1 Chapter 5 Posting from a General Journal to a General Ledger

2 What is a general journal? Shows each transaction Review Chapter 4 Does not show all changes to 1 account in 1 place Need a form to summarize changes to each account

3 5.1 Preparing a Chart of Accounts Includes the debit and credit sides of a T-Account Also includes Account Name, Transaction Date, Journal Page # Used to trace a specific entry back to where a transaction is recorded in a journal Does not include current balances form now commonly includes a Debit and Credit Balance Column called a balance-ruled form 3

4 Chart of Accounts Ledger- a group of accounts General Ledger- a ledger that contains all accounts needed to prepare financial statements Included a list of account titles and # see page 3 for Encore Music (GL) Accounts arranged in the same order they appear on financial statements Assets (100); Liabilities (200); Owner’s Equity (300); Revenue (400); Expenses (500) 4

5 Account Numbers Encore uses 3 digits for account # Digit 1- General ledger division Digits 2 & 3- location of the account in the general ledger File Maintenance- procedure for arranging accounts in the GL and keeping current records Unused account # are assigned to new accounts Read page 98 5

6 Opening an Account in the GL Account Title Account Number Writing these at the heading of an account is called opening an account 6

7 4.1 Review p. 100 Audit Your Understanding #1-2 Work Together #3-5 On Your Own #6-7 7

8 5.2 Positng from a General Journal to a GL Posting- transfer info from a journal entry to a ledger All debits and credits affecting each account are brought to one place POST REF. columns: an entry in an account can be traced to its source journal an entry in a journal can be traced to where it is posted in an account can easily see which entries are posted 8

9 Posting an Amount to a Debit Column Post to the correct account in GL Date in Date Col Journal Page # in Post Ref Col Debit amount Balance Debit Return to the journal and write the account # in the Post Ref of the General Journal 9

10 Posting from the Credit Column Date Journal Page #- Post Ref of GL Credit Amount New Credit Balance Return to journal and write account # in Post Ref Col 10

11 What if the Account Already has a balance? Date Journal Page # - in GL Post Ref Col Debit Amount New Balance Debits: Add previous balance and New Post Credit: Subtract previous balance and New Post Account # - in Journal Post Ref 11

12 FYI See page 104 for a Journal Page with Posting Completed All Post Ref cells are filled with account numbers Posting will go smoothly if you follow the 5 steps Last Step- Return to General Journal and put the account number in Post Ref 12

Review- p. 105 Audit Your Understanding #1-2 Work Together #3 On Your Own #4 13

The Completed General Ledger Look at pgs After all postings are completed Questions? How many journal pages are there? 14

15 Proving Cash Proving Cash- the amount of cash agrees with the balance of the cash account Cash can be proved at any time Encore proves at the end of month Two balances must equal In GL and in Checkbook 15

16 Memorandum for a Correcting Entry Errors can be made in recording transactions Correcting Entry- a journal entry made to correct an error in the ledger When an error in a journal entry has already been posted, the incorrect journal entry should be corrected with an additional journal entry Source Doc- Memorandum 16

17 Journal Entry to Record a Correcting Entry November 13. Discovered that a payment of cash for advertising in October was journalized and pasted in error as a debit to Miscellaneous Expense instead of Advertising Expense, $ Memorandum 45. Date? Debit- Advertising Expense Credit- Misc Expense SD- M 45 17

Review p. 111 Terms Review Audit Your Understanding # 1-4 Work Together #5 On Your Own #6 18

19 Chapter Review Chapter Summary p. 112 Application Problems p