THE JOURNAL

• The journal is a chronological

record of the entity’s
transactions.

• A journal entry shows all effects

of a business transaction in terms
of debits and credits.

• The journal is called the book of

original entry.
The standard contents of the General Journal Format
are as follows:

1. Date - The year and month are not

rewritten for every entry unless the year or
month changes or a new page is needed.
2. Account Titles and Explanation – the
account to be debited is entered at the
extreme left of the first line while the
account to be credited is entered slightly
intended on the next line.
3. Debit – the debit amount for each account
is entered in this column.
4. Credit – the credit amount for each
account is entered in this column.
 Example

Assume that Elisa Diaz

established her own wedding
consultancy with an initial
investment of 250,000 on May
1, 2022.

The Journal Entry is shown

below:
Date Account Titles and Explanation Debit Credit
2022
May 1 Cash 250,000
Diaz, Capital 250,000
 Simple Entry
In a simple entry, only two
accounts are affected – one
account is debited and the other
account credited. An example of
Simple and this is the entry to record the
Compound Entry initial investment of Diaz.

Compound Entry
However, some transactions
require the use of more than two
accounts. When three or more
accounts are required in a journal
entry, the entry is referred to as a
compound entry.
After the transactions or event has been
identified and measured, it is recorded in the
journal. The process of recording transaction is
called journalizing, the following are the
transactions for Wedding “R” Us during the
month of May. The double-entry system will be
used.
JOURNALIZING
To Understand the nature of the affected accounts, the letter A (for asset), L (Liability) or
OE (Owner’s Equity) is inserted after each entry. In addition, owner’s equity is further
classified into OE:I (Income) and OE:E (Expenses).
 Note that the rules of double-
entry system are observed in
each transaction:

1. Two or more accounts are affected by each transaction.

2. The sum of the debits for every transactions equals the sum of the credits.
3. The equality of the accounting equation is always maintained
 May 1 Elisa Diaz is a social
entrepreneur from the
South. She is into a lot of
interesting causes. Her fine
Assets increased. Owner’s Equity increased. tastes preeminent such
Analysis that she is considered an
Increases in assets are recorded by debits. authority in planning
Rules Increases in owner’s Equity are recorded by
weddings. Upon the advice
credits.
and prodding of an
Increase in assets is recorded by a debit to cash.
Entry Increases in owner’s equity is recorded by a credit esteemed colleague, Maria
to Diaz, Capital. Concepcion Manalo, Diaz
decided to organize her
Date Account Titles and Explanation Debit Credit
wedding consultancy and
2022
named the business
May 1 Cash (A) 250,000
Weddings “R” Us. Elisa Diaz
Diaz, Capital (OE) 250,000
invested P250,000.
 May 1 Rented office space and
paid two months’ rent in
advance, P8,000.

Analysis Assets increased. Asset decreased.

Increases in assets are recorded by debits.

Rules decreases in assets are recorded by credits.

Increase in assets is recorded by a debit to prepaid

Entry rent. Decreases in asset is recorded by a credit to
cash.

Date Account Titles and Explanation Debit Credit

2022
May 1 Prepaid Rent (A) 8,000
Cash (OE) 8,000
 May 2 Elisa Diaz issued
promissory note for a
P210,000 loan from
Metrobank. This availment
Assets increased. Liabilities increased. will be used for the
Analysis acquisition of a service
Increases in assets are recorded by debits. vehicle. The note carries a
Rules Increases in liabilities are recorded by credits.
20% interest per annum.
Increase in assets is recorded by a debit to cash. That arrangement with the
Entry Increase in liabilities is recorded by a credit to bank is that both the
notes payable. interest and the principal
are payable in full in one
Date Account Titles and Explanation Debit Credit
year.
2022
May 2 Cash (A) 210,000
Notes Payable (L) 210,000
 May 2 Hired an office assistant
and an account executive
each with a P7,800
monthly salary. Or, each is
to receive P300 per day for
Analysis the 26-day work month.
They started work
Rules immediately.

