Margosatubig Pax High School /Kindergarten ,Inc.

7035 Poblacion , Margosatubig, Zamboanga del Sur

Email Address : paxhighschool_margos@yahoo.com
Senior High School
2020-2021
Grade 12- Entrepreneurship
Second Semester
NAME
ACTIVITY NO. 11
ACTTITY TITLE BOOKKEEPING
Content standard The learners demonstrate an understanding of:

Performance The learners

standard
MELC
LEARNING
RESOURCES
Core values Deepen and nurture faith life and relationship with God, others and all of creations.
iNtegration
Learning Target/s: At the end of the lesson, the students CAN…
1 – Perform bookkeeping tasks
2 – Prepare an income statement and a balance sheet,
3 – Identify where there is a profit or loss for a business,
4 – Interpret financial statements (balance sheet, income statement),
cash flow projections, and summary of sales and cash receipts

INTRODUCTION
TRANSITION/LINKING STATEMENT/Motivation:
TEST I – Multiple Choice: Identify the correct answer among the given choices. write the letter on the space provided before the number.
____1. A source document evidencing that orders have been placed by the customer waiting to be served by the supplier-
A. Purchase request B. Purchase order C. Purchase invoice D. Purchase check
____2. The source document evidencing that goods have been delivered by the supplier to the customer-
A. Supplier’s sales invoice B. Vale slip C. Customer’s sales invoice D. Customer’s delivery receipt
____3. A source document issued by the supplier acknowledging that full payment has been received from the customer-
A. Official receipt B. Purchase receipt C. Delivery receipt D. Receiving report
____ 4. Is a statement of the financial position of a business which states the assets, liabilities, and owners' equity at a particular point in time.
A. Balance Sheet B. Income Statement C. Owner’s Equity D. Assets
____5. A source document which accompanies a check when payment is made-
A. Check voucher B. Purchase voucher C. Cash voucher D. All of the above
____6. All of the following are examples of source documents, except-
A. Check B. Invoices C. Contract D. Journal
____7. A source document which shows that the customer has already made partial payment to the supplier through issuance of-
A. Check B. Voucher C. Official receipt D. Sales invoice
____8. Are things or properties that the business owns, example includes cash, account receivable and prepaid expenses.
A. Assets B. Liabilities C. Owner’s Equity D. Revenue
____9. It is the obligations of the company, payable in money, goods or services.
A. Assets B. Liabilities C. Owner’s Equity D. Revenue
____10. It is the claim of the owner of the business also known as the capital.
A. Assets B. Liabilities C. Owner’s Equity D. Revenue
____11. Is a record comprising the sales and other income recieved by the business.
A. Assets B. Liabilities C. Owner’s Equity D. Revenue
____12. The most liquid form of asset that can be used anytime to purchase another assets or pay liabilities.
A. Inventories B. Receivables C. Payable D. Cash
____13. An example of asset that can be used in the business for a long period of time. Usually more than a year.
A. Inventories B. Computer C. Receivables D. Cash
____14. A type of business that is purely engage in providing all types of service activities such as medical or legal services.
A. Service Business B. Merchandising business C. Manufacturing business D. Trading Business
____15. A type of business that is engage in buying and selling of food products such as Grocery/convenient stores.
A. Service Business B. Merchandising business C. Manufacturing business D. Forex Trading Business
A. ESSENTIAL IDEAS
In the previous lesson, you learned how to make and prepare a business plan, operate the business, know how to sell the product, and the significance for
keeping business records.
A business plan is an effective tool in making your dream business come true. It reiterates different plans or strategies in Operation and Administration,
Marketing, Production and Logistics, Finance, etc.
The operational plan put into details on what business model you are going to employ and how are you going to start the business. Among others, its also
reiterated the layers pf management, type of skills and employee attitude your business need and the steps on how to get the government license.
The marketing plan contains valuable strategies as to what product your are going to produce or sell, what industry you want to enter, group of target
customers, or your target market and the business model or strategies you are going to employ.
The production plan revealed the production processes and the quality control system of the goods produced for sale. While the logistics provides a
channel of distribution of the goods from production lines down to the wholesellers/retailers or directly to consumers.
What’s In What’s In What’s In What’s In What’s In
The financial plan talks about monetary requirements before you open the business. While financial forcast informs the business owners of the expected
outcome of the business in monetary terms.
What is Bookkeeping?
Bookkeeping is the process of recording business transactions in a systematic and chronological manner.
It is systematic because it follows procedures and principles. On the otherhand, it is chronological because the transactions are recorded in order of the date
of occurrence.
 Bookkeeping is the starting point of the accounting process. A sound bookkeeping system is the foundation for gathering the information necessary to
answer questions related to profitability, solvency and liquidity of the business.
What is a Bookkeeper?
Each business has a bookkeeper who is incharge to record, maintain and update business records from all sorts of financial transactions using account
title that can be found in the charts of accounts already set up by the Accountant.
The bookkeeping function dictates the bookkeeper to keep track of all financial transactions of the business. Only transactions that has monetary value
will be recorded.

