posting to the general ledger chapter 7. bellringer think about the process in writing a research...
TRANSCRIPT
Posting to the General Ledger
Chapter 7
Bellringer
• Think about the process in writing a research paper. Why do we take notes before we write the paper?
Enduring Understanding:
• The General Ledger is a permanent record that organizes the details of all business transactions and their accounts.
Essential Questions
• How do you set up the general ledger?
• How do managers use journals and ledgers?
What is a General Ledger?How do you set it up?• Permanent record organized by account
number.
• Chart of Accounts:– Assets 100’s– Liabilities 200’s– Owner’s Equity 300’s– Revenues 400’s– Expenses 500’s
What is a General Ledger?How do you set it up?• The “General Ledger” can be maintained
manually or electronically. (The book that holds each specific ledger account)
• Ledger - each “account” has it’s own page, file or card (All accounts together form the General Ledger).
• Ledger account form – Stationary used to record the specific information about each account.
Step 1: For Each Account…
Account Name: Cash in Bank (top of page)
Account Number: 101
(on ledger account form)
NOTE: Computerized accounting system similar, still need account name and number at a minimum
Starting a new page for an Existing Account…
Account Name: Cash in Bank ACCT #: 101
DateDescriptio
nPost
RefDebit Credit
Balance
Debit Credit
2010 Dec 31 Balance $25,000
Work on Problem 7-1 Pg 167 in Text and Workbook Pg 94
What is Posting?
• Fourth step in Accounting Cycle.
• Process of transferring information from the journal to individual general ledger accounts.
• Also known as “ recording”
• Creates a record of impact of business transaction on each account used by the business.
Why do we post?
• Managers continually use the information from accounting records.
• Can easily find the current balance of a specific account.– Cash Flow – which bills to pay due to short
funds (bad economy)
• Real World Example:
PIC’s cash on hand
What you already know….
• You know how to analyze a business transaction using the four analytical steps!– Identify– Classify– Increase or Decrease– Balance
• You know the Debits and Credits of Each Transaction
• You know how to Journalize
Today you will be able to….
• Locate the important information from a journal and move that information to it’s ledger
• Find the current (and ending) balance of each different account throughout an accounting period
• Correctly post each transaction to their appropriate ledger account
In your Notebooks…
Write a brief statement explaining the importance of Posting to the Ledger
&How it is useful to you as Accountants
(Give an example)
Please Take out your Packets
Step 2: Stay Organized….
• Find the similar account transactions first….
• Find it’s important information (date, whether it was debited or credited, and for what amount)
• Lastly …. Post it to it’s ledger
Date DescriptionPost
Ref Debit Credit
Jan 1 Cash in Bank $25,000
Mrs. Nemec, Capital $25,000
6 Maintenance Expense $5,000
Cash in Bank $5,000
Take that Information & put it into the “Cash in Bank” Ledger
Account Name: Cash in Bank ACCT #: 101
Date DescriptionPost
RefDebit Credit
Balance
Debit Credit
Jan 1 G1 $25,000
6 G1 $5,000
Remember to…
A new account balance is computed each time a transaction is posted to an account.
If you have a Debit Balance– ADD Debits– SUBTRACT Credits
• If you have a Credit Balance– ADD Credits – SUBTRACT Debits
• Lastly…. Find the Ending Balance!
Date DescriptionPost
RefDebit Credit
Balance
Debit Credit
Jan 1 G1 $25,000 $25,000
6 G1 $5,000 $20,000
Ending Balance as of January 25
Date DescriptionPost
RefDebit Credit
Balance
Debit Credit
Jan 1 G1 $25,000 $25,000
6 G1 $5,000 $20,000
8 G1 $15,000 $35,000
10 G1 $12,000 $47,000
25 G1 $7,000 $40,000
Now try it yourselves!!
Complete Problem 7-2 and show it to me when you are finished!
Continue then to work on Problem 7-5