Accounting Cycle Illustrated JDC

Juan Dela Cruz, CPA
Chart of Accounts
AS S E T S
Acc. No.
Current Assets
101
102
103
104
105
106
Non-current Assets
111
112
113
114
115
116
LIAB I LI T I E S
Current Liabilities
201
202
203
204
205
Non-current Liabilities
211
O W N E R S E Q U I T Y
301
302
REVENUE
401
402
EXPENSES
501
502
503
504
505
506
507
508
509
OTHER INCOME
601
F I NAN C E C O S T
701
Juan Dela Cruz, CPA

Chart of Accounts
AS S E T S
Account Title
Cash
Accounts Receivable
Notes Receivable
Interest Receivable
Office Supplies
Prepaid Expenses
Office Furniture and Fixtures

Accumulated Depreciation Office Furniture and Fixtures
Office Equipment
Accumulated Depreciation Equipment
Service Car
Accumulated Depreciation Service Car
LIAB I LI T I E S
Accounts Payable
Unearned Professional Fees
Utilities Payable
Interest Payable
Notes Payable
Loan Payable
O W N E R S E Q U I T Y
Juan Dela Cruz, Capital
Juan Dela Cruz, Drawing
REVENUE
Professional Fees
Income Summary
EXPENSES
Taxes and Licenses
Rent Expense
Salaries Expense
Office Supplies Expense
Insurance Expense
Depreciation Expense
Gas and Oil
Utilities Expense
Miscellaneous Expense
OTHER INCOME
Interest Income
F I NAN C E C O S T
Interest Expense
GENERAL JOURNAL
Date
2012
July
Particulars
1
Cash
(initial investment to start a business)
Office Supplies
Cash
(paid cash for office supplies)
Office Equipment
Accounts Payable
(purchased office equipment on account)
Rent Expense
Cash
(paid monthly rent)
Cash
Professional Fees
(received cash for services rendered)
Accounts Receivable
Professional Fees
(charged client for services rendered)
10
Notes Receivable
Accounts Receivable
(received 60-day 10% note in settement of account)
11
Accounts Receivable
Professional Fees
13
Cash
Professional Fees
15
Salaries Expense
Cash
(paid employees salaries)
17
Accounts Payable
Cash
(paid half of the account due on the purchased of office equipment)

20
Cash
Accounts Receivable
(partial collection from client on account)
GENERAL JOURNAL
Date
2012
July
Particulars
22
Accounts Receivable
Professional Fees
27
Cash
Professional Fees
28
Utilities Expense
Cash
(paid monthly telephone bill)
31
Salaries Expense
Cash
(paid employees salaries)
Cash
(owner withdrew cash)
AD J U S T I N G
31
ENTRIES

Office Supplies
(to record supplies expense for the month)
Utilities Expense
Utilities Payable
(to record accrued electic bill)
(to record depreaciaton on office equipment for the month)
Interest Receivable
Interest Income
(to record accrued interest on Notes Receivable)
CLOSING
31
ENTRIES
Professional Fees
Interest Income
Income Summary
(to close revenue accounts)
GENERAL JOURNAL
Date
2012
July
Particulars
31
Income Summary
Rent Expense
Salaries Expense
Utilities Expense
(to close the expense accounts)
Income Summary
(to close income summary to owner's capital account)
(to close drawing account)
REVERSING
2012
Aug
ENTRIES
Utilities Payable
Utilities Expense
(to reverse the adjusting entry for accrued electric bill)
Interest Income
Interest Receivable
(to reverse the adjusting entry for accrued interest on the notes)
NOTE: These journal entries should be posted on their corresponding ledger account. On this example business entity, I intentionally did not p
it relates to the next accounting period. Just take note that it should be posted on ledger account on next accounting period. Juan Dela Cruz
report and business life is divided monthly. This example is for accounting period of July 2012 and next accounting period (August 2012) will s
accounting cycle with the real or permanent account balances carried over from July 2012.
Page 1
PR
Debit
101
301
100,000
105
101
6,750
113
201
62,500
502
101
12,000
101
401
15,000
102
401
12,000
103
102
12,000
102
401
9,200
101
401
8,000
503
101
7,800
201
101
31,250
Credit
100,000
6,750
62,500
12,000
15,000
12,000
12,000
9,200
8,000
7,800
31,250
101
102
PR
4,600
4,600
Page 2
Credit
Debit
102
401
5,000
101
401
12,000
508
101
960
503
101
7,800
302
101
10,000
504
105
2,140
508
203
3,180
506
114
1,000
5,000
12,000
960
7,800
10,000
2,140
3,180
1,000
104
601
70
401
601
402
61,200
70
PR
70
61,270
Page 3
Credit
Debit
402
502
503
504
506
508
34,880
402
301
26,390
301
302
10,000
203
508
3,180
601
104
70
12,000
15,600
2,140
1,000
4,140
26,390
10,000
3,180
70
ess entity, I intentionally did not post reversing entries because

