Chapter 8 – Posting to General Ledger Accounts Learning Outcome This chapter shows how to post journal entries to the general ledger accounts and to prepare a Trial Balance. Copyright  2006 McGraw-Hill Australia Pty Ltd PPTs t/a Introductory Accounting 2r, by David Willis By Kaye Watson

KEY TERMS Accounts payable (also known as creditors) Accounts receivable (also known as debtors) Control accounts Trial Balance Copyright  2006 McGraw-Hill Australia Pty Ltd PPTs t/a Introductory Accounting 2r, by David Willis By Kaye Watson

GENERAL LEDGER ACCOUNTS Journal totals posted to ledgers to: summarise classify information Facilitate ease of: locating information extracting information Copyright  2006 McGraw-Hill Australia Pty Ltd PPTs t/a Introductory Accounting 2r, by David Willis By Kaye Watson

TRANSACTION FLOWCHART Copyright  2006 McGraw-Hill Australia Pty Ltd PPTs t/a Introductory Accounting 2r, by David Willis By Kaye Watson

DOUBLE ENTRY RULES DEBIT SIDE (DR) CREDIT SIDE (CR) ASSETS Increases Decreases EXPENSES Increases Decreases EQUITY Decreases Increases REVENUE Decreases Increases LIABILITIES Decreases Increases Copyright  2006 McGraw-Hill Australia Pty Ltd PPTs t/a Introductory Accounting 2r, by David Willis By Kaye Watson

DOUBLE ENTRY RULES cont… Debit Credit ASSETS EXPENSES Increases Decreases Debit Credit EQUITY REVENUE LIABILITIES Decreases Increases Copyright  2006 McGraw-Hill Australia Pty Ltd PPTs t/a Introductory Accounting 2r, by David Willis By Kaye Watson

SUMMARY OF DOUBLE ENTRY RULES Account Balance Copyright  2006 McGraw-Hill Australia Pty Ltd PPTs t/a Introductory Accounting 2r, by David Willis By Kaye Watson

ACCOUNTS RECEIVABLE CONTROL ACCOUNT Copyright  2006 McGraw-Hill Australia Pty Ltd PPTs t/a Introductory Accounting 2r, by David Willis By Kaye Watson

ACCOUNTS PAYABLE CONTROL ACCOUNT Copyright  2006 McGraw-Hill Australia Pty Ltd PPTs t/a Introductory Accounting 2r, by David Willis By Kaye Watson

TRIAL BALANCE Ensures ledgers are balanced Every debit has corresponding credit Lists all general ledger accounts, with balances, in numerical order Copyright  2006 McGraw-Hill Australia Pty Ltd PPTs t/a Introductory Accounting 2r, by David Willis By Kaye Watson

TRIAL BALANCE cont… Separate columns for debit balances and credit balances show if total debits equal total credits Control accounts, not subsidiary accounts, appear in Trial Balance ‘Nil’ balances usually not included Copyright  2006 McGraw-Hill Australia Pty Ltd PPTs t/a Introductory Accounting 2r, by David Willis By Kaye Watson

CHECKLIST FOR POSTING FROM JOURNALS TO LEDGER ACCOUNTS Postings to the ledger Cash receipts Bank column total debited to the Cash at bank account. All individual amounts or the total of each column (e.g. Accounts receivable, cash sales and GST payable) are credited to the relevant account. Debit Discount allowed account, credit the Accounts receivable control account (unless it is already in the total of Accounts receivable). Copyright  2006 McGraw-Hill Australia Pty Ltd PPTs t/a Introductory Accounting 2r, by David Willis By Kaye Watson

CHECKLIST FOR POSTING FROM JOURNALS TO LEDGER ACCOUNTS cont… Cash payments Bank column total credited to the Cash at bank account. All individual amounts, or the total of each column (e.g. Accounts payable, cash purchases and GST input), are debited to the relevant account. Debit the Accounts payable control account (unless it is already in the total of Accounts payable), credit Discount revenue account. Sales dissection Debit the Accounts receivable control account. Credit sales column total to the Sales account, GST column to GST payable account and other sales (e.g. assets) to the relevant account. Copyright  2006 McGraw-Hill Australia Pty Ltd PPTs t/a Introductory Accounting 2r, by David Willis By Kaye Watson

CHECKLIST FOR POSTING FROM JOURNALS TO LEDGER ACCOUNTS cont… Purchases dissection Debit the purchases column total to the Purchases account , the GST column to the GST input tax credits account, and the asset purchases and expenses on credit to the relevant account. Credit the Accounts payable control account. General Post it exactly as stated (e.g. writing off bad debts incorporating GST). Debit bad debts and debit GST payable. Credit the Accounts receivable control account. Copyright  2006 McGraw-Hill Australia Pty Ltd PPTs t/a Introductory Accounting 2r, by David Willis By Kaye Watson

GST CALCULATION Copyright  2006 McGraw-Hill Australia Pty Ltd PPTs t/a Introductory Accounting 2r, by David Willis By Kaye Watson