Chapter Three
The General Journal
and the General
Ledger
Performance Objectives
1. Record a group of transactions
pertaining to a service enterprise in a
two-column general journal
2. Post entries from a two-column
general journal to general ledger
accounts
Copyright © Houghton Mifflin Company. All rights reserved.
3-2
Performance Objectives
3. Prepare a trial balance from the ledger
accounts
4. Correct entries using the ruling
method
5. Correct entries using the correcting
entry method
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3-3
Last Chapter
Record
Business
Transaction in
Account
After Footing
Accounts,
Send
Account
Balances to
Trial Balance
Copyright © Houghton Mifflin Company. All rights reserved.
After DR =
CR in Trial
Balance,
Create
Financial
Statements
3-4
This Chapter
Record
Business
Transaction
in General
Journal:
“Journal
Entries”
Post Journal
Entries to
Accounts in
the Ledger
Copyright © Houghton Mifflin Company. All rights reserved.
After Footing
Accounts,
Send
Account
Balances to
Trial Balance
3-5
Performance Objective 1
Record a group of transactions
pertaining to a service enterprise in a
two-column general journal
Copyright © Houghton Mifflin Company. All rights reserved.
3-6
What Is a General Journal?
• The book in which a person enters the
original record of a business transaction
– Commonly referred to as a book of original entry
• Chronological listing of all the business
transactions for the company
– Each listing records the debits and credits
associated with that business transaction
• A book or a location on a hard drive where all
business transactions are listed
– Like a diary
Copyright © Houghton Mifflin Company. All rights reserved.
3-7
Two-Column General Journal
• A general journal in which there are two
amount columns
– One used for debit amounts
– One used for credit amounts
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3-8
Other Journals
• What are they?
–
–
–
–
–
General journal (this chapter)
Sales journal (Chapter 10)
Purchases journal (Chapter 10)
Cash receipts journal (Chapter 11)
Cash payments journal (Chapter 11)
• Why different journals?
– Separation of duties
– Efficiency and accuracy in recording accounting
information
Copyright © Houghton Mifflin Company. All rights reserved.
3-9
Journalizing
The process of recording a business
transaction in a journal
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3 - 10
Example of Business Transaction Recorded
in the General Journal
Create a journal entry for each transaction.
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3 - 11
What’s in a Journal Entry?
1. Date
2. At least one debit entry
– Debit account, use exact account title, do not indent
titles
3. At least one credit entry
– Credit account, use exact account title, indent titles
4. An explanation of the transaction:
– Check number
– Invoice number
– Accounts receivable customer name
– Many other elements…
– Remember: the accountant must leave a good audit
trail so that users of accounting information can
understand what occurred with each transaction
DR=CR
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3 - 12
Invoice #
Source
Documents
• Business papers,
such as checks,
invoices, receipts,
letters, and
memos, that
furnish proof that a
transaction has
taken place
• The objective
evidence that the
transaction
occurred
• Example
4369
Gel Boomerangs
2124 Kittredge St. PMB 61
Berk eley, CA 94704
INVOICE
Customer
Name
Address
City
Phone
Qty
25
15
Misc
Kitty Hawk Kite Store
403 Lake Dr. Unit Highline
KDH
State NC
Date
2/23/05
Order No.
Rep
FOB
Shipping Point
ZIP 27943
Description
Unit Price
$ 10.00 $
$ 12.50 $
Bellen Boomerang Model
Duece Boomerang Model
TOTAL
250.00
187.50
Terms: 2/15,N/45
Payment
Credit
Comments
Name
CC #
Expires
Copyright © Houghton Mifflin Company. All rights reserved.
SubTotal
Shipping
$
437.50
TOTAL
$
437.50
Tax Rate(s)
Office Use Only
Our Customers Have Many Happy Returns!
3 - 13
Invoice #
Which Company Is
Selling the
Boomerangs?
• The company name
at the top of the
invoice indicates who
is selling
Gel Boomerangs
2124 Kittredge St. PMB 61
Berk eley, CA 94704
INVOICE
Customer
Name
Address
City
Phone
Qty
25
15
• Knowing how to make
this distinction will
help you with:
– your practice sets at
the end of this class!