ounting period. Juan Dela Cruz, CPA prepares a monthly
nting period (August 2012) will start again from step 1 of
Cash
Date
2012
July
Particulars
PR
Debit
Date
2012
100,000 July
initial investment to start a business
received cash for services rendered
15,000
13
8,000
15
20
partial collection from client on account
4,600
17
27
12,000
28
139,600
31
63,040
Acc.
No.
Particulars
PR
101
Credit
paid cash for office supplies
6,750
paid monthly rent
12,000
paid employees salaries

paid half of the account due on the purchased
of office equipment
7,800
31,250
paid monthly telephone bill
960
7,800
owner withdrew cash
10,000
76,560
Accounts Receivable
Date
2012
July
Particulars
PR
Debit
Date
2012
12,000 July
charged client for services rendered
11
9,200
22
5,000
26,200
9,600
10
20
Acc.
No.
Particulars
received 60-day 10% note in settement of
account
partial collection from client on account
PR
102
Credit
12,000
4,600
16,600
Notes Receivable
Date
2012
July
10
Particulars
received 60-day 10% note in settement of
account
PR
1
Debit
Date
12,000
Acc.
No.
Particulars
PR
103
Credit
Interest Receivable
Date
2012
July
31
Particulars
to record accrued interest on Notes Receivable
(AJE)
PR
2
Debit
Date
70
Acc.
No.
Particulars
PR
104
Credit
Office Supplies
Date
2012
July
Particulars
3
PR
paid cash for office supplies
4,610
Debit
Date
2012
6,750 July
31
Acc.
No.
Particulars
to record supplies expense for the month (AJE)
PR
2
105
Credit
2,140
Prepaid Expenses
Date
Particulars
PR
Debit
Date
Acc.
No.
Particulars
PR
106
Credit
Office Furniture and Fixtures

Date
Particulars
PR
Debit
Date
Acc.
No.
ures
Particulars
PR
111
Credit
Accumulated Depreciation Office Furniture and Fixtures

Date
Particulars
PR
Debit
Date
niture and Fixtures

Particulars
Acc.
No.
PR
112
Credit
Office Equipment
Date
2012
July
Particulars
4
purchased office equipment on account
PR
1
Debit
Date
62,500
Acc.
No.
Particulars
PR
113
Credit

Date
Particulars
PR
Debit
Date
2012
July
31
quipment
Particulars
to record depreaciaton on office equipment for
the month (AJE)
Acc.
No.
PR
2
114
Credit
1,000
Service Car
Date
Particulars
PR
Debit
Date
Acc.
No.
Particulars
PR
115
Credit
Accumulated Depreciation Service Car

Date
Particulars
PR
Debit
Date
ervice Car
Particulars
Acc.
No.
PR
116
Credit
Accounts Payable
Date
2012
July
17
Particulars
paid half of the account due on the purchased
of office equipment
PR
1
Debit
Date
2012
31,250 July
Acc.
No.
Particulars
PR
purchased office equipment on account
31,250
201
Credit
62,500
Unearned Professional Fees

Date
Particulars
PR
Debit
Date
Acc.
No.
ees
Particulars
PR
202
Credit
Utilities Payable
Date
Particulars
PR
Debit
Date
2012
July
31
Acc.
No.
Particulars
to record accrued electic bill (AJE)
PR
2
203
Credit
3,180
Interest Payable
Date
Particulars
PR
Debit
Date
Acc.
No.
Particulars
PR
204
Credit
Notes Payable
Date
Particulars
PR
Debit
Date
Acc.
No.
Particulars
PR
205
Credit
Loan Payable
Date
Particulars
PR
Debit
Date
Acc.
No.
Particulars
PR
211
Credit

Date
2012
July
Particulars
31
to close drawing account (closing entries)
PR
3
Debit
Date
2012
10,000 July
1
31
Acc.
No.
al
Particulars
PR
initial investment to start a business

to close income summary to owner's capital
account (closing)
116,390
301
Credit
100,000
26,390

