Accounting 10
Module 2
Lesson 7
Accounting 10
1
Lesson 7
Accounting 10
2
Lesson 7
Lesson Seven - Posting Transaction Data
Read pages 127 to 149 in the textbook.
Topics:
•
Posting Transaction Data
•
Preparing Accounting Proofs
•
Remember These Important Points
•
Do You Understand?
•
Conclusion
•
Self Test
•
Answer for Self Test
•
Assignment 7
At the end of Lesson 7, the student should be able to
•
identify from a given chart of accounts the account number of the account that
would be debited, and the account number of the account that would be credited for
any given narrative transaction.
•
accurately post information from the General Journal to the General Ledger using
the balance ledger form of account.
•
calculate and record correctly the new balance in any General Ledger account using
the balance ledger form.
Accounting 10
3
Lesson 7
•
make up a suitable chart of accounts from a given set of entries recorded in the
General Journal for a specific business.
•
set up a General Ledger from a given chart of accounts for a specific business.
•
show a journal proof for each page of a completed General Journal.
•
identify the final balance in any General Ledger account as a Dr., Cr., or zero
balance.
•
prepare a formal trial balance of a given General Ledger.
Posting Transaction Data
Introducing the Ledger
Once the debits and credits have been recorded in the journal, it follows that these debits
and credits must be transferred to the appropriate accounts in the ledger.
Posting is transferring debits and credits from the journal to the ledger.
Ledger is a group or file of accounts; the "book of final entry".
Different forms of the ledger are
•
a loose-leaf binder which holds individual ledger sheets.
•
a ledger tray which holds individual ledger cards.
•
a filing tub or cabinet which holds individual ledger folders and files.
•
those stored on magnetic tape or disk.
Accounting 10
4
Lesson 7
Exploring the Need for a Formal Ledger Account
The simple T-account form does not exist. However, it may be used as a valuable tool to
assist with the visual analysis of a troublesome transaction.
Instead, forms are designed according to the type of information required from the
account. One type of account form that is in widespread use is the three-column form as
shown below.
Study carefully the information on pages 129 and 130 in the textbook.
Balance Ledger Form
Account Title
DATE
20__
Accounting 10
Account No.
EXPLANATION
POST
REF.
5
DEBIT
CREDIT
BALANCE
Lesson 7
In addition to the information in the text, the following should be noted:
The name of the account will be shown at the left-hand side, beginning above the Date
column called the account title.
All accounts are identified by some form of number code. Numbers are very important
when identifying accounts which report information for the future preparation of financial
statements.
These accounts would be filed in a ledger called the General Ledger. The ledger filing
those accounts supplies information for the preparation of financial statements.
Organizing the Chart of Accounts
Financial statements can be prepared from the numerical sequence of accounts in the
General Ledger.
The Chart of Accounts is a numbering plan, listing all account titles in the order in which
they appear in the accounting equation, and the numbers assigned to them.
A typical three-digit plan for numbering accounts for Stacom Travel follows.
Accounting 10
6
Lesson 7
STACOM TRAVEL CHART OF ACCOUNTS
Assets
101
102
103
104
105
106
110
112
Cash
Accts. Rec./Lee Baines
Accts. Rec./Terry Thompson
Accts. Rec./Janet Brown
Accts. Rec./Black’s Shoe Co.
Accts. Rec./J. McCain
Office Equipment
Furniture
Liabilities
201
202
203
204
205
Bank Loan Payable
Accts. Pay./A & B Furniture Co.
Accts. Pay./The City Record
Accts. Pay./Nelson Equipment Co.
Accts. Pay./Office Equipment Co.
Owner's Equity
301
302
R. Ireland, Capital
R. Ireland, Drawing
Revenue
401
Sales
Expenses
501
502
503
504
505
Rent Expense
Telephone Expense
Utilities Expense
Salaries Expense
Advertising Expense
Accounting 10
7
Lesson 7
Notice the first digit of the account code identifies the major class of accounts, while the
second and third digits provide a further breakdown.
Account numbers beginning with 1 indicate asset accounts; those beginning with 2
indicate liability accounts; owner's equity accounts begin with the number 3; the numbers
beginning with 4 indicate revenue accounts; and those with 5 indicate expense accounts.