– recording the correct
journal entry
4369
Misc
Kitty Hawk Kite Store
403 Lake Dr. Unit Highline
KDH
State NC
Date
2/23/05
Order No.
Rep
FOB
Shipping Point
ZIP 27943
Description
Unit Price
$ 10.00 $
$ 12.50 $
Bellen Boomerang Model
Duece Boomerang Model
TOTAL
250.00
187.50
Terms: 2/15,N/45
Payment
Credit
Comments
Name
CC #
Expires
Copyright © Houghton Mifflin Company. All rights reserved.
SubTotal
Shipping
$
437.50
TOTAL
$
437.50
Tax Rate(s)
Office Use Only
Our Customers Have Many Happy Returns!
3 - 14
Cost Principle
• The principle that a purchased asset should
be recorded at its actual, or historical, cost
• Historical cost:
–
–
–
–
Actual cost
What you paid for it
The amount that was on the receipt
Remember: this is different from “market value”
• Look ahead:
– In Chapter 4 we will see that the historical cost
principle is the reason we will create a new
account for depreciation expense
Copyright © Houghton Mifflin Company. All rights reserved.
3 - 15
Building the Journal Entry
• Date
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3 - 16
Building the Journal Entry
• Debit
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3 - 17
Building the Journal Entry
• Credit
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3 - 18
Building the Journal Entry
• Explanation
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3 - 19
Recording Transactions in a Two-Column
General Journal
We will be recording business
transactions for a company with the
following details:
Owner name:
L. P. Arch
Business name: Arch Copy Co.
Business type: Sole proprietorship
(one-person business)
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3 - 20
Transaction (a): Arch deposited $70,000 in
bank account in name of business
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3 - 21
Transaction (b): Bought equipment costing
$33,000, paying cash
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3 - 22
Transaction (c): Bought equipment on
account from Melton Office Supply, $7,000
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3 - 23
Transaction (d): Paid Melton Office Supply,
a creditor, $2,000
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3 - 24
The Debits and Credits Within a Journal
Entry:
• Formulating the appropriate transaction
debits and credits is the most important
element in the accounting process
• It represents the very basic foundation
of accounting, and all the structure
represented by financial statements and
other reports is entirely dependent upon
it
DR=CR
Copyright © Houghton Mifflin Company. All rights reserved.
3 - 25
Now Take a Look in the Book for the Rest of
Arch Copy Co. Journal Entries
• Transaction (e): Arch invested her own
personal data processing equipment in Arch
Copy Co. having a fair market value of
$6,200
• Transaction (f): Arch Copy Co. sold services
for cash, $2,520
• Transaction (g): Paid rent for the month, $700
• And the rest of the transactions from (g) to (s)
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3 - 26
Performance Objective 2
Post entries from a two-column general
journal to general ledger accounts
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3 - 27
From General Journal to Ledger Accounts
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3 - 28
General Ledger
• A loose-leaf book or computer file
containing the activity (by accounts) of a
business
• Each account from the chart of
accounts has its own ledger account in
the general ledger
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3 - 29
Chart of Accounts
• The official list of account titles used to
record the transactions of a business
• The account number for each account
Assets (100s)
111 Cash
113 Accounts Receivable
117 Prepaid Insurance
124 Equipment
Owner's Equity (300s)
311 L.P. Arch, Capital
312 L.P. Arch, Drawing
Revenues (400s)
411 Income from Services
Liabilities (200s)
221 Accounts Payable
Expenses (500s)
511
512
513
514
515
Copyright © Houghton Mifflin Company. All rights reserved.
Wages Expense
Rent Expense
Supplies Expense
Advertising Expense
Utilities Expense
3 - 30
Ledger Account
• Complete listing of business
transactions for an individual account
• Where you look if you want to find the
balance of any given account
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3 - 31
T Account Compared with
Ledger Account
Bal.
34,120
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3 - 32
Posting
The process of transferring figures from
the journal to the ledger accounts
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3 - 33
Four-Step Posting Process
1. Transfer transaction date to account’s date
column
2. Transfer the debit/credit amount and
calculate the new balance
3. Write journal page number in posting
reference column of ledger as a crossreference
4. Go back to journal and write account
number in posting reference column of
journal as a cross-reference
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3 - 34
Cross-reference
The ledger account number in the Post.
