POSTING TRANSACTIONS IN THE

LEDGER AND PREPARING TRIAL

BALANCE
for Fundamentals of Accountancy,
Business and Management 1
Senior High School (ABM)
Quarter 1 / Week 8

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FOREWORD

This Self-Learning Kit for Fundamentals of Accountancy, Business and

Management 1 is designed specifically for ABM students in the Senior High
School. This is about understanding the use of accounting in negotiating
problems in business operations. It includes the accounting cycle, definition
about service business, the types of transactions that a service business has,
rules of posting in the ledger, and the preparation of the unadjusted trial
balance.
It is aligned with the K to 12 Curriculum of the Department of Education
following the prescribed MELCs (Most Essential Learning Competencies).
This is designed to be more comprehensive for learners even in studying
at home.
What happened?
This part contains review of prior knowledge that has a great contribution
to the focused topic of this module. This also contains preliminary activities that
will awaken the prior knowledge of the learners and will motivate them to learn.
What I Need To Know? (Discussion)
This section discusses the accounting cycle of a service business and
focuses on the posting of business transactions and the preparation of the
unadjusted trial balance.
What I have Learned? (Evaluation/Post Test)
The exercises found in this section are guaranteed to develop accounting
skills, analyses, and to check the understanding of the learners about the topic in
this module.

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OBJECTIVES:
K. Identify transactions involving service business.
S. Post transactions in ledgers, and prepare trial balance.
A. Reflect on the importance of the rules in posting business transactions
and preparing the unadjusted trial balance for service business.

LEARNING COMPETENCY:

1. Post transactions in the ledger (ABM_FABM11- IVa-d -31).

2. Prepares a trial balance (ABM_FABM11- IVa-d -32).

I. What Happened

REVIEW

Below is the accounting cycle, what is/are the emphasis of the first four steps in
the cycle?

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PRE-ACTIVITIES/PRE-TEST:

Post the following entries to the ledger. You may use the T-account method in
posting and prepare an unadjusted trial balance after. Write your answer in a
separate sheet of paper.

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II. What You Need to Know
DISCUSSION

What is service business?

A service business is a commercial enterprise that provides work performed in an expert
manner by an individual or team for the benefit of its customers. The typical service business
provides intangible products, such as accounting, banking, consulting, cleaning, landscaping,
education, insurance, treatment, and transportation services.
Examples of service business are:
• barbershop
• offices of practicing doctors, lawyers and other professionals
• repairs of TV and other electrical equipment
• auto repair shop
• laundry shop
• dressmaker

Going back to the accounting cycle, after the journalizing of business transactions to the
general and special journals, the posting of these entries to the subsidiary and general ledgers
will follow.

What is posting?
Posting refers to the process of transferring entries in the journal into the accounts in
the ledger. Posting to the ledger is the classifying phase of accounting.
An accounting ledger refers to a book that consists of all accounts used by the company, the
debits and credits under each account, and the resulting balances.
While the journal is referred to as Books of Original Entry, the ledger is known as Books of
Final Entry.
The Posting Process
Let us illustrate how accounting ledgers and the posting process work using the following
transactions.
Transaction #1: On December 1, 2019, Mr. Donald Gray started Gray Electronic Repair
Services by investing 10,000. The journal entry should increase the company's Cash, and
increase (establish) the capital account of Mr. Gray; hence:

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Now, go to the ledger and find the accounts. Post the amounts debited and credited to the
appropriate side. Debits go to the left and credits to the right. After posting the amounts, the
cash and capital account would look like:

First, we posted the entry to Cash. Cash in the journal entry was debited so we placed the
amount on the debit side (left side) of the account in the ledger. For Mr. Gray, Capital, it was
credited so the amount is placed on the credit side (right side) of the account. And that's it.
Posting is simply transferring the amounts from the journal to the respective accounts in the
ledger.

Transaction #2: On December 5, Gray Electronic Repair Services paid registration and
licensing fees for the business, 370.
First, we will debit the expense (to increase an expense, you debit it); and then, credit Cash to
record the decrease in cash as a result of the payment.

There was a debit to Taxes and Licenses so we posted that in the left side (debit side) of the
account. Cash was credited so we posted that on the right side of the account.
Notice that after posting transaction #2, we now can get a more updated balance for each
account. Cash now has a balance of 9,630 (10,000 debit and 370 credit). Nice, right? Post all
the other entries and we will be able to get the balances of all the accounts.

Transaction #3: On December 6, the company acquired tables, chairs, shelves, and other
fixtures for a total of 3,000. The entire amount was paid in cash.
There is an increase in an asset account (Furniture and Fixtures) in exchange for a decrease in
another asset (Cash).

The posting will be debit (left side) in Furniture and Fixtures and credit (right side) in Cash
since it is an acquisition of additional tangible assets through purchase involving cash.