Date
2012
July
Particulars
31
PR
owner withdrew cash
0.00
Debit
Date
2012
10,000 July
31
Acc.
No.
g
Particulars
to close drawing account (closing entries)
PR
3
302
Credit
10,000
Professional Fees
Date
2012
July
Particulars
31
to close revenue accounts (closing entries)
PR
2
Debit
Date
2012
61,200 July
7
9
11
13
22
27
Acc.
No.
Particulars
PR
401
Credit
15,000
12,000
9,200
8,000
5,000
12,000
61,200
0.00
Income Summary
Date
2012
July
Particulars
31
PR
to close the expense accounts (closing entries)

to close income summary to owner's capital
account
Debit
Date
2012
34,880 July
26,390
61,270
0.00
31
Acc.
No.
Particulars
PR
2
402
Credit
61,270
Taxes and Licenses

Date
Particulars
PR
Debit
Date
Acc.
No.
Particulars
PR
501
Credit
Rent Expense
Date
2012
July
Particulars
5
PR
paid monthly rent
0.00
Debit
Date
2012
12,000 July
31
Acc.
No.
Particulars
PR
3
502
Credit
12,000
Salaries Expense
Date
2012
July
Particulars
PR
Debit
Date
15
2012
7,800 July
31
7,800
15,600
0.00
31
Acc.
No.
Particulars
PR
3
503
Credit
15,600

Date
2012
July
Particulars
31
PR
to record supplies expense for the month (AJE)
0.00
Debit
Date
2012
2,140 July
31
Acc.
No.
se
Particulars
PR
3
504
Credit
2,140
Insurance Expense
Date
Particulars
PR
Debit
Date
Acc.
No.
Particulars
PR
505
Credit
Date
2012
Juy
31
Particulars
to record depreaciaton on office equipment for
the month (AJE)
0.00
PR
2
Debit
Date
2012
1,000 Juy
31
Acc.
No.
Particulars
PR
3
506
Credit
1,000
Gas and Oil

Date
Particulars
PR
Debit
Date
Acc.
No.
Particulars
PR
507
Credit
Utilities Expense
Date
2012
July
Particulars
PR
28
paid monthly telephone bill
31
to record accrued electic bill (AJE)
Debit
Date
2012
960 July
3,180
4,140
0.00
31
Acc.
No.
Particulars
PR
3
508
Credit
4,140
Miscellaneous Expense
Date
Particulars
PR
Debit
Date
Acc.
No.
e
Particulars
PR
509
Credit
Interest Income
Date
2012
July
Particulars
31
PR
2
Debit
Date
2012
70 July
31
Acc.
No.
Particulars
to record accrued interest on Notes Receivable
(AJE)
0.00
PR
2
601
Credit
70
Interest Expense
Date
Particulars
PR
Debit
Date
Acc.
No.
Particulars
PR
701
Credit
Juan Dela Cruz, CPA

Trial Balance
July 31, 2012
Account Titles
PR
Cash
101
63,040
Accounts Receivable
102
9,600
Notes Receivable
103
12,000
Office Supplies
105
6,750
Office Equipment
113
62,500
Accounts Payable
201
31,250
301
100,000
302
Professional Fees
401
Rent Expense
502
12,000
Salaries Expense
503
15,600
Utilities Expense
508
960
TOTAL
Debit
Credit
10,000
61,200
192,450
192,450
Adjustment Data:
a.) A physical count of office supplies showed that P4,610 of office supplies remained unused as of July 31,
b.) Accrued electric bill for July 31 is P3,180
c.) The office equipment has a salvage value of P2,500 and an estimated life of 5 years.
d.) Accrued interest on the notes receivable is computed using 360 days
s remained unused as of July 31, 2012
fe of 5 years.
Mon Store
Worksheet
December 31, 2011
Account Titles
Trial Balance
Dr
Cash
Accounts Receivable
Notes Receivable
Office Supplies
Office Equipment
Accounts Payable
Professional Fees
Rent Expense
Salaries Expense
Utilities Expense
Total
Utilities Payable
Accumulated Depreciation-Office Equipment
Interest Receivable
Interest Income
Adjustments
Cr
Dr
Cr
63,040
9,600
12,000
6,750
62,500
a.)
2,140
63,040
9,600
12,000
4,610
62,500
31,250
100,000
10,000
10,000
61,200
12,000
15,600
960
192,450
b.)
3,180
a.)
2,140
12,000
15,600
4,140
192,450
2,140
b.)
c.)
1,000
d.)
70
6,390
Net Income
Adjusted Trial Balance