Ref. column of the journal and the
journal page number in the Post. Ref.
column of the ledger account
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3 - 35
Posting—an Illustration
Line #
General Journal
1. Date
Description
1 Cash
L.P. Arch, Capital
Original investment by Arch in Arch Copy Co.
4. Account #
Credit
70,000.00
70,000.00
33,000.00
33,000.00
General Ledger
Account:
Cash
Date
3. Page #
111
2 Equipment
Cash
Bought Equipment for cash
Line #
2. Amount
Date
1
2005
2 June
3
4
5
6
7
8
9
Page 1
Post.
Ref. Debit
Item
Account No: 111
P o st.Ref.
Debit
Credit
Debit
1
2005
2 June
3
4
5
6
7
8
9
10
11
12
13
14
15
1
2
4
7
8
10
15
18
20
24
26
30
30
30
Copyright © Houghton Mifflin Company. All rights reserved.
1
1
1
1
1
1
1
1
2
2
3
3
3
3
70,000.00
33,000.00
2,000.00
2,520.00
700.00
360.00
1,800.00
160.00
200.00
2,130.00
620.00
850.00
4,220.00
2,500.00
Balance
Credit
70,000.00
37,000.00
35,000.00
37,520.00
36,820.00
36,460.00
34,660.00
34,500.00
34,300.00
32,170.00
31,550.00
32,400.00
36,620.00
34,120.00
3 - 36
Post. Ref. in Journal
• Why don’t we write in the posting
reference when we first create the
journal entry?
• So we don’t forget to post it later!
• We want to do it only after we post it
– When we look in the journal, we know that
we have already posted the entry
– We know what account to look at if there is
a problem
Copyright © Houghton Mifflin Company. All rights reserved.
3 - 37
Posting Transaction (a): Arch deposited $70,000 in bank
account in name of business
Copyright © Houghton Mifflin Company. All rights reserved.
3 - 38
Posting Transaction (a): Arch deposited $70,000 in bank
account in name of business
Copyright © Houghton Mifflin Company. All rights reserved.
3 - 39
Posting Arch Copy Co. Transactions (a) to (s)
Your textbook presents each transaction
and shows how to post it.
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3 - 40
Performance Objective 3
Prepare a trial balance from the ledger
accounts
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3 - 41
Preparing a Trial Balance
• List the ledger account balances in two columns on the trial
balance
– Left column = Debits
– Right column = Credits
• Trial balance proves DR = CR
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3 - 42
Steps in the Accounting Process
• Journalize business transaction:
– Use source document to record journal entry in general
journal
• Decide on accounts that are affected
• Enter Date
• Don’t indent debit
• Indent credit
• Write description
• DR = CR
• Post all journal entries to ledger accounts in general ledger
– Transfer date
– Transfer amount
– Record both cross references
• Transfer all totals to trial balance
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3 - 43
If DR = CR on the Trial Balance, Can There
Be Errors?
• Yes!
• Therefore, we must look at how to
correct errors
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3 - 44
Correct Entries Using the Ruling Method—
Manual
Correcting errors before posting has
taken place
• Insert I -- corrected Mar. 1 entry, page 90
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3 - 45
Correct Entries Using the Ruling Method—
Manual
Correcting errors before posting has
taken place
Copyright © Houghton Mifflin Company. All rights reserved.
3 - 46
Correct Entries Using the Ruling Method—
Manual
Correcting errors after posting has
taken place
Copyright © Houghton Mifflin Company. All rights reserved.
3 - 47
Correcting Entry Method—Manual or
Computerized
• One-step method
– Create journal entry
to undo error and
provide correction
– Always include
explanation!
Copyright © Houghton Mifflin Company. All rights reserved.
• Two-step method
– Reverse the error
with a journal entry
– Make the correct
journal entry
– Always include
explanation!
3 - 48
One-Step Method
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3 - 49
Two-Step Method
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3 - 50
Demonstration Problem
We will be recording business
transactions for the company with the
following details:
Owner name:
R. P. Nelson
Business name: WindSport Boomerang & Kite Demos
Business type: Sole proprietorship
(one-person business)
Copyright © Houghton Mifflin Company. All rights reserved.
