Fundamentals of Accountancy

Learning Area Grade Level 11

W8 Quarter
Business and Management 1
3rd Quarter Date

I. LESSON TITLE Accounting Cycle - Journalizing, Posting, and Preparation of a Trial Balance
II. MOST ESSENTIAL LEARNING The learners
COMPETENCIES (MELCs) a. record transactions of a service business in the general journal
(ABM_FABM11-IVa-d -30)
b. post transactions in the ledger (ABM_FABM11-IVa-d -31)
c. prepare a trial balance (ABM_FABM11-IVa-d -32)
III. CONTENT/CORE CONTENT The Accounting Cycle of a Service Business
Ref: Teachers Guide FABM, pages 97-118/ FABM1 Textbook, pages 70-124/
Quexhub PERC Learning Portal
Suggested
IV. LEARNING PHASES Learning Activities
Timeframe
A. Introduction 15 mins DAY 1
Panimula Good day! Welcome to another week of learning.
By the end of our topic, you should be able to:
1. describe the recording transactions in a general journal,
2. record transactions of a service business in the general journal,
3. post transactions in the ledger,
4. prepare a trial balance, and
5. exhibit the ability to stay detail oriented.

What comes into your mind when you read the word record? The word record
is commonly used when you need something to put into writing. For example,
the school will provide you a record of your performance after the end of the
semester. That record is called the report card.

Recording business transactions also known as journalizing is the process of

entering a business transaction in the form of an accounting entry in the
“journal” or the so-called “book of original entry”. You may go back to week
6 and 7 of your LEAP to review discussion in analyzing business transactions.

B. Development 135 mins To start our lesson, below is the Journal Entry format.
Pagpapaunlad
JOURNAL
Date Particulars Folio Debit Credit

Business transactions are chronologically recorded in the journal. The

particular column is where you will enter accounts that will be affected by
the transactions. By this time, it is expected that you already knew when to
debit and credit an account. Debiting and crediting an account is a result
of an increase or decrease in its value.

Let us study the proper way of journalizing business transactions. Practice

thorough analysis in every situation.

On January 2, 2017, Mr. Juan dela Cruz started Automoto Repair Shop with a
starting capital of 20,000. This transaction is evidenced by a check issued by
Mr. dela Cruz to the name of the business.
The transaction resulted in an increase in cash and dela Cruz capital,
hence:
Date Particulars Debit Credit
January 02 Cash (Asset increased) 20,000
dela Cruz, Capital (Equity increased) 20,000
Journal entries require a proper way of entering business transactions. All
credit entries must be indented, this will simply signifies that credits are on the
right side of an equation.
Below are other business transactions of Automoto Repair Shop.
January 3, Borrowed ₱10,000 payable in 30 days
Date Particulars Debit Credit
January 03 Cash (Asset increased) 10,000
Loan Payable (Liability increased) 10,000
For illustration purposes an open and closed parentheses on the effect of
business transactions was provided.
January 5, Purchased supplies for the amount of ₱2,500 in cash
Date Particulars Debit Credit
January 05 Supplies (Asset increased) 2,500
Cash (Asset decreased) 2,500
January 6, Purchased service equipment on account for an amount of ₱7,800
payable in 10 days
Date Particulars Debit Credit
January 06 Service Equipment (Asset increased) 7,800
Accounts Payable (Liability increased) 7,800
January 9, Purchased tables, chairs and other fixtures amounting to ₱9,500.
The company only paid half of it and the balance will be paid after 15 days
Date Particulars Debit Credit
January 09 Furniture and Fixtures (Asset increased) 9,500
Cash (Asset decreased) 4,750
Accounts Payable (Liability increased) 4,750
The entries above resulted in a compound journal entry, it involves two more accounts.
In our example the credit entries require an entry to cash for the down payment and
an entry to accounts payable for a succeeding payment.
January 12, Paid the service equipment acquired last January 6
Date Particulars Debit Credit
January 12 Accounts Payable (Liability decreased) 7,800
Cash (Asset decreased) 7,800
January 17, Received cash of ₱500, the amount left to be paid for ₱2,500 is to
be collected after 10 days for the services rendered
Date Particulars Debit Credit
January 17 Cash (Asset increased) 500
Accounts Receivable (Asset increased) 2,500
Service Income (Equity increased) 3,000
The full amount of services will be recorded regardless of the mode of
payment following the accrual basis of accounting.
January 24, Paid the balance last January 9
Date Particulars Debit Credit
January 24 Accounts Payable (Liability decreased) 4,750
Cash (Asset decreased) 4,750
January 27 Received the payment for January 17 services
Date Particulars Debit Credit
January 27 Cash (Asset increased) 2,500
Accounts Receivables (Asset decreased) 2,500
January 31, Paid loan last January 3
Date Particulars Debit Credit
January 31 Loan Payable (Liability decreased) 10,000
Cash (Asset decreased) 10,000