The next two digits indicate the sequence of the account within its group.
This system of numbering accounts makes it easy to locate any account quickly.
Accounts related to the balance sheet are in the lower code numbers while the income
statement accounts are given higher number codes.
Posting to the Ledger
Study carefully the steps required to post to the ledger on pages 131 – 133 in the textbook.
In Step 4, the text states that the letter G. J. for General Journal should go just before the
Post. Ref. column. The G. J. may be put in the Post. Ref. column. just as well. Both
procedures are acceptable.
Understand the information under "Important" with regard to the post reference column
on page 133.
Remember that account numbers are entered in the Post. Ref column in
the General Journal only after each entry is posted.
Accounting 10
8
Lesson 7
Ledger Accounts After Posting
The illustrations that follow show how the accounts should look after all of the
transactions of Stacom Travel have been posted from the General Journal entries (in
lesson 10) to the General Ledger.
Cash
Account No. 101
DATE
20__
EXPLANATION
Sept. 30
DEBIT
CREDIT
BALANCE
GJ
1
28 000.00
28 000.00
1
GJ
1
1 000.00
29 000.00
2
GJ
1
3
GJ
1
5
GJ
2
8
GJ
2
16
GJ
3
40.00
27 371.00
30
GJ
3
2 000.00
25 371.00
30
GJ
3
2 750.00
22 621.00
Oct.
Opening entry
POST
REF.
1 000.00
411.00
28 000.00
28 411.00
4 000.00
3 000.00
24 411.00
27 411.00
(DR)
Accts. Rec./Lee Baines
DATE
20__
Sept. 30
Oct. 1
Accounting 10
Account No. 102
EXPLANATION
Opening entry
POST
REF.
GJ
1
GJ
1
DEBIT
CREDIT
1 000.00
1 000.00 DR
1 000.00
9
BALANCE

Lesson 7
Accts. Rec./J. Mc Cain
DATE
20__
Account No. 106
EXPLANATION
Oct. 12
GJ
POST
REF.
2
DEBIT
CREDIT
40.00
40.00
Office Equipment
DATE
20__
Oct.
Account No. 110
EXPLANATION
Sept. 30
Opening entry
3
4
POST
REF.
DEBIT
CREDIT
1
11 000.00
11 000.00
GJ
1
1 400.00
12 400.00
GJ
2
400.00
Oct.
Opening entry
2
POST
REF.
DEBIT
CREDIT
Sept. 30
1
10 000.00
10 000.00
GJ
1
1 000.00
11 000.00
Accounting 10
Account No. 201
EXPLANATION
Opening entry
BALANCE
GJ
Bank Loan Payable
DATE
20__
12 000.00
Account No. 112
EXPLANATION
Sept. 30
BALANCE
GJ
Furniture
DATE
20__
BALANCE
GJ
POST
REF.
1
DEBIT
CREDIT
10 000.00
10
BALANCE
10 000.00
Lesson 7
Accts. Pay./A & B Furniture Co.
DATE
20__
Account No. 202
EXPLANATION
Sept. 30
Opening entry
GJ
POST
REF.
DEBIT
1
CREDIT
6 000.00
BALANCE
6 000.00
(CR)
Accts. Pay./Nelson Equipment Co.
DATE
20__
EXPLANATION
Account No. 204
POST
REF.
Oct. 3
GJ
1
4
GJ
2
DEBIT
CREDIT
1 400.00
400.00
BALANCE
1 400.00
1 000.00
(CR)
Accts. Pay./Office Equipment Co.
DATE
20__
EXPLANATION
Sept. 30
Oct.
Opening entry
5
Account No. 205
POST
REF.
GJ
1
GJ
2
DEBIT
CREDIT
4 000.00
Account No. 301
EXPLANATION
Sept. 30
Opening entry
Oct.
Additional
investment
GJ
8
4 000.00 CR

4 000.00
Rob Ireland, Capital
DATE
20__
BALANCE
GJ
POST
REF.
DEBIT
CREDIT
BALANCE
1
30 000.00
30 000.00
2
3 000.00
33 000.00
(CR)
Accounting 10
11
Lesson 7
Rob Ireland, Drawing
DATE
20__
Account No. 302
EXPLANATION
Oct. 30
GJ
POST
REF.