Dr
3,180
1,000
c.)
1,000
d.)
70
6,390
70
196,700
Mon Store
Worksheet
December 31, 2011
Adjusted Trial Balance
Cr
Income Statement
Dr
Cr
Balance Sheet
Dr
Cr
63,040
9,600
12,000
4,610
62,500
31,250
100,000
31,250
100,000
10,000
61,200
61,200
12,000
15,600
4,140
2,140
3,180
3,180
1,000
1,000
1,000
70
70
196,700
34,880
26,390
61,270
70
61,270
161,820
61,270
161,820
135,430
26,390
161,820
Juan Dela Cruz, CPA

Income Statement
For the month ended July 31, 2012
Professional Fees
61,200
Less: Operating Expenses

Rent
Salaries
12,000
15,600
Office Supplies
2,140
Depreciation
1,000
Utilities
4,140
Net Operating Income
(34,880)
P
26,320
Add: Other income

Interest Income
Net Income
70
P
26,390
Juan Dela Cruz, CPA

Statement of Changes in Owner's Equity
For the month ended July 31, 2012
Juan Dela Cruz, Capital, July 1, 2012
Add: Net Income for the month
100,000
26,390
Total
126,390
Less: Juan Dela Cruz, Drawing
(10,000)
116,390
Juan Dela Cruz, CPA

Balance Sheet
July 31, 2012
ASSETS
Cash
Accounts Receivable
Notes Receivable
Interest Receivable
Office Supplies
Office Equipment
Less: Accumulated Depreciation
Total Assets
62,500
(1,000)
63,040
9,600
12,000
70
4,610
61,500
150,820
31,250
3,180
34,430
LIABILITIES
Accounts Payable
Utilities Payable
Total Liabilities
O W N E R' S E Q U I T Y
Total Liabilities & Owner's Equity
116,390
P
150,820
Juan Dela Cruz, CPA

Balance Sheet
July 31, 2012
ASSETS
Cash
Accounts Receivable
9,600
Notes Receivable
12,000
Interest Receivable
70
Office Supplies
Office Equipment
Less: Accumulated Depreciation
Total Assets
63,040
4,610
P
62,500
(1,000)
61,500
P
150,820
Dela Cruz, CPA

alance Sheet
uly 31, 2012
LIABILITIES
Accounts Payable
Utilities Payable
31,250
3,180
Total Liabilities
34,430
O W N E R' S E Q U I T Y
Total Liabilities & Owner's Equity
116,390
P
150,820
Juan Dela Cruz, CPA

Post ClosingTrial Balance
July 31, 2012
Account Titles
PR
Cash
101
63,040
Accounts Receivable
102
9,600
Notes Receivable
103
12,000
Interest Receivable
104
70
Office Supplies
105
4,610
Office Equipment
113
62,500
114
Accounts Payable
201
Utilities Payable
203
301
TOTAL
Debit
151,820
Credit
1,000
31,250
3,180
116,390
151,820

Accounting Cycle Illustrated JDC

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Accounting Cycle Illustrated JDC

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Juan Dela Cruz, CPA

Juan Dela Cruz, CPA

Office Furniture and Fixtures

(paid half of the account due on the purchased of office equipment)

Office Supplies Expense

ess entity, I intentionally did not post reversing entries because

initial investment to start a business

received cash for services rendered

received cash for services rendered

partial collection from client on account

received cash for services rendered

paid cash for office supplies

paid monthly rent

paid employees salaries

paid monthly telephone bill

paid employees salaries

owner withdrew cash

charged client for services rendered

charged client for services rendered

charged client for services rendered

paid cash for office supplies

Office Furniture and Fixtures

Accumulated Depreciation Office Furniture and Fixtures

niture and Fixtures

purchased office equipment on account

Accumulated Depreciation Equipment

Accumulated Depreciation Service Car

purchased office equipment on account

Unearned Professional Fees

Juan Dela Cruz, Capital

to close drawing account (closing entries)

initial investment to start a business

Juan Dela Cruz, Drawing

owner withdrew cash

to close revenue accounts (closing entries)

received cash for services rendered

charged client for services rendered

charged client for services rendered

received cash for services rendered

charged client for services rendered

received cash for services rendered

to close the expense accounts (closing entries)

Taxes and Licenses

paid monthly rent

paid employees salaries

paid employees salaries

Office Supplies Expense

to record supplies expense for the month (AJE)

Gas and Oil

paid monthly telephone bill

to record accrued electic bill (AJE)

to close revenue accounts (closing entries)

Juan Dela Cruz, CPA

Juan Dela Cruz, Capital

Juan Dela Cruz, Drawing

s remained unused as of July 31, 2012

Adjusted Trial Balance

Juan Dela Cruz, CPA

Less: Operating Expenses

Net Operating Income

Add: Other income

Juan Dela Cruz, CPA

Add: Net Income for the month