To give you more detailed discussion on journalizing, refer to your textbook

on pages 79-82.

We will move forward on the 3rd step of the accounting cycle. Business
transactions may increase or decrease the value of the account. You also
learned that each account has normal balances. To generate the normal
balance or the ending balance of an account we need, to summarize all
transactions that affect a particular account. Summarizing transactions can
be done through posting.

What is Posting?
Posting refers to the procedure of transferring information in the journal to the
ledger accounts. It is for this reason that a ledger is the so-called “book of
final entry”. In journalizing we have used a journal; in posting we will be using
a ledger.
To give you a clear view how a ledger looks like, open your textbook on
pages 84 to 85. Ledger looks like a big letter T. The use of chart of accounts
will help you open the accounts in the general ledger. When you say
opening the account in the general ledger you will name a particular ledger
to a particular account. Take a look at the diagram below; see the process
of posting from a journal to general ledger.

For January 2 transactions

Cash was affected; it was
increased due to
investment of the owner,
same with the capital
account

For January 3 transaction Cash

was again affected, it will posted
on the same ledger that we
created for Jan 2 transaction and
a new ledger to be opened for
Loans payable.

The posting will be done up to the last entry in the general journal.
Below is the completed posting to the general ledger of Automoto Repair
Shop.

The presentation of accounts is arranged in the following order: asset, liability,

equity, revenue, expenses.

The difference between total debit and total credit will become the ending
balance of an account depending on its normal balances. Accounts with
zero balances are considered closed accounts and they will not be included
in the trial balance. You are now ready for the 4 th step of the accounting
cycle, the preparation of a trial balance.
The trial balance is a list of general ledger accounts and their ending
balances. There are three types of Trial balance.
1. Unadjusted trial balance – this is prepared before adjusting entries are made.
2. Adjusted trial balance – prepared after adjusting entries
3. Post-closing trial balance - prepared after the closing entries.
Steps on how to prepare a trial balance
1. Identify accounts that have ending balances.
2. The heading of the trial balance will consist of the following:
● Name of the business
● Title of the report
● Date of the report
3. Accounts in the trial
balance must be listed in
the following order:
● Assets
● Liabilities
● Equity
● Income
● Expenses

ACTIVITY 1 – Journalizing, Posting, and Preparing Trial Balance

I hope you learned a lot about journalizing, posting, and preparing trial
balance. Now, ask a help from a friend or any household member to answer
Exercises 8-10 on page 128 in your textbook. Write your answer in your
accounting journal.
C. Engagement 60 mins DAY 2
Good day! Today you will pretend that you are hired as a bookkeeper of
Pakikipagpalihan Minesgate Computer Repair. You are tasked to do the activity below.
ACTIVITY 2 – Accounting Cycle
1. create a chart of account
2. journalize transactions provided in the Leap week 7
3. post to ledger all the entries from your journal
4. prepare a trial balance
Write all your answers in your accounting journal.
D. Assimilation 10mins ACTIVITY 3 – Its importance
Using your accounting journal, write down the importance of journalizing, posting, and
Paglalapat
preparation of trial balance in the business.

V. ASSESSMENT 10 mins To check your understanding

(Learning Activity Sheets for Enrichment,
Remediation or Assessment to be given Answer Exercises 8-7 on page 125 in your textbook. Write your answer in your
on Weeks 3 and 6) accounting journal.
VI. REFLECTION 10 mins In your accounting journal, write your personal insights about the lesson using the
prompts below.
I understand that ___________________.
I realize that ________________________.
I need to learn more about __________.

Prepared by: Eva C. Topacio, Jennifer B. Fernandez, Checked by: Dr. Josephine P. Canlas, Adora G. del Mundo,
SDO Imus City Cherie L. Logatoc