3
DEBIT
CREDIT
1 200.00
BALANCE
1 200.00
(DR)
Sales
DATE
20__
Account No. 401
EXPLANATION
POST
REF.
DEBIT
CREDIT
BALANCE
Oct. 3
GJ
1
411.00
411.00
12
GJ
2
400.00
811.00
(CR
Telephone Expense
DATE
20__
Account No. 502
EXPLANATION
Oct. 16
GJ
POST
REF.
3
DEBIT
CREDIT
BALANCE
40.00
40.00
(DR
Salaries Expense
DATE
20__
Oct. 30
Account No. 504
EXPLANATION
GJ
POST
REF.
3
DEBIT
2 750.00
CREDIT
BALANCE
2 750.00
(DR
Accounting 10
12
Lesson 7
Account numbers come from the Chart of Accounts listed previously.
Calculating a New Balance
Study carefully and understand the information given on pages 133 to 138 in the textbook.
To a debit balance, you add a debit amount and subtract a credit amount. This would be
the case with asset, drawing, and expense accounts.
To a credit balance, you subtract a debit amount and add a credit amount. This would be
the case with liability, capital, and revenue accounts.
Summary of Accounting Cycle to Date
You have now been introduced to the first three steps in the study of the accounting cycle:
Step 1 is originating transaction data. As you remember, the transaction data are
contained in a variety of source documents.
Step 2 is journalizing transaction data. As you recall, source documents are analyzed into
debits and credits. These debits and credits are recorded in chronological order in the
General Journal.
Step 3 is posting transaction data. The debits and credits appearing in the journal are
transferred from the journal to appropriate accounts in the General Ledger.
Preparing Accounting Proofs
Before financial statements are prepared from the General Ledger, accountants
recommend the practice of taking a number of accounting proofs to ensure
•
that the data recorded in the journal and ledger is accurate.
•
that all transactions have been accounted for.
Accounting 10
13
Lesson 7
Preparing the Journal Proof
Carefully study pages 141 to 144 in the textbook.
You must have equal debits and credits for every transaction. The journal may be proved
in two ways:
•
by totalling each column on a journal page before any posting is done.
•
by totalling money columns before a second or subsequent page in the journal is
used.
The balance of an account is recorded on the same side as that on which the
account appears in the accounting equation.
Proving the Ledger
One of the best routine checks of overall debits equalling credits in the ledger is obtained
by preparing a summary of the balances of the ledger accounts at regular intervals and
especially before financial statements are prepared. This summary is known as a trial
balance. A Formal Trial Balance is a list or summary of the balances of accounts in a
ledger as at a certain date.
Preparing the Formal Trial Balance
Study carefully the information on pages 145 to 146 in the textbook.
Accounting 10
14
Lesson 7
The formal trial balance for Stacom Travel follows. The information was taken from the
ledger previously shown in this lesson.
Stacom Travel
Trial Balance
October 31, 20__
Account Title
Acct.
No.
Debit
Credit
Cash
101
$22 621.00
Accts. Rec./J.Mc Cain
106
40.00
Office Equipment
110
12 000.00
Furniture
112
11 000.00
Bank Loan Payable
201
$10 000.00
Accts. Pay./A & B Furniture Co.
202
6 000.00
Accts. Pay./Nelson Equipment Co.
204
1 000.00
Rob Ireland, Capital
301
33 000.00
Rob Ireland, Drawing
302
Sales
401
Telephone Expense
502
40.00
Salaries Expense
504
2 750.00
1 200.00
811.00
$50 811.00
Accounting 10
15
$50 811.00
Lesson 7
Preparing an Informal Trial Balance
Study carefully page 146 in the textbook with regard to the procedures for a quick trial
balance.
The informal trial balance or "zero proof" for Stacom Travel follows:
Informal Trial Balance
Trial Balance "zero proof" Oct. 31, 20__
0.00T
22 621 00+
400.00+
12 000.00+
11 000.00+
1 200.00+
40.00+
2 750.00+
10 000.006 000.001 000.0033 000.00811.000.00T
Zero Proof is deducting all of the credit balances from all of the debit balances to give a
zero balance.
