance; however the normal balance of a

contra asset account is credit.
In the above chart, the contra asset accounts are:
Allowance for Bad Debts,
Accumulated Depreciation (Accum. Deprn.) – Store Equipment
Accum. Deprn. – Off Eqpt
Accum. Deprn – Trans Eqpt
Accum. Deprn – Building
21

NORMAL BALANCES OF AN ACCOUNT

b. Liability Accounts – Credit Balance

c. Equity Accounts – Owner’s, Capital account has a normal
balance on the credit side while the Owner’s,
Withdrawal account has a normal balance on the debit side.
d. Income – Credit Balance
e. Expense – Debit Balance
22

NORMAL BALANCES OF AN ACCOUNT

23
24

SAMPLE
PROBLEM
25
26
27

Analysis: Assets increased. Owners Equity increased

(Income)
Rules: Increases in Assets are recorded by debits.
Increases in Owners Equity are recorded by credits.
Entry: Increases in assets is recorded by a debit CASH.
Increases in owner’s equity is recorded by a credit to
SERVICE REVENUE.
28

T-ACCOUNTS
29
30
31
32
33
34

Compound Journal
Entry
“
▸ An entry the involved two accounts
only, one debit and one credit is
called a simple journal entry. Some
transactions, however, require more
than two accounts in journalizing. An
entry that requires three or more
accounts is a compound entry.
Sample of A Simple Entry

To illustrate:
Ariel Garden Supply Store acquire a land for
P800,000. Ariel paid P300,000 cash and
issued a promissory note for the balance.
To record the above transaction using simple
entry:
(1) Land 300,000
Cash 300,000
Sample of A Simple Entry

To record purchased of land by paying cash

(2) Land 500,000
Note Payable 500,000
To record purchased of land by issuing
promissory note
38

Compound Entry

To record the above transactions using a

compound entry:

Land 800,000
Cash 300,000
Notes Payable 500,000
To record purchased of land by paying cash and
issuance of a promissory note