General Ledger
General Ledger
General Ledger
DEBIT CREDIT
Use of an three-amount column format
A T-account looks like English alphabet "T" which is why a ledger account is also
referred to as "T" account.
This transaction increased both the asset – cash and owner’s equity. According
to the rules of debit and credit, an increase in asset is recorded as debit while an
increase in owner’s equity is recorded as credit; thus, the entry is to debit cash and
credit Penaco, Capital. The transaction dates are placed on the left side of the amount
for reference.
Page 8 of 33
FSUCTI
Posting Transaction Developed by:
The transaction increased by P 50,000 the asset – computer equipment and the
liability – notes payable. Computer equipment must be debited and notes payable must
be credited.
May 3 Penaco paid P 15,000.00 to Liceo Grande Suites for rent on the office
studio for the month of May, June and July.
The entity paid advance rent for three-months. A resource having future
economic benefit – prepaid rent, is acquired for a cash payment of P 15,000. Increases
in assets are recorded by debits and decreases in assets are recorded by credits. The
transaction resulted to a debit to prepaid rent and a credit to cash for P 15,000. The
prepaid rent is consumed based on the passage of time so that after one month, P 5,000
of the prepaid rent will be transferred to the rent expense account.
May 4 Received advance payment of P 18,000.00 from Roa Leisure Hotel for web
site updating for the next three month.
Page 8 of 33
FSUCTI
Posting Transaction Developed by:
The entity has an obligation to Roa Leisure Hotel for the next three months. This
liability is called unearned revenues. The asset – cash is increased by a debit of P 18,000
and the liability – unearned revenues is increased by a credit of P 18,000. As it renders
service, the entity discharge its obligation at a rate of P 6,000 per month for the next
three months.
This transaction increased the asset – computer equipment and decreased the
asset – cash. Assets are increased by debits and decreased by credits; thus, computer
equipment is debited and cash is credited for P 178,000.
Page 8 of 33
FSUCTI
Posting Transaction Developed by:
The asset – computer supplies is increased by a debit of P 9,000 while the liability
account – accounts payable is increased by a credit for the same amount.
May 11 Penaco WebPage Express collected P 77,000.00 in cash for designing web
sites.
The transaction increased the asset – cash and increased the income account –
design revenues. Assets are increased by debits, income are increased by credits; hence,
a debit of P 77,000.00 to cash and a credit of P 77,000.00 to design revenues is made.
Increases in income increase owner’s equity.
May 16 Penaco paid P 15,000.00 to Bills Unlimited for the semi-monthly utilities.
Page 8 of 33
FSUCTI
Posting Transaction Developed by:
Expenses are increased by debits and assets are decreased by credits; therefore,
utilities expense is debited and cash credited for P 15,000. Increases in expenses
decrease owner’s equity.
May 17 Penaco billed clients P 25,000.00 for services already rendered during the
month.
5/11 77,000
5/17 25,000 5/17 25,000
Assets are increased by debits, income are increased by credits. Increase in income
increase owner’s equity. A debit of P 25,000 to accounts receivable and a credit of P
25,000 to the income account – design revenues is needed.
May 19 Penaco partially paid P 7,000.00 for the May 9 purchase of computer
supplies.
Page 8 of 33
FSUCTI
Posting Transaction Developed by:
Assets are decreased by credits while liabilities are decreased by debits. The
transaction is recorded by debiting accounts payable and crediting cash for P 7,000
each.
May 20 Received checks totaling P 21,000.00 from clients for billing dated May 17.
Collections on account reduced the asset – accounts receivable but increased the
asset – cash. Assets are increased by debits and decreased by credits; thus, a debit to
cash for P 21,000 and a credit to accounts receivable for P 21,000 is made.
Page 8 of 33
FSUCTI
Posting Transaction Developed by:
Withdrawals are reductions of owner’s equity but are expenses of the business
entity. A withdrawal is a personal transaction of the owner that is exactly the opposite
of an investment. This transaction increased the withdrawals account but reduced cash.
