LESSON 4 1 Preparing a Chart of Accounts

LESSON 4 -1 Preparing a Chart of Accounts CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning

2 CHART OF ACCOUNTS CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning page 92 LESSON 4 -1

Lesson 4 -1 SLIDE Chart of Accounts n A group of accounts is called a ledger. n A ledger that contains all accounts needed to prepare financial statements is called a general ledger. n The name given to an account is known as an account title. n The number assigned to an account is called an account number. CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning 3

4 ACCOUNT NUMBERS CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning page 92 LESSON 4 -1

Lesson 4 -1 SLIDE Assigning Account Numbers 560 570 565 570 580 Miscellaneous Expense(Existing account) Supplies Expense Postage Expense (Existing (New Account) account) Supplies Expense (Existing account) Water Expense (New Account) CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning 5

6 RELATIONSHIP OF A T ACCOUNT TO AN ACCOUNT FORM page 91 Balance columns CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning LESSON 4 -1

Lesson 4 -1 SLIDE Assigning Account Numbers n The procedure for arranging accounts in a general ledger, assigning account numbers, and keeping records current is called file maintenance. CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning 7

Lesson 4 -1 SLIDE Opening an Account in a General Ledger n Writing an account title and number on the heading of an account is called opening an account. CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning 8

9 OPENING AN ACCOUNT IN A GENERAL LEDGER 1 page 94 2 1. Write the account title. 2. Write the account number. CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning LESSON 4 -1

LESSON 4 -2 Posting Separate Amounts from a Journal to a General Ledger CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning

Lesson 4 -2 11 SLIDE Posting an Amount from a General Debit Column n Transferring information from a journal entry to a ledger account is called posting. CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning

12 POSTING AN AMOUNT FROM A GENERAL DEBIT COLUMN 1 page 96 5 3 2 4 1. Write the date. 2. Write the journal page number. 3. Write the debit amount. 4. Write the new account balance. 5. Return to the journal and write the account number. CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning LESSON 4 -2

13 POSTING A SECOND AMOUNT TO AN ACCOUNT 1 3 5 page 97 2 4 1. Write the date. 2. Write the journal page number. 3. Write the debit amount. 4. Write the new account balance. 5. Return to the journal and write the account number. CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning LESSON 4 -2

14 POSTING AN AMOUNT FROM A GENERAL CREDIT COLUMN 1 page 98 5 3 2 4 1. Write the date. 2. Write the journal page number. 3. Write the credit amount. 4. Write the new account balance. 5. Return to the journal and write the account number. CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning LESSON 4 -2

LESSON 4 -3 Posting Column Totals from a Journal to a General Ledger CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning

16 CHECK MARKS SHOW THAT AMOUNTS ARE NOT POSTED page 100 Check mark indicates that amounts ARE NOT posted individually. Check mark indicates that general amount column totals ARE NOT posted. CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning LESSON 4 -3

17 POSTING THE TOTAL OF THE SALES CREDIT COLUMN 3 1 page 101 5 2 4 1. Write the date. 2. Write the journal page number. 3. Write the column total. 4. Write the new account balance. 5. Return to the journal and write the account number. CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning LESSON 4 -3

18 POSTING THE TOTAL OF THE CASH DEBIT COLUMN page 102 1 3 5 2 4 1. Write the date. 2. Write the journal page number. 3. Write the column total. 4. Write the new account balance. 5. Return to the journal and write the account number. CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning LESSON 4 -3

19 POSTING THE TOTAL OF THE CASH CREDIT COLUMN page 103 3 1 5 2 4 1. Write the date. 2. Write the journal page number. 3. Write the column total. 4. Write the new account balance. 5. Return to the journal and write the account number. CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning LESSON 4 -3

LESSON 4 -4 Completed Accounting Forms and Making Correcting Entries CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning

21 JOURNAL PAGE WITH POSTING COMPLETED CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning page 105 LESSON 4 -4

22 MEMORANDUM FOR A CORRECTING ENTRY page 108 n An incorrect journal entry should be corrected with an additional journal entry, called a correcting entry. n A memorandum is prepared as the source document describing the correction to be made. CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning LESSON 4 -4

23 JOURNAL ENTRY TO RECORD A CORRECTING ENTRY page 108 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 Credit 3 CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning LESSON 4 -4