The bookkeeper uses the Book of Accounts to record the business transactions which is to be consolidated later to help construct financial statement
such as the Trial Balance, Income Statement and Balance Sheet.
What is a Book of Account?
The book of accounts are composed of the Journal and Ledger. It depends on the type of business, some businesses used special journals when they
are engaged merchandising type of business to records business transactions. This module will cover and provide example for service oriented business. Thus,
only journal and ledger will be used in the succeeding examples.
There are two types of books used in recording business transactions. They are called journals and ledgers.

Journal refers to the book of original entry while the Ledger refers to the book of final entry.

What is a General Journal?

The general journal is the most basic journal which provides columns for date, account titles and explanations, folio or references and a separate column
for debit and credit entries. Depicted in figure 1 below is a sample format of a general journal:
NAME OF THE COMPANY
MONTH & YEAR ___________________
GENERAL JOURNAL
PAGES
DATE PARTICULARS FOLIO BALANCES
DEBIT CREDIT
Month Day 200,000.00

Figure 1 General Journal

What is a General Ledger?
The general ledger is a grouping of all accounts directly traceable to chart of accounts. These accounts will be reflected in the financial statements as a
summary of all financial activities that have taken place as recorded in the general journal and subsidiary ledgers. Depicted in figure 2 below is a
sample format of a general ledger:

Figure 2 – General Ledger

What is a Subsidiary Ledger?
The subsidiary ledger is a group of accounts directly associated from the general ledger. This record is created to maintain individual accounts for
customers and vendors whose cash is not being used as a medium of exchange when purchasing or selling merchandise. Depicted in figure 3 and 4
below is a sample format of a subsidiary ledgers Accounts Receivable and Accounts Payable respectively:

The Rules of Debit and Credit

In the process of journalization, following the rules of Debit and Credit are essential part to ensure accurate recording and sound decision making. Debit is
abbreviated as DR while CR for Credit.
It is a requirement that the bookkeeper is able to master the normal balance of each account title before performing the tasks of bookkeeper.

When to Debit?
When cash or non-cash items are received, the said cash or non-cash items must be recorded in the debit column. This means that the debit balance
increased. It is called Value Received.

When to Credit?
When cash or non-cash items are given, the said cash or non-cash items must be recorded in the credit column. This means that the credit balance is
increased. It is called Value Parted With.
The following steps will be undertaken in determining account balances for every account title such as cash, account receivable, etc.:
1. Add all the debit side to generate total debit 3. Subtract total debit to the total credit.
2. Add all the credit side to generate total credit. 4. Determine the balance of each account.

Depicted in figure 5 below is a matrix of normal debit and credit balances of Five Major Accounts:

Account Type Debit Credit

Assets
Liabilities
 Owner’s Equity
Revenue
Expenses
Figure 5 - matrix of normal debit and credit balances of Five Major Accounts

In order to fully understand the concept of debit and credit balances, depicted in figure 6 below is a matrix of normal debit and credit
balances under each of the five major accounts:
Account Type Debit Credit
Assets
Cash on Hand
Cash in Bank
Accounts Receivable
Allowance for Doubtful Accounts
Notes Receivable
Prepayments
Inventories
Land
Building
Equipment
Accumulated Depreciations
Other Assets
Liabilities
Accounts Payable
Notes Payable
Salaries Payable
Mortgage Payable
Unearned Fees
Owner’s Equity
Capital
Drawing
Revenue
Service Income
Other Income
v
Expenses
Rent Expense
Utilities Expense
Depreciation Expense
Salaries and Wages Expense
Other Expenses
Figure 6 - Matrix of normal debit and credit balances of sub-accounts
TRIAL BALANCE
Trial balance is a list of all ledger accounts with closed or final balances on a certain period arranged according to the rules of debit and credit. The debit
and credit columns must be equal in total amount. This is the first report prior to financial statement preparation. Depicted in figure 7 below is a sample format of
a trial balance report with peso amount.

12 As you can observed, the accounts reflected in figure 7 above are arranged according to the proper placement of the five major accounts. The Assets,
Liabilities, Owner’s Equity, Revenue and Expense accounts. You may refer to figure 6.
On the other hand, the trial balance report has two phases. The first phase “Un-adjusted trial balance” is a report of all balances after the posting of the
general ledger accounts. The general ledger account balances are extracted to construct the un-adjusted trial balance. Meanwhile, the second phase is the
“Adjusted trial balance”. This phase is a final report of trial balance after all necessary adjustments in journal entries are posted in the general ledger.
MR LABANDERO
TRIAL BALANCE
FOR THE PERIOD JANUARY 2016
Acct.
No. ACCOUNTS TRIAL BALANCE
100 CASH DR CR
110 ACCOUNT RECEIVABLE 434,000
120 OFFICE SUPPLIES 15,000
125 STORE SUPPLIES 12,500
130 WASHING MACHINE 10,000
200 ACCOUNTS PAYABLE 50,000
300 L. DEYRO CAPITAL 500,000
310 L. DEYRO DRAWING 18,000
400 LAUNDRY INCOME 78,000
500 UTILITIES EXPENSE 18000
510 SALARIES EXPENSE 15000
520 TRANSPORTATION EXPENSE 1500
530 TAXES & LICENSES 4000

TOTAL 578,000 578,000

Figure 7– Sample format of a Trial Balance

What is an Adjusting Entry?

