Step 1: Identification of Events to be Recorded
For example: Company A hires B as the new Secretary. Her salary is 15,000 a month.
Does the above event need to be journalized? The answer is no. You cannot debit Salaries Expense nor credit cash because the event is merely a statement showing the newly hired secretary.
Memo Entry: A new secretary is hired with a salary of 15,000 per month.
This will not affect the ledger or trial balance, but it is important to know it.
Step 2: Transactions are Recorded in the Journal
August 1: Sanaol invested P100,000 personal funds
| Date | Account Title & Explanation | Debit | Credit |
|---|---|---|---|
| August 1 | Cash | 100,000 | |
| Sanaol Capital | 100,000 |
Sanaol invested P100,000 of personal funds into the business. This increases the company's cash and also increases the owner's equity in the business.
August 2: Bought a computer for office use
| Date | Account Title & Explanation | Debit | Credit |
|---|---|---|---|
| August 2 | Computer | 30,000 | |
| Cash | 15,000 | ||
| Accounts Payable | 15,000 |
The company purchased a computer worth P30,000. Sanaol paid 50% and that is P15,000 (30,000*50%). The remaining half which is P15,000, will be paid in 60 days.
August 3: Acquired office supplies on account
| Date | Account Title & Explanation | Debit | Credit |
|---|---|---|---|
| August 3 | Office Supplies | 5,000 | |
| Accounts Payable | 5,000 |
The company acquired office supplies worth P5,000 on credit. This increases the company's office supplies and also increases its liabilities, particularly accounts payable because the supplies were purchased on account, which means on credit.
August 4: Performed tutoring services and sent a bill
| Date | Account Title & Explanation | Debit | Credit |
|---|---|---|---|
| August 4 | Accounts Receivable | 28,000 | |
| Service Revenue | 28,000 |
The company provided tutoring services and billed customers P28,000. This increases the company's receivables and also increases its revenue.
August 6: Received payment for tutoring services
| Date | Account Title & Explanation | Debit | Credit |
|---|---|---|---|
| August 6 | Cash | 28,000 | |
| Accounts Receivable | 28,000 |
The company received payment from customers for the tutoring services previously billed in August 4. Since nakatanggap ka ng cash, syempre tataas ang amount ng cash kaya ide-debit mo siya. At the same time, bababa na rin ang receivable mo kasi natanggap mo na ang bayad. Dahil diyan, you have to credit accounts receivable.
Tip para hindi malito: Kung tumaas ang isang asset account, debit. Kung bumaba ang isang asset account, credit.
In the given transaction, one asset increases, and at the same time, another asset decreases. This is also called the exchange of assets. Normally, wala siyang change in total assets since tumaas yung is a at bumaba naman ang is a pa. In effect, zero ang change.
August 8: Hired a personal assistant
The company hired a personal assistant with a salary of P8,000. This is an administrative action and does not result in a financial transaction on this date.
Memo Entry: Hired a personal assistant with a salary of P8,000.
August 10: Paid in full to Supplies Company
| Date | Account Title & Explanation | Debit | Credit |
|---|---|---|---|
| August 10 | Accounts Payable | 5,000 | |
| Cash | 5,000 |
The company paid the P5,000 owed to Supplies Company. This decreases the company's liabilities and also decreases its cash.
Balikan mo lang ang transaction sa August 3. Nasa credit side and accounts payable mo doon and that signifies na tumaas siya dahil umutang ka. In this date, August 10, binayaran mo na ang utang. Therefore, mababawasan ngayon ang utang mo or yung payable mo kaya ide-debit mo naman siya ngayon. Since nagbayad ka, mababawasan din ang cash mo kaya ire-credit mo naman ang cash.August 12: Bought additional supplies for cash
| Date | Account Title & Explanation | Debit | Credit |
|---|---|---|---|
| August 12 | Office Supplies | 2,000 | |
| Cash | 2,000 |
Sanaol purchased additional office supplies worth P2,000 and paid in cash. Office supplies was increased so you have to debit it. On the other hand, nabawasan ang cash so you have to credit it.
August 15: Rented a new space for office use
| Date | Account Title & Explanation | Debit | Credit |
|---|---|---|---|
| August 15 | Prepaid Rent | 15,000 | |
| Cash | 15,000 |
The company paid P15,000 rent for five months in advance for a new office space.
This is a prepayment. An adjusting entry may be made at the end of the month. But that will be discussed in a separate discussion.
August 20: Paid miscellaneous expense
| Date | Account Title & Explanation | Debit | Credit |
|---|---|---|---|
| August 20 | Miscellaneous Expense | 500 | |
| Cash | 500 |
The company paid P500 for miscellaneous expenses. Tumaas ang expenses mo so you have to debit it. Cash, on the other hand, ay bumaba naman kaya siya credited.
August 24: Billed Client for tutoring service
| Date | Account Title & Explanation | Debit | Credit |
|---|---|---|---|
| August 24 | Accounts Receivable | 14,000 | |
| Service Revenue | 14,000 |
The company provided tutoring services for two weeks and billed the client P14,000. The word billed means hindi pa nabayaran. Dito, tumaas ang accounts receivable mo kaya siya debited. Service revenue was increased naman because you have already performed the service. You earned it already.
August 25: Received and paid electric bill
| Date | Account Title & Explanation | Debit | Credit |
|---|---|---|---|
| August 25 | Utilities Expense-Electricity | 1,125 | |
| Cash | 1,125 |
The company received and paid an electric bill amounting to P1,125.
August 28: Received water bill
| Date | Account Title & Explanation | Debit | Credit |
|---|---|---|---|
| August 25 | Utilities Expense-Water | 1,125 | |
| Accounts Payable | 1,125 |
The company received water bill so you have to debit utilities expense-water. At the same time, credited naman ang accounts payable dahil hindi mo pa nababayaran.
Just in case it was mentioned in the transaction na sumulat ng promissory note, Notes Payable ang gagamiting account title instead of Accounts Payable.
August 31: Received partial payment from Client B
| Date | Account Title & Explanation | Debit | Credit |
|---|---|---|---|
| August 31 | Cash | 10,000 | |
| Accounts Receivable | 10,000 |
Although it is a partial payment lang, there is still an effect that needs to be recorded. Debit cash for the amount received and credit accounts receivable to decrease the receivable.
- Performed services to various customers and sent a bill of P20,000 for the services rendered.
- Received 80% of the account previously charged to various customers for the tutoring services rendered.
- Hired a secretary. The salary of the new secretary is 10,000.
- Sold a dozen of pencils to A. Terms: 2/10, n/30.
- Received payment from A 9 days after the sale.