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Chapter 5Chapter 5
Posting from a General Journal to a General Ledger
OBJECTIVES: OBJECTIVES:
Define accounting terms related to posting from a general journal to a general ledger.
Identify accounting concepts and practices related to posting from a general journal to a general ledger.
Prepare a chart of accounts for a service business organized as a proprietorship
Post amounts from a general journal to a general ledger
Prove cash and journalize correcting entries
Preview of the ChapterPreview of the Chapter
Journals alone aren’t practical for businesses– They don’t provide account balances– You’d have to search through PAGES of journals to find total
accounts
Now, we’re going to create a LEDGER – Separate form for EACH account!
Preview– Arrange accounts in general ledger– Prepare chart of accounts– Posting to general ledger
Accounting Flow ChartAccounting Flow Chart
Source Document (transaction)
Journal
Ledger
Account form (ledger) Account form (ledger) Summarizes in one place all
changes to a single item or account.
Includes DR and CR sides Separate form for each account Used to trace specific entries to
where they are recorded in the journal
Two types of Account Two types of Account FormatsFormats
Basic account form- does not contain balances
Balance-Ruled - Contains balance columns
LedgerLedger A group of accounts
– There are different types of ledgers. The General Ledger contains all accounts to
prepare financial statements.
– Account title – name given to account
– Account number – number assigned to an account
• determines its classification and order within the classification.
Preparing a Chart of Accounts – pg 97Preparing a Chart of Accounts – pg 97 List all accounts by name and number
that a business has opened.
They are listed in the same order they appear on financial statements.
Assets are listed in order of liquidity.– How quickly something can be turned into
cash
Other classifications are listed alphabetically.
Chart of accounts:Chart of accounts:
ALL accounts will have an account form in the general ledger
Balance Sheet Accounts: – Assets
• listed by order of LIQUIDITY– Liabilities– Owner’s Equity– Income Summary – used to close accounts such as
expenses and revenue• Temporary account
Income Statement Accounts – Expenses and Revenues – Listed in alphabetical order
Put this in your notes – you will need this LATER
CHART OF ACCOUNTSCHART OF ACCOUNTS
We will be preparing these soon!
Preparing a Chart of Accounts: Preparing a Chart of Accounts:
Accounts are arranged in same order as they appear on financial statements
5 divisions:
1. Assets - 100
2. Liabilities - 200
3. Owner’s Equity - 300
4. Revenue - 400
5. Expenses – 500
Assign 3-digit account number to each account
CHART OF ACCOUNTSCHART OF ACCOUNTS
Lesson 5-1, page 97Lesson 5-1, page 97
File MaintenanceFile Maintenance
The procedure of arranging accounts in the general ledger, assigning numbers, and keeping accounts current.
A new account is assigned the middle, unused # between the numbers of the existing accounts– EX) may record payments for Gasoline in Misc. Expense– Spend a lot on Gasoline create new account– Gasoline Expense 515
If no longer needed accounts are removed from chart of accounts– EX) Buy the building no need for rent expense– Account number 540 is available for use
New account added at end of ledger division next number in sequence is used– Ex ) Add Water Expense account– New account # 570 is assigned
Some companies may need to use more than 3 digits with more accounts
Questions????Questions????
Look at chart of accounts on page 97 What account number would be assigned to a new
account Car Expense? – Where would it be listed???
What account numbers would be assigned to: Automobile Expense Accounts Payable – Trent Supplies Accounts Receivable – Sarasota Day Care
Opening an AccountOpening an Account in the General Ledger in the General Ledger
Definition: Writing the account title and number on the heading of an account
Open and arrange them in same order as chart of accounts
STEPS:
1. Writing the account title Cash
2. Writing the account number 110
OPENING AN ACCOUNT IN A GENERAL LEDGEROPENING AN ACCOUNT IN A GENERAL LEDGER
Lesson 5-1, page 99Lesson 5-1, page 99
1
1. Write the account title.
2. Write the account number.
2
TO DO: Work Together, pg 100On your own, pg 100
CHAPTER 5-2CHAPTER 5-2
Posting an Amount from the Debit Column of a General Journal
A COMPLETED JOURNAL PAGEA COMPLETED JOURNAL PAGE
What would you have to do to determine how much cash the business has midway through the entries?
Lesson 4-4, page 82Lesson 4-4, page 82
PostingPosting Transferring the information from
the journal to the ledger account.
Sorts journal entries so that all DEBITS and CREDITS affecting one account are brought together in ONE place
Purpose of Post Reference Number Purpose of Post Reference Number 1. To trace the entry from the ledger to the journal page2. To trace the entry from the journal to the ledger account3. Accountant can tell which entries are posted and which
still need to be posted
A blank in Post Ref. column indicates that posting still needs to be completed
Posting reference is ALWAYS recorded in the journal as the last step in the posting procedure!!!!
Steps in PostingSteps in Posting
1. Date in date column
2. Page number from journal in the post reference column of ledger
1. letter G is abbreviation for General Journal
3. Amount
4. Calculate new balance
5. Ledger account number in post reference column of journal (ALWAYS LAST!!!!!)
Posting Debits/CreditPosting Debits/Credit
Debits are posted as debits Credits are posted as credits. IF Debit amount exceeds Credit amount Debit
Balance IF Credit amount exceeds Debit amount Credit
Balance In finding a new balance like amounts are added.
