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CHAPTER 4

CHAPTER 4. JOURNALIZING, POSTING, AND TAKING A TRIAL BALANCE. Outline. The Accounting Cycle Transactional Analysis: Step 1 Journalizing: Step 2 The General Journal Steps 3 and 4 of the Accounting Cycle Posting to the General Journal: Step 3 The General Ledger and “T” Accounts

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CHAPTER 4

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  1. CHAPTER 4 JOURNALIZING, POSTING, AND TAKING A TRIAL BALANCE

  2. Outline • The Accounting Cycle • Transactional Analysis: Step 1 • Journalizing: Step 2 • The General Journal • Steps 3 and 4 of the Accounting Cycle • Posting to the General Journal: Step 3 • The General Ledger and “T” Accounts • Posting Procedures: An Illustration • The Chart of Accounts • Taking the Trial Balance: Step 4 • Discovering Sources of Error • Computers in Accounting

  3. The Accounting Cycle STEP ONE ANALYZING TRANSACTIONS STEP THREE POSTING STEP TWO JOURNALIZING STEP FOUR TAKING THE TRIAL BALANCE

  4. Transactional Analysis: Step 1 • Transactional analysis – Identification of business transaction • Determine values received – Debits • Determine values given – Credits • DEBITS = CREDITS

  5. Journalizing: Step 2 • Recording values received (debits) and values given (credits) in a journal • Chronological recording of the transaction - like keeping a business diary • Debits = Credits

  6. The General Journal • Used to record hospitality entity transactions in chronological order • Date Column • Account Names and Description column • Reference column – REF • Debit (dr) and Credit (cr) columns 1 2 3 4

  7. ILLUSTRATIONChapter 4 Exercise 2 (b) General Journal

  8. Steps 3 and 4 of the Accounting Cycle STEP 4 Taking a trial balance of The General Ledger STEP 3 Posting Transferring information From the journal to the ledger Dr=Cr

  9. Posting to The General Ledger: Step 3 • The book of final entry • Used to complete Step 3 of the Accounting Cycle-Posting to the General Ledger • Contains the group of accounts that constitute a hospitality organization’s accounting system • It may be a book, a tray of cards, a CD-ROM, or “T” accounts

  10. General Ledger ”T” Accounts

  11. General Ledger “T” Accounts 113 111 A/R 112 Prepaid Exp Cash Building 115 Land 114

  12. Posting Procedures: An Illustration Cash Accts Recivable Feb 18 2344 Feb 18 4113 Accounts Payable Food and Beverage Inventory Feb 15 4561 Feb 15 4561 Sales Feb 18 6457 Partial General Ledger

  13. The Chart of Accounts • Sequential listing of the firm’s accounts found in the General Ledger • Facilitates finding ledger accounts during journalizing, posting and preparing financial statements

  14. Chart of Accounts - Chapter 4 – Problem 2 (b)

  15. Calculation of General Account Balance for the Cash Account-Refer to Problem 2 Chapter 4 • Debit postings are added • Total 355,000 • Credit postings are added • Total 185,526 • Since debit postings are Higher than credit postings The ending balance of cash is 169,474 (355,000-185,526) and appears on the debit side

  16. Taking the Trial Balance: Step 4 • Used to check the accuracy of the debit and credit balances in the General Ledger at the end of the accounting period • List of General Ledger accounts with their current balances as of the last day of the accounting period

  17. Trial Balance for Lockwood Hotel Corporation - Refer to Problem 2 Chapter4 • Note that the order of accounts in the Trial Balance is the same as in the General Ledger (Assets, Liabilities, • Owners’ Equity, Revenues, and Expenses) • Balances of accounts with Debit balances are added in a left-hand money column while the balances of the accounts with credit balances are added in the right-hand columns • The equality of value exchanges must be maintained DEBIT BALANCES MUST BE EQUAL TO CREDIT BALANCES

  18. Discovering Sources of Error • If a trial balance balances, the existence of errors and or omissions is still possible • Different types of errors or omissions • Rule of “9” for transposition errors

  19. Computers in Accounting • Facilitate data entry • Might eliminate posting errors; will not allow posting if journal entry doesn’t balance • Eliminate errors in the calculation of account balances

  20. Computers in Accounting • Expedite the accounting process • Errors can be corrected more easily

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