Making an adjusting entry helps the bookkeeper capture all financial events happened over a period of time within the accounting cycle. It is essential in keeping
the financial record updated. The bookkeeper is going to look or examine accounts that needs to be updated. Outlined below are the five basic sources of
adjusting entries:
1. Depreciation expense 4. Accrued expenses of accrued liabilities
2. Deferred expenses of prepaid expenses
3. Deferred income of unearned income 5. Accrued income or accrued assets

1. Depreciation.
This is a method of allocating the cost of an asset to an expense over the accounting periods that make up the asset’s useful life. Examples of assets subject to
depreciation are: Store, Office, Building, and Transportation equipment. These types of assets lose their ability to provide useful service as time passes.
Depreciation can also be referred to as the decrease in the usefulness of these types of assets. Take note that Land is not subject to depreciation because the
value of land mostly increases as time passes.
There are several methods or formulas to compute the amount of depreciation. The simplest is the straight line method.
The formula:
(Acquisition Cost – Salvage or Residual Value)
Annual Depreciation = --------------------------------------------------------------------
Useful Life
Where:
• Acquisition cost – the actual cost of the asset acquired.
• Salvage value – the selling price of the asset upon reaching the useful life.
• Useful life – is the economic or productive life of the asset.

Illustrative problem:
The cost of the equipment is PHP25,000. It was estimated to have a useful life of five years. It is estimated that after five years, the office equipment can be sold
at a scrap value of PHP1,000. To compute for the monthly depreciation, just divide the annual depreciation by 12. One year is composed of 12 months.
(P 25,000 – P 1,000)
P 400.00 = -----------------------------------
60 months
- (5 yrs x 12 mos. = 60 months)
Adjusting entry:
The depreciation expense is an allocated for all sixed assets except land. Example are building, equipment and or machineries that the business is using
to generate income. It shall be reported as an expense account in the income statement directly attributable in the said fixed assets. While the accumulated
depreciation is a balance sheet account but treated as a contra-account to the concerned fixed asset. Refer to the illustration below:
Balance Sheet
As of ____________
…
Equipment (at cost) P 25,000
Less: Accumulated Depreciation-Equipment 400
Net Book value of Equipment P 24,600
15
GENERAL JOURNAL PAGE 1
DATE PARTICULARS POST.
REF. DEBIT CREDIT
1 June 30 Depreciation expense 400,00
2 Accumulated depreciation – (equipment name) 400.00
3 To record the allocation of depreciation expense
2. Deferred expenses or prepaid expenses.
These are items that have been initially recorded as assets but are expected to become expenses over time or through the operations of the business.
In order to recognize the correct amount of expenses, prepayments shall be amortized weekly, semi-monthly or monthly, depending on its nature and
purpose.
Illustrative problem:
Purchased P5,000 worth of office supplies on account. By the end of the month, PHP2,000 worth of these supplies are still unused.
Adjusting entry:
GENERAL JOURNAL PAGE 1
DATE PARTICULARS POST.
REF. DEBIT CREDIT
1 June 30 Supplies expense 3,000
2 Supplies 3,000
3 To set up the value of used supplies
The supplies expense is an income statement account, while the supplies which is now credited is an asset account. All asset has a normal debit
balance. Considering that the supplies in this record is credited, This will be deducted to the supplies account in the balance sheet to generate the remaining
balance in supplies.
63. Deferred income of unearned income
These are items that have been initially recorded as liabilities but are expected to become income over time or through the operations of the business.
Illustrative problem:
On February 15, 2016 Matapang entered into a contract with Makisig to maintain the computers of Makisig for two months starting on February 15, 2016 up to
April 15, 2016. On the same date, Makisig paid the total contract amount of PHP40,000 in full. The entries to record and adjust the books are: In the February
29, 2016 entry above, as of end of February 2016, Matapang has already earned the service revenue for the first 15 days, thus an adjusting entry is recorded.
GENERAL JOURNAL PAGE 1
Journal Entry
DATE PARTICULARS POST.
REF. DEBIT CREDIT
1 Feb 29 Cash 40,000
2 Unearned service revenue 40,000
3 To record receipt of full payment for the two-month
service contract with Makisig
Adjusting Entry
DATE PARTICULARS POST.
REF. DEBIT CREDIT
1 Feb 29 Unearned Service Revenue 10,000
2 Service Revenue 10,000
3 To record service income earned from Feb 15-29,
2016; P40,000 x (1/2 month /2 months)