3 - 51
Trans. (a), 6/1/05: Nelson deposited $43,000 in a bank
account in the name of business
Line #
General Journal
Date
Description
1 2005
2 June
1 Cash
3
R. P. Nelson, Capital
4
Original investment by Nelson in WindSport Boomerang and Kite Demos.
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
Page 1
Post.
Ref.
Debit
Credit
43,000.00
43,000.00
Journalize
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3 - 52
Trans. (b), 6/5/05: Bought truck, paying cash, $23,000
Line #
General Journal
Date
Description
1 2005
2 June
1 Cash
3
R. P. Nelson, Capital
4
Original investment by Nelson in WindSport Boomerang and Kite Demos.
5
6
5 Equipment
7
Cash
8
Bought equipment for cash.
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
Page 1
Post.
Ref.
Debit
Credit
43,000.00
43,000.00
23,000.00
23,000.00
Journalize
Copyright © Houghton Mifflin Company. All rights reserved.
3 - 53
Trans. (c), 6/6/05: Bought camper shell for truck on
account from Louie's Trucks & Campers, $2,500
Line #
General Journal
Date
1 2005
2 June
1
3
4
5
6
5
7
8
9
10
6
11
12
13
14
15
16
17
18
19
20
21
22
23
24
Page 1
Post.
Ref.
Description
Debit
Credit
Cash
R. P. Nelson, Capital
Original investment by Nelson in WindSport Boomerang and Kite Demos.
43,000.00
Equipment
Cash
Bought equipment for cash.
23,000.00
43,000.00
23,000.00
Equipment
Accounts Payable
Bought equipment on account from Louie's Trucks & Campers.
2,500.00
2,500.00
Journalize
Copyright © Houghton Mifflin Company. All rights reserved.
3 - 54
Trans. (d), 6/9/05: Paid Louie's Trucks & Campers, a
creditor, $1,500, Ck. No. 4300
Line #
General Journal
Date
1 2005
2 June
1
3
4
5
6
5
7
8
9
10
6
11
12
13
14
9
15
16
17
18
19
20
21
22
23
24
Page 1
Post.
Ref.
Description
Debit
Credit
Cash
R. P. Nelson, Capital
Original investment by Nelson in WindSport Boomerang and Kite Demos.
43,000.00
Equipment
Cash
Bought equipment for cash.
23,000.00
43,000.00
23,000.00
Equipment
Accounts Payable
Bought equipment on account from Louie's Trucks & Campers.
2,500.00
Accounts Payable
Cash
Paid Louie's Trucks & Campers on account, Ck. No. 4300.
1,500.00
2,500.00
1,500.00
Journalize
Copyright © Houghton Mifflin Company. All rights reserved.
3 - 55
Trans. (e), 6/9/05: Nelson invested his own personal
computer equipment, having a fair market value of
$3,400, in WindSport Boomerang & Kite Demos
Line #
General Journal
Date
1 2005
2 June
1
3
4
5
6
5
7
8
9
10
6
11
12
13
14
9
15
16
17
18
9
19
20
21
22
23
24
Page 1
Post.
Ref.
Description
Debit
Credit
Cash
R. P. Nelson, Capital
Original investment by Nelson in WindSport Boomerang and Kite Demos.
43,000.00
Equipment
Cash
Bought equipment for cash.
23,000.00
43,000.00
23,000.00
Equipment
Accounts Payable
Bought equipment on account from Louie's Trucks & Campers.
2,500.00
Accounts Payable
Cash
Paid Louie's Trucks & Campers on account, Ck. No. 4300.
1,500.00
Equipment
R. P. Nelson, Capital
Investment by Nelson in WindSport Boomerang & Kite Demos.
3,400.00
2,500.00
1,500.00
3,400.00
Journalize
Copyright © Houghton Mifflin Company. All rights reserved.
3 - 56
Trans. (f), 6/14/05: Nelson and employee performed
boomerang & kite demo for Girl Scouts and received
$2,500, Ck. No. 12655
Line #
General Journal
Date
1
2005
2 June
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
Page 1
Post.
Ref.
Description
.Debit
1 Cash
R. P. Nelson, Capital
Original investment by Nelson in WindSport Boomerang and Kite Demos.
43,000.00
5 Equipment
Cash
Bought equipment for cash.