Procedures to Follow in Correcting Errors
If the debit and credit totals in the trial balance are not equal, corrections must be made
before you continue.
Calculate the trial balance difference and test it to see:
•
if the difference is a multiple of 10, an addition error has likely been made.
•
if the difference is equal to an amount entered in the ledger or journal, divide the
difference by two and search the trial balance and ledger accounts for this amount.
•
if the difference is divisible by 9, a transposition error has likely occurred.
Accounting 10
16
Lesson 7
If the above quick tests do not find the problem, proceed with the following:
•
re-add columns
•
check transfer of account balances from the ledger to the trial balance
•
re-add account column balances; or
•
check postings for incorrect amounts, amounts not posted, amounts posted twice or
amounts posted in the wrong column
Advantages of Using the Trial Balance
The trial balance serves the following purposes:
•
It proves the equality of the total debits and credits in the ledger. Thus it provides
at least a mathematical check on the accuracy of the posting procedure. If the total
debits do not equal the total credits, then there is an error in one or more accounts
in the ledger.
•
It provides a condensed picture of each account that has a balance in the ledger.
•
The formal trial balance may be used as a basis for the preparation of the financial
statements.
Summary of the Accounting Cycle to Date
The taking of the trial balance is the key checkpoint before any financial statements are
prepared. The steps taken so far are
Step 1:
originating transactions from source documents.
Step 2:
journalizing transactions from source documents.
Step 3:
posting transactions from the journal to the ledger.
Step 4:
preparing a trial balance.
Accounting 10
17
Lesson 7
Defining Bookkeeping
Carefully study pages 147 to 149 in the textbook.
Bookkeeping is the process of journalizing business transactions, posting transactions to
ledger accounts, and proving the ledger to be in balance.
Remember These Important Points
•
The third step in the accounting cycle is to post the debits and credits
recorded earlier in the journal to appropriate ledger accounts.
•
Since the debits and credits of accounting transactions are first
recorded in the journal, the journal is the "book" of original entry.
•
Since the debits and credits of accounting transactions are transferred
from the journal to the ledger, the ledger is the "book" of final entry.
•
One common type of general ledger account used in modern practice is
a three-column form called the balance ledger form. The Balance
column receives the balance after posting is done for a particular
transaction.
•
The Chart of Accounts is a listing of all accounts that supply data for
the preparation of financial statements. The listing includes a threedigit number plan organized around the elements of the accounting
equation.
•
The final step in posting is to return to the journal and show in the
Post. Ref. column the account number of the account just posted from
the ledger.
If posting to ledger accounts is not done, the Post. Ref. column in the
journal is not filled in.
•
Accounting 10
The Post. Ref. column of the balance ledger form receives the source of
posting; that is, the initials and page number of the journal from which
information is being transferred.
18
Lesson 7
•
Before the financial statements are prepared at the end of any
accounting period, the work done in journalizing and posting must be
proven.
•
Proving the equality of debits and credits in the journal is called the
journal proof.
For each page of the General Journal, the total of the debits in the
Debit column should agree with the total of the credits in the Credit
column. These proofs are taken before posting is done to the General
Ledger.
•
The trial balance is a summary of all account balances in the General
Ledger because it tests the fact that the total of debit balances in the
ledger must be equal to the total of credit balances at any given time.
•
Two forms of trial balances are common -- the formal trial balance and
the informal or "quick" trial balance.
•
Identify the final balance as either Dr. or Cr. opposite the final balance
in every ledger account before preparing a trial balance.
All normal asset, drawing and expense accounts have a final Dr.
balance. All normal liability, capital, and revenue accounts have a
final Cr. balance.
Do You Understand?
Posting - transferring debits and credits from the journal to the ledger.
Ledger - a group or file of accounts; the book of secondary or final entry.
Balance Ledger Form - a three-column account with a "running balance" column.
General Ledger - the ledger filing those accounts which supply information for the
preparation of financial statements.
Chart of Accounts - a numbering plan, listing all account titles in the order in which they
appear in the accounting equation, and the numbers assigned to them.
Journal Proof - the total of the debit column is equal to the total of the credit column on a
journal page.
Bookkeeping - the process of journalizing business transactions, posting transactions to
ledger accounts, and proving the ledger to be in balance.
