Accounting Chapter 4 The Chart of Account and Ledgers
The next step in the GAAP Step 1:Source documents Step 2: Journalize Step 3:Post to General Ledger accounts But before we post to General Ledger accounts, we need to know about the Chart of Accounts
CHART OF ACCOUNTS - BALANCE SHEET ACCOUNTSINCOME STATEMENT ACCOUNTS (100) Assets(400) Revenue (500) Expenses (200) Liabilities (300) Owners Equity Follows layout of balance sheet and income statement
TECHKNOW CONSULTING’S CHART OF ACCOUNTS - BALANCE SHEET ACCOUNTSINCOME STATEMENT ACCOUNTS (100) Assets(400) Revenue 110Cash 120 Petty Cash 130 Accounts Receivable – Oakdale School(500) Expenses 140 Accounts Receivable – Campus Internet Cafe 150 Supplies 160 Prepaid Insurance (200) Liabilities (300) Owners Equity Accounts are numbered by 10’s so that new accounts can be inserted as needed The account numbers is for the general ledger division (assets) 5 0 is for the location within the general ledger division
TECHKNOW CONSULTING’S CHART OF ACCOUNTS - BALANCE SHEET ACCOUNTSINCOME STATEMENT ACCOUNTS (100) Assets(400) Revenue 110Cash 120 Petty Cash 130 Accounts Receivable – Oakdale School(500) Expenses 140 Accounts Receivable – Campus Internet Cafe 150 Supplies 160 Prepaid Insurance (200) Liabilities 210 Accounts Payable – Supply Depot 220 Accounts Payabe – Thomas Supply Co (300) Owners Equity
TECHKNOW CONSULTING’S CHART OF ACCOUNTS - BALANCE SHEET ACCOUNTSINCOME STATEMENT ACCOUNTS (100) Assets(400) Revenue 110Cash 120 Petty Cash 130 Accounts Receivable – Oakdale School(500) Expenses 140 Accounts Receivable – Campus Internet Cafe 150 Supplies 160 Prepaid Insurance (200) Liabilities 210 Accounts Payable – Supply Depot 220 Accounts Payabe – Thomas Supply Co (300) Owners Equity 310Kim Park, Capital 320 Kim Park, Drawing 330 Income Summary
TECHKNOW CONSULTING’S CHART OF ACCOUNTS - BALANCE SHEET ACCOUNTSINCOME STATEMENT ACCOUNTS (100) Assets(400) Revenue 110Cash410 Sales 120 Petty Cash 130 Accounts Receivable – Oakdale School(500) Expenses 140 Accounts Receivable – Campus Internet Cafe 150 Supplies 160 Prepaid Insurance (200) Liabilities 210 Accounts Payable – Supply Depot 220 Accounts Payabe – Thomas Supply Co (300) Owners Equity 310Kim Park, Capital Kim Park, Drawing Income Summary
TECHKNOW CONSULTING’S CHART OF ACCOUNTS - BALANCE SHEET ACCOUNTSINCOME STATEMENT ACCOUNTS (100) Assets(400) Revenue 110Cash410 Sales 120 Petty Cash 130 Accounts Receivable – Oakdale School(500) Expenses 140 Accounts Receivable – Campus Internet Cafe510 Advertising Expense 150 Supplies520 Insurance Expense 160 Prepaid Insurance530 Miscellaneous Expense 540 Rent Expense (200) Liabilities550 Supplies Expense 210 Accounts Payable – Supply Depot560 Utilities Expense 220 Accounts Payabe – Thomas Supply Co (300) Owners Equity 310 Kim Park, Capital 320 Kim Park, Drawing 330 Income Summary Expense accounts are alphabetized
TECHKNOW CONSULTING’S CHART OF ACCOUNTS - BALANCE SHEET ACCOUNTSINCOME STATEMENT ACCOUNTS (100) Assets(400) Revenue 110Cash410 Sales 120 Petty Cash 130 Accounts Receivable – Oakdale School(500) Expense 140 Accounts Receivable – Campus Internet Cafe510 Advertising Expense 150 Supplies515 Gasoline Expense 160 Prepaid Insurance520 Insurance Expense 530 Miscellaneous Expense (200) Liabilities540 Rent Expense 210 Accounts Payable – Supply Depot550 Supplies Expense 220 Accounts Payabe – Thomas Supply Co560 Utilities Expense 570 Water Expense (300) Owners Equity 310 Kim Park, Capital 320 Kim Park, Drawing 330 Income Summary New account in the middle New account at the end
File Maintenance The procedure for arranging accounts in a general ledger, assigning account numbers, and keeping records current –Open a General Ledger Account 1. Place it appropriately on the Chart of Accounts 2.Start a new General Ledger Account Form (Txtbk p. 94) a. Write in the Account Title and the Account Number
AccountAccount No. DATEITEM POST. R E F.DEBITCREDIT BALANCE DEBITCREDIT Aug Opening a General Ledger Account (Txtbk p. 94) Write name of account Write account number