23,000.00
Credit
43,000.00
23,000.00
6 Equipment
Accounts Payable
Bought equipment on account from Louie's Trucks & Campers.
2,500.00
9 Accounts Payable
Cash
Paid Louie's Trucks & Campers on account, Ck. No. 4300.
1,500.00
9 Equipment
R. P. Nelson, Capital
Investment by Nelson in WindSport Boomerang & Kite Demos.
3,400.00
14 Cash
Income from Demos
Cash revenue received from Girl Scouts, Ck. No. 12655.
2,500.00
1,500.00
3,400.00
2,500.00
2,500.00
Journalize
Copyright © Houghton Mifflin Company. All rights reserved.
3 - 57
Trans. (a), 6/1/05: Nelson deposited $43,000 in a bank
account in the name of business
Line #
General Journal
Date
1 2005
2 June
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
Page 1
Post.
Ref.
Description
Debit
Credit
1 Cash
R. P. Nelson, Capital
Original investment by Nelson in WindSport Boomerang and Kite Demos.
43,000.00
5 Equipment
Cash
Bought equipment for cash.
23,000.00
43,000.00
23,000.00
6 Equipment
Accounts Payable
Bought equipment on account from Louie's Trucks & Campers.
2,500.00
9 Accounts Payable
Cash
Paid Louie's Trucks & Campers on account, Ck. No. 4300.
1,500.00
9 Equipment
R. P. Nelson, Capital
Investment by Nelson in WindSport Boomerang & Kite Demos.
3,400.00
14 Accounts Receivable
Income from Demos
Cash revenue received from Girl Scouts, Ck. No. 12655.
2,500.00
1,500.00
3,400.00
2,500.00
2,500.00
Posting
Copyright © Houghton Mifflin Company. All rights reserved.
3 - 58
Trans. (a), 6/1/05: Nelson deposited $43,000 in a bank
account in the name of business
General Ledger
Line #
Account:
Cash
Date
Item
1
2005
2 June
1
3
4
5
6
7
Account No:
Post.
Ref.
1
111
Balance
Debit
Credit
43,000.00
Debit
Credit
43,000.00
Posting
Copyright © Houghton Mifflin Company. All rights reserved.
3 - 59
Trans. (a), 6/1/05: Nelson deposited $43,000 in a bank
account in the name of business
Line #
General Journal
Date
1 2005
2 June
1
3
4
5
6
5
7
8
9
10
6
11
12
13
14
9
15
16
17
18
9
19
20
21
22
14
23
24
Page 1
Post.
Ref.
Description
Cash
R. P. Nelson, Capital
Original investment by Nelson in WindSport Boomerang and Kite Demos.
Equipment
Cash
Bought equipment for cash.
111
Debit
Credit
43,000.00
43,000.00
23,000.00
23,000.00
Equipment
Accounts Payable
Bought equipment on account from Louie's Trucks & Campers.
2,500.00
Accounts Payable
Cash
Paid Louie's Trucks & Campers on account, Ck. No. 4300.
1,500.00
Equipment
R. P. Nelson, Capital
Investment by Nelson in WindSport Boomerang & Kite Demos.
3,400.00
Accounts Receivable
Income from Demos
Cash revenue received from Girl Scouts, Ck. No. 12655.
2,500.00
2,500.00
1,500.00
3,400.00
2,500.00
Posting
Copyright © Houghton Mifflin Company. All rights reserved.
3 - 60
Trans. (a), 6/1/05: Nelson deposited $43,000 in a bank
account in the name of business
General Ledger
Line #
Account:
R. P. Nelson, Capital
Date
Item
1
2005
2 June
1
3
4
5
6
7
Post.
Ref.
Account No:
Debit
1
Credit
43,000.00
Debit
311
Balance
Credit
43,000.00
Posting
Copyright © Houghton Mifflin Company. All rights reserved.
3 - 61
Trans. (a), 6/1/05: Nelson deposited $43,000 in a bank
account in the name of business
Line #
General Journal
Date
1 2005
2 June
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
Page 1
Post.
Ref.
Description
1 Cash
R. P. Nelson, Capital
Original investment by Nelson in WindSport Boomerang and Kite Demos.
5 Equipment
Cash
Bought equipment for cash.
