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Gr.11-ABM Fundamentals of ABM 1 Module 2 2nd Sem

(week 7-8)
Fundmentals of Accountancy, Business and Management (Franciscan College of the
Immaculate Conception)

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SET B WEEK 7-8 FUNDAMENTALS OF ABM1 MODULE 2

Name:
Grade/Section:
Subject Teacher: MISS MAY CLOUDINE A. LAO
Adviser:

LESSON 3: Book of Accounts

I. LEARNING OBJECTIVES
Using varied learning activities, the students can:
a. differentiate a journal from a ledger;
b. respond to values life connection questions;
c. prepare a journal and a ledger.
II. ESSENTIAL QUESTION
How important are the journals and ledgers in accounting?
III. FORMATION

Hi! Congratulations, you are now in Module 2 Lesson 3!

In this lesson it is all about the “Book of Accounts”. What is a book of accounts? Book of
accounts are the finance records, ledgers, and journals that compose the company’s
account. So, stay tuned and enjoy learning!

Discussion

Using your textbooks in Fundamentals of ABM 1, please follow the discussion method below:
1. Read the introduction on page 164-183.
2. Learn the following terms that used in the topic.
3. Study the examples given by the book.
4. You can research other information about this topic don’t forget to give the link on what site you
used.
IV. ACTIVITY: CHECK
Direction: Using the Venn diagram differentiate a journal from a ledger.

Journal Ledger

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V. INTEGRATE
KNOWLEDGE
Directions: Discuss the following.
1. Differentiate General Ledger from a Subsidiary Ledger. (10 pts.)
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2. Enumerate all special journals and discuss each of them. (40 pts.)
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SKILL
On April 1, 2020, Nels Ferrer organized a business called Friendly Trucking. During April, the company entered into the
following transactions:
Apr. 1 Nels Ferrer deposited Php 500,000 cash in a bank account in the name of the business.
Apr. 1 Purchased for Php 250,000 a transportation equipment to be use in the business. Nels paid 50% as
down payment while the balance will be paid on May 15, 2020.
Apr. 1 Paid rental for the month of April, Php 5,000
Apr. 5 Earned and collected trucking income from Ryan, Php 8,000
Apr. 8 Earned trucking income from Jesper, Php 30,000 on account. Jesper will pay on May 8, 2020
Apr. 10 Paid salaries of drivers, Php 10,000
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Apr. 15 Rented the vehicle to Joshua for Php35,000, Joshua paid Php20,000 on that date and the balance
on April 20
Apr. 18 Paid electric bills for the month, Php2,000
Apr.20 Collected from Joshua the balance of his April 15 account
Apr. 25 Purchased office supplies, Php2,300
Apr. 29 Earned and collected trucking income from Jay, Php18,000
Instructions:
b. Journalize the above transactions
c. Post to ledger using the T-account format
Note: Kindly put your answer in a neat short bond paper by following the format that will be given to you below. Above of
your paper write your name, your grade and section. Please observe neatness in your answers as much as possible,
avoid erasures. Label your answer if it is in Journal or T-account. Afterwards, staple your answer in your module.

Example and Guidelines on how to Journalize and create a Ledger.

GENERAL LEDGER
Account: Cash Account No.: 1000
Date Item Ref Debit Credit Balance

A general ledger is often called a T-Account because of its resemblance to the letter T. A T-Account is a simplified form of
general ledger. A sample of a T-account is shown below:
ACCOUNT TITLE (Ex. Cash)

Left Side or Debit Right Side or

Side Credit Side

Determining the Balance of a T-Account

Shown below is the Chart of Accounts discussed from the previous topic (Types of Major Accounts):
ACCOUNT CODE ACCOUNT TITLE CLASSIFIED BY TYPE OF
MAJOR ACCOUNTS
Statement of Financial Position Account
1000 Cash
1200 Account Receivable
1201 Allowance for Bad Debts
1300 Inventory
1400 Prepaid Expense
1500 Supplies
1600 Office Equipment
1601 AccumDeprn- Off Eqpt ASSET
1650 Store Equipment
1651 AccumDeprn- Trans Eqpt
1750 Building
1751 AccumDeprn- Building
1800 Land
1900 Intangible Assets
2000 Accounts Payable
2100 Notes Payable
2200 Accrued Expense LIABILITIES
2201 Salaries Payable
2202 Utilities Payable
2300 Income Taxes Payable
3000 Owner’s, Capital EQUITY
3100 Owner’s Withdrawal
Income Statement Accounts
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4000 Service Revenue

4100 Sales INCOME
4101 Sales Returns and Allowances
4102 Sales Discounts
4150 Interest Income
5000 Cost of Sales
5100 Purchases
5101 Purchase Returns and Allowances
5102 Purchase Discounts
5103 Freight In
6100 Salaries Expense
6150 Supplies Expense
6200 Utilities Expense EXPENSES
6220 Communication Expense
6250 Travel Expense
6300 Rental Expense
6350 Fuel Expense
6400 Advertising Expense
6410 Delivery Expense
6450 Commission Expense
6500 Depreciation Expense EXPENSES
6600 Taxes and Licenses
6700 Interest Expense

In order to determine the ending balance of each account using the “T-account”, the beginning balance is plot in
the appropriate debit or credit side, then total debits and credits are then determined. If the account has a beginning
balance on the debit side, all the debits during the period is added to the beginning then all the credits are deducted.
There is a debit balance of the account if the sum of the beginning balance and the total debits exceeds the total credits.

