@ 2012, Cengage Learning Analyzing Transactions LO 3 – Posting Journal Entries to Accounts.
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@ 2012, Cengage Learning Analyzing Transactions LO 3 – Posting Journal Entries to Accounts
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Transcript of @ 2012, Cengage Learning Analyzing Transactions LO 3 – Posting Journal Entries to Accounts.
@ 2012, Cengage Learning
Analyzing Transactions
LO 3 – Posting Journal Entries to Accounts
The process of transferring the debits and credits from the journal entries to the accounts is called posting.
LO 3LO 3Posting Journal Entries to Accounts
On December 1, NetSolutions paid a premium of $2,400 for an insurance policy for liability, theft, and fire. The policy covers a one-year period.
LO 3LO 3Posting Journal Entries to Accounts
LO 3LO 3
Accounting Equation ImpactAssets = Liabilities + Stockholders’ Equity
Posting Journal Entries to Accounts
increase
decrease
Exhibit 4 - Steps in Posting
Step 1. The date of the transaction is entered in the Date column of Prepaid Insurance.
LO 3LO 3
Account Prepaid Insurance Account No. 15
Date Item Ref. Debit Credit Debit Credit Post.. Balance
Dec. 12011
Dec. 1 Prepaid Insurance 2,400 Cash 2,400 Paid premium on one-year policy.
Account Prepaid Insurance Account No. 15
Date Item Ref. Debit Credit Debit Credit Post. Balance
Dec.
1
2011
Dec. 1 Prepaid Insurance 2,400 Cash 2,400 Paid premium on one-year policy.
Step 2. The amount ($2,400) is entered in the Debit column of Prepaid Insurance.
LO 3LO 3
Account Prepaid Insurance Account No. 15
Date Item Ref. Debit Credit Debit Credit Post. Balance
Dec.
1
2011
Dec. 1 Prepaid Insurance 2,400 Cash 2,400 Paid premium on one-year policy.
2,400 2,400
Exhibit 4 - Steps in Posting
Step 3. The journal page number (2) is entered in the account’s Post. Ref. column.
LO 3LO 3
Account Prepaid Insurance Account No. 15
Date Item Ref. Debit Credit Debit Credit Post. Balance
Dec.
1
2011
Dec. 1 Prepaid Insurance 2,400 Cash 2,400 Paid premium on one-year policy.
2,400 2,4002
Exhibit 4 - Steps in Posting
LO 3LO 3
Step 4. The ledger account number (15) is entered in the journal’s Post. Ref. column.
Account Prepaid Insurance Account No. 15
Date Item Ref. Debit Credit Debit Credit Post. Balance
Dec.
1
2011
Dec. 1 Prepaid Insurance 2,400 Cash 2,400 Paid premium on one-year policy.
2,400 2,4002
15
Exhibit 4 - Steps in Posting
Recording and Posting of a Debit and a Credit
LO 3LO 3
These steps are repeated to post to the Cash account.