4. Accrued expenses of accrued liabilities

These are items of expenses that have been incurred but have not been recorded and paid.
Illustrative problem:
On February 29, 2016, Matapang received the electric bill for the month of February amounting to PHP3,800. Matapang will pay this bill on March 2016. The
electric bill represents the cost of electricity used (or incurred) for February. Although the said bill is still unpaid and thus was not recorded, the matching
principle and accrual basis of accounting dictates that the same should be recorded in February. Otherwise, your expense will be understated and thus the
company will be reporting an overstated income (or an erroneous income). Needless to say, erroneous information may lead to wrong decisions. The entry to
record the accrual of this expense is:
Adjusting entry:
GENERAL JOURNAL PAGE 1
DATE PARTICULARS POST.
REF. DEBIT CREDIT
1 Feb 29 Utilities expense 3,800
2 Utilities payable 3,800
3 To accrue the cost of electricity incurred for the month of
February

5. Accrued expenses of accrued liabilities

These are income items that have been earned but have not been recorded and paid by the customer. In short, these are receivables of the business.
Illustrative problem:
On February 28, 2016, Matapang repaired the computer of Pedro for PHP15,000. Pedro was on an out-of-town trip so he could not pay Matapang. He told
Matapang that he will pay for their services on March 1, 2016. Matapang has already earned the PHP15,000 but was not paid as of the end of February 2016.
Therefore, an income should be properly recognized in February 2016 for this transaction. The entry to record this is:
Adjusting entry:
GENERAL JOURNAL PAGE 1
DATE PARTICULARS POST.
REF. DEBIT CREDIT
1 Feb 29 Accounts Receivable 15,000
2 Service Income 15,000
3 To record accrued income for the services already rendered during
the month of February.

INCOME STATEMENT
This statement is one of the major financial report. Also known as profit and loss statement or statement of comprehensive income. This statement summarizes
the results of company’s operations for a specific period of time. If the result of operation is positive, then the business earns net income otherwise, net loss.
Ledger accounts that can be found in the income statement are called Temporary accounts of Nominal accounts. They are called such because at the end
of the accounting period, balances under these accounts are transferred to the capital account, thus having only temporary amounts and resulting to zero
beginning balances at the beginning of the following year.(Haddock, Price, & Farina, 2012) Examples of temporary accounts include revenues, sales, utilities
expense, supplies expense, salaries expense, depreciation expense, interest expense among others. Depicted in figure 8 below is sample format of an income
statement.
The different parts of income statement are:
• The heading or title of report • Name of the company • Date or period covered
Major parts are:
• Income or revenues - consist of all income received within the period upon provision of services for service-concern business and sales for
merchandising
• Expenses – money spent during the conduct of business operations
• Net income / net loss – the outcome of business operations.

Figure 8–Income statement of a Service type Business

BALANCE SHEET
Also known as the statement of financial position. This statement summarizes the total balances of assets, liabilities and owner’s equity. In general, it provides
the financial condition of the business on a specific date.
The balance sheet is composed of Permanent accounts. Permanent in nature because their balances remain intact and will be forwarded from one period to
another.
Contra asset are those asset account presented under the asset portion of the balance sheet such as Allowance for Bad debts and Accumulated depreciation.
Depicted in figure 9 below is sample format of a balance sheet of a service type business presented in as an account format with contra asset account.
The different parts of balance sheet are:
• The heading or title of report • Name of the company • Date or period covered
Major parts are:
• Assets (Current and Non-current)
Current Assets – Assets that can be realized (collected, sold, used up) one year after year-end date. Examples include Cash, Accounts Receivable,
Merchandise Inventory, Prepaid Expense, etc.
Current Assets are arranged based on which asset can be realized first (liquidity). Current assets and current liabilities are also called short term assets and
shot term liabilities.
Noncurrent Assets – Assets that cannot be realized (collected, sold, used up) one year after yearend date. Examples include Property, Plant and Equipment
(equipment, furniture, building, land), Long Term investments, Intangible Assets etc.
• Liabilities (Current and Non-current)
Current Liabilities – Liabilities that fall due (paid, recognized as revenue) within one year after year end date. Examples include Notes Payable, Accounts
Payable, Accrued Expenses (example: Utilities Payable), Unearned Income, etc.
Noncurrent Liabilities – Liabilities that do not fall due (paid, recognized as revenue) within one year after year-end date. Examples include Loans Payable,
Mortgage Payable, etc.
Noncurrent assets and noncurrent liabilities are also called long term assets and long term liabilities.
• Owner’s Equity or Capital
Capital is an item of balance sheet wherein the capital or interest of the owner of the business is listed. Initial withdrawal of capital will be recorded in a drawing
account of the owner and will be reflected as a deduction to the capital balance.

