Secondary Ledgers - The Power of Adjustment Ledgers for Reporting and Compliance
Accounting Chapter 4 The Chart of Account and Ledgers.
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Accounting Chapter 4 The Chart of Account and Ledgers
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Transcript of Accounting Chapter 4 The Chart of Account and Ledgers.
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 ACCOUNTS INCOME STATEMENT ACCOUNTS
(100) Assets (400) Revenue
(500) Expenses
(200) Liabilities
(300) Owners Equity
Follows layout of balance sheet and income statement
TECHKNOW CONSULTING’SCHART OF ACCOUNTS -
BALANCE SHEET ACCOUNTS INCOME STATEMENT ACCOUNTS
(100) Assets (400) Revenue
110 Cash
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 numbers150
1 is for the general ledger division (assets)5 0 is for the location within the general ledger division
TECHKNOW CONSULTING’SCHART OF ACCOUNTS -
BALANCE SHEET ACCOUNTS INCOME STATEMENT ACCOUNTS
(100) Assets (400) Revenue
110 Cash
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’SCHART OF ACCOUNTS -
BALANCE SHEET ACCOUNTS INCOME STATEMENT ACCOUNTS
(100) Assets (400) Revenue
110 Cash
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
310 Kim Park, Capital
320 Kim Park, Drawing
330 Income Summary
TECHKNOW CONSULTING’SCHART OF ACCOUNTS -
BALANCE SHEET ACCOUNTS INCOME STATEMENT ACCOUNTS
(100) Assets (400) Revenue
110 Cash 410 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
310 Kim Park, Capital
311 320 Kim Park, Drawing
312 330 Income Summary
TECHKNOW CONSULTING’SCHART OF ACCOUNTS -
BALANCE SHEET ACCOUNTS INCOME STATEMENT ACCOUNTS
(100) Assets (400) Revenue
110 Cash 410 Sales
120 Petty Cash
130 Accounts Receivable – Oakdale School (500) Expenses
140 Accounts Receivable – Campus Internet Cafe
510 Advertising Expense
150 Supplies 520 Insurance Expense
160 Prepaid Insurance 530 Miscellaneous Expense
540 Rent Expense
(200) Liabilities 550 Supplies Expense
210 Accounts Payable – Supply Depot 560 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’SCHART OF ACCOUNTS -
BALANCE SHEET ACCOUNTS INCOME STATEMENT ACCOUNTS
(100) Assets (400) Revenue
110 Cash 410 Sales
120 Petty Cash
130 Accounts Receivable – Oakdale School (500) Expense
140 Accounts Receivable – Campus Internet Cafe
510 Advertising Expense
150 Supplies 515 Gasoline Expense
160 Prepaid Insurance 520 Insurance Expense
530 Miscellaneous Expense
(200) Liabilities 540 Rent Expense
210 Accounts Payable – Supply Depot 550 Supplies Expense
220 Accounts Payabe – Thomas Supply Co 560 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 Accounts2. Start a new General Ledger Account Form (Txtbk p.
94)a. Write in the Account Title and the Account Number
Account Account No.
DATE ITEM
POST. REF. DEBIT CREDIT
BALANCE
DEBIT CREDIT
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 1
1 2 3 4 5
DOC. POST.
GENERAL
SALES CASH
DATE ACCOUNT TITLE NO. REF. DEBIT CREDIT CREDIT DEBIT CREDIT
2011
Apr 1 Norm Derner, Capital R1 150 150
2 Supplies C1 375 375
5 Supplies M1 500
Accts. Payable - Palm Suppy 500
7 Prepaid Insurance C2 300 300
9 Accts. Payable - Palm Supply C3 250 250
12 Rent Expense C4 1,000.00 1,000.00
13 √ T13 √ 2500 2500
14 Accts. Receivable - L. Rohe S1 510 510
19 Utilities Expense C5 148 148
20 Accts Receivable - L Rohe R2 255 255
21 Norm derner, Drawing C6 1000 1000
23 Accts Receivable - L. Rohe S2 375 375
27 Norm Derner, Drawing C7 500 500
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 1
1 2 3 4 5
DOC. POST.GENERAL
SALES CASH
DATE ACCOUNT TITLE NO. REF. DEBIT CREDIT CREDIT DEBIT CREDIT
3 Supplies C1 275.00 275.00
Start with our Journal
JOURNAL PAGE 1
1 2 3 4 5
DOC. POST.GENERAL
SALES CASH
DATE ACCOUNT TITLE NO. REF. DEBIT CREDIT CREDIT DEBIT CREDIT
3 Supplies C1 275.00 275.00
Account Supplies Account No. 150
DATE ITEM
POST.
