Fast File, Chapter 7 - Montgomery Township School … · CHAPTER 7 Chapter Outline Notes Posting...

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C H A P T E R 6 Component Title

Name Date Class

C H A P T E R 7 Chapter Outline Notes

Posting Journal Entries to General Ledger Accounts

Section 1: The General Ledger

• posting—the process of transferring information from the journal to individual general ledger accounts

A. Setting Up the General Ledger • general ledger—a permanent record organized by account number • In a computerized accounting system, the electronic fi les containing the accounts are

still referred to as the ledger, or the ledger accounts. 1. The Four-Column Ledger Account Form • ledger account forms—used to record information about specifi c accounts in a

manual accounting system 2. Accounts in the Ledger

a. Opening a General Ledger Accountb. Starting a New Page for an Existing Account

B. The Usefulness of Journals and Ledgers • Managers use ledgers to obtain summarized information.

Section 2: The Posting Process

A. The Fourth Step in the Accounting Cycle: Posting • The ledger is sometimes called the book of fi nal entry. • Posting to a ledger account is completed from left to right. 1. Posting to the Roadrunner General Ledger

2. The Importance of Posting • Posting organizes business transaction details into the proper accounts. B. General Ledger Account Balances 1. Computing a New Account Balance

2. Showing a Zero Balance in a Ledger Account

Section 3: Preparing a Trial Balance

A. The Fifth Step in the Accounting Cycle: The Trial Balance • proving the ledger—add all debit and credit balances to see if the two totals equal • trial balance—a list of all the account names and their current balances B. Finding and Correcting Errors 1. Finding Errors • transposition error—two digits within an amount are reversed, or transposed • slide error—a decimal point is moved by mistake 2. Correcting Entries • correcting entry—a journal error that is recorded to fi x an error

24 ■ Chapter Outline Notes

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C H A P T E R 7 Concept Assessment


PART A Accounting Vocabulary (7 points)

Directions: Using terms from the following list, complete the sentences below. Write the letter of the term you have chosen in the space provided.

A 0. A must be made when an error in a journal entry is discovered after posting. 1. Adding all the debit balances and all the credit balances of accounts in the ledger to

determine whether the two totals are equal is called . 2. A results when two numbers are accidentally reversed. 3. The process of transferring the information in a journal entry to an individual

account is called . 4. are the accounting stationery used to record fi nancial information about

specifi c accounts. 5. A is a proof of the equality of total debits and total credits. 6. When an amount such as $90 is written as $900, a error has occurred. 7. A is a book or fi le that contains the pages or cards for the accounts used by

a business.

PART B The Posting Process (12 points)

Directions: Read each of the following statements to determine whether the statement is true or false.

Answer

T F 0. Posting to the ledger is the fourth step in the accounting cycle. T F 1. The accounts of a business are kept in a special book called a ledger. T F 2. You can easily see the increases and decreases taking place in the accounts of a

business by looking at the general journal entries. T F 3. Errors discovered after posting has occurred should be corrected by drawing a

line through the incorrect item and writing the correction directly above. T F 4. An account may be opened by writing the account title and account number on

the account form. T F 5. All businesses do their posting daily. T F 6. A trial balance is prepared before posting. T F 7. To avoid forgetting a step in the posting process, always post from right to left. T F 8. The fi rst step in posting is to write the date of the journal entry in the Date

column of the account debited. T F 9. A line across the Debit balance column shows that an asset account has a zero

balance. T F 10. Every journal entry requires a posting to at least three ledger accounts. T F 11. The purpose of a trial balance is to prove the equality of the ledger. T F 12. If the trial balance is in agreement, there are no errors in the accounting

records.

Concept Assessment ■ 1

Total Points 57 Student’s Score

A. correcting entry C. ledger account forms E. proving the ledger G. transposition error B. ledger D. posting F. slide H. trial balance

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Concept Assessment cont.

PART C Determining Account Balances (24 points)

Directions: 1. Open the ledger account by writing the account title and account number, 105.2. Record the account balance of $450 as of June 1 of the current year.3. Assume the following transactions have been recorded on page 1 of the general

journal. The transactions that follow affect the account, Accounts Receivable—Amy Anderson. Post these transactions to the account of Amy Anderson.

Date Transaction June 2 Received $200 from Amy Anderson on account. 5 Completed services for Amy Anderson and billed her $70. 21 Received a check for $320 from Amy Anderson to apply to her account. 29 Sent Invoice 417 to Amy Anderson for services completed, $90.

Does error Affect Correcting Does Error Affect Correcting Entry Error Trial Balance? Entry Required Error Trial Balance? Required?

