Unit 6 Journalizing

The Accounting Cycle Journalize Entries in the General Journal Analyze Transactions and Source Documents Post the General Journal to the General Ledger Post Closing Entries to the Trial Balance Prepare Adjusting Entries, Vouchers, and the Trial Balance Analyze and Review the Financial Statements Prepare Financial Statements Prepare Closing Entries

Step 2: Journalizing Entries into the General Journal The general journal is: A day-to-day record of business transactions Sometimes referred to as the book of original entry Each journal entry includes: The date of the transaction The account(s) affected by the transaction A brief description of the transaction The debit or credit amount

Step 3: Posting the General Journal to the General Ledger Is a complete record of all financial transactions Includes multiple subsidiary ledgers Sometimes referred to as the book of final entry Is the source of data for company financial statements

Step 4: Preparing Adjusting Entries, Vouchers, and the Trial Balance Lists all the debit and credit balances for an accounting period Includes every general ledger account Helps you to find errors in the general ledger Adjusting and correcting journal entries: Are recorded at the end of an accounting period to adjust general ledger accounts Are used to correct errors and/or match revenues and expenses

Computerized Accounting Systems Have practically eliminated the use of physical book ledgers Popular accounting software packages include: QuickBooks Peachtree/Sage Quicken ERPs Excel

Journalizing in the General Journal For Day-to-Day Business Transactions Five Basic Steps: Record the date. Record the relevant chart of accounts number. Record the description of the chart of accounts number. Record the debit or credit. Record the description of the business transaction that took place.

Journalizing in the General Journal For Day-to-Day Business Transactions

Posting to the General Ledger A Complete Record of Financial Transactions Summarized General Ledger Balances

Posting to the General Ledger A Complete Record of Financial Transactions Subsidiary Ledgers

Correcting Entries When you find an error in the general ledger: Use a journal voucher template. Select a journal entry number. Input information into the voucher. Include supporting documents.

Voucher For a Correcting Journal Entry

Depreciation = Depreciation Expense Asset Value – Salvage Value Useful Life of the Asset (in years) =

Voucher For a Depreciation Expense

Preparing the Trial Balance When analyzing and reviewing the trial balance, make sure that you: Check the balance. Look for duplicate entries. Investigate transposed numbers. Review source documents.

Example—Debits and Credits Equal Trial Balance Example—Debits and Credits Equal

Inventory Two Systems: Perpetual system Periodic system

Computerized Accounting Systems Xxxxxxxx Quicken Quickbooks Peachtree / Sage 50 Microsoft Excel