Posting to a General Ledger Accounting I Chapter

Posting to a General Ledger Accounting I Chapter 4

Preparing a Chart of Accounts � Ledger-a group of accounts � General ledger-ledger that contains all accounts needed to prepare financial statements � Account title- is the name given to an account � Account number-number assigned to an account � Chart of accounts-list of account titles and numbers showing the location of each account in the ledger

Account Numbers � First digit-shows general ledger division (ex. Asset) � Second two digits-indicate location within a general ledger division � File maintenance-procedure for arranging accounts in a general ledger, assigning account numbers, and keeping records current � Opening an account-writing an account title and number on the heading of an account

General Ledger

Classwork � Preparing a chart of accounts and opening an account on a separate sheet of paper � Problem is page 95 of your books. ◦ Problem 4 -1 on your own.

Charts of Accounts: � 1 st we must create a chart of accounts according to the category they fall under in the Accounting Equation: ◦ Assets= liabilities + Owners Equity (balance sheet accounts) ◦ Income Statement-how the business incurs its revenues and expenses through both operating and non-operating activities. (revenue, expenses) � Prepare our asset accounts (do not worry about alphabetical order-that was just an exercise yesterday) �Prepare them in the order they appear

Chart of Accounts � Prepare our liabilities in the order they appear � Prepare our Owner’s Equity accounts � Income Statement Accounts � Prepare our revenue accounts ◦ Revenue-amount of money that a company actually receives during a specific period, including discounts and deductions for returned merchandise � Prepare our expense accounts: ◦ All accounts that are labeled expense against owners equity

Chart of Accounts � Assets will be notated as (100) � Liabilities (200) � Owner’s Equity (300) � Revenue (400) � Expenses (500) ◦ Ex pg. 95 4 -1 work together

4 -1 work together � Assets= ◦ ◦ ◦ (100) Cash 110 Accts Rec. Superior Supplies 120 Accts Rec. M. Waller 130 Prepaid Insurance 140 Supplies 150

4 -1 � Liabilities (200) ◦ Accounts payable Milton Company 210 ◦ Accounts payable North Star 220 � Owners Equity (300) ◦ Eric Roen-Drawing (310) ◦ Eric Roen – Capital (320)

4 -1 � Income Statement Accounts � Revenue(400) ◦ Sales (410) � Expenses(500) ◦ ◦ Delivery Expense (510) Insurance Expense(520) Supplies Expense (530) Telephone Expense (540)

4 -1 Chart of Accounts � Assets (100) ◦ ◦ ◦ � Cash 110 Accts Rec-superior supplies 120 Accts Rec-M. waller 130 Prepaid insurance- 140 Supplies-150 Liabilities (200) ◦ Accts pay M. C. 210 ◦ Accts Pay N. S. 220 � Owners Equity (300) ◦ Eric Roen- Drawing 310 ◦ Eric Roen – Capital 320 Balance Sheet � Revenue(400) ◦ Sales 410 � Expenses(500) ◦ ◦ Delivery Expense (510) Insurance Expense(520) Supplies Expense (530) Telephone Expense (540) Income Sheet

Creating or opening an account � Gasoline Expense ◦ Expense account so it goes in with the expenses ◦ Expenses are listed in alphabetical order so we must input Gasoline ◦ Gasoline is between Delivery (510) and Insurance (520) ◦ Gasoline (515) � Water Expense ◦ Expense account so it goes with expenses ◦ Water expense (570)

Opening a working paper Account: Delivery Expense Date: Item Post Ref Account no: 510 Debit Credit Balance Debit Credit

Posting � Posting-transferring information from a journal entry to a ledger account � Steps in Posting: ◦ ◦ ◦ 1. 2. 3. 4. 5. Write Write the the the date journal page number debit or credit amount new account balance Post. Ref. number in the journal

Class work � Pg 80. 3 -5 application problem do your general journal and posting into your ledgers.

Instructions � Get a book � Get a calculator � Get ready to take notes

Proving Cash and Correcting Entries � Proving cash-determining that the amount of cash agrees with the balance of the cash account � Correcting entry-journal entry made to correct an error in the ledger ◦ When correcting an entry a memorandum must be written to correct the entry. ◦ The memorandum becomes the source document ◦ Steps to correcting entry � 1. � 2. � 3. � 4. date debit account credit account Source document

Class work � 4 -2 and 4 -3 page 110

Instructions � Get a book and calculator � Turn in your assignment from yesterday (Pg 80. 3 -5 application problem do your general journal and posting into your ledgers. )