Transaction Journal Entry Ledger Trial Balance Adjusting Entries Financial Statements Closing...
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Transcript of Transaction Journal Entry Ledger Trial Balance Adjusting Entries Financial Statements Closing...
The ledger is a group of all of the business’ accountsThe group of them together is known as the
ledgerMay be a binder or kept on the computer
In the past few weeks....you were introduced to them in T-FormBut Remember..... I’m tricky
In reality....The Ledger is organized in much the same
fashion as the journalRather 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 paperReferred to as the Balance Column form
The Owner had $500 cash beginning on March 1st
The Owner then bought a microphone for $100
Used to be....
Becomes.....
Cash
500100
OpeningBalance March 19
General Ledger
K. Dub Lip Singing
Account: Cash 101
Date Particulars P.R. Debit Credit DR/CR Balance
1 1
2 2
3 3
General Ledger
K. Dub Lip Singing
Account: Cash
Date Particulars P.R. Debit Credit DR/CR Balance
1 1
2 2
3 3
Mar 1Opening Entry J1 500500
Dr
This is the Page # of the General Journal
This is your running balance. You update this after every entry
Chart of Account #
19 Bought Microphone
J1 100 Dr 400
1Opening Entry
Items of NoteEach account has a separate page/section in
the ledgerFor each transaction that happens in the
business, we record it in the journalTHEN Post the total to the ledger
The ledger will keep a running total of each account
Since we are going to be “Posting”, we need to reference all of our accounts.Assets 100-199Liabilities 200-299Capital (including Drawings) 300-399Revenues 400-499Expenses 500-599
The numbers are used for identification.
Assets 100-199
Liabilities 200-299
Capital 300-399
Revenues 400-499
Expenses 500-599
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
ExampleThe owner, K. Dub invests $500 into the
business on March 18th
General Journal
K. Dub Lip Singing
Page 1
Date Particulars P.R. Debit Credit
1 Mar 18 Cash 500 1
2 Capital, K.
Dub 500 2
3
Opening Balance. Lip Singing Company 3
Posting is the process of transferring the information from the accountant’s general journal to the ledger of accountsWHY DO WE BOTHER DOING THIS?
CROSS REFERENCEAllows the accountant to double check to
errors in balances over the fiscal periodAnother name for this is an audit
Systematic check of accounting records and procedures
The accountant will make sure to includeThe Journal Page # when posting to the ledgerThe ledger account # when posting from the
journal
General Journal
K. Dub Lip Singing
Page 1
Date Particulars P.R. Debit Credit
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!
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 ?
The Opening Entries must first be recorded in our journal
General Journal
P Money Accounting
Page 1
Date Particulars P.R. Debit Credit
1 1
2 2
3 3
Next you must transfer those total into separate accounts in the ledger
Be sure to includeThe name of the accountThe Account #The Opening DateThe Description “Opening Entry”Journal Page Reference
General Ledger
P. Money Accounting
Account: P. Lovett, Capital Account #: 301
Date Particulars P.R. Debit Credit DR/CR Balance
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
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 business2. Sales of $450 were made3. He paid off $1000 of the bank loan
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
General Journal
K Efsee’s Fish
Page 1
Date Particulars P.R. Debit Credit
1 1
2 2
3 3
General Ledger
K. Efsee’s Fish
Account: Cash Account #: ???
Date Particulars P.R. Debit Credit DR/CR Balance
1 1
2 2
3 3
General Ledger
K. Efsee’s Fish
Account: Equipment Account #: ???
Date Particulars P.R. Debit Credit DR/CR Balance
1 1
2 2
3 3
General Ledger
K. Efsee’s Fish
Account: K. Efsee, Capital Account #: ???
Date Particulars P.R. Debit Credit DR/CR Balance
1 1
2 2
3 3
General Ledger
K. Efsee’s Fish
Account: Bank Loan Account #: ????
Date Particulars P.R. Debit Credit DR/CR Balance
1 1
2 2
3 3
General Ledger
K. Efsee’s Fish
Account: Revenue Account #: ???
Date Particulars P.R. Debit Credit DR/CR Balance
1 1
2 2
3 3
General Journal
K Efsee’s Fish
Page 1
Date Particulars P.R. Debit Credit
1 1
2 2
3 3
Page 132 #4 & #5