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Posting to a General Ledger

Posting to a General Ledger. Chapter Four. Vocabulary Challenge. Chapter Four Vocabulary: Ledger General Ledger Account Number File maintenance Opening an Account Posting Correcting Entry. FOCUS: Updating Account Information. LESSON 4-1. Preparing a Chart of Accounts.

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Posting to a General Ledger

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  1. Posting to a General Ledger Chapter Four

  2. Vocabulary Challenge Chapter Four Vocabulary: • Ledger • General Ledger • Account Number • File maintenance • Opening an Account • Posting • Correcting Entry FOCUS: Updating Account Information LESSON 4-1

  3. LESSON 4-1 Preparing a Chart of Accounts

  4. Section 1: Preparing a Chart of Accounts Review: Journal = permanent record of all transactions Problem- does not show in one place all of the changes to a single item • Search to find information For this reason a form is used to summarize in one place all the changes to a single item – separate from is used for each account LESSON 4-1

  5. Relationship of T-account and Account Form • Account Form includes: • Debit and Credit parts • Date • Journal page • Debit and Credit Balance Columns (referred as the balanced ruled account form) • Can be traced back to specific entry in a journal • Account balance is calculated & recorded as each entry is recorded in the account. • Shows permanent record of changes LESSON 4-1

  6. Balance columns RELATIONSHIP OF A T ACCOUNT TO AN ACCOUNT FORM page 91 LESSON 4-1

  7. Chart of Accounts Ledger - a group of accounts General ledger – contains all accounts needed to prepare financial statements • Account title: name given to an account • Cash, Supplies, Sales, Rent Expense, Capital, Drawing, Account Receivable, Accounts Payable • Account Number – number assigned to an account Chart of Accounts – list of account titles and numbers showing the location of each account in a ledger LESSON 4-1

  8. Chart of Accounts • Accounts in a general ledger are arranged in the same order as they appear on the financial statements. • Five General Ledger Divisions: • Assets • Liabilities • Owner’s Equity • Revenue • Expenses LESSON 4-1

  9. CHART OF ACCOUNTS page 92 LESSON 4-1

  10. How to Order Your Chart of Accounts • Assets are listed by order of the liquidity. • Liquidity measures closeness to cash, which is the most liquid asset. A/R is relatively liquid because it will be collected in the near future. • Supplies are less liquid than receivables, and Pre-paid insurance is least liquid because it is a policy in case of emergency. LESSON 4-1

  11. How to Order Your Chart of Accounts (Cont.) • Expenses are listed in alphabetical order. LESSON 4-1

  12. ACCOUNT NUMBERS page 92 LESSON 4-1

  13. Assigning Account Numbers • Assign numbers by 10, so that accounts can be easily added • File maintenance – procedure for arranging account in a general ledger, assigning account number, and keeping records current. • Check out adding accounts on p. 93 LESSON 4-1

  14. Adding Accounts • Ms. Park found out that the amount paid for gasoline has become a major expense. Therefore, she wants to add Gasoline Expense as a separate account. 510 Advertising Expense (Existing Account) 520 Insurance Expense (Existing Account) 515 Gasoline Expense (New Account) LESSON 4-1

  15. Adding Accounts • Ms. Park found out that the amount paid for water has become a major expense and wants to show more detail on Utilities Expense. Expense accounts are arranged in alphabetical order. 550 Supplies Expense (Existing Account) 560 Utilities Expense (Existing Account) 570 Water Expense (New Account) LESSON 4-1

  16. Opening an Account in a G. Ledger • Writing an account title and number on the heading of an account form is called opening an account • A ledger account is opened for each account listed on the chart of accounts • Opened and arranged in the same order as the chart of accounts • Example p. 94 LESSON 4-1

  17. OPENING AN ACCOUNT IN A GENERAL LEDGER page 94 1 2 1. Write the account title. 2. Write the account number. LESSON 4-1

  18. TERMS REVIEW page 95 • ledger • general ledger • account number • file maintenance • opening an account LESSON 4-1

  19. Practice • Working Together • On Your Own • Application Problem 1 LESSON 4-1

  20. Preparing a Chart of Accounts Review • Partner • Pick a business or Create One • Decide on accounts • Make a chart of accounts • Share LESSON 4-1