Accounting 10
19
Lesson 7
Conclusion
You should now be able to post entries from the general journal to the general ledger. Post
entries accurately.
Self Test
1.
P 4-7, page 138 of the text
Refer to Problem 4-4 from the Self Test,
Lesson 10
2.
MC 4-9, page 140 of the text
3.
P 4-10, page 150 of the text
Refer to Problem 4-7 of this Self Test
4.
MC 4-12, page 152 of the text
P 4-7 Key Figure to Check: the balance of Cash on Nov. 30 is $9 993 Dr.
Accounting 10
20
Lesson 7
Account
Date
20
Cash
Account No.
Account
Date
20
Accts.Rec./Lambton Industries Inc.
Account
Date
20
Accts. Rec./A.Lee
Account
Date
20
Office Supplies
Explanation
Explanation
Explanation
Accounting 10
Explanation
Post
Ref.
Debit
Credit
Balance
Account No.
Post
Ref.
Debit
Credit
Balance
Account No.
Post
Ref.
Debit
Credit
Balance
Account No.
Post
Ref.
Debit
21
Credit
Balance
Lesson 7
Account
Date
20_
Office Equipment
Account
Date
20_
Bank Loan Payable
Account
Date
20_
Accts. Pay./G/ Heath Suppliers
Account
Date
20_
Accts. Pay./D. Moyer Computers Ltd.
Post
Explanation
Ref.
Debit
Credit
Balance
Post
Ref.
Debit
Credit
Balance
Explanation
Explanation
Explanation
Account
Date
20_
Accounting 10
Explanation
Account No.
Post
Ref.
Debit
Credit
Balance
Account No.
Post
Ref.
Debit
Credit
Balance
Account No.
Post
Ref.
Debit
Credit
Balance
Account No.
22
Lesson 7
Account
Date
20
J. Edgar, Drawing
Account
Date
20
Consulting Fees Earned
Account
Date
20
Teelphone Expense
Account
Date
20
Rent Expense
Explanation
Explanation
Explanation
Accounting 10
Explanation
Account No.
Post
Ref.
Debit
Credit
Balance
Account No.
Post
Ref.
Debit
Credit
Balance
Account No.
Post
Ref.
Debit
Credit
Balance
Account No.
Post
Ref.
Debit
23
Credit
Balance
Lesson 7
Account
Date
19__
Advertising Expense
Account
Date
19__
Utilities Expense
Explanation
Accounting 10
Explanation
Account No.
Post
Ref.
Debit
Credit
Balance
Account No.
Post
Ref.
Debit
24
Credit
Balance
Lesson 7
MC 4-9b
Account
Date
20
Ge ne ra l Le dge r
Cash
Accounting 10
Account No.
Explanation
Post
Ref.
Debit
25
Credit
Balance
Lesson 7
General Ledger
MC 4-9b
4-10a
Journal Proof of Page 1 (General Journal for Problem P 4-4):
Total of Debit Column
.......... .......... ..........$_______________
Total of Credit Column
.......... .......... ..........$_______________
Journal Proof of Page 2:
Total of Debit Column
.......... .......... ..........$_______________
Total of Credit Column
.......... .......... ..........$_______________
Journal Proof of Page 3 (if necessary):
Total of Debit Column
.......... .......... ..........$_______________
Total of Credit Column
.......... .......... ..........$_______________
P 4-10b
Check the mathematical accuracy of the final balance for each account solved for the
General Ledger Problem P 4-7. After proving the accuracy of this balance, print
DR. or CR. after each final account balance in the General Ledger.
Accounting 10
26
Lesson 7
P 4-10c,d
Page
Trial Balance
Acct.
No.
Account Title
Debit
Credit
Key Figure to check: Total of the formal trial balance is $18 050
Accounting 10
27
Lesson 7
Answers for Self Test
P 4-7
Note: Appropriate posting references would be made in the General Journal used in
Problem 4-4 (J. Edgar Consulting Services). Posting references in ledger accounts
will vary directly with journal page numbers used in P 4-4.
General Ledger (J. Edgar Consulting Services)
Cash
Account No. 101
Date
20__
Nov. 1
Explanation
Opening Entry
Post
Ref.
