2. Transaction Journal Entry Ledger Trial Balance Adjusting Entries Financial Statements Closing Entries

3. The ledger is a group of all of the business’ accounts The group of them together is known as the ledger May be a binder or kept on the computer In the past few weeks....you were introduced to them in T-Form But Remember..... I’m tricky

4. In reality.... The Ledger is organized in much the same fashion as the journal Rather than use the LS and the RS of a T-Account, accountants will post transactions to the debit or credit side of the ledger journal paper Referred to as the Balance Column form

5. The Owner had $500 cash beginning on March 1 st The Owner then bought a microphone for $100

6. Used to be.... Becomes..... Cash 500 100 Opening Balance March 19

7. General Ledger K. Dub Lip Singing Account: Cash 101 DateParticularsP.R.DebitCreditDR/CRBalance 1 1 2 2 3 3 General Ledger K. Dub Lip Singing Account: Cash DateParticularsP.R.DebitCreditDR/CRBalance 1 1 2 2 3 3 Mar1 Opening Entry J1 500 Dr This is the Page # of the General Journal This is your running balance. You update this after every entry Chart of Account # 19Bought Microphone J1100Dr 400 1 Opening Entry

8. Items of Note Each account has a separate page/section in the ledger For each transaction that happens in the business, we record it in the journal THEN Post the total to the ledger The ledger will keep a running total of each account

9. Since we are going to be “Posting”, we need to reference all of our accounts. Assets 100-199 Liabilities 200-299 Capital (including Drawings) 300-399 Revenues 400-499 Expenses 500-599 The numbers are used for identification.

10. Assets100-199 Liabilities200-299 Capital 300-399 Revenues400-499 Expenses500-599 In order of Liquidity and then Longevity (useful life) In order of Maturity Will be only 1 account + drawings List Core revenues 1st Alphabetical order

11. Example The owner, K. Dub invests $500 into the business on March 18 th General Journal K. Dub Lip Singing Page 1 DateParticularsP.R.DebitCredit 1 Mar 18 Cash 500 1 2 Capital, K. Dub 500 2 3 Opening Balance. Lip Singing Company 3

12. Posting is the process of transferring the information from the accountant’s general journal to the ledger of accounts WHY DO WE BOTHER DOING THIS?

13. CROSS REFERENCE Allows the accountant to double check to errors in balances over the fiscal period Another name for this is an audit Systematic check of accounting records and procedures The accountant will make sure to include The Journal Page # when posting to the ledger The ledger account # when posting from the journal

14. General Journal K. Dub Lip Singing Page 1 DateParticularsP.R.DebitCredit 1 Mar 18 Cash 500 1 2 Capital, K. Dub 500 2 3 Opening Balance. Lip Singing Company 3 101 301 This stands for Posting Reference. It is to show you which Chart of Account # match up with Notice we’re on Page 1. You’ll need this info later!

15. The process of performing Opening Entries to show what the business first has in each account Example Cash$4000 Equipment$5000 Truck$20000 Accounts Payable$3000 Capital?

16. The Opening Entries must first be recorded in our journal General Journal P Money Accounting Page 1 DateParticularsP.R.DebitCredit 1 1 2 2 3 3

17. Next you must transfer those total into separate accounts in the ledger Be sure to include The name of the account The Account # The Opening Date The Description “Opening Entry” Journal Page Reference

18. General Ledger P. Money Accounting Account: P. Lovett, Capital Account #: 301 DateParticularsP.R.DebitCreditDR/CRBalance 1 1 2 2 Mar 18 Opening Bal. J1 500 Cr 500 If you were “Forwarding”, you would type that here. Forwarding is the process of continuing an account on the next page by carrying forward all relevant information

19. Example: K. Efsee began his own restaurant. He had $17,000 in cash; $6,000 in equipment, a Bank Loan of $15,000 and overall capital of _______. Over the first month of operation the following 3 transactions happened 1. He deposited $5,000 into the business 2. Sales of $450 were made 3. He paid off $1000 of the bank loan

20. Step 1: Opening the Accounts Opening Journal Transactions and Opening Balances in the Ledger Step 2: Performing Transactions in the journal Step 3: Posting the transactions to the ledger accounts

21. General Journal K Efsee’s Fish Page 1 DateParticularsP.R.DebitCredit 1 1 2 2 3 3

22. General Ledger K. Efsee’s Fish Account: Cash Account #: ??? DateParticularsP.R.DebitCreditDR/CRBalance 1 1 2 2 3 3 General Ledger K. Efsee’s Fish Account: Equipment Account #: ??? DateParticularsP.R.DebitCreditDR/CRBalance 1 1 2 2 3 3

23. General Ledger K. Efsee’s Fish Account: K. Efsee, Capital Account #: ??? DateParticularsP.R.DebitCreditDR/CRBalance 1 1 2 2 3 3 General Ledger K. Efsee’s Fish Account: Bank Loan Account #: ???? DateParticularsP.R.DebitCreditDR/CRBalance 1 1 2 2 3 3

24. General Ledger K. Efsee’s Fish Account: Revenue Account #: ??? DateParticularsP.R.DebitCreditDR/CRBalance 1 1 2 2 3 3

25. General Journal K Efsee’s Fish Page 1 DateParticularsP.R.DebitCredit 1 1 2 2 3 3

26. Page 132 #4 & #5