Debits record increases in the withdrawals account and credits record decreases in
asset accounts; thus, a debit to withdrawals and a credit to cash for P 20,000 each is
necessary.
May 27 Daganta billed Penaco for P 8,000.00 internet ads. Penaco will pay next
month.
Page 8 of 33
FSUCTI
Posting Transaction Developed by:
This transaction increased the expense – advertising expense and increased the liability
– accounts payable by P 8,000. Expenses are increased by debits while liabilities are
increased by credits; hence, an entry to debit advertising expense and to credit accounts
payable for P 8,000 is needed.
May 31 Penaco paid his assistant web designer salaries of P 15,000.00 for the
month.
Assets (Decrease) = Owner’s Equity (Decrease)
Expenses are increased by debits and assets are decreased by credits. Hence,
salaries expense is debited for P 15,000 and cash credited for the same amount.
Increases in salaries expense decrease owner’s equity.
The major advantage of this form is that it shows the latest account balance at a
glance. This form of account has six columns.
Page 8 of 33
FSUCTI
Posting Transaction Developed by:
Cash Account:
Beginning Balance - - -
Equipment Account
Page 8 of 33
FSUCTI
Posting Transaction Developed by:
Supplies Account
Truck Account
Wages Account
Page 8 of 33
FSUCTI
Posting Transaction Developed by:
There are seven (7) steps in posting a journal entry for (refer Figure 2.1):
Date Developed: Document No.
Page 8 of 33
FSUCTI
Posting Transaction Developed by:
2. The description column on the ledger account is usually left blank. Some
businesses use this space to write in the source document number.
3. in the ledger account posting reference (Post. Ref.) Column, identify where
the journal entry is recorded. Enter a letter a specific journal and journal page
number (GJ-1, GJ stands for General Journal).
4. Enter the debit amount in the debit column of the ledger account.
5. Compute and record the new account balance in the balance column. Every
amount posted will either increase or decrease the balance of that account.
6. Return to the journal and, in the posting reference column, enter the account
number of the ledger account to which you just posted the debit part of the
journal entry. Be sure it is entered on the same line as the debit entry. This
step of the posting process is very important. The notation in the posting
reference column of the journal indicates that the journal entry has been
posted. The posting reference also shows the account to which the entry is
posted. Never write an account number in the posting reference column until
after you have posted.
7. Repeat steps 1-6 for the credit part of the journal entry.
GENERAL JOURNAL
PAGE 1
DATE DESCRIPTION R DEBIT CREDIT
1 20__ 1
2 Aug. 1 Cash in Bank GL101 25 0 0 0 00 2
3 R. Cario, Capital GL301 25 0 0 0 00 3
4 To record investment of the owner 4
5 5
6 Enter the account
number in the
4 Enter the
general journal
2 the
1 Enter Description
date of thecolumn 3 Enter the journal debit amount reference
Usually blank
journal entry letter and page number
column
in reference column 5 Compute the
new balance
7 Repeat steps 1-6 for the credit Date Developed: Document No.
part of journal entry
CBLM on FEBRUARY 2O16 Issued by:
Bookkeeping NC III Date Revised:
Page 8 of 33
FSUCTI
Posting Transaction Developed by:
17 Cash 100,000
Notes Payable 100,000
To record borrowed money from
bank with promissory note
21 Cash 45,000
Accounts Receivable 45,000
To record collection from
customer’s account.
Page 8 of 33
FSUCTI
Posting Transaction Developed by:
GENERAL LEDGER
Page 8 of 33
FSUCTI
Posting Transaction Developed by:
Page 8 of 33
FSUCTI
Posting Transaction Developed by:
Page 8 of 33
FSUCTI
Posting Transaction Developed by:
Page 8 of 33
FSUCTI
Posting Transaction Developed by: