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Service-Business Cycle Workbench Chapter 5 · The Accounting Cycle for a Service Business
Chapter 5 · Recording → Reporting

A service business, the whole cycle — live

Journalize a repair shop's very first month in the general journal; everything you type flows automatically into the ledger, the trial balance, the worksheet, and finally the income statement and balance sheet. Change any figure and watch the chain re-foot.

Scenario

iSilang Repair Services — January 2026

Silang Repair Services is a brand-new sole proprietorship — an appliance repair shop opening its doors on January 2, 2026. Because it is new, there are no opening balances: the whole cycle starts from the owner's first investment. This business and its figures are illustrative and do not appear in the printed book.

Transactions during January

  • Jan 2 — R. Silang invested ₱200,000 cash to start the business.
  • Jan 3 — Bought repair equipment for cash, ₱80,000.
  • Jan 5 — Bought repair supplies on account, ₱12,000.
  • Jan 8 — Paid shop rent for January, ₱8,000.
  • Jan 10 — Repair services for cash, ₱35,000.
  • Jan 14 — Billed Mr. Reyes for services on account, ₱28,000.
  • Jan 18 — Paid assistants' salaries, ₱15,000.
  • Jan 20 — Collected ₱20,000 of Mr. Reyes' account.
  • Jan 24 — Paid ₱7,000 of the account for supplies.
  • Jan 28 — Repair services for cash, ₱22,000.
  • Jan 30 — Owner withdrew ₱10,000 cash.

Month-end data · Jan 31

Supplies still on hand
₱5,000
Depreciation for the month
₱1,000
Unpaid assistants' salaries
₱4,000
A service business sells time and skill, not goods — so there is no inventory, no cost of goods sold, and the income statement is a simple Revenue − Expenses. Compare this with the merchandiser in the Chapter 7 workbench.
Ch 5 · Step 2 — Journalizing

1Journalize — the general journal

A small service business records every transaction in the two-column general journal. The accounts are set up for you — enter each amount. Entries post to the ledger automatically below.

Ch 5 · Step 3 — Posting

2The ledger — T-accounts (auto-posted)

Every journal entry above, posted live. Read-only — this is what your journal produces.

Ch 5 · Step 4

3Unadjusted Trial Balance

Each ledger balance on its normal side. It must foot to equal debits and credits before you adjust.

Ch 5 · Step 5 — Adjusting entries

4Adjusting entries

Enter the three month-end adjustments from the data above. They feed straight into the worksheet and statements. (Chapter 6 explores adjustments in depth — its own workbench drills all five families.)

Ch 5 · Step 6

5Ten-column worksheet (auto-built)

Adjusted trial balance extended into the Income Statement and Balance Sheet columns. The balancing figure is the period's profit or loss.

Ch 5 · Step 7 — Financial statements

6Financial statements

The service-business income statement (no COGS — compare Chapter 7) and the classified balance sheet, built from everything above.

Income Statement — for the month ended Jan 31, 2026

Balance Sheet — as at Jan 31, 2026