111
311
Debit
Credit
43,000.00
43,000.00
23,000.00
23,000.00
6 Equipment
Accounts Payable
Bought equipment on account from Louie's Trucks & Campers.
2,500.00
9 Accounts Payable
Cash
Paid Louie's Trucks & Campers on account, Ck. No. 4300.
1,500.00
9 Equipment
R. P. Nelson, Capital
Investment by Nelson in WindSport Boomerang & Kite Demos.
3,400.00
14 Accounts Receivable
Income from Demos
Cash revenue received from Girl Scouts, Ck. No. 12655.
2,500.00
1,500.00
3,400.00
2,500.00
2,500.00
Posting
Copyright © Houghton Mifflin Company. All rights reserved.
3 - 62
Trans. (b), 6/5/05: Bought truck, paying cash, $23,000
Line #
General Journal
Date
1 2005
2 June
1
3
4
5
6
5
7
8
9
10
6
11
12
13
14
9
15
16
17
18
9
19
20
21
22
14
23
24
Page 1
Post.
Ref.
Description
Cash
R. P. Nelson, Capital
Original investment by Nelson in WindSport Boomerang and Kite Demos.
Equipment
Cash
Bought equipment for cash.
111
311
Debit
Credit
43,000.00
43,000.00
23,000.00
23,000.00
Equipment
Accounts Payable
Bought equipment on account from Louie's Trucks & Campers.
2,500.00
Accounts Payable
Cash
Paid Louie's Trucks & Campers on account, Ck. No. 4300.
1,500.00
Equipment
R. P. Nelson, Capital
Investment by Nelson in WindSport Boomerang & Kite Demos.
3,400.00
Accounts Receivable
Income from Demos
Cash revenue received from Girl Scouts, Ck. No. 12655.
2,500.00
2,500.00
1,500.00
3,400.00
2,500.00
Posting
Copyright © Houghton Mifflin Company. All rights reserved.
3 - 63
Trans. (b), 6/5/05: Bought truck, paying cash, $23,000
General Ledger
Line #
Account:
Equipment
Date
Item
1
2005
2 June
5
3
4
5
6
7
Account No:
Post.
Ref.
1
Debit
Credit
23,000.00
Debit
124
Balance
Credit
23,000.00
Posting
Copyright © Houghton Mifflin Company. All rights reserved.
3 - 64
Trans. (b), 6/5/05: Bought truck, paying cash, $23,000
Line #
General Journal
Date
1 2005
2 June
1
3
4
5
6
5
7
8
9
10
6
11
12
13
14
9
15
16
17
18
9
19
20
21
22
14
23
24
Page 1
Post.
Ref.
Description
Debit
Credit
Cash
R. P. Nelson, Capital
Original investment by Nelson in WindSport Boomerang and Kite Demos.
111
311
43,000.00
Equipment
Cash
Bought equipment for cash.
124
23,000.00
43,000.00
23,000.00
Equipment
Accounts Payable
Bought equipment on account from Louie's Trucks & Campers.
2,500.00
Accounts Payable
Cash
Paid Louie's Trucks & Campers on account, Ck. No. 4300.
1,500.00
Equipment
R. P. Nelson, Capital
Investment by Nelson in WindSport Boomerang & Kite Demos.
3,400.00
Accounts Receivable
Income from Demos
Cash revenue received from Girl Scouts, Ck. No. 12655.
2,500.00
2,500.00
1,500.00
3,400.00
2,500.00
Posting
Copyright © Houghton Mifflin Company. All rights reserved.
3 - 65
Trans. (b), 6/5/05: Bought truck, paying cash, $23,000
General Ledger
Line #
Account:
Cash
Date
Item
1
2005
2 June
1
3
5
4
5
6
7
Account No:
Post.
Ref.
1
1
Debit
Credit
43,000.00
23,000.00
Debit
111
Balance
Credit
43,000.00
20,000.00
Posting
Copyright © Houghton Mifflin Company. All rights reserved.
3 - 66
Trans. (b), 6/5/05: Bought truck, paying cash, $23,000
Line #
General Journal
Date
1 2005
2 June
1
3
4
5
6
5
7
8
9
10
6
11
12
13
14
9
15
16
17
18
9
19
20
21
22
14
23
24
Page 1
Post.
Ref.