0 Yes No 4

1 5

2 6

3 7

2 ■ Concept Assessment

PART D Correcting Errors (14 points)

Directions: Several errors are described below. Use the form below. For each error:1. Determine whether the error will affect the totals of the trial balance.2. Indicate whether the error requires a correcting entry.

The fi rst item has been completed for you as an example.Errors: 0. A $50 debit was not posted to the Offi ce Supplies account. 1. A $200 purchase of store equipment was journalized and posted to Store Supplies. 2. A $30 job completed for Sarah James was recorded and posted to James Scott’s account. 3. A $500 check received as payment for services was journalized and posted to the capital

account. 4. A $69 debit to the withdrawals account was posted as $96. 5. A $100 debit to Cash in Bank was posted as $10. 6. After posting a $75 credit to a creditor’s account, the account balance was incorrectly

calculated. 7. A $25 debit to the Store Supplies account was posted as a credit.

ACCOUNT ___________________________________________ ACCOUNT NO. ________

DATE DESCRIPTIONPOST.REF. CREDITDEBIT DEBIT CREDIT

BALANCE

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C H A P T E R 7 Quick Quiz


PART A True or FalseDirections: Read each of the following statements to determine whether the statement is true or false.

Answer

T F 1. The accounts in a business are kept in a book called a ledger.

T F 2. Posting is the process of transferring information from the journal to the ledger accounts.

T F 3. Every posting requires the year, month, and day to be entered in the Date column of the ledger account for every transaction.

T F 4. Every journal entry requires a posting to at least two accounts.

T F 5. If a transaction is journalized on the 6th, but not posted until the 8th, the date of the posting should be the 8th.

T F 6. If an account has a zero balance, it is not necessary to list it on the trial balance.

T F 7. A ledger is sometimes called a book of fi nal entry.

T F 8. Ideally, all businesses should post on a daily basis; however, businesses having few transactions may post only once a week.

T F 9. An example of a transposition error is writing the number 45 when you should have written 54.

T F 10. If you discover an error before posting, a correcting entry is required.

Quick Quiz ■ 3

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Quick Quiz cont.

PART B Multiple ChoiceDirections: Choose the letter of the correct answer and write it in the space provided.

Answer

1. The fi rst step in the posting process is to:(A) post the amount.(B) enter the page number in the Posting Reference

column of the ledger account.(C) enter the date in the Date column of the account debited.(D) compute the new balance.

2. If the total debits and total credits of the trial balance do not agree, the fi rst step in locating the error is to:(A) re-add the debit and credit columns.(B) fi nd the amount you are out of balance.(C) make certain you copied the amount correctly from the

ledger account to the trial balance.(D) divide the amount you are out of balance by 2.

3. All of the following about a trial balance are true except:(A) it includes all general ledger accounts.(B) it includes only the permanent accounts.(C) it is completed after posting.(D) it proves the ledger.

4. Transposition errors are evenly divisible by the number:(A) 2(B) 3(C) 4(D) 9

5. Which of the following steps in the accounting cycle is in the correct order?(A) Post to the ledger, prepare a trial balance, journalize,

analyze each transaction, and collect source documents.(B) Analyze each transaction, journalize, collect source

documents, prepare a trial balance, and post.(C) Collect and verify source documents, analyze each

transaction, journalize each transaction, post to the ledger, and prepare a trial balance.

(D) Collect and verify source documents, analyze each transaction, prepare a trial balance, journalize each transaction, and post to the ledger.

4 ■ Quick Quiz

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C H A P T E R 7 Chapter Quiz


True or FalseDirections: Read each of the following statements to determine whether the statement is true or false.

Answer

T F 1. The general ledger is the record of original entry.

T F 2. Posting is the third step in the accounting cycle.

T F 3. The four-column ledger form has separate columns for debit and credit balances.

T F 4. Every account in the general ledger must have a balance.

T F 5. A check mark is placed in the Posting Reference column of the general journal to indicate an entry has been posted.

T F 6. A check mark in the Posting Reference column of a ledger form indicates that the balance was not posted from a journal entry.

T F 7. The debit portion of a journal entry is always posted fi rst.

T F 8. If the totals of the trial balance are equal, that is proof that there are no errors in the ledger.

T F 9. Reversing the order of two numbers is a transposition error.

T F 10. A slide error occurs when a debit amount is mistakenly entered in a credit column.

Chapter Quiz ■ 5

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C H A P T E R 6 Component Title

Name Date Class

C H A P T E R 7 Demonstration Problems

Posting Journal Entries to General Ledger AccountsPROBLEM 7–1 Opening an Account with a BalanceOpen the following accounts as of May 1 of the current year.

