BAF3M Accounting Chapter 7 – Posting

The Accounting Cycle Source documents Transaction Analysis Record in Journal Post to Ledger Financial Statements Adjusted Trial Balance Record & Post Adjusting Entries Unadjusted Trial Balance The Accounting Cycle Close Temporary Accounts Post-Closing Trial Balance

7.1 Posting You now know both the ledger and the journal, but now it’s time to use them more ‘formally’ as accountants do 7.1 is a relatively large subsection … Balance column account Opening an account Steps in the Posting process Cross-Referencing Correcting Errors Forwarding Procedure

7.1 Posting The Balance Column Account Has three money columns Page 228 The Balance Column Account Has three money columns One for Debits One for Credits One for the Balance

7.1 Posting Opening an Account  preparing an account page and placing it in its proper place in the ledger

7.1 Posting Formal Posting “POSTING”  the process of transferring information from the journal to the ledger 6 step process on p. 229 5 steps in ledger, 1 in journal As intro activity – do a cut up and match in groups … for tactile and visual learners

7.1 Posting Turn to proper account in ledger Record date. Use the next unused line in the account Record the page number of the journal in the Posting Reference (PR) column of the account. Write the letter “J” in front of the page number (ex “J14”) Cont 

7.1 Posting 4) Record the amount. Debit amounts go in debit column, credit amounts in credit column 5) Calculate and enter the new account balance in the balance column, indicate whether it is a debit or credit balance in the DR/CR column 6) In the journal: record the account number to which the posting was made in the PR column on the same line as the amount being posted

7.1 Posting Follow these steps through the visual examples in Figure 7.3 starting on p. 230

7.1 Posting

7.1 Posting Cross Referencing (p. 231) The recording of the journal page number in the account and the recording of the account number in the journal Three reasons: Account entries can be traced back to the journal Journal entries can be traced to their accounts If the posting process is interrupted it is easy to tell where to begin again

7.1 Posting Correcting Errors in the Books Accounts don’t just “erase”  suspicion So other methods have been developed Two types: Errors found Immediately Errors found Later

7.1 Posting Errors Found Later Usually requires an offsetting entry This entry is called a correcting journal entry, its purpose is to cancel the effect of an error Explained well on p. 235

7.1 Posting Forwarding Procedure Forwarding is just the process of continuing and account or journal on a new page by carrying forward the date and the balance from the completed page

7.2 Trial Balance Out of Balance If your trial balance is off, no need to worry Quick tests to detect a single error… 1) if balance difference is a multiple of 10 Likely an addition error 2) check both the ledger and the journal to see if the trial balance difference is equal to an amount entered in the ledger or the journal Likely an amount was omitted or added twice 3) Divide the trial balance difference by two A DR may have been posted as a CR or vice versa 4) If the trial balance difference is a multiple of 9 Likely a transposition error or decimal point error