Accounting Chapter 7 Teacher Notes

Posting to a General Ledger

Posting Terms:

  1. Ledger: a group of accounts
  2. General Ledger: a ledger that contains every account a business uses to record transactions
  3. File maintenance: how records are organized
  4. Posting: transferring information from the journal to the General Ledger

Chart of Accounts Review

The General Ledger is a record off all financial transactions that a business makes, or all money coming in and going out, listed by account.

Accounts are divided by financial statement.

Account numbers not only give you another way to reference account information, they are also used to organize accounts within the General Ledger.

For instance, in your textbook all Asset accounts start with "1", liability accounts with "2", and owner's equity accounts with "3".

Sample Chart of Accounts (COA)

Balance Sheet Accounts

Income Statement Accounts

(100) Assets

110 Cash
120 Petty Cash
130 AR Thing 1
131 AR Thing 2
132 AR Mary Poppins
140 Office Supplies
145 Sales Supplies

(400) Revenue

410 Sales

(200) Liabilities

210 Homer Simpson Homes
220 Winnie the Pooh Water

(500) Expenses

510 Advertising Expense
515 Automobile Expense
530 Catering Expense
540 Rent Expense
550 Salary Expense
570 Utility Expense

(300) Owner's Equity

310 My Money, Capital
320 My Money, Drawing

 

Posting to the General Ledger

Every financial transaction is recorded in the journal chronologically. At the end of each month, after the journal is prooved and ruled, the information is then transfered, or posted, to the General Ledger. This makes it easier to see what is happening in each account, and to keep track of account balances.

Steps for Posting a Journal Entry to the General Ledger:

First, locate the correct General Ledger page. Then:

  1. Write the transaction date on the Ledger page.
  2. Write the Journal page number in the Post Ref. column of the Ledger.
  3. Write the Debit or Credit amount.
  4. Record the current Debit or Credit balance for the account.
  5. Write the General Ledger Account number on the Journal sheet in the Post Ref. column for the transaction. This indicate that you have completed posting that entry.
Journal
 Page 2
DATE
ACCOUNT TITLE
DOC.
NO.
POST.
REF.
GENERAL
SALES
CREDIT
CASH
DEBIT
CREDIT
DEBIT
CREDIT
2010
Sept. 1
 My Money, Capital
R1
310
a
4000.00
a
4000.00
a
1
 Office Supplies
C1
140
50.00
a
a
a
50.00
1
 Sales Supplies
M1
145
125.00
a
a
a
a
a
AP Homer Simpson Homes
a
210
a
125.00
#F2C1B0
a
a
7
 √
T1
√
a
a
200.00
200.00
 a
9
 AR Thing 2
S1
131
350.00
a
350.00
a
a
15
 AP Homer Simpson Homes
C2
210
125.00
a
a
a
125.00
15
 Rent Expense
C3
540
400.00
a
a
400.00
a
30
 Totals
a
√
1050.00
4125.00
550.00
4600.00
175.00
1 1 1 1
(√)
(√)
(410)
(110)
(110)

When posting to the General Ledger:

  1. First post all transactions, chronologically, that have debits and credits recorded in the General Debit and General Credit columns.

    2. After every entry on the journal page is posted, put a check in parenthesis (check) at the bottom of the General Debit column and the General Credit column to indicate you have completed the posting.

  2. Next, post the Special Amount Columns to the correct account in the General Ledger. In our practice, those columns are:

    When you finish posting each special amount column, write the account number in parentheses (110) at the bottom of the column to indicate that you have finished posting the totals.

Computing General Ledger Account Balances

Rule of thumb:

Debits are added to Debit balances. Result – Debit.

Credits are added to Credit balances. Result – Credit.

Debits are subtracted from Credit balances. Result – Credit.

Credits are subtracted from Debit balances. Result – Debit.