Description
Debit
Credit
Cash
R. P. Nelson, Capital
Original investment by Nelson in WindSport Boomerang and Kite Demos.
111
311
43,000.00
Equipment
Cash
Bought equipment for cash.
124
111
23,000.00
43,000.00
23,000.00
Equipment
Accounts Payable
Bought equipment on account from Louie's Trucks & Campers.
2,500.00
Accounts Payable
Cash
Paid Louie's Trucks & Campers on account, Ck. No. 4300.
1,500.00
Equipment
R. P. Nelson, Capital
Investment by Nelson in WindSport Boomerang & Kite Demos.
3,400.00
Accounts Receivable
Income from Demos
Cash revenue received from Girl Scouts, Ck. No. 12655.
2,500.00
2,500.00
1,500.00
3,400.00
2,500.00
Posting
Copyright © Houghton Mifflin Company. All rights reserved.
3 - 67
Trans. (c), 6/6/05: Bought camper shell for truck on
account from Louie's Trucks & Campers, $2,500
Line #
General Journal
Date
1 2005
2 June
1
3
4
5
6
5
7
8
9
10
6
11
12
13
14
9
15
16
17
18
9
19
20
21
22
14
23
24
Page 1
Post.
Ref.
Description
Debit
Credit
Cash
R. P. Nelson, Capital
Original investment by Nelson in WindSport Boomerang and Kite Demos.
111
311
43,000.00
Equipment
Cash
Bought equipment for cash.
124
111
23,000.00
43,000.00
23,000.00
Equipment
Accounts Payable
Bought equipment on account from Louie's Trucks & Campers.
2,500.00
Accounts Payable
Cash
Paid Louie's Trucks & Campers on account, Ck. No. 4300.
1,500.00
Equipment
R. P. Nelson, Capital
Investment by Nelson in WindSport Boomerang & Kite Demos.
3,400.00
Accounts Receivable
Income from Demos
Cash revenue received from Girl Scouts, Ck. No. 12655.
2,500.00
2,500.00
1,500.00
3,400.00
2,500.00
Posting
Copyright © Houghton Mifflin Company. All rights reserved.
3 - 68
Trans. (c), 6/6/05: Bought camper shell for truck on
account from Louie's Trucks & Campers, $2,500
General Ledger
Line #
Account:
Equipment
Date
Item
1
2005
2 June
5
3
6
4
5
6
7
Account No:
Post.
Ref.
1
1
Debit
Credit
23,000.00
2,500.00
Debit
124
Balance
Credit
23,000.00
25,500.00
Posting
Copyright © Houghton Mifflin Company. All rights reserved.
3 - 69
Trans. (c), 6/6/05: Bought camper shell for truck on
account from Louie's Trucks & Campers, $2,500
Line #
General Journal
Date
1 2005
2 June
1
3
4
5
6
5
7
8
9
10
6
11
12
13
14
9
15
16
17
18
9
19
20
21
22
14
23
24
Page 1
Post.
Ref.
Description
Debit
Credit
Cash
R. P. Nelson, Capital
Original investment by Nelson in WindSport Boomerang and Kite Demos.
111
311
43,000.00
Equipment
Cash
Bought equipment for cash.
124
111
23,000.00
Equipment
Accounts Payable
Bought equipment on account from Louie's Trucks & Campers.
124
2,500.00
43,000.00
23,000.00
2,500.00
Accounts Payable
Cash
Paid Louie's Trucks & Campers on account, Ck. No. 4300.
1,500.00
Equipment
R. P. Nelson, Capital
Investment by Nelson in WindSport Boomerang & Kite Demos.
3,400.00
Accounts Receivable
Income from Demos
Cash revenue received from Girl Scouts, Ck. No. 12655.
2,500.00
1,500.00
3,400.00
2,500.00
Posting
Copyright © Houghton Mifflin Company. All rights reserved.
3 - 70
Trans. (c), 6/6/05: Bought camper shell for truck on
account from Louie's Trucks & Campers, $2,500
General Ledger
Line #
Account:
Accounts Payable
Date
Item
1
2005
2 June
6
3
4
5
6
7
Post.
Ref.
Account No:
Debit
1
Credit
2,500.00
Debit
221
Balance
Credit
2,500.00
Posting
Copyright © Houghton Mifflin Company. All rights reserved.
