1. Accounting Chapter 4 The Chart of Account and Ledgers

2. 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

3. 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

4. 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 150 1 is for the general ledger division (assets) 5 0 is for the location within the general ledger division

5. 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

6. 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

7. 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 311320 Kim Park, Drawing 312330 Income Summary

8. 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

9. 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

10. 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

11. 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

12. PRACTICE WT 4-1: Txtbk p. 95, WP p. 57 OYO 4-1: Txtbk p. 95, WP p. 58

13. Chapter 4-2 Posting to a General Ledger

14. 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

15. 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

16. What would you have to do to determine how much cash the business has on April 15th? JOURNAL PAGE 1 12345 DOC.POST. GENERAL SALESCASH DATEACCOUNT TITLENO.REF.DEBITCREDIT DEBITCREDIT 2011 Apr 1Norm Derner, CapitalR1 150 2SuppliesC1 375 5SuppliesM1 500 Accts. Payable - Palm Suppy 500 7Prepaid InsuranceC2 300 9Accts. Payable - Palm SupplyC3 250 12 Rent Expense C4 1,000.00 13 √ T13 √ 2500 14Accts. Receivable - L. RoheS1 510 19Utilities ExpenseC5 148 20Accts Receivable - L RoheR2 255 21Norm derner, DrawingC6 1000 23Accts Receivable - L. RoheS2 375 27Norm Derner, DrawingC7 500

17. 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

18. Posting to a General Account Each transaction is posted individually

19. JOURNAL PAGE 1 12345 DOC.POST. GENERAL SALESCASH DATEACCOUNT TITLENO.REF.DEBITCREDIT DEBITCREDIT 3SuppliesC1275.00 Start with our Journal

20. JOURNAL PAGE 1 12345 DOC.POST. GENERAL SALESCASH DATEACCOUNT TITLENO.REF.DEBITCREDIT DEBITCREDIT 3SuppliesC1275.00 Account Supplies Account No. 150 DATEITEM POST. R E F.DEBITCREDIT BALANCE DEBITCREDIT 2012 Aug 31 27500275 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

21. JOURNAL PAGE 1 12345 DOC.POST. GENERAL SALESCASH DATEACCOUNT TITLENO.REF.DEBITCREDIT DEBITCREDIT 3SuppliesC1275.00 Account Supplies Account No. 150 DATEITEM POST. REF.DEBITCREDIT BALANCE DEBITCREDIT Aug 3 11 27500275 150 This is the Balance section –

22. JOURNAL PAGE 1 12345 DOC.POST. GENERAL SALESCASH DATEACCOUNT TITLENO.REF.DEBITCREDIT DEBITCREDIT 3SuppliesC1150 275.00 7Suppliesm1 500.00 Accts Pay-Supply Depot 500.00 Bought Supplies on account from Supply Depot - $500.00 Account Supplies Account No. 150 DATEITEM POST. RE F.DEBITCREDIT BALANCE DEBITCREDIT Aug 31 27500275 Aug 71 50000 150 7 7 5 00 Write the new balance: 275 + 500 = 775

23. JOURNAL PAGE 1 12345 DOC.POST. GENERAL SALESCASH DATEACCOUNT TITLENO.REF.DEBITCREDIT DEBITCREDIT Aug 1Kim Park, CapitalR15000.00 Received cash as an investment, $5000.00 Account Kim Park, Capital Account No. 310 DATEITEM POST. REF.DEBITCREDIT BALANCE DEBITCREDIT Aug 1 1 5000005000 310 Write the new balance

24. 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

25. WORK TOGETHER 4-2 WP p 59 – 61, Txtbook p. 99

26. Posting a Special Account Each transaction is posted individually

27. JOURNAL PAGE 1 12345 DOC.POST. GENERAL SALESCASH DATEACCOUNT TITLENO.REF.DEBITCREDIT DEBITCREDIT 2011 Aug 2020Brought Forward√3543.005750.001960.006710.002543.00 PAGE 2 3131√√190.00 3131Miscellaneous ExpM38.00 3131Totals43551.005750.003565.008315.003351.00 (√) 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.

28. JOURNAL PAGE 2 12345 DOC.POST. GENERAL SALESCASH DATEACCOUNT TITLENO.REF.DEBITCREDIT DEBITCREDIT 3131Totals43551.005750.003565.008315.003351.00 (√)

29. Posting the total of the sales credit column Account Sales Account No. 410 DATEITEM POST. REF.DEBITCREDIT BALANCE DEBITCREDIT Aug 31 2 3565003565 Write the new balance JOURNAL PAGE 2 12345 DOC.POST. GENERAL SALESCASH DATEACCOUNT TITLENO.REF.DEBITCREDIT DEBITCREDIT 3131Totals43551.005750.003565.008315.003351.00 (√)

30. Posting the total cash debit columns Account Cash Account No. 110 DATEITEM POST. R E F.DEBITCREDIT BALANCE DEBITCREDIT Aug 31 2 8315 00 8315 Write the new balance JOURNAL PAGE 2 12345 DOC.POST. GENERAL SALESCASH DATEACCOUNT TITLENO.REF.DEBITCREDIT DEBITCREDIT 3131Totals43551.005750.003565.008315.003351.00 (√)