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CENTURY 21 ACCOUNTING © Thomson/South-Western Posting to a General Ledger Chapter Four.

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Presentation on theme: "CENTURY 21 ACCOUNTING © Thomson/South-Western Posting to a General Ledger Chapter Four."— Presentation transcript:

1 CENTURY 21 ACCOUNTING © Thomson/South-Western Posting to a General Ledger Chapter Four

2 CENTURY 21 ACCOUNTING © Thomson/South-Western 2 LESSON 4-1 Vocabulary Challenge Chapter Four Vocabulary: Ledger General Ledger Account Number File maintenance Opening an Account Posting Correcting Entry FOCUS: Updating Account Information

3 CENTURY 21 ACCOUNTING © Thomson/South-Western LESSON 4-1 Preparing a Chart of Accounts

4 CENTURY 21 ACCOUNTING © Thomson/South-Western 4 LESSON 4-1 Section 1: Preparing a Chart of Accounts Review : Journal = permanent record of all transactions Problem- does not show in one place all of the changes to a single item Search to find information For this reason a form is used to summarize in one place all the changes to a single item – separate from is used for each account

5 CENTURY 21 ACCOUNTING © Thomson/South-Western 5 LESSON 4-1 Relationship of T-account and Account Form Account Form includes: Debit and Credit parts Date Journal page Debit and Credit Balance Columns (referred as the balanced ruled account form) Can be traced back to specific entry in a journal Account balance is calculated & recorded as each entry is recorded in the account. Shows permanent record of changes

6 CENTURY 21 ACCOUNTING © Thomson/South-Western 6 LESSON 4-1 RELATIONSHIP OF A T ACCOUNT TO AN ACCOUNT FORM page 91 Balance columns

7 CENTURY 21 ACCOUNTING © Thomson/South-Western 7 LESSON 4-1 Chart of Accounts Ledger - a group of accounts General ledger – contains all accounts needed to prepare financial statements Account title: name given to an account Cash, Supplies, Sales, Rent Expense, Capital, Drawing, Account Receivable, Accounts Payable Account Number – number assigned to an account Chart of Accounts – list of account titles and numbers showing the location of each account in a ledger

8 CENTURY 21 ACCOUNTING © Thomson/South-Western 8 LESSON 4-1 Chart of Accounts Accounts in a general ledger are arranged in the same order as they appear on the financial statements. Five General Ledger Divisions: Assets Liabilities Owner’s Equity Revenue Expenses

9 CENTURY 21 ACCOUNTING © Thomson/South-Western 9 LESSON 4-1 CHART OF ACCOUNTS page 92

10 CENTURY 21 ACCOUNTING © Thomson/South-Western How to Order Your Chart of Accounts 10 LESSON 4-1 Assets are listed by order of the liquidity. Liquidity measures closeness to cash, which is the most liquid asset. A/R is relatively liquid because it will be collected in the near future. Supplies are less liquid than receivables, and Pre- paid insurance is least liquid because it is a policy in case of emergency.

11 CENTURY 21 ACCOUNTING © Thomson/South-Western How to Order Your Chart of Accounts (Cont.) 11 LESSON 4-1 Expenses are listed in alphabetical order.

12 CENTURY 21 ACCOUNTING © Thomson/South-Western 12 LESSON 4-1 ACCOUNT NUMBERS page 92

13 CENTURY 21 ACCOUNTING © Thomson/South-Western 13 LESSON 4-1 Assigning Account Numbers Assign numbers by 10, so that accounts can be easily added File maintenance – procedure for arranging account in a general ledger, assigning account number, and keeping records current. Check out adding accounts on p. 93

14 CENTURY 21 ACCOUNTING © Thomson/South-Western Ms. Park found out that the amount paid for gasoline has become a major expense. Therefore, she wants to add Gasoline Expense as a separate account. 510Advertising Expense (Existing Account) 520Insurance Expense (Existing Account) 14 LESSON 4-1 Adding Accounts 515Gasoline Expense (New Account)

15 CENTURY 21 ACCOUNTING © Thomson/South-Western Ms. Park found out that the amount paid for water has become a major expense and wants to show more detail on Utilities Expense. Expense accounts are arranged in alphabetical order. 550Supplies Expense(Existing Account) 560 Utilities Expense (Existing Account) 15 LESSON 4-1 Adding Accounts 570Water Expense (New Account)

16 CENTURY 21 ACCOUNTING © Thomson/South-Western 16 LESSON 4-1 Opening an Account in a G. Ledger Writing an account title and number on the heading of an account form is called opening an account A ledger account is opened for each account listed on the chart of accounts Opened and arranged in the same order as the chart of accounts Example p. 94

17 CENTURY 21 ACCOUNTING © Thomson/South-Western 17 LESSON Write the account title. 2.Write the account number. OPENING AN ACCOUNT IN A GENERAL LEDGER page 94 12

18 CENTURY 21 ACCOUNTING © Thomson/South-Western 18 LESSON 4-1 TERMS REVIEW ledger general ledger account number file maintenance opening an account page 95

19 CENTURY 21 ACCOUNTING © Thomson/South-Western 19 LESSON 4-1 Practice Working Together On Your Own Application Problem 1

