1. Chapter 4 Posting from a General Journal to a General Ledger

2. Key Ideas A journal is a permanent record of the debit and credit parts of each transaction recorded in chronological order A journal does not show, in one place, all the changes in a single account

3. Preparing a Chart of Accounts Account Form is based on debit and credit sides of a T account. –Record transaction date and journal page number. Useful device for analyzing transactions into debit and credit parts Used to trace specific entry back to where a transaction is recorded in a journal –Disadvantage of the Account Form: No Current, up-to-date account balance Balance-Ruled Account Form – has columns for the debit and credit balance –More useful than the T account as a permanent record of changes to account balances. Example on page 91

4. Chart of Accounts Ledger – group of accounts General Ledger – contains all accounts needed to prepare financial statements Chart of Accounts - list of account titles and numbers showing the location of each account in the ledger Account Title – Name give to an account Account Number – Number assigned to an account –Three digit number First Digit – shows General Ledger division (ex. Assets) Second Two Digits – Location within General Ledger division Ex. 150 – 1 represents Assets; 50 represents Supplies –Account Numbers assigned by 10s so new accounts can be added easily

5. File Maintenance Procedure for arranging accounts in a general ledger, assigning account numbers, and keeping records current Expense accounts are arranged in alphabetic order

6. Opening an Account Writing the (1) Account Title and (2) Account Number on the head of an account Accounts are opened and arranged in a General Ledger in the same order as on the Chart of Accounts p. 95 WT/OYO

7. Posting from a General Journal to a General Ledger Posting – Transferring information from a journal entry to a ledger account Posting sorts journal entries so that all debits and credits affecting each account are brought together in one place Numbers in the Post Ref. columns of General Ledger Account & General Journal

8. Post Reference Columns 1.Entry in an account can be traced to its source in a journal 2.Entry in a journal can be traced to where it was posted in an account 3.If posting is interrupted, easily determine which entries in general journal still need to be posted **The posting reference is always recorded in the journal as the last step in the posting procedure

9. Steps in Posting an Amount from the General Journal 1.Write the date in the correct account in the General Ledger 2.Write the journal page # in the Post Ref. column 3.Write the debit or credit amount 4.Determine the new account balance 5.Return to General Journal and write the account # in the Post Ref. column of the journal p. 101 WT/OYO

10. Proving Cash Determining that the amount of cash agrees with the balance of the cash account in the accounting records To prove cash, compare the cash balance in the checkbook with the cash balance account If two balances equal, cash is proved Cash is always proved at the end of a month

11. Correcting Entries A journal entry made to correct an error in the ledger Source document for a correcting entry is the memorandum –Memorandum is prepared to describe the correction to be made

12. Journal Entry to Record a Correcting Entry 1.Write the Date 2.Write the account title of the Debit and amount 3.Next line, indent 1”; write Credit account title and amount 4.Source Document; write Memo # on 1 st line of Debit entry p. 108 WT/OYO