REF. DEBIT CREDIT
BALANCE
DEBIT CREDIT
2012
Aug 3 1 2 7 5 00 2 7 5 00
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 1
1 2 3 4 5
DOC. POST.GENERAL
SALES CASH
DATE ACCOUNT TITLE NO. REF. DEBIT CREDIT CREDIT DEBIT CREDIT
3 Supplies C1 275.00 275.00
Account Supplies Account No. 150
DATE ITEM
POST. REF
. DEBIT CREDIT
BALANCE
DEBIT CREDIT
Aug 3 1 1 2 7 5 00 2 7 5 00
150
This is the Balance section
–
JOURNAL PAGE 1
1 2 3 4 5
DOC. POST.
GENERAL SALES CASH
DATE ACCOUNT TITLE NO. REF. DEBIT CREDIT CREDIT DEBIT CREDIT
3 Supplies C1 150 275.00 275.00
7 Supplies m1
500.00
Accts Pay-Supply Depot 500.00
Bought Supplies on account from Supply Depot - $500.00
Account Supplies Account No. 150
DATE ITEM
POST. REF. DEBIT CREDIT
BALANCE
DEBIT CREDIT
Aug 3 1 2 7 5 00 2 7 5 00
Aug 7 1 5 0 0 00
150
7 7 5 00
Write the new
balance: 275 + 500 =
775
JOURNAL PAGE 1
1 2 3 4 5
DOC. POST.
GENERAL SALES CASH
DATE ACCOUNT TITLE NO. REF. DEBIT CREDIT CREDIT DEBIT CREDIT
Aug 1 Kim Park, Capital R15000.0
0 5000.00
Received cash as an investment, $5000.00
Account Kim Park, Capital Account No. 310
DATE ITEM
POST. REF
. DEBIT CREDIT
BALANCE
DEBIT CREDIT
Aug 1 1 5 0 0 0 00 5 0 0 0 00
310
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 1
1 2 3 4 5
DOC. POST.
GENERAL SALES CASH
DATE ACCOUNT TITLE NO. REF. DEBIT CREDIT CREDIT DEBIT CREDIT
2011
Aug20 Brought Forward √ 3543.00 5750.00 1960.00 6710.00 2543.00
PAGE 2
31 √ √ 190.00 190.00
31 Miscellaneous Exp M3 8.00 8.00
31 Totals 43551.00 5750.00 3565.00 8315.00 3351.00
(√) (√)
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.
JOURNAL PAGE 2
1 2 3 4 5
DOC. POST.
GENERAL SALES CASH
DATE ACCOUNT TITLE NO. REF. DEBIT CREDIT CREDIT DEBIT CREDIT
31 Totals 43551.00 5750.00 3565.00 8315.00 3351.00
(√) (√)
Posting the total of the sales credit column
Account Sales Account No. 410
DATE ITEM
POST. REF
. DEBIT CREDIT
BALANCE
DEBIT CREDIT
Aug 31 2 3 5 6 5 00 3 5 6 5 00
Write the new balance
JOURNAL PAGE 2
1 2 3 4 5
DOC. POST.
GENERAL SALES CASH
DATE ACCOUNT TITLE NO. REF. DEBIT CREDIT CREDIT DEBIT CREDIT
31 Totals 43551.00 5750.00 3565.00 8315.00 3351.00
(√) (√)
Posting the total cash debit columns
Account Cash Account No. 110
DATE ITEM
POST. REF. DEBIT CREDIT
BALANCE
DEBIT CREDIT
Aug 31 2 8 3 1 5 00 8 3 1 5 00
Write the new balance
JOURNAL PAGE 2
1 2 3 4 5
DOC. POST.
GENERAL SALES CASH
DATE ACCOUNT TITLE NO. REF. DEBIT CREDIT CREDIT DEBIT CREDIT
31 Totals 43551.00 5750.00 3565.00 8315.00 3351.00
(√) (√)