20 CENTURY 21 ACCOUNTING © Thomson/South-Western 20 LESSON 4-1 Preparing a Chart of Accounts Review Partner Pick a business or Create One Decide on accounts Make a chart of accounts Share

21 CENTURY 21 ACCOUNTING © Thomson/South-Western LESSON 4-2 Posting Separate Amounts from a Journal to a General Ledger

22 CENTURY 21 ACCOUNTING © Thomson/South-Western 22 LESSON 4-1 Posting Posting: transferring information from a journal entry to a ledger. Sorts entries so that all debits and credit affecting each account are brought together Example: Changes to cash are brought together in a cash account Two rules for posting: Separate amounts in a journal’s general amount columns are posted individually to the account written in the account title column. Separate amounts in a journal’s special amount columns are not posted individually… Only the totals (for special columns) are posted.

23 CENTURY 21 ACCOUNTING © Thomson/South-Western 23 LESSON 4-1 Section 2: Posting Separate Amounts form a Journal to a General Ledger Posting Separate Amounts from General Debit Column… Example p. 97 Posting Second Amount to an account…. Posting from General Credit Column… Posting Procedure Write Date Write Journal Page Number Write Debit or Credit Amount Write new account balance Return to journal and write account number to show that it has been posted.

24 CENTURY 21 ACCOUNTING © Thomson/South-Western 24 LESSON Write the date.4.Write the new account balance. 2.Write the journal page number. 3.Write the debit amount. 5.Return to the journal and write the account number. POSTING AN AMOUNT FROM A GENERAL DEBIT COLUMN page

25 CENTURY 21 ACCOUNTING © Thomson/South-Western 25 LESSON 4-1 POSTING A SECOND AMOUNT TO AN ACCOUNT page Write the date.4.Write the new account balance. 2.Write the journal page number. 3.Write the debit amount. 5.Return to the journal and write the account number.

26 CENTURY 21 ACCOUNTING © Thomson/South-Western 26 LESSON 4-1 POSTING AN AMOUNT FROM A GENERAL CREDIT COLUMN page Write the date.4.Write the new account balance. 2.Write the journal page number. 3.Write the credit amount. 5.Return to the journal and write the account number. 2

27 CENTURY 21 ACCOUNTING © Thomson/South-Western 27 LESSON 4-1 TERM REVIEW posting page 99

28 CENTURY 21 ACCOUNTING © Thomson/South-Western 28 LESSON 4-1 Practice Working Together On Your Own Application 2

29 CENTURY 21 ACCOUNTING © Thomson/South-Western LESSON 4-3 Posting Column Totals from a Journal to a General Ledger

30 CENTURY 21 ACCOUNTING © Thomson/South-Western 30 LESSON 4-1 Section 4-3: Posting Column Totals from a journal to a general ledger Checkmarks show that amounts are not posted Journal Entries that are not posted individually Forwarding totals Amounts recorded in special amount columns General debit and general credit column totals Posting Sales credit column Posting Cash Debit Column Posting Cash credit Column

31 CENTURY 21 ACCOUNTING © Thomson/South-Western 31 LESSON 4-1 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.

32 CENTURY 21 ACCOUNTING © Thomson/South-Western 32 LESSON 4-1 POSTING THE TOTAL OF THE SALES CREDIT COLUMN page Write the date.4.Write the new account balance. 2.Write the journal page number. 3.Write the column total. 5.Return to the journal and write the account number

33 CENTURY 21 ACCOUNTING © Thomson/South-Western 33 LESSON 4-1 POSTING THE TOTAL OF THE CASH DEBIT COLUMN page Write the date.4.Write the new account balance. 2.Write the journal page number. 3.Write the column total. 5.Return to the journal and write the account number

34 CENTURY 21 ACCOUNTING © Thomson/South-Western 34 LESSON 4-1 POSTING THE TOTAL OF THE CASH CREDIT COLUMN page Write the date.4.Write the new account balance. 2.Write the journal page number. 3.Write the column total. 5.Return to the journal and write the account number

35 CENTURY 21 ACCOUNTING © Thomson/South-Western 35 LESSON 4-1 Practice Working Together On Your Own Application 3

36 CENTURY 21 ACCOUNTING © Thomson/South-Western LESSON 4-4 Completed Accounting Forms and Making Correcting Entries

37 CENTURY 21 ACCOUNTING © Thomson/South-Western 37 LESSON 4-1 JOURNAL PAGE WITH POSTING COMPLETED page 105

38 CENTURY 21 ACCOUNTING © Thomson/South-Western 38 LESSON 4-1 MEMORANDUM FOR A CORRECTING ENTRY page 108

39 CENTURY 21 ACCOUNTING © Thomson/South-Western 39 LESSON 4-1 JOURNAL ENTRY TO RECORD A CORRECTING ENTRY page Source Document 3 Credit 1 Date 2 Debit 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, $ Memorandum No. 15.

40 CENTURY 21 ACCOUNTING © Thomson/South-Western 40 LESSON 4-1 TERM REVIEW correcting entry page 109

41 CENTURY 21 ACCOUNTING © Thomson/South-Western 41 LESSON 4-1 Section 4: Completing Accounting Forms and Making Correcting Entries Page 105 and 108 Practice with WT and OYO Application 4


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