– If the balance of the account is a debit and you post a debit, the amount is added.
– If the balance of the account is a credit and you post a debit, the amount is subtracted.
5
4
321
POSTING AN AMOUNT FROM THE DEBIT COLUMN OF POSTING AN AMOUNT FROM THE DEBIT COLUMN OF A GENERAL JOURNALA GENERAL JOURNAL
1. Write the date.
2. Write journal page number.
3. Write the debit amount.
4. Write new account balance.
5. Write the account number in the Post. Ref. column of the journal. Lesson 5-2, page 101Lesson 5-2, page 101
1. Write the date.
5
4
3
2. Write the journal page number.3. Write the credit amount.4. Write the new account balance.5. Write the account number in the Post. Ref.
column of the journal.Lesson 5-2, page 102Lesson 5-2, page 102
21
POSTING AN AMOUNT FROM A CREDIT COLUMN OF POSTING AN AMOUNT FROM A CREDIT COLUMN OF A GENERAL JOURNALA GENERAL JOURNAL
POSTING A DEBIT AMOUNT TO AN ACCOUNT WITH A POSTING A DEBIT AMOUNT TO AN ACCOUNT WITH A BALANCEBALANCE
1. Write the date.
2. Write the journal page number.
3. Write the debit amount.
4. Write the new account balance.
5. Write the account number in the Post. Ref. column of the journal.
Lesson 5-2, page 103Lesson 5-2, page 103
5
4
321
Posting a DEBIT amount to an account with a CREDIT Posting a DEBIT amount to an account with a CREDIT balancebalance
Previous CREDIT Balance $2720.00 CR
– Debit column amount - 1360.00 DR
= NEW CREDIT balance 1360.00 CR
REVIEW: REVIEW:
What is file maintenance? What is Chart of Accounts? How are accounts listed in the chart of accounts? What are the number classifications of the following
FIVE types of accounts? Why do we post journal entries? $2000 DR, $1500 DR = _______ balance $5000 CR, $2000 DR = __________ balance $900 DR, $200 CR = ____________ balance How do you open a ledger account? What is the LAST step in posting?
TO DO: TO DO:
Work, pg 105 On your own, pg 105
App 5-1, 5-2 pg 113
Chapter 5-3: Completed General Ledger
– Proving Cash, and Making Correct Entries
Page 106-107 – completed general ledger with posting completed
Chapter 5-3: Completed General Ledger, Proving Cash, Chapter 5-3: Completed General Ledger, Proving Cash, and Making Correcting Entriesand Making Correcting Entries
General Ledger with a Posting Completed – PAGE 106-108
QUESTIONS: On what journal pages would you find the supply
accounts entries? Does Accounts payable – Ling Music have a
Debit or Credit balance? How many accounts have Credit Balances? Debit
Balances? Which Transactions took place on August 31?
Proving CashProving Cash This determines that the amount of cash on
hand agrees with the accounting records. Can be proved any time – ALWAYS END OF
MONTH Three places Cash Balance Must Agree
– Checkbook– Cash Account– Ledgers and Journals
PROVING CASHPROVING CASH
Lesson 5-3, page 109Lesson 5-3, page 109
***What might have to be done if 2 amounts did not agree????
Cash balance in check book=Cash balance in cash account CASH IS PROVED
Memorandum for a Correcting EntryMemorandum for a Correcting Entry
Simple errors can be corrected by ruling through item
BUT when error in journal is posted to the ledger incorrect journal entry should be corrected with additional journal entry
Correcting Entry: journal entry made to correct an error in the ledger
If accountin error is discovered memorandum is prepared describing correction to be made
Memo becomes source document for correcting entry
MEMORANDUM FOR A CORRECTING ENTRYMEMORANDUM FOR A CORRECTING ENTRY
Lesson 5-3, page 109Lesson 5-3, page 109
JOURNAL ENTRY TO RECORD A CORRECTING ENTRYJOURNAL ENTRY TO RECORD A CORRECTING ENTRY
Lesson 5-3, page 110Lesson 5-3, page 110
November 13. Discovered that a payment of cash for advertising in October was journalized and posted in error as a debit to Miscellaneous Expense instead of Advertising Expense, $120.00. Memorandum No. 45.
1. Which accounts are affected?
Advertising Expense
Miscellaneous Expense
3. How is each classification changed?
2. How is each account classified?
Advertising Expense is an expense account.
Miscellaneous Expense is an expense account. Miscellaneous Expense
Advertising Expense
120.00
120.00
3. Credit Miscellaneous Expense.
JOURNAL ENTRY TO RECORD A CORRECTING ENTRYJOURNAL ENTRY TO RECORD A CORRECTING ENTRY
1. Write the date.
4. Write the source document number.
2. Debit Advertising Expense.
1 3
4
2
Lesson 5-3, page 110Lesson 5-3, page 110
TO DO: TO DO:
Work Together, pg 111 On your own, pg 111 App 5-3
Ch 5 Summary: Ch 5 Summary:
Ch. 5 Quiz Mastery 5-4 – pg 114 Extra Problem 5-1 Ch. 5 Study Guide