1. RECORDING OF BUSINESS TRANSACTIONS

2. Financial Statement :  Income Statement  Balance Sheet  Statement of Owner’s Equity  Cash Flow Statement  Notes of Financial Statement Trial Balance

3. UNDERSTANDING THE STEPS OF RECORDING PROCESS Transaction occurs and the information is recorded on a source document Source document information is recorded in a journal Transaction information is posted from the journal to the ledger A Trial Balance is prepared at the end of the period Financial Statement are prepared (Income Statement, Statement of Owner’s Capital, Balance Sheet, Cash Flows Statement, Notes of Financial Statement) To the Decision Makers

4. The General Journal and Its Function A Journal is the first recording of the business transaction The function of a journal is to provide a permanent and complete record, arranged in chronological order for future reference, of all the business transactions of a firm The manner of entering transaction in the journal displays their effects on the accounts of the firm The process of recording a transaction in the journal is called journalizing This form of recording a transaction is called a journal entry

5. The Procedures of Journalizing a transaction 1.Every page of the journal is numbered for future reference 2.The year is entered at the head of the date column 3.The date of the business transaction is entered in the date column. The name of the month need not be repeated for successive transactions during that month 4.The name of the account to be debited is entered against the left margin of the description column 5.The amount to be debited is entered in the debit amount column 6.The name of the account to be credited is entered on the line following the debit account entry. An indentation is made to indicate that the account is credited

6. Continuing………. 7.The amount to be credited is entered in the credit amount column 8. A detailed description is entered immediately below the journal entry. This valuable information becomes a permanent record for the company 9. A line is usually skipped between journal entries 10. The reference column is provided for entering cross references to the accounts in the ledger

7. The Types of Journal There are two types of journal: General Journal Special Journal Special Journal consists of: Cash Receipts Journal Cash Disbursement Journal Sales Journal Purchased Journal General Journal Special Journal consists of: Cash Receipts Journal Cash Disbursement Journal Sales Journal Purchased Journal General Journal

8. Illustration of the Two Column Journal DateDescriptionRefDebitCredit 2008June(3)1Cash1,000 Angga’s Capital Angga’s Capital1,000 Angga invested cash in Angga invested cash in the company the company General Journal Page 6 (1) (in Rp.000) (2) (4)(5) (7)(6) (8) (9) (10)

9. Examples of Special Journal

11. Preparing Journal Entries in General Journal The “Kartika”, Co is a service firm. Some of the following transactions took place during the month of May, 2008. How to record are those transactions into general journal?DateTransactions2008May1 The owner invests in the firm. He contributes three assets: cash, supplies and office equipment. Cash is recorded the Rp. 100,000,000 amount and office equipment is recorded the Rp. 80,000,000 amount. The two asset accounts are debited and the capital account is credited to record the owner’s equity in the firm 3 The firm buys equipment to operate the car-wash service on credit. Car-wash equipment is recorded the Rp. 136,000,000 amount on debit side and Notes Payable is recorded the Rp. 136,000,000 amount on credit side.

12. DateTransactions 2008May8 Supplies to be used in washing cars are purchased on credit. Supplies will be recorded the Rp. 8,000,000 amount on debit side. Account Payable is credited the Rp. 8,000,000 amount 11 The rent for the month is paid. Rent Expense will be recorded the Rp. 3,000,000 on debit, and Cash will be credited the Rp. 3,000,000 amount 17 The revenues earned are recorded the Rp. 80,000,000. This revenue comes from sales on credit and cash. The Revenue will be credited the Rp. 80,000,000, Accounts Reveivable is debited the amount of Rp. 10,000,000, and Cash is debited the Rp. 70,000,000 amount 18 The amount due Airlangga, Co on the May, 8 purchased of supplies is paid. Account Payable will be debited the Rp. 1,000,000 amount and Cash is credited the Rp. 1,000,000 amount Continuing …………

13. DateTransactions 2008May27 Collected cash form customer. This the amount owed from the May, 17 transaction. Cash will be debited the Rp. 1,000,000 amount, and Accounts Receivable is credited the Rp. 1,000,000 amount 31 Salaries are paid. Salaries expense will be debited the Rp. 6,000,000 amount, and Cash is credited the Rp. 6,000,000 amount 31 Utilities are paid. As in the case of other expenses, the debit represents a decrease in capital. Utilities expenses are debited the Rp. 1,000,000 amount and Cash is credited Rp. 1,000,000 31 The revenues earned are recorded the Rp. 15,000,000. This revenue comes from sales on credit and cash. The Revenue will be credited the Rp. 4,000,000, Accounts Reveivable is debited the amount of Rp. 11,000,000, and Cash is debited the Rp. 15,000,000 amount 31 The owner withdraws cash for personal use. Angga’s withdrawals will be debited Rp. 5,000,000 amount, and Cash is credited Rp. 5,000,000 amount Continuing……….

14. Recording to transaction May, 1, 2008

15. Recording to transaction May, 3, 2008

16. Recording to transaction May, 8, 2008

17. Recording to transaction May, 11, 2008

18. Recording to transaction May, 17, 2008

19. Recording to transaction May, 18, 2008

20. Recording to transaction May, 27, 2008

21. Recording to transaction May, 31, 2008