Profitability has always been the overall goal of the business. It is of great achievement in a successful implementation of strategic, operating and other plans.
In identifying the profit or loss of a business, the business will record every detail of all business transactions and translate it into financial report. An income
statement is a financial report that reveals the total revenue or income, total expenses incurred during the conduct of the business and, most of all the net profit
or net loss as a result of business operations over a specified period of time.

INTERPRETATION OF FINANCIAL STATEMENTS

Financial statements will reveal the outcome of the business operations. A financial analyst is like a medical doctor who will conduct diagnosis by reading the
financial report and render interpretations on it which will be used as the basis of a sound economic decision making.
As previously defined, balance sheet reflects the financial position and condition of the business. The financial position refers to the assets of the business
which will be financed by the liability and owner’s equity. On the other hand, financial condition refers to the situation wherein assets, liability and owner’s equity
are used to maximize income. Also, assets, liability and owner’s equity may encounter growth or decline in value.
There are many available financing tools to be used in analysing and interpreting financial statements. It depends on the purpose. Most of these tools are able
to evaluate and interpret asset growth of the business, profitability, liquidity and solvency. In general, it will provide a bird’s eye view of the overall health of the
business.
Depicted in figure 14 below is a matrix of financial interpretation with formula and explanation.
Interaction
LEARNING EXPERIENCE:
A. Clarifying for Understanding:
Now, let us complete the accounting cycle by recording financial transactions and applying the concept of bookkeeping which will generate financial
statements. Upon completing this activity you will be able to know the financial position, profitability and the condition of the business thru financial
statement analysis and interpretation.

Activity 1 : Identifying and recording a business transaction using the General Journal

Below is an example of business transactions of a service type business. You are task to record the said transactions in the general journal by
means of journal entry applying the rules of debit and credit.
Depicted in figure 11 is the standard chart of accounts of Alpha Laundry System.
CHART OF ACCOUNTS
Alpha Laundry System
Account ASSET ( 100 -190 ) Account REVENUE ( 400 – 490)
Number Number
100 Cash 400 Laundry Income
110 Accounts Receivable
120 Prepaid Insurance
130 Office Supplies
140 Laundry Supplies
150 Laundry Equipment
160 Accumulated Dep’n laundry Eqt
Account LIABILITIES ( 200 – 290) Account EXPENSES ( 500 – 590)
Number Number
200 500 Utilities Expense
510 Salaries and Wages Expense
Account CAPITAL ( 300 – 390 ) 520 Insurance Expense
Number
300 Mr. A. Capital 530 Transportation Expense
310 Mr. A Drawing 540 Depreciation Expense

Figure 11 – Chart of Accounts

Instruction: Complete the given chart of accounts in each transactions.

Mr. Denver Ambrose is a retired public school teacher. He started his laundry business in June 2018. He used all of his savings to start a “coin-
operated laundry” business. He named it Alpha Laundry Systems (ALS). The following are business transactions for the month of June 2018, the
first month of business operation:
1. June 1, 2018 - Mr. A invested P 200,000 cash in his newly opened Alpha Laundry System business.
Your Journal Entry:
GENERAL JOURNAL PAGE 1
DATE PARTICULARS POST.
REF. DEBIT CREDIT
1 June Cash 200,000.00
2 Mr. A. capital
3 To record the Initial Capital investment of Mr A.

2. June 2, 2018 - Mr. A hired his former classmate Doree Dy to be the laundry operator of ALS for a fixed monthly salary of P10,000. The operator
will be paid every quencina.

3. On June 5, 2018 – Alpha Laundry Systems purchased laundry equipment for cash, P150,000.
Your Journal Entry:
GENERAL JOURNAL PAGE 1
DATE PARTICULARS POST.
REF. DEBIT CREDIT
4 June 5 Laundry equipment
5 Cash 150,000.00
6 To record Acquisition of Laundry equipment

4. On June 6, 2018 – Alpha Laundry Systems paid cash in advance for the 1 year insurance coverage of laundry equipment for the whole year
amounting to P6,000. Monthly insurance expense will be recognized for each month end report.
Your Journal Entry:
GENERAL JOURNAL PAGE 1
DATE PARTICULARS POST.
REF. DEBIT CREDIT
7 June 6 Prepaid Insurance
8 Cash 6,000.00
9 To record the Initial Capital investment of Mr A.