Debit
Credit
2 500.00
Balance
GJ
1
2 500.00
2
GJ
1
6
GJ
1
7
GJ
1
67.00
3 233.00
10
GJ
1
700.00
2 533.00
12
GJ
1
200.00
2 333.00
15
GJ
1
500.00
2 833.00
17
GJ
1
5 000.00
7 833.00
23
GJ
2
350.00
7 483.00
25
GJ
2
440.00
7 043.00
30
GJ
2
30
GJ
2
150.00
950.00
2 350.00
3 300.00
3 200.00
10 243.00
250.00
9 993.00
(DR)
Note: Optionally, the entire posting reference, GJ and page number, may be placed in the
narrow Post. Ref. column, or shown as above.
Accounting 10
28
Lesson 7
P 4-7 (continued)
Accts. Rec./Lambton Industries Inc.
DATE
20__
Account No. 105
POST
REF.
EXPLANATION
Nov. 20
GJ
2
DEBIT
CREDIT
BALANCE
1 200.00
1 200.00
(DR)
Accts. Rec./A. Lee
DATE
20__
Account No. 108
POST
REF.
EXPLANATION
Nov. 4
GJ
1
DEBIT
CREDIT
BALANCE
450.00
450.00
(DR)
Office Supplies
DATE
20__
Nov. 1
Account No. 115
POST
REF.
EXPLANATION
Opening entry
2
DEBIT
CREDIT
BALANCE
GJ
1
1 450.00
1 450.00
GJ
1
150.00
1 600.00
(DR)
Office Equipment
DATE
20__
Account No. 120
POST
REF.
EXPLANATION
Nov. 16
GJ
1
DEBIT
CREDIT
BALANCE
3 000.00
3 000.00
(DR)
Bank Loan Payable
DATE
20__
Nov. 17
Account No. 201
POST
REF.
EXPLANATION
GJ
1
DEBIT
CREDIT
5 000.00
BALANCE
5 000.00
(CR)
Accounting 10
29
Lesson 7
Accts. Pay./G. Health Suppliers
DATE
20__
Nov. 1
Account No. 205
POST
REF.
EXPLANATION
Opening entry
12
GJ
1
GJ
1
DEBIT
CREDIT
BALANCE
800.00
200.00
800.00
600.00
(CR)
Accts. Pay./D. Moyer Computers Ltd.
DATE
20__
Account No. 210
POST
REF.
EXPLANATION
Nov. 16
GJ
DEBIT
1
CREDIT
BALANCE
3 000.00
3 000.00
(CR)
J. Edgar, Capital
DATE
20__
Nov. 1
Account No. 301
POST
REF.
EXPLANATION
Opening entry
GJ
DEBIT
1
CREDIT
BALANCE
3 150.00
3 150.00
(CR)
J. Edgar, Drawing
DATE
20__
Nov. 30
Account No. 302
POST
REF.
EXPLANATION
GJ
2
DEBIT
250.00
CREDIT
BALANCE
250.00
(DR)
Accounting 10
30
Lesson 7
Consulting Fees Earned
DATE
20__
Account No. 401
POST
REF.
EXPLANATION
Nov. 4
DEBIT
CREDIT
BALANCE
GJ
1
450.00
450.00
6
GJ
1
950.00
1 400.00
15
GJ
1
500.00
1 900.00
20
GJ
2
1 200.00
3 100.00
30
GJ
2
3 200.00
6 300.00
(CR)
Telephone Expense
DATE
20__
Account No. 505
POST
REF.
EXPLANATION
Nov. 7
GJ
1
DEBIT
CREDIT
67.00
BALANCE
67.00
(DR)
Rent Expense
DATE
20__
Account No. 510
POST
REF.
EXPLANATION
Nov. 10
GJ
1
DEBIT
CREDIT
700.00
BALANCE
700.00
(DR)
Advertising Expense
DATE
20__
Nov. 23
Account No. 515
POST
REF.
EXPLANATION
GJ
2
DEBIT
350.00
CREDIT
BALANCE
350.00
(DR)
Accounting 10
31
Lesson 7
Utilities Expense
DATE
20__
Account No. 520
POST
REF.