The normal balances of these accounts are listed below:

a. Asset Accounts- Debit Balance; however, the normal balance of a contra asset account is credit. In the above, the
contra asset accounts are:
Allowance for Bad Debts,
Accumulated Depreciation (Accum. Deprn.)- Store Equipment
Accum. Deprn. -Office Equipment
Accum. Deprn. – Transportation Equipment
Accum. Deprn. – Building
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

A summary of the normal balance of the account is shown below:

Increase (Normal Balance) Decrease
Statement of Financial Position Accounts
Asset Debit Credit
Liability Credit Debit
Owner’s Capital Credit Debit
Owner’s Withdrawal Debit Credit
Income Credit Debit
Expense Debit Credit

When an account that normally has a credit balance actually has a debit balance, it may mean that an error has
occurred or that an unusual situation may exist. For examples the accounts receivable account normally have a debit
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balance, if at the end of the period the actual balance is on the credit side, it may mean that there was overpayment of the
customer or an error in the recording processed has occurred.

To illustrate the determination of balances in the T-account, let us take the following series of transaction for the
month of February 2019:
On February 1, 2019, the following beginning balances were correctly determined from previous accounting
period of Vicente Repair Shop:
Cash 25,000.00 Debit Balance
Accounts Receivable 100,000.00 Debit Balance
Office Equipment 50,000.00 Debit Balance
Accounts Payable 35,000.00 Credit Balance
Vicente, Capital 140,000.00 Credit Balance

Transactions during February 2019 are:

Feb 2 Rendered service to X-Company for Php 15,000 and received cash payment on same date
Feb 4 Paid rental for the month amounting to Php3,500.00
Feb 5 Collected accounts receivable from Y Company amounting to Php 30,000. The amount was included in
the beginning balance as of February 1, 2016 stated above.
Feb 10 Rendered service to Jose on account, Php18,000 to be collected on March 2016.
Feb 15 Paid salaries to staff Php 17,000
Feb 18 Paid account payable to Marine Company amounting to Php 5,000. The amount was included in the
beginning balance as of February 1, 2016 stated above
Feb 20 Rendered service to Maria Company for P23,000, cash

The General Journal entries to record the above transactions are:

GENERAL JOURNAL
Date Account Title & Explanation Ref Debit Credit
2/2 Cash 15,000
Service Revenue 15,000
2/4 Rental Expense 3,500
Cash 3,500
2/5 Cash 30,000
Accounts Receivable 30,000
2/10 Accounts Receivable 18,000
Service Revenue 18,000
2/15 Salaries Expense 7,000
Cash 7,000
2/18 Accounts Payable 5,000
Cash 5,000
2/20 Cash 23,000
Service Revenue 23,000
TOTAL 111,500 111,500

Recall the accounting cycle that after journalizing, the transactions are posted to the General Ledger. However,
instead of using a three-column general ledger format we will be using the “T-Accounts”. The T-accounts for the
transactions journalized above are shown below.

CASH ACCOUNTS RECEIVABLE

Beg. Bal 25,000 Beg. Bal 100,000
2/2 15,000 2/4 3,500 2/10 18,000 2/5 30,000
2/5 30,000 2/15 7,000 Total 118,000 Total 30,000
2/20 23,000 2/18 5,000
Ending Bal. 88,000
Ending Bal. 77,500
ACCOUNTS PAYABLE
OFFICE EQUIPMENT 2/18 5,000 Beg. Bal 35,000
Beg. Bal 50,000 Ending 30,000
Ending Bal. 50,000 Bal.
ACCOUNT PAYABLE
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2/10 18,000
2/23 23,000
Total 56,000 5
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VICENTE, CAPITAL
Beg. Bal 140,000
Ending Bal 140,000

RENTAL EXPENSE SALARIES EXPENSE

2/4 3,500 2/15 7,000
Total 3,500 Total 7,000

COMPOUND JOURNAL ENTRY

An entry that 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.

To illustrate:
Ariel Garden Supply Store acquire 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
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
To record the above transaction using the 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

VALUES

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After answering this module, take a deep breath and relax. You finally made it here. Take a silent moment and
recall your learnings from out topic that you want to impart to other people. Write your answer in the open
book.

Criteria:
The Book
Content - 9 pts.
Structure - 6 pts.
Total - 15 pts.

VI. CONCLUDE
ESSENTIAL QUESTION

How important
are the journals
and ledgers in accounting?
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REFERENCES
Textbook: Salazar, Dani Rose C., (2017) REX Book Store Inc., 856 Nicanor Reyes Sr. St.,
Sampaloc Manila.
Graphics/Icons: Microsoft 365 Icons, Avatoon App

PROGRESS CHART
Dimensions LESSON 1
Check A
Integration: KNOWELDGE
Integration: SKILLS
Integration: VALUES
SCORE:

TEACHER’S FEEDBACK:

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Teacher’s Signature

MISS MAY CLOUDINE A. LAO

Signature

PARENTAL CONSENT

I hereby certify that I am aware of my son/daughters’ answers in this module.

Signature over printed name

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