5. On June 7, 2018 – Alpha Laundry Systems bought supplies for laundry amounting to P10,000. The supplies bought are laundry consumables
such detergent powder, soap bar and fabric softener. Monthly inventory will be conducted to determine unused supplies and will be recognized for
each month end report.
Your Journal Entry:
GENERAL JOURNAL PAGE 1
DATE PARTICULARS POST.
REF. DEBIT CREDIT
10 June 7 Laundry supplies
11 Cash 10,000.00
12 To record the acquisition of laundry
consumables

6. On June 15, 2018 – Alpha Laundry Systems paid P4,750 cash for salary of laundry operator.
Your Journal Entry:
GENERAL JOURNAL PAGE 1
DATE PARTICULARS POST.
REF. DEBIT CREDIT
13 June 15 Salary and wages
14 Cash 4,750.00
15 To record the payment of Laundry operator’s salary

7. On June 16, 2018 – Alpha Laundry Systems received P25,000 cash for laundry services rendered to MZ. Hotel.
Your Journal Entry:
GENERAL JOURNAL PAGE 1
DATE PARTICULARS POST.
REF. DEBIT CREDIT
16 June 16 Cash
17 Laundry income 25,000.00
18 To record the payment received from MZ
Hotel.

8. On June 17, 2018 – Alpha Laundry Systems rendered service to Argon Hotel amounting to P45,000. Argon promised to pay on June 20 of the
same year.
Your Journal Entry:
GENERAL JOURNAL PAGE 1
DATE PARTICULARS POST.
REF. DEBIT CREDIT
19 June 17 Accounts receivable 45,0000.00
20 Laundry Income
21 To record the service rendered to Argon Hotel

9. On June 18, 2018, Alpha Laundry Systems purchase office supplies from Ku Enterprises amounting to P2,000 on account. ALS will pay it on
June 25 of the same year.
Your Journal Entry:
GENERAL JOURNAL PAGE 1
DATE PARTICULARS POST.
REF. DEBIT CREDIT
22 June 18 Office supplies 2,000.00
23 Accounts payable
24 To record the acquisition of Office Supplies on
account from Ku Enterprises
10. On June 20, 2018, Alpha Laundry Systems collected payment of Argon Hotel.
Your Journal Entry:
GENERAL JOURNAL PAGE 1
DATE PARTICULARS POST.
REF. DEBIT CREDIT
25 June 20 Cash
26 Accounts receivable 45,000.00
27 To record the full payment from Argon Hotel

11. On June 25, 2018, Alpha Laundry Systems paid in full the amount owed to Ku Enterprises.
Your Journal Entry:
GENERAL JOURNAL PAGE 1
DATE PARTICULARS POST.
REF. DEBIT CREDIT
31 June 25 Accounts payable 2,000.00
32 Cash
33 To record the full payment of account to Ku
Enterprises

12. On June 27, 2018, Alpha Laundry Systems paid electric bill for the month amounting to P1,000 in cash. The payment is charged to Utility
expense account.
Your Journal Entry:
GENERAL JOURNAL PAGE 1
DATE PARTICULARS POST.
REF. DEBIT CREDIT
31 June 27 Utilities expense
32 Cash 1,000.00
33 To record the payment of electricity for the month

13. On June 30, 2018, Alpha Laundry Systems paid a month’s transportation expense amounting to P 1,300.
Your Journal Entry:
GENERAL JOURNAL PAGE 1
DATE PARTICULARS POST.
REF. DEBIT CREDIT
34 June 30 Transportation expense 1,300.00
35 Cash
36 To record the payment of transportation for the
month

14. On June 30, 2018, Alpha Laundry Systems paid P5,000 cash for salary of laundry operator.
Your Journal Entry:
GENERAL JOURNAL PAGE 1
DATE PARTICULARS POST.
REF. DEBIT CREDIT
37 June 30 Salary and wages
38 Cash 5,000.00
39 To record the payment of Laundry operator’s salary

15. On June 30, 2018, Alpha Laundry Systems paid P7,500 cash for the month’s rent of laundry space.
Your Journal Entry:
GENERAL JOURNAL PAGE 1
DATE PARTICULARS POST.
REF. DEBIT CREDIT
40 June 30 Rent expense 7,500.00
41 Cash
42 To record payment of rent of Laundry space

Completing the monthly General Journal record will give the owner of the business a financial record of all business transactions that transpired during the
month. It will reflect the inflows and outflows of cash, provisions of services which generate income.
The debit and credit columns should always be equal. Otherwise, the record will affect overall accuracy of the entire financial record. The error should be properly
corrected before the next step in the recording process takes place.
Activity # 2
Interaction

Activity 2 : Posting journal entries to the General Ledger using T - accounts.

In this activity, you are task to post journal entries in the general ledger. The most convenient and fastest way of posting journal entries to the ledger
is by way of using “T” Account. A T- Account is divided into two sides. The left- hand side is called the debit side and the right-hand side which is
the credit side. The left -hand or debit side shows the value received while the right-hand side shows the value parted with.
This is called T account because it resemble capital letter “T.” an account title is written above the T- account.
After performing the T-accounts, balances for each account under Assets, Liabilities, Capital, Revenue/Income and Expenses, can now be
determined.
Depicted in figure 12 below is a T-account and its description:

To strengthen your focus on the posting of journal entries to the general ledger, it is suggested to create T – account and label them with account
title and group them according to Assets, Liabilities, Owner’s Equity, Revenue and Expense. Given below are T – accounts for all ledger accounts
group according to the five major accounts.
Activity # 3
Interaction

Activity 3 : Transferring T - account balances to prepare Trial Balance (un-adjusted TB).

