Unit - PowerPoint Presentation

Slide1

Unit 7 – Posting to the LedgerSlide2

Posting to the Ledger

Business Transactions

Journal

(Journalizing)Ledger(Posting)

** The General Journal does not provide the balance for each account. This information is found in the accounts in the general ledger.

*** Transfer information from the journal to the ledger by a process called

posting

.Slide3

Balance-Column Ledger Account“three-column account”

The most widely used form of account that provides a running balance on each line.

“T-accounts introduced in Chapter 2, ideal for learning rules, but not very practical for use in business.Slide4

Ex: Cash T-Account

Cash

Nov. 1 2

000 3 75 5 100

2 175Balance 1 825Nov. 3 150

6 200 350Slide5

Ex: Three-Column Account

General Ledger

Account

Cash

No

. 100

Date

Particulars

P.R.

Debit

Credit

DR.

CR.Balance20_Nov.13356J1J1J1J2J32000007500100001500020000DR.DR.DR.DR.DR.200000207500192500202500182500

Journal Page number is shown.

Indicates whether the account balance is a debit or a credit.

Each entry has its own line.Slide6

Chart of Accounts

Is a list of the names and account numbers of all of the accounts in a ledger.

Each account in a ledger

Has a title and a numberPlaced in numerical sequence – located quicklyUseWhich accounts to journalize Locating accountsAccounts in ledger numbered in the same order as they appear on the balance sheet and income statement.Slide7

Rainbow Painting Contractors

Chart

of Accounts

Assets100101102131141142Liabilities

200201221Owner’s Equity300301Revenue

400Expenses500501502503

Cash

Accounts

Recievable

/

A.Baker

Accounts Recievable/L.CarterPainting SuppliesEquipmentTruckAccounts Payable/International PaintsAccounts Payable/Hardware Supply Corp.Bank LoanK. Schmidt, CapitalK. Schmidt, DrawingsSalesAdvertising ExpenseRent ExpenseSalaries ExpenseUtilities ExpenseSlide8

In large companies with a large number of accounts, a four-digit series of numbers may be required to cover all of the accounts.

Ex: Assets (1000-1999)

Liabilities (2000-2999)

Computer Accounting - The accounting number becomes a numeric code for finding account names and information faster.Slide9

Steps – Posting to a Balance-Column Form of Ledger accounts

See Figure 4.6 – Page 117

Step 1: Locate the account and current balance

Step 2: Record the dateStep 3: Enter the amountDebit or credit?Step 4: Calculate the New BalanceStep 5: Complete the Ledger Posting Reference Column

Journal Page number from which the amount was posted.Step 6: Complete the Journal Posting Reference ColumnCopy account number from the ledger account into the P.R. column of the general journal.Slide10

Example.Slide11

Example Continued…Slide12

Example Continued…Slide13

Posting ReferencesNumbers in posting reference columns serve an important purpose.

Cross-references that

link particular journal

entries to corresponding postings to the ledger accounts.Journal Page in Ledger – Where to find more info about transaction.Ledger Acct. # in Journal – indicates that the amount has been posted, and tells accounting clerk where they left off in posting to the ledger.Slide14

AuditsAn

audit

is a systematic check of accounting records and procedures by an accountant.

Periodically, all companies have their records audited.Purpose: Use the cross-references to check the accuracy of the journalizing and posting of transactions.P.R. numbers allow the transactions to be traced from the journal to the ledger and vice versa.Slide15

Posting ExamplePage 120-121 (Textbook)Slide16

Opening EntryRecords the assets, liabilities, and owner’s equity when a business first begins operations.

To ‘

open the books

’, the general journal is set up and the business’ assets, liabilities, & owner’s equity are recorded.After the opening entry is journalized, the daily entries of the business can be recorded.Slide17

Example – Page 122Compound Entry:

Has more than one debit or more than one credit.

All entries, including compound ones, must have equal debit and credit amounts.Slide18

Opening Ledger Accounts (first time)

A

ccount name (“Cash”)

Account number (“100”)DateOpening Entry (in particulars column)P.R. of J1 (General Journal page 1)Amount (in debit or credit)Enter the opening balanceDR. or CR. (depending on balance)

Ledger account number in P.R. of Journal EntryInsert the account in numerical sequence in the ledger.

Page 123 – Figure 4.11Slide19

Forwarding Procedure

Happens when an account page is filled – a new page must then be opened using the following procedure:

New Page: Same Header (Same Acct Name & #)

Write Forwarded – Last line of old page in the particulars columnNew Page: First line: Date (yr, month, day)

Forwarded (Particulars column) Balance (Balance column)

Check mark in P.R.** Particulars column is seldom used. (Exception: Opening Entry and Forwarded notations)…use P.R. numbers to trace back for more detailed information.

Page 124 – Figures 4.12-13Slide20

Review Trial Balance

See Page 125

Trial balance includes Acct. number column

.Trial balance – is proof of the mathematical accuracy of the ledger.Slide21

Forms of the Trial balanceFormal Trial balance (previous slide)

List form

Trial balance

(Total list of debits = Total list of credits)Machine tape form Trial balance(Debit balances – Credit balances = 0)Slide22

Types of Trial balances

List form

Rainbow Painting

ContractorsTrial BalanceNovember 30, 20__

DEBITCREDIT$ 3 515

2951 2005 00020 000$30 010

$ 695

315

15 000

14 000

______

$30

010Machine tape formRainbow PaintingContractorsTrial BalanceNovember 30, 20__03 515+ 295+ 1 200+ 5 000+20 000+ 695- 315- 15 000- 14 000-0*Slide23

Possible Posting ErrorsNot posting an entire transactionNot posting either the debit or credit part of a transaction

Posting to the correct side but to the wrong account

Posting to the wrong side of an account

Calculating the balance incorrectlyTransposing figures (posting 86 instead of 68)Slide24

How to locate Trial Balance Errors

Determine the difference (Debit-Credit)

Difference (1,10,100) – (+ or – error?)

Acct. in ledger with balance = difference?(possible omission from trial balance)4) Divide difference by 2(amount may have been placed in the wrong column of the trial balance)5) Difference divisible by 9?

(Transposition error)Slide25

How to locate Trial Balance Errors Cont.

6) If divisible by 9 and the difference is 2 (18/9)

(The numbers that were transposed have a difference of 2) ex: 57 to 75

7) Amount not posted from journal?8) Check each balance in each account of ledger Check P.R. column for unposted items

Re-check each posting.Slide26

Examples.

Transposition Error (Page 127)

Correcting Errors (Page 127)

- Rule out mistake, and re-write. (some want initials)Correcting Journal Entries (Page 128)Cancel entry by performing the opposite transaction4. Checking for accuracy (Page 128-29)5. Checking accounts - Calculator

- Calculator with sub-total methodSlide27

The Accounting CycleIs the set of accounting procedures performed in each accounting period.

Business Transactions

Journal

Ledger

Trial Balance

Financial Statements

Journalizing

Posting

Proof

Preparing Financial Statements

New Accounting Period Begins