  21. LESSON 4-2 Posting Separate Amountsfrom a Journal to aGeneral Ledger

  22. Posting Posting: transferring information from a journal entry to a ledger. • Sorts entries so that all debits and credit affecting each account are brought together • Example: Changes to cash are brought together in a cash account Two rules for posting: • Separate amounts in a journal’s general amount columns are posted individually to the account written in the account title column. • Separate amounts in a journal’s special amount columns are not posted individually… • Only the totals (for special columns) are posted. LESSON 4-1

  23. Section 2: Posting Separate Amounts form a Journal to a General Ledger Posting Separate Amounts from General Debit Column… • Example p. 97 • Posting Second Amount to an account…. • Posting from General Credit Column… • Posting Procedure • Write Date • Write Journal Page Number • Write Debit or Credit Amount • Write new account balance • Return to journal and write account number to show that it has been posted. LESSON 4-1

  24. 1 5 3 2 4 POSTING AN AMOUNT FROM A GENERAL DEBIT COLUMN page 96 1. Write the date. 4. Write the new account balance. 2. Write the journal page number. 5. Return to the journal and write the account number. 3. Write the debit amount. LESSON 4-1

  25. 1 5 2 3 4 POSTING A SECOND AMOUNT TO AN ACCOUNT page 97 1. Write the date. 4. Write the new account balance. 2. Write the journal page number. 5. Return to the journal and write the account number. 3. Write the debit amount. LESSON 4-1

  26. 5 1 3 2 4 POSTING AN AMOUNT FROM A GENERAL CREDIT COLUMN page 98 1. Write the date. 4. Write the new account balance. 2. Write the journal page number. 5. Return to the journal and write the account number. 3. Write the credit amount. LESSON 4-1

  27. TERM REVIEW page 99 • posting LESSON 4-1

  28. Practice • Working Together • On Your Own • Application 2 LESSON 4-1

  29. LESSON 4-3 Posting Column Totalsfrom a Journal to aGeneral Ledger

  30. Section 4-3: Posting Column Totals from a journal to a general ledger • Checkmarks show that amounts are not posted • Journal Entries that are not posted individually • Forwarding totals • Amounts recorded in special amount columns • General debit and general credit column totals • Posting Sales credit column • Posting Cash Debit Column • Posting Cash credit Column LESSON 4-1

  31. Check mark indicates that amounts ARE NOT posted individually. Check mark indicates that general amount column totals ARE NOT posted. CHECK MARKS SHOW THAT AMOUNTS ARE NOT POSTED page 100 LESSON 4-1

  32. 3 5 1 2 4 POSTING THE TOTAL OF THE SALES CREDIT COLUMN page 101 1. Write the date. 4. Write the new account balance. 2. Write the journal page number. 5. Return to the journal and write the account number. 3. Write the column total. LESSON 4-1

  33. 1 2 3 5 4 POSTING THE TOTAL OF THE CASH DEBIT COLUMN page 102 1. Write the date. 4. Write the new account balance. 2. Write the journal page number. 5. Return to the journal and write the account number. 3. Write the column total. LESSON 4-1

  34. 3 1 5 2 POSTING THE TOTAL OF THE CASH CREDIT COLUMN page 103 4 1. Write the date. 4. Write the new account balance. 2. Write the journal page number. 5. Return to the journal and write the account number. 3. Write the column total. LESSON 4-1

  35. Practice • Working Together • On Your Own • Application 3 LESSON 4-1

  36. LESSON 4-4 Completed Accounting Forms and Making Correcting Entries

  37. JOURNAL PAGE WITH POSTING COMPLETED page 105 LESSON 4-1

  38. MEMORANDUM FOR A CORRECTING ENTRY page 108 LESSON 4-1

  39. November 13. Discovered that a payment of cash for advertising in October was journalized and posted in error as a debit to Miscellaneous Expense instead of Advertising Expense, $140.00. Memorandum No. 15. 1 Date 2 Debit 4 Source Document 3 Credit JOURNAL ENTRY TO RECORD A CORRECTING ENTRY page 108 LESSON 4-1

  40. TERM REVIEW page 109 • correcting entry LESSON 4-1

  41. Section 4: Completing Accounting Forms and Making Correcting Entries • Page 105 and 108 • Practice with WT and OYO • Application 4 LESSON 4-1

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