In this activity, you are task to create/prepare a trial balance for ALS. The period covered is June 2018.
You are going to pick up ledger account balances starting from cash, accounts receivable up to the last account in expense. Then, plot them in the
trial balance report (un-adjusted trial balance). Compute for the total debit and credit balances. The debit amount should be equal to the credit.
Activity # 4
Interaction
Activity 4 : Record adjusting journal entries in the General Journal.
In this activity, you are task to identify accounts that needs to be adjusted.
1. Depreciation of Equipment. The laundry equipment, which was purchased by ALS on June 5, 2018 at P150,000 has an estimated useful life of
5 years with a salvage value of P10,000. Compute for the monthly depreciation to be charge as depreciation expense and will be deducted against
the cost to get the net book value of the laundry equipment.
a. Compute for the monthly depreciation using straight line method.

2. Prepayments. The insurance paid for Laundry equipment is P6,000. An expired portion of the insurance in the amount of P 500 is determined
by dividing the prepayments over 12 months (P6,000 / 12 months). The expired portion will be charged to expense. This will reduce the value of
prepaid insurance balance.
a. Compute for the expired portion of the insurance.
To compute for the expired portion of the insurance:
Formula: Insurance Cost
Term of coverage = Expired insurance per month
(No. of Months)
Prepaid insurance P 6,000
Less: Expired portion (June) 500
Un-expired portion P 5,500
Note: The expired portion is charge to expense (insurance expense). The un-expired portion will be reported as the new prepaid insurance account
balance for the next month.
Your Adjusting Entry:

3. Deferred expenses for supplies inventory. At the end of the month, unused supplies were recorded to be P3,000.
Note: The used supplies is charge to expense (supplies expense). The unused portion will be reported as the new supplies inventory balance for
the next month.
Your Adjusting Entry:

Formula to compute for the used supplies:

Supplies at cost P 10,000
Less: Unused supplies 3,000
Used supplies P 7,000
Activity # 5
Interaction
Activity 5 : Post adjusting journal entries in the General Ledger.
In this activity, you are task to post the adjusting entries written in the general journal to the general ledger and update the debit, credit and
outstanding balances. After doing so, you may proceed to the next activity.

CHART OF ACCOUNTS
Alpha Laundry System
Account ASSET ( 100 -190 ) Account REVENUE ( 400 – 490)
Number Number
100 Cash 400 Laundry Income
110 Accounts Receivable
120 Prepaid Insurance
130 Office Supplies
140 Laundry Supplies
150 Laundry Equipment
160 Accumulated Dep’n laundry Eqt
Account LIABILITIES ( 200 – 290) Account EXPENSES ( 500 – 590)
Number Number
200 500 Utilities Expense
510 Salaries and Wages Expense
Account CAPITAL ( 300 – 390 ) 520 Insurance Expense
Number
300 Mr. A. Capital 530 Transportation Expense
310 Mr. A Drawing 540 Depreciation Expense
Activity # 6
Interaction
Activity 6 : Prepare Adjusted Trial Balance.
In this activity, you are task to update the balance of all ledger accounts and transfer the balance to form a new adjusted trial balance. Still, the total
debit and credit balances must be equal, if not you need to go back and review all entries and their corresponding amount to avoid errors and
accuracy issues.
Activity # 7
Interaction
Activity 7 : Prepare Income Statement.
In this activity, you are task to segregate nominal accounts from permanent accounts. Only nominal accounts will be reflected in the income
statement. Determine the debit and credit balances and deduct all expenses from revenue accounts in order to arrive at net income/loss.
How much is net income or loss of Alpha Laundry System?
The net income or loss can be determine upon finalization of income statements. Net income indicates that the business is profitable.

ALPHA LAUNDRY SYSTEM

INCOME STATEMENT
AS OF JUNE 2018

LAUNDRY INCOME
LESS : Operating expenses:
Rent expense
Depreciation expense
Insurance expense
Salaries and wages
Utilities expense
Total transportation expense
NET INCOME

Activity # 8
Interaction
Activity 8 : Prepare Balance Sheet.
In this activity, you are task to segregate permanent accounts from nominal accounts. Only permanent accounts will be reflected in the balance
sheet. Determine the debit and credit balances and compute for the total assets, total liabilities and total owner’s equity. The net income generated
from the income statement must be added to the capital to generate total owner’s equity. If the business incur net loss, it will be deducted.
How much is the assets of the business? The assets of the business can be computed by adding up all assets accounts and deduct contra asset
account. assets are used to generate income for the business.

As prescribed in the accounting equation, total assets must be equal to total liabilities and owner’s equity. Depicted in figure 13 below is the basic
accounting equation.