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Transaction #4: On December 7, the company acquired service equipment for 16,000. The
company paid a 50% down payment and the balance will be paid after 60 days.
This will result in a compound journal entry. There is an increase in an asset account
(debit Service Equipment, 16,000), a decrease in another asset (credit Cash, 8,000, the
amount paid), and an increase in a liability account (credit Accounts Payable, 8,000, the
balance to be paid after 60 days).

In posting, you will be posting it under ledger Service Equipment (debit), Cash (credit), and
Accounts Payable (credit).

Transaction #5: Also on December 7, Gray Electronic Repair Services purchased service
supplies on account amounting to 1,500.
The company received supplies thus we will record a debit to increase supplies. By the terms
"on account", it means that the amount has not yet been paid; and so, it is recorded as a
liability of the company.

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Transaction #6: On December 9, the company received 1,900 for services rendered. We will
then record an increase in cash (debit the cash account) and increase in income (credit the
income account).

Transaction #7: On December 12, the company rendered services on account, 4,250.00. As
per agreement with the customer, the amount is to be collected after 10 days. Under
the accrual basis of accounting, income is recorded when earned.
In this transaction, the services have been fully rendered (meaning, we made an income; we
just haven't collected it yet.) Hence, we record an increase in income and an increase in a
receivable account.

Transaction #8: On December 14, Mr. Gray invested an additional 3,200.00 into the
business. The entry would be similar to what we did in transaction #1, i.e. increase cash and
increase the capital account of the owner.

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Transaction #9: Rendered services to a big corporation on December 15. As per agreement,
the 3,400 amount due will be collected after 30 days.

Transaction #10: On December 22, the company collected from the customer in transaction
#7. We will record an increase in cash by debiting it. Then, we will credit accounts receivable
to decrease it. We are reducing the receivable since it has already been collected.

Transaction #11: On December 23, the company paid some of its liability in transaction #5
by issuing a check. The company paid 500 of the 1,500 payable.
To record this transaction, we will debit Accounts Payable for 500 to decrease it by the said
amount. Then, we will credit cash to decrease it as a result of the payment. The entry would
be:

Transaction #12: On December 25, the owner withdrew cash due to an emergency need. Mr.
Gray withdrew 7,000 from the company.

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We will decrease Cash since the company paid Mr. Gray 7,000. And, we will record
withdrawals by debiting the withdrawal account – Mr. Gray, Drawings.

Transaction # 13: On December 29, the company paid rent for December, 1,500. Again, we
will record the expense by debiting it and decrease cash by crediting it.

Transaction #14: On December 30, the company acquired a 12,000 short-term bank loan;
the entire amount plus a 10% interest is payable after 1 year.
Again, the company received cash so we increase it by debiting Cash. The company now has
a liability. We will record it by crediting the liability account – Loans Payable.

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Transaction #15: On December 31, the company paid salaries to its employees, 3,500.

For this transaction, we will record/increase the expense account by debiting it and decrease
cash by crediting it.

General Ledger Example

A general ledger contains accounts that are broad in nature such as Cash, Accounts
Receivable, Supplies, and so on. There is another type of ledger which we call subsidiary
ledger. It consists of accounts within accounts (i.e., specific accounts that make up a broad
account).
For example, Accounts Receivable may be made up of subsidiary accounts such as Accounts
Receivable – Customer A, Accounts Receivable – Customer B, Accounts Receivable –
Customer C, etc.
Okay – let's go back to the general ledger. In the above discussion, we posted transactions #1
to #15 into the ledger. The following are the balances of each account at the end of the
month, the ledger would look like this:

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After all accounts are posted, we can now derive the balances of each account. So how
much Cash do we have at the end of the month? As shown in the ledger above, the company
has 7,480 at the end of December.
How about accounts receivable? Accounts payable? You can find them all in the ledger.
After the posting all the entries in the general ledger, this will be followed by the next step in
the accounting cycle which is the preparation of the Unadjusted Trial Balance.

WHAT IS A TRIAL BALANCE?

A trial balance is a bookkeeping worksheet in which the balance of all ledgers are compiled
into debit and credit account column totals that are equal. A company prepares a trial balance
periodically, usually at the end of every reporting period. The general purpose of producing a
trial balance is to ensure the entries in a company's bookkeeping system are mathematically
correct.

