Posting To A General Ledger

1
Posting To A General Ledger
Chapter 5
2
Account Form

• A journal does not show all the changes in a
  single account in one place
• A form is used to summarize all the changes to a
  single account in one place
• A separate form is used for each account

3
Relationship of a T Account to an Account Form
See Page 98

• Includes Debit and Credit sides
• Space is provided for recording the transaction
  date and journal page number
• This information can be used to trace a specific
  entry back to where it was originally recorded in
  a journal

4
Relationship of a T Account to an Account Form
See Page 98

• More commonly used account form has Debit and
  Credit Balance columns
• Commonly referred to as the Balance Ruled Account
  Form

5
Why

• The account balance is calculated and recorded as
  each entry is recorded in the account
• The balance ruled account form is more useful as
  a permanent record of changes to account balances
  than a T Account

6
Chart of Accounts

• Chart of Accounts a list of account titles and
  numbers showing the location of each account in a
  ledger

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Chart of Accounts

• Ledger a group of accounts
• General Ledger a ledger that contains all
  accounts needed to prepare financial statements
• Account Title the name given to an account
• Account Number the number assigned to an
  account

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Preparing a Chart of Accounts

• Accounts are arranged in the same order as they
  appear on financial statements.
• Assets
• Liabilities
• Owners Equity
• Revenue
• Expense

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Account Numbers

• The first digit of each account number shows the
  general ledger division in which the account is
  located.
• Assets (1)
• Liabilities (2)
• Owners Equity (3)
• Revenue (4)
• Expenses (5)
• The second two digits indicate the location of
  each account within a general ledger division

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Account Numbers

• Rule of thumb
• Assign account numbers by 10s so that new
  accounts can be added easily
• File Maintenance the procedure for arranging
  accounts in a general ledger, assigning account
  numbers, and keeping records current

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Example

• Adding an Expense Account
• Add alphabetically
• 510 Advertising Expense (Existing Account)
• 515 Gasoline Expense (New Account)
• 520 Insurance Expense (Existing Account)
• 550 Supplies Expense (Existing Account)
• 560 Utilities Expense (Existing Account)
• 570 Water Expense (New Account)

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Opening an Account in a General Ledger

• Opening an Account Writing an account title and
  number on the heading of an account
• A general ledger account is opened for each
  account listed on a chart of accounts
• Accounts are opened and arranged in a general
  ledger in the same order as on the chart of
  accounts
• The same procedure is used to open all accounts
• Write the account title
• Write the account number

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Work Together

• Work Together
• Page 102/73
• On Your Own
• Page 102/74

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Special Thanks

• To Tyler Hildebrand and his great animations and
  sounds on Mrs. Walkers wonderful notes. Tyler,
  you make them so much better.

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Posting To A General Ledger

• Posting Separate Amounts From A Journal
• Posting transferring information from a
  journal entry to a ledger account
• All debits and credits affecting each account
  are brought together.
• Example All changes to Cash are brought
  together in the Cash account

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Rules

• Separate amounts in a journals General Amount
  columns are posted individually to the account
  written in the Account Title column
• Separate amounts in a journals Special Amount
  columns are not posted individually

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Rules

• The amounts in Special Amount Columns are posted
  IN TOTAL to the account named in the heading of
  the special amount columns

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Posting From General Amount Columns

• Write the date (Follow rules for the first entry
  on a page)
• Write the journal page number in the Post. Ref.
  column of the account
• Write the Debit amount

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Posting From General Amount Columns

• Calculate and write the new balance
• Return to the journal and write the appropriate
  account number in the Post. Ref. column of the
  journal

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Work Together

• Work Together
• Page 106/75-78
• On Your Own
• Page 106/79-82

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Posting Special Amount Column Totals to a General
Ledger

• Forwarding totals are not posted individually
• Amounts in special amount columns are not posted
  individually
• Check marks in Posting Reference column show that
  nothing on that line was posted

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• Totals from the General Debit and Credit columns
  are not posted so a check mark is placed below
  the total in parentheses
• Since some of the totals are posteddo NOT place
  a check in the posting reference column on that
  line

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Posting the Revenue Credit Total

• Fill in complete date in ledger using date of the
  totals
• Fill in the posting reference column with the
  page number from the journal
• Transfer the amount to the credit column and
  calculate the balance
• Take the account number back to the journal and
  write it under the credit total in parentheses

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Posting the Cash Debit Total

• Fill in complete date in ledger using date of the
  totals
• Fill in the posting reference column with the
  page number from the journal
• Transfer the amount to the debit column and
  calculate the balance
• Take the account number back to the journal and
  write it under the debit total in parentheses

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Posting the Cash Credit Total

• Fill in complete date in ledger using date of the
  totals
• Fill in the posting reference column with the
  page number from the journal
• Transfer the amount to the credit column and
  calculate the balance
• Take the account number back to the journal and
  write it under the credit total in parentheses

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Assignments

• Audit Your Understanding pg. 111
• Work Together pg. 111/75-78
• On Your Own pg. 111/75-78

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Memorandum for a Correcting Entry

• Simple errors may be corrected simply by ruling
  through the item
• However if a transaction has been improperly
  journalized and posted to the ledger, you must
  correct it with a correcting entry
• The source document for this correction will be a
  memorandum describing the correction to be made

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Journalizing and Posting the Correcting Entry

• Enter the date in the journal that you make the
  correction
• Enter the debit and credit information
• Use the Memorandum Number as the Document number
• Post as directed in previous notes

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Assignments

• Audit Your Understanding pg. 117
• Work Together pg. 117/83
• On Your Own pg. 117/84

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• Application Problem 5-2 5-3 pg. 119/87-90
• Application Problem 5-4 pg. 119/91
• Mastery Problem 5-5 pg.120/93-96