Figure 13 - Basic Accounting Equation

ALPHA LAUNDRY SYSTEM

BALANCE SHEET
AS OF JUNE 30, 2018
ASSETS
CASH
ACCOUNTS RECEIVABLE
PREPAID INSURANCE
OFFICE SUPPLIES
LAUNDRY SUPPLIES
LAUNDRY EQUIPMENT
LESS: ACCUMULATED DEPRECIATION
TOTAL ASSETS

LIABILITIES
ACCOUNTS PAYABLE
OWNER’S EQUITY
MR. A CAPITAL
ADD: NET INCOME
TOTAL LIABILITIES AND OWNER’S EQUITY

What is cash receipt?

Cash Receipts include all of a firm’s inflows of cash in a given financial period. The most common components of cash receipts are cash sales,
collections of accounts receivable, and other cash receipts.

What is a sales report?

A sales report is a record of all sales transactions. There are two type of sales transactions. A cash sales and a credit sales.
The amount received in cash sales transactions will be recorded in the cash receipt record book bearing the account cash. This will increase cash
inflow. While the credit sales transactions cannot be recorded in the cash receipt record book because there were no inflows of cash. Instead, it will
be recorded in the account receivable account. This means, that the business has a collectible account from a customer who bough the
merchandise on his/her account.

What Is Cash Flow Projection?

A cash flow report records all cash inflow or out flow of the business.
Normally, it will report three business activities, namely, the operating, investing and financing activities.
The operating activities involves the main operations of the business which the buying supplies (cash outflow) and selling (cash inflow) of its
products.
The investing activities involves the acquisition of long term or fixed assets of the business (cash outflow) and selling the old one’s cash inflow).
The financing activities involves the acquisition of capital of the business thru borrowings or investors (cash inflow) and payments of investors and
creditors (cash outflow).

The cash flow projection is an important task of an accountant to determine the cash requirement for the next period of business operations. The
business will be guided as to how much cash should be needed in order to pay operating expenses
and how much cash should the business spend for fixed assets in order to increase sales, cash collection or a market share.

Identification:
_______________________1. An employee of the company in charge to maintain bookkeeping records of the business.
_______________________2. considered the book of original entry.
_______________________3. considered the book of final entry.
_______________________4. Is a financial statement that reports the financial position of the business.
_______________________5. Is a financial statement that reports net income or net loss of the business.
_______________________6. Is an entry necessary to update ledger accounts from un-adjusted trial balance to adjusted trial balance.
_______________________7. Is a report summarizing the ledger accounts with updated balances in debit and credit columns.
_______________________8. Is a statement that reports the cash inflow and cash outflow of the business.
_______________________9. Is a type of sales report that presents cash collection only.
_______________________10. Is a record that report cash inflow of the business.

_____1. Measure the ability of the company to generate income from the use of its assets and invested capital as well as control its cost.
a. Solvency ratio b. Liquidity ratio c. Profitability ratio d. Acid-test ratio
_____2. The following are financial records of ABC C
• Revenues – 20,000
• Rent expense – 3,000
• Salaries expense – 4,000
• Utilities expense – 2,000
How much is the total expenses?
a. P9,000 b. P10,000 c. P 18,000 d. P1,000
_____3. How much is the net income?
a. P9,000 b. P10,000 c. P 18,000 d. P1,000
_____4. All of the following is an income statement accounts, except.
a. Rent expense b. Service fees c. Accounts receivable d. Insurance expense
_____5. All of the following is a balance sheet accounts, except.
a. Cash b. Equipment c. Depreciation expense d. Accumulated depreciation
_____6. One of the accounts title below is used in making an adjusting entry.
a. Liability b. Prepayments c. Asset d. Capital
_____7. A financial statement that reports the Asset, Liability and Owner’s equity of the business.
a. Income statement b. Balance sheet c. General journal d. General ledger
AssessmentAssessmentAssessmentAssessmentAssessmentAssessmentAssessmentAssessmentAssessmentAssessment
_____8. A financial statement that reports the Sales or Income received, Expenses and the Net income of the business.
a. Income statement b. Balance sheet c. General journal d. General ledger
_____9. Is a book used to record journal entries called the book of original entry.
a. Income statement b. Balance sheet c. General journal d. General ledger
_____10. Is a book used to record account balances called the book of final entry.
a. Income statement b. Balance sheet c. General journal d. General ledger

Mr. Izatsuki Hamida, the bookkeeper of Honda Massage and Spa Services reported the following data for the month of January to March 2018:
Water expenses ---------------------- P 4,000
Soap expense ---------------------- 7,500
Massage oil expenses ---------------------- 15,000
Light & power expenses ---------------------- 12,000
Rent of the Massage parlor ---------------------- 24,000
Salary of staff (4 massage worker) -------- 72,000
Income received from massage service -------- 120,000
Telephone expenses ------------------------ 7,500
How much is the net profit or net loss?