Entry No Entry is necessary at this point.

Date Account Titles and Explanation Debit Credit

2022
May 2 NO ENTRY
 May 4 Acquired service vehicle for
P420,000.

Analysis Assets increased. Assets decreased.

Increases in assets are recorded by debits.

Rules Decrease by credits.

Increase in assets is recorded by a debit to service

Entry vehicle. Decrease in assets is recorded by a credit
to cash.

Date Account Titles and Explanation Debit Credit

2022
May 4 Service Vehicle (A) 420,000
Cash (A) 420,000
 May 4 Paid Prudential
Guarantee and
Assurance, Inc. P14,400
for a one-year
An asset increased. Another asset decreased. comprehensive insurance
Analysis coverage on the service
Increases in assets are recorded by debits. vehicle.
Rules Decreases in assets are recorded by credits.

Increase in assets is recorded by a debit to prepaid

Entry insurance. Decrease in assets is recorded by a
credit to cash.

Date Account Titles and Explanation Debit Credit

2022
May 4 Prepaid Insurance (A) 14,400
Cash (A) 14,400
 May 5 Acquired office equipment
from Fair and Square
Emporium for P60,000;
Assets increased. Assets decreased. Liabilities paying P15,000 in cash and
Analysis decreased. the balance next month.
Increases in assets are recorded by debits. Note: A compound entry is
Rules Decreases in assets are recorded by credits. needed for this
Increases in liabilities are recorded by credits. transaction.
Increase in assets is recorded by a debit to office
equipment. Decrease in assets is recorded by a
Entry credit to cash. Increase in liabilities is recorded by
a credit to accounts payable.
Date Account Titles and Explanation Debit Credit
2022
May 5 Office Equipment (A) 60,000
Cash (A) 15,000
Accounts Payable (L) 45,000
 May 8 Purchased supplies on
credit for P18,000 from San
Jose Merchandising.

Analysis Assets increased. Liabilities increased.

Increases in assets are recorded by debits.

Rules Increases in liabilities are recorded by credits.

Increase in assets is recorded by a debit to

Entry supplies. Increase in liabilities is recorded by a
credit to accounts payable.
Date Account Titles and Explanation Debit Credit
2022
May 8 Supplies (A) 18,000
Accounts Payable (L) 18,000
 May 9 Paid San Jose
Merchandising P10,000 of
the amount owed

Analysis Assets decreased. Liabilities decreased.

Decreases in assets are recorded by credits.

Rules Decreases in liabilities are recorded by debits.

Decrease in liabilities is recorded by a debit to

Entry accounts payable. Decrease in assets is recorded
by a credit to cash.
Date Account Titles and Explanation Debit Credit
2022
May 9 Accounts Payable (L) 10,000
Cash (A) 10,000
 May 10 Coordinated and finalized
simple bridal arrangements
for three couples and
collected fees of P8,800
per couple. Services
Analysis Assets decreased. Owner’s equity increased.
include prospecting and
Increase in assets are recorded by debits, selecting the church and
Rules Increases in owner’s equity are recorded by reception location,
credits. couturier, caterer, car
Increase in assets is recorded by a debit to cash . service, flowers, souvenirs
Entry Increase in owner’s equity is recorded by a credit
and invitations.
to consulting revenues.
Date Account Titles and Explanation Debit Credit
2022
May 10 Cash (A) 26,400
Consulting Revenues (OE:I) 26,400
 May 13 Paid salaries P6,600. The
entity pays salaries every
two Saturdays.

Analysis Assets decreased. Owner’s equity decreased.

Decreases in assets are recorded by credits.