Account Name Account Number Balance Cash in Bank 101 $3,000.00 Accts. Pay.—Knight Systems 206 50.00 Jamie Parker, Capital 301 4,000.00 Jamie Parker, Withdrawals 302 600.00 Professional Fees 401 1,800.00 Advertising Expense 501 200.00

Demonstration Problems ■ 25



BALANCE



BALANCE



BALANCE



BALANCE



BALANCE



BALANCE

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Demonstration Problems cont.

PROBLEM 7–2 PostingPost the following general journal transactions.

26 ■ Demonstration Problems

GENERAL JOURNAL

DATE DESCRIPTION POST..

REF.DEBIT CREDIT

1

2

3

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5

6

7

8

9

10

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2

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PAGE 15

20--

Mar. 1 Accounts Receivable—Tina Taylor 5 0 00

Professional Fees 5 0 00

Invoice 555

8 Cash in Bank 8 0 00

Professional Fees 8 0 00

Receipt 73

29 Cash in Bank 1 1 0 00

Accts. Rec.—Tina Taylor 1 1 0 00

Receipt 74


20--

Mar. 1 Balance ✓ 2 4 7 0 00

Cash in Bank 101


BALANCE


20--

Mar. 1 Balance ✓ 1 1 0 00

Accounts Receivable—Tina Taylor 105


BALANCE


20--

Mar. 1 Balance ✓ 6 3 0 00

Professional Fees 401


BALANCE

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PROBLEM 7–3 Showing Zero Balance in a Ledger AccountPost the following general journal transactions.


GENERAL JOURNAL


REF.DEBIT CREDIT

1

2

3

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5

6

7

8

9

10

1

2

3

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5

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PAGE 15

20--

Oct. 1 Cash in Bank 2 0 0 00

Accounts Receivable—James Garrity 2 0 0 00

Receipt 101

10 Accounts Payable—Jill Johnston 1 0 0 00

Cash in Bank 1 0 0 00

Check 340


20--

Oct. 1 Balance ✓ 2 5 0 0 00

Cash in Bank 101


BALANCE


20--

Oct. 1 Balance ✓ 2 0 0 00

Accounts Receivable—James Garrity 108


BALANCE


20--

Oct. 1 Balance ✓ 1 0 0 00

Accounts Payable—Jill Johnston 207


BALANCE

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PROBLEM 7–4 Proving the Equality of the LedgerListed below are the ledger accounts of DeMaria’s Service Center.

1. Prepare a trial balance for DeMaria’s Service Center as of December 31.

2. List each account name and place its balance in the appropriate amount column.

3. Add the balances in each amount column.

4. Prove the equality of the ledger by comparing the two totals to determine whether they are equal.

101 Cash in Bank $ 2,000.00 105 Accounts Receivable—Kevin White 150.00 110 Offi ce Equipment 270.00 115 Store Equipment 600.00 201 Accounts Payable—King Suppliers 140.00 205 Accounts Payable—Mancuso Company 100.00 301 Donna DeMaria, Capital 2,500.00 302 Donna DeMaria, Withdrawals 700.00 303 Income Summary — 401 Professional Fees 1,320.00 501 Miscellaneous Expense 40.00 505 Rent Expense 300.00

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PROBLEM 7–5 Finding ErrorsBelow is the trial balance for Dell’s Lawn Spray Service Company.

1. Total the two amount columns.

2. Determine the amount the trial balance is out of equality.

3. Explain the most likely types of errors that were made.


Dell’s Lawn Spray Service Company

Trial Balance

June 30, 20--

101

105

110

115

120

201

205

301

302

303

401

501

Cash in Bank

Accounts Receivable—Estelle Andrews

Accounts Receivable—Paul Longo

Lawn Service Equipment

Office Equipment

Accounts Payable—Chemco Chemical Co.

Accounts Payable—Kapko Fertilizer Co.

Perry Dell, Capital

Perry Dell, Withdrawals

Income Summary

Lawn Service Income

Truck Expense

4 2 0 0 00

3 0 0 00

1 7 0 00

2 2 5 0 00

1 5 0 0 00

4 0 0 0 00

—

2 7 5 00

2 7 5 5 00

1 5 5 0 00

6 5 0 0 00

—

1 8 0 0 00


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PROBLEM 7–6 Recording and Posting a Correcting EntryA $200 purchase of offi ce supplies was incorrectly journalized and posted to the Store Supplies account. Record and post the necessary correcting entry as of April 15. Use Memorandum 32 as your source document.


20--

Apr. 1 Balance ✓ 7 5 00

Office Supplies 106


BALANCE


20--

Apr. 1 Balance ✓ 3 0 0 0 0

5 G 9 2 0 0 0 0 5 0 0 0 0

Store Supplies 107


BALANCE

GENERAL JOURNAL


REF.DEBIT CREDIT

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PAGE 10

Fast File, Chapter 7 - Montgomery Township School … · CHAPTER 7 Chapter Outline Notes Posting...

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