PRACTICE WT 4-1: Txtbk p. 95, WP p. 57 OYO 4-1: Txtbk p. 95, WP p. 58
Chapter 4-2 Posting to a General Ledger
TERMS TO KNOW Ledger: A group of accounts General ledger: A ledger that contains all accounts needed to prepare financial statements Account number: The number assigned to an account
What is 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. For example, all changes to Cash are brought together in one account
What would you have to do to determine how much cash the business has on April 15th? JOURNAL PAGE DOC.POST. GENERAL SALESCASH DATEACCOUNT TITLENO.REF.DEBITCREDIT DEBITCREDIT 2011 Apr 1Norm Derner, CapitalR SuppliesC SuppliesM1 500 Accts. Payable - Palm Suppy 500 7Prepaid InsuranceC Accts. Payable - Palm SupplyC Rent Expense C4 1, √ T13 √ Accts. Receivable - L. RoheS Utilities ExpenseC Accts Receivable - L RoheR Norm derner, DrawingC Accts Receivable - L. RoheS Norm Derner, DrawingC7 500
POSTING is different for general account entries than for special account entries Posting general account journal entries: –When posting to a general account, amounts are separated and posted individually Posting special account journal entries: –When posting to a special account, amounts are not posted individually. Instead, the totals are posted to the account
Posting to a General Account Each transaction is posted individually
JOURNAL PAGE DOC.POST. GENERAL SALESCASH DATEACCOUNT TITLENO.REF.DEBITCREDIT DEBITCREDIT 3SuppliesC Start with our Journal
JOURNAL PAGE DOC.POST. GENERAL SALESCASH DATEACCOUNT TITLENO.REF.DEBITCREDIT DEBITCREDIT 3SuppliesC Account Supplies Account No. 150 DATEITEM POST. R E F.DEBITCREDIT BALANCE DEBITCREDIT 2012 Aug Here’s the Journal (like last chapter) This is a General Ledger The Supplies account is opened (Name and number) Write the date Write the journal page number (1) in Post Ref on the GL 150
JOURNAL PAGE DOC.POST. GENERAL SALESCASH DATEACCOUNT TITLENO.REF.DEBITCREDIT DEBITCREDIT 3SuppliesC Account Supplies Account No. 150 DATEITEM POST. REF.DEBITCREDIT BALANCE DEBITCREDIT Aug This is the Balance section –
JOURNAL PAGE DOC.POST. GENERAL SALESCASH DATEACCOUNT TITLENO.REF.DEBITCREDIT DEBITCREDIT 3SuppliesC Suppliesm Accts Pay-Supply Depot Bought Supplies on account from Supply Depot - $ Account Supplies Account No. 150 DATEITEM POST. RE F.DEBITCREDIT BALANCE DEBITCREDIT Aug Aug Write the new balance: = 775
JOURNAL PAGE DOC.POST. GENERAL SALESCASH DATEACCOUNT TITLENO.REF.DEBITCREDIT DEBITCREDIT Aug 1Kim Park, CapitalR Received cash as an investment, $ Account Kim Park, Capital Account No. 310 DATEITEM POST. REF.DEBITCREDIT BALANCE DEBITCREDIT Aug Write the new balance
To summarize the steps: For General Account Journal entries: –Open a General Ledger Account –Post from the journal to the ledger –Date –Post Ref (The page of the Journal) –Debit or Credit amount –Calculate and record new balance –Record Post Ref (Acct #) on Journal
WORK TOGETHER 4-2 WP p 59 – 61, Txtbook p. 99
Posting a Special Account Each transaction is posted individually
JOURNAL PAGE DOC.POST. GENERAL SALESCASH DATEACCOUNT TITLENO.REF.DEBITCREDIT DEBITCREDIT 2011 Aug 2020Brought Forward√ PAGE √√ Miscellaneous ExpM Totals (√) Start with our Journal (Txtbk p. 100) Checkmarks indicate that amounts ARE NOT posted individually Checkmarks indicate that general amount column totals amounts ARE NOT posted.
JOURNAL PAGE DOC.POST. GENERAL SALESCASH DATEACCOUNT TITLENO.REF.DEBITCREDIT DEBITCREDIT 3131Totals (√)
Posting the total of the sales credit column Account Sales Account No. 410 DATEITEM POST. REF.DEBITCREDIT BALANCE DEBITCREDIT Aug Write the new balance JOURNAL PAGE DOC.POST. GENERAL SALESCASH DATEACCOUNT TITLENO.REF.DEBITCREDIT DEBITCREDIT 3131Totals (√)
Posting the total cash debit columns Account Cash Account No. 110 DATEITEM POST. R E F.DEBITCREDIT BALANCE DEBITCREDIT Aug Write the new balance JOURNAL PAGE DOC.POST. GENERAL SALESCASH DATEACCOUNT TITLENO.REF.DEBITCREDIT DEBITCREDIT 3131Totals (√)