The unadjusted trial balance is the listing of general ledger account balances at the end
of a reporting period, before any adjusting entries are made to the balances to create
financial statements. The unadjusted trial balance is used as the starting point for
analyzing account balances and making adjusting entries.
This is an example of an Unadjusted Trial Balance

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Using the following balances in the general ledger of Gray Electronic Repair Services, we
can create the Unadjusted Trial Balance below:

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In preparing the unadjusted trial balance, you will just copy the ending balances from
the general ledger - all the assets, liabilities, and owner’s equity. Do not forget to consider the
normal balances for each account.
As you can see, cash turned out to have an ending balance of 7,480.00 in the t-account/ledger
and should have the same amount reflected in the trial balance. Since the normal balance for
cash is debit, then the balance must be written under debit column.
The same as with the Service Revenue account, it has a balance of 9,550.00. It is reflected in
the trial balance on the credit side because it is an increase in capital and the Normal Balance
for capital is credit.
These rules and considerations are all applicable to all the accounts.

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III. What Have I Learned
POST TEST:
Post the following journal entries of Linda’s Ironing Services in the General Ledger using T-
account form and prepare the Unadjusted Trial Balance. Write your answer in a separate
sheet of clean paper.

Sept. 1 Cash 12,500.00

Capital, Linda Smith 12,500.00

1 Prepaid Advertising 600.00

Cash 600.00

1 Ironing Supplies 100.00

Cash 100.00

1 Ironing Equipment 600.00

Cash 300.00
Accounts Payable 300.00

5 Cash 2,500.00
Capital, Linda Santos 2,500.00

8 Accounts Payable 150.00

Cash 150.00

10 Withdrawals, Linda Santos 300.00

Cash 300.00

15 Cash 15,000.00
Accounts Receivable 2,000.00
Ironing Revenue 17,000.00

18 Rent Expense 5,000.00

Cash 5,000.00

20 Cash 100.00
Unearned Ironing Revenue 100.00

29 Telephone Expense 200.00

Cash 200.00

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DEPARTMENT OF EDUCATION
SCHOOLS DIVISION OF NEGROS ORIENTAL

SENEN PRISCILLO P. PAULIN, CESO V

Schools Division Superintendent

JOELYZA M. ARCILLA, EdD

Assistant Schools Division Superintendent

MARCELO K. PALISPIS, EdD

Assistant Schools Division Superintendent

NILITA L. RAGAY, EdD

OIC - Assistant Schools Division Superintendent
CID Chief

ROSELA R. ABIERA
Education Program Supervisor – (LRMS)

ELISA L. BAGUIO, EdD

Division Education Program Supervisor – MATHEMATICS

MARICEL S. RASID
Librarian II (LRMDS)

ELMAR L. CABRERA
PDO II (LRMDS)

CHRISTINE D. PADUA
CHONA V. BONTIGAO
Writer

NAME OF ILLUSTRATOR/LAY-OUT ARTIST/TYPESETTER

Illustrator/Lay-out Artist
BB. BOY JONNEL C. DIAZ
Chona V. Bontigao

ALPHA QA TEAM
LITTIE BETH S. BERNADEZ
MERCYDITHA D. ENOLPE
RONALD G. TOLENTINO

BETA QA TEAM
ELIZABETH A. ALAP-AP
EPIFANIA Q. CUEVAS
NIDA BARBARA S. SUASIN
VRENDIE P. SYGACO
MELBA S. TUMARONG
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DISCLAIMER

The information, activities and assessments used in this material are designed to provide accessible learning modality to the teachers
and learners of the Division of Negros Oriental. The contents of this module are carefully researched, chosen, and evaluated to comply with the
set learning competencies. The writers and evaluator were clearly instructed to give credits to information and illustrations used to substantiate
this material. All content is subject to copyright and may not be reproduced in any form without expressed written consent from the division.
REFERENCES
n.d. https://www.accountingverse.com/accounting-basics/accounting-ledger.html.
n.d. https://www.accountingtools.com/articles.
n.d. http://www.businessdictionary.com/definition/service-business.html.
n.d. Teaching Guide for Senior High Fundamentals of Accountancy, Business, and Management 1.
Quezon City: Commision on Higher Education

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SYNOPSIS AND ABOUT THE AUTHOR

SYNOPSIS
This Self-Learning Kit (SLK) is all about posting and
preparation of the unadjusted trial balance of a service
business.
This provides ways of understanding how a certain
transaction is a transaction for a service business.
As you read and understand the discussion, you will be
appreciating the role of accounting in the day to day business
activities and you will know how important posting and
preparing the trial balance.

AUTHOR
.
CHONA V. BONTIGAO received
her Certificate of Professional
Education last March 2016 at St.
Francis College of Guihulngan,
Guihulngan City, Negros Oriental.
She was a graduate of Bachelor of
Science in Business Administration
major in Management Accounting at
Asian College of Science and
Technology Dumaguete City last 2006. She is currently pursuing her
Master’s Degree major in Educational Management at Far East
Advent School of Theology International, Inc., in Kabangkalan City,
Negros Occidental. She is currently teaching at Jimalalud National
High School, Jimalalud Negros Oriental handling Accountancy,
Business and Management (ABM) subjects. She is also the Career
Guidance/ Guidance coordinator of the said school
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