Rules Decreases in Owner’s equity are recorded by
debits.
Decrease in owner’s equity is recorded by a debit
Entry to salaries expense. Decrease in assets is recorded
by a credit to cash.
Date Account Titles and Explanation Debit Credit
2022
May 13 Salaries Expense (OE:E) 6,600
Cash(A) 6,600
 May 15 The entity is earning
revenues by referring
consulting clients to
friendly hotels, caterers,
printers and couturiers.
Analysis Assets decreased. Liabilities increased.
Received P10,000 cash as
Increases in asset are recorded by debits. payment for service to be
Rules Increases in liabilities are recorded by credits. rendered later of the same
month
Increase in assets is recorded by a debit to cash.
Entry Increase in liabilities is recorded by a credit to
unearned referral revenues.
Date Account Titles and Explanation Debit Credit
2022
May 15 Cash (A) 10,000
Unearned Referral Revenues (L) 10,000
 May 19 Coordinated and finalized
elaborate arrangements for
three couples and billed
fees of P12,000per couple.
Additional services include
Analysis Assets increased. Owner’s equity increased. documents preparation,
Increases in asset are recorded by debits. consultation with a feng
Rules Increases in owner’s equity are recorded by shui expert as to the ideal
credits. wedding date for
Increase in assets is recorded by a debit to prosperity and harmony,
Entry accounts receivable. Increase in owner’s equity is
provision for limousine
recorded by a credit to consulting revenues.
service and honeymoon
Date Account Titles and Explanation Debit Credit
trip.
2022
May 19 Accounts Receivable (A) 36,000
Consulting Revenues (OE:I) 36,000
 May 25 Diaz withdrew P14,000
cash for personal use.

Analysis Assets decreased. Owner’s equity decreased.

Decreases in asset are recorded by credits.

Rules Decreases in owner’s equity are recorded by
debits.
Decreases in owner’s equity is recorded by a debit
Entry to Diaz, Withdrawals. Decrease in assets is
recorded by a credit to cash.
Date Account Titles and Explanation Debit Credit
2022
May 25 Diaz Withdrawals (OE) 14,000
Cash (A) 14,000
 May 27 Paid salaries, P7,200

Analysis Assets decreased. Owner’s equity decreased.

Decreases in asset are recorded by credits.

Rules Decreases in owner’s equity are recorded by
debits.
Decreases in owner’s equity is recorded by a debit
Entry to Salaries expense. Decrease in assets is recorded
by a credit to cash.
Date Account Titles and Explanation Debit Credit
2022
May 27 Salaries Expense (OE:E) 7,200
Cash (A) 7,200
 May 30 Received the ICC-BayanTel
telephone bill. P1,400

Analysis Liabilities increase. Owner’s equity decreased.

Increases in liabilities are recorded by credits.

Rules Decreases in owner’s equity are recorded by
debits.
Decreases in owner’s equity is recorded by a debit
Entry to Utilities Expense. Increases in liabilities is
recorded by a credit to utilities payable.
Date Account Titles and Explanation Debit Credit
2022
May 30 Utilities Expense (OE:E) 1,400
Utilities Payable (L) 1,400
 May 30 Received P24,000 from two
clients for services billed
last May 19.

Analysis An asset increased. Another asset decreased.

Increases in assets are recorded by debits.

Rules Decreases as credits

Increases in assets is recorded by a debit to cash.

Entry Decrease in assets is recorded by a credit to
accounts receivable.
Date Account Titles and Explanation Debit Credit
2022
May 30 Cash (A) 24,000
Accounts Receivable (A) 24,000
 May 31 Settled the electricity bill of
P3,000 for the month.

Analysis Asset decreased. Owner’s Equity decreased.

Decrease in assets are recorded by credits.

Rules Decreases in owner’s equity are recorded by
debits.
Decreases in owner’s equity is recorded by a debit
Entry to utilities expense. Decreases in assets is
recorded by a credit to cash.
Date Account Titles and Explanation Debit Credit
2022
May 31 Utilities Expense (OE:E) 3,000
Cash (A) 3,000