EXPLANATION
Nov. 25
GJ
2
DEBIT
CREDIT
BALANCE
440.00
440.00
(DR)
MC 4-9a
1.
Under the Date column, the month should be listed once at the top of each page. If
the month changes on a page, it should be recorded the first time that it is used.
2.
The numeric date should be listed each time an entry is made in the ledger.
3.
Under the explanation column, the ledger is typically not ruled off and totalled.
Therefore, there is no need for words "final total."
4.
Under the Posting Reference column, expect the posting references to follow in
increasing order by page number (first two entries).
5.
Each posting should have a posting reference (entry of May 15).
6.
Dollar signs are not used in ledger accounts because they are not financial
statements or formal reports.
7.
The credit of $150 should have been subtracted from the $200 debit balance (first
and second line of the ledger account). Rule: Add likes together, subtract opposites.
8.
The subtraction has been completed in error (entry of the 15th).
9.
Since there is no totalling completed in the ledger accounts, the single and double
underscoring and the total are inappropriate.
Accounting 10
32
Lesson 7
P 4-9b
Cash
General Ledger
DATE
20__
May 10
Account No. 101
POST
REF.
EXPLANATION
Rec'd on acct.
GJ
1
10
Payment on acct.
GJ
2
14
Loan from the bank
GJ
2
15
Payment on acct
GJ
2
16
Additional investment GJ
3
DEBIT
CREDIT
200.00
200.00
150.00
5 000.00
50.00
5 050.00
500.00
1 000.00
BALANCE
4 550.00
5 550.00
(DR)
P 4-10a
Journal Proof of Page 1 (General Journal for Problem P 4-4):
Total of Debit Column .... .......... ..........
$14 967.00
Total of Credit Column ... .......... ..........
$14 967.00
Journal Proof of Page 2:
Total of Debit Column .... .......... ..........
$ 5 440.00
Total of Credit Column ... .......... ..........
$ 5 440.00
P 4-10b
See the ledger accounts in the answer key to P 4-7.
Accounting 10
33
Lesson 7
P 4-10c, d
J. Edgar Consulting Services
Trial Balance
November 30, 20__
Cash ...... ............ .............. ............. .......... 101
Accts. Rec./Lambton Industries Inc. ........ 105
Accts. Rec./A. Lee ...................................... 108
Office Supplies .. .............. ............. .......... 115
Office Equipment ............. ............. .......... 120
Bank Loan Payable .......... ............. .......... 201
Accts. Pay./G. Health Suppliers .... .......... 205
Accts. Pay./D. Moyer Computers Ltd. ...... 210
J. Edgar, Captial ............................ .......... 301
J. Edgar, Drawing ............ ............. .......... 302
Consulting Fees Earned .. ............. .......... 401
Telephone Expense .......... ............. .......... 505
Rent Expense .... .............. ............. .......... 510
Advertising Expense ........ ............. .......... 515
Utilities Expense ............. ............. .......... 520
$ 9 993.00
1 200.00
450.00
1 600.00
3 000.00
$
5000.00
600.00
3 000.00
3 150.00
250.00
6 300.00
67.00
700.00
350.00
440.00
$18 050.00
$18 050.00
Note: Dollar signs are not used in a handwritten trial balance. They are normally used
when the formal trial balance is keyed using a computer.
MC 4-12a
This is a definition of the Trial Balance.
MC 4-12b
This can be done formally by listing each account with a balance and placing the
debit or credit balance into an appropriate account. After all accounts have been
listed, the debit and credit totals should be calculated to ensure that they are equal.
The second method is often referred to as "zero proof" or "informal trial balance."
This method uses a calculator or electronic spreadsheet to enter all debit balances
as pluses and all credit balances as minuses and then total them. If the debits
equal the credits, the total should equal zero.
MC 4-12c
The debits must equal the credits before financial statements are begun it would be
a waste of time to proceed to the stage of preparing financial statements. If the
debits did not equal the credits the statements would not be accurate.
Accounting 10
34
Lesson 7
MC 4-12d
The steps in the accounting cycle leading to and including the trial balance are
1.
2.
3.
4.
Accounting 10
preparing source documents
journalizing
posting to the ledger
preparing the trial balance
35
Lesson 7