CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning Today’s Target!  Wed, Sept. 23 rd  Demonstrate how to post to the General Ledger  Agenda  Begin Chapter 4 Guiding Question:  “How do we know how much we have in each account?” Test – Chapter 3 Fri., Sept. 25 th Test – Chapter 3 Fri., Sept. 25 th

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

CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning Read and define the following terms: Read pgs As you read, stop and define the following terms: ledger general ledger account number file maintenance opening an account 3 LESSON 4-1

CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning 4 LESSON 4-1 TERMS REVIEW ledger ledger – a group of accounts general ledger general ledger – a ledger that contains all accounts needed to prepare financial statements account number account number – the number assigned to a specific account file maintenance file maintenance – the procedure for arranging accounts in a general ledger, assigning account numbers, and keeping records current opening an account opening an account – creating a new account by choosing an account number and title page 95

CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning 5 LESSON 4-1 ACCOUNT FORM A journal is a permanent record of the debit and credit parts of each transaction in chronological order However, journals do not show all the changes in a single account in one place If only using a journal, business must search through all journal pages to find transactions Therefore, a separate form is used for each account page 95

CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning 6 LESSON 4-1 ACCOUNT FORM An account form is based on and includes the debit and credits Also includes date and journal page number (post ref) Helps trace entries back to journal Up-to-date balance must be calculated each time account is used Balance-ruled account form is used as a permanent record of changes to account balances page 95

CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning 7 LESSON 4-1 RELATIONSHIP OF A T ACCOUNT TO AN ACCOUNT FORM page 91 Balance columns

CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning 8 LESSON 4-1 CHART OF ACCOUNTS page 92 Accounts in a general ledger are arranged in the same order as they appear on financial statements: Balance Sheet: Assets, Liabilities, Owner’s Equity Income Statement: Revenue, Expenses

CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning 9 LESSON 4-1 CHART OF ACCOUNTS page 92

CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning 10 LESSON 4-1 CHART OF ACCOUNTS page 92 A 3 digit number is assigned to each account First digit shows the general ledger division Second & third digits indicate the location of each account within a general ledger division Companies initially assign account numbers by 10s so that new accounts can be added easily (pg ) Expense accounts are arranged in alphabetical order

CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning 11 LESSON 4-1 ACCOUNT NUMBERS page 92

CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning 12 LESSON Write the account title after the word Account in the heading. 2.Write the account number after the words Account No. in the heading. OPENING AN ACCOUNT IN A GENERAL LEDGER page 94 12

CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning 13 LESSON 4-1 OPENING AN ACCOUNT IN A GENERAL LEDGER page 94 To open an account - write an account title and number on the general ledger (pg.94) A general ledger account is opened for each account listed on a chart of accounts Accounts are opened and arranged in a general ledger in the same order as on the chart of accounts

CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning 14 LESSON 4-1 Assignment page 94 Complete 4-1 Work Together and On Your Own

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

CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning 16 LESSON 4-2 TERMS Define the following terms: Posting Proving cash Correcting Entry page 101

CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning 17 LESSON 4-2 Posting from a General Journal to a General Ledger Posting Posting – transferring information from a journal entry to a ledger account Posting sorts journal entries so that all debits and credits affecting each account are brought together in one place Example: All changes to cash are brought together in the cash account

CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning 18 LESSON 4-2 Posting from a General Journal to a General Ledger The numbers in the Post. Ref. columns of the general ledger account and the general journal serve three purposes: An entry in an account can be traced to its source in a journal An entry in a journal can be traced to where it was posted in an account If posting is interrupted, the accounting personnel can easily see which entries in the general journal still need to be posted

CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning 19 LESSON 4-2 Posting from a General Journal to a General Ledger A blank in the Post. Ref. column of the journal indicates that posting for that line still needs to be completed. Therefore, the posting reference is always recorded in the journal as the last step in the posting procedure.

CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning 20 LESSON 4-2 Posting from a General Journal to a General Ledger 5 Steps to Post from a General Journal to a General Ledger 1.Write the date 2.Write the journal page number in the Post. Ref. column of the ledger page 3.Record the debit or credit amount 4.Write the new account balance 5.Return to the journal and write the account number in the Post. Ref. column

CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning 21 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 THE DEBIT COLUMN OF A GENERAL JOURNAL page

CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning 22 LESSON 4-2 POSTING AN AMOUNT FROM THE CREDIT COLUMN OF A GENERAL JOURNAL 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

CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning 23 LESSON 4-2 POSTING A DEBIT AMOUNT TO AN ACCOUNT WITH A DEBIT BALANCE 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. 2

CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning 24 LESSON 4-2 POSTING A DEBIT AMOUNT TO AN ACCOUNT WITH A CREDIT BALANCE page 99 1.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

CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning 25 LESSON 4-2 JOURNAL PAGE WITH POSTING COMPLETED (continued on next slide) page 100

CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning 26 LESSON 4-2 JOURNAL PAGE WITH POSTING COMPLETED page 100 (continued from previous slide)

CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning 27 LESSON 4-1 Assignment page 94 Complete 4-2 Work Together and On Your Own

CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning Today’s Target!  Fri., Sept. 25 th  Demonstrate how to post to the General Ledger  Agenda  Chapter 3 Test  Continue Chapter 4 Guiding Question:  “How do we know how much we have in each account?”

CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning Today’s Target!  Tues., Sept. 29 th  Demonstrate how to post to the General Ledger  Agenda  Complete Chapter 4 Guiding Question:  “How do we verify cash?”

CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning LESSON 4-3 Completed General Ledger, Proving Cash, and Making Correcting Entries

CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning 31 LESSON 4-3 GENERAL LEDGER WITH POSTING COMPLETED page 102 (continued on next slide)

CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning 32 LESSON 4-3 GENERAL LEDGER WITH POSTING COMPLETED page 103 (continued on next slide)

CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning 33 LESSON 4-3 GENERAL LEDGER WITH POSTING COMPLETED page 103 (continued on next slide)

CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning 34 LESSON 4-3 GENERAL LEDGER WITH POSTING COMPLETED page 104 (continued on next slide)

CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning 35 LESSON 4-3 GENERAL LEDGER WITH POSTING COMPLETED page 104 (continued on next slide)

CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning 36 LESSON 4-3 GENERAL LEDGER WITH POSTING COMPLETED page 105 (continued on next slide)

CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning 37 LESSON 4-3 GENERAL LEDGER WITH POSTING COMPLETED page 105 (continued from previous slide)

CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning Proving Cash Proving CashProving Cash – determining that the amount of cash agrees with the balance of the cash account in the accounting records Can be proved at any time Typically, prove cash at the end of a month Compare the cash balance in the checkbook with the cash balance in the cash account (general ledger) If the two balances equal, cash is proved

CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning 39 LESSON 4-3 PROVING CASH page 106

CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning Memorandum For a Correcting Entry Errors can be made even though care is taken in recording transactions Simple errors may be corrected by ruling through the item if the transaction has not been posted to the general ledger When an error in a journal entry has already been posted, the incorrect journal entry should be corrected with an additional journal entry

CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning Memorandum For a Correcting Entry Correcting entry – journal entry made to correct an error in the ledger If an accounting error is discovered, a memo is prepared describing the correction to be made (source document) See pgs

CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning 42 LESSON 4-3 MEMORANDUM FOR A CORRECTING ENTRY page 106

CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning 43 LESSON 4-3 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. JOURNAL ENTRY TO RECORD A CORRECTING ENTRY page Source Document 3 Credit 1 Date 2 Debit

CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning 44 LESSON 4-1 Assignment page 94 Complete: 4-3 Work Together and On Your Own/Application 4-1 Application 4-2 Application 4-3 Application 4-4 Mastery Problem Chapter 4 Study Guide Chapter 4 Test A