Republic of the Philippines

Department of Education
REGION VII, CENTRAL VISAYAS
Division of Cebu Province

SELF-LEARNING HOME TASK (SLHT)

Subject: Fundamentals of Accountancy, Business and Management 1 Grade Level: 12

Quarter: 1 Week: 9

MELCs:

1. Post transactions in the ledger.

2. Prepares a trial balance.

Competency Code : (ABM_FABM11- IVa-d -31) ; (ABM_FABM11- IVa-d -32)

Name __________________________ Section ____________ Date ________

School MANLAPAY NATIONAL HIGH SCHOOL District DALAGUETE II

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.

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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:

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.

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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.

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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.

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.

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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.

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.

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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.

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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.

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.

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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.

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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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 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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Answer Key

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