3 - 71
Trans. (c), 6/6/05: Bought camper shell for truck on
account from Louie's Trucks & Campers, $2,500
Line #
General Journal
Date
1 2005
2 June
1
3
4
5
6
5
7
8
9
10
6
11
12
13
14
9
15
16
17
18
9
19
20
21
22
14
23
24
Page 1
Post.
Ref.
Description
Debit
Credit
Cash
R. P. Nelson, Capital
Original investment by Nelson in WindSport Boomerang and Kite Demos.
111
311
43,000.00
Equipment
Cash
Bought equipment for cash.
124
111
23,000.00
Equipment
Accounts Payable
Bought equipment on account from Louie's Trucks & Campers.
124
221
2,500.00
43,000.00
23,000.00
2,500.00
Accounts Payable
Cash
Paid Louie's Trucks & Campers on account, Ck. No. 4300.
1,500.00
Equipment
R. P. Nelson, Capital
Investment by Nelson in WindSport Boomerang & Kite Demos.
3,400.00
Accounts Receivable
Income from Demos
Cash revenue received from Girl Scouts, Ck. No. 12655.
2,500.00
1,500.00
3,400.00
2,500.00
Posting
Copyright © Houghton Mifflin Company. All rights reserved.
3 - 72
Trans. (d), 6/9/05: Paid Louie's Trucks & Campers, a
creditor, $1,500, Ck. No. 4300
Line #
General Journal
Date
1 2005
2 June
1
3
4
5
6
5
7
8
9
10
6
11
12
13
14
9
15
16
17
18
9
19
20
21
22
14
23
24
Page 1
Post.
Ref.
Description
Debit
Credit
Cash
R. P. Nelson, Capital
Original investment by Nelson in WindSport Boomerang and Kite Demos.
111
311
43,000.00
Equipment
Cash
Bought equipment for cash.
124
111
23,000.00
Equipment
Accounts Payable
Bought equipment on account from Louie's Trucks & Campers.
124
221
2,500.00
43,000.00
23,000.00
2,500.00
Accounts Payable
Cash
Paid Louie's Trucks & Campers on account, Ck. No. 4300.
1,500.00
Equipment
R. P. Nelson, Capital
Investment by Nelson in WindSport Boomerang & Kite Demos.
3,400.00
Accounts Receivable
Income from Demos
Cash revenue received from Girl Scouts, Ck. No. 12655.
2,500.00
1,500.00
3,400.00
2,500.00
Posting
Copyright © Houghton Mifflin Company. All rights reserved.
3 - 73
Trans. (d), 6/9/05: Paid Louie's Trucks & Campers, a
creditor, $1,500, Ck. No. 4300
General Ledger
Line #
Account:
Accounts Payable
Date
Item
1
2005
2 June
6
3
9
4
5
6
7
Post.
Ref.
1
1
Account No:
Debit
Credit
2,500.00
1,500.00
Debit
221
Balance
Credit
2,500.00
1,000.00
Posting
Copyright © Houghton Mifflin Company. All rights reserved.
3 - 74
Trans. (d), 6/9/05: Paid Louie's Trucks & Campers, a
creditor, $1,500, Ck. No. 4300
Line #
General Journal
Date
1 2005
2 June
1
3
4
5
6
5
7
8
9
10
6
11
12
13
14
9
15
16
17
18
9
19
20
21
22
14
23
24
Page 1
Post.
Ref.
Description
Debit
Credit
Cash
R. P. Nelson, Capital
Original investment by Nelson in WindSport Boomerang and Kite Demos.
111
311
43,000.00
Equipment
Cash
Bought equipment for cash.
124
111
23,000.00
Equipment
Accounts Payable
Bought equipment on account from Louie's Trucks & Campers.
124
221
2,500.00
Accounts Payable
Cash
Paid Louie's Trucks & Campers on account, Ck. No. 4300.
221
1,500.00
43,000.00
23,000.00
2,500.00
1,500.00
Equipment
R. P. Nelson, Capital
Investment by Nelson in WindSport Boomerang & Kite Demos.
3,400.00
Accounts Receivable
Income from Demos
Cash revenue received from Girl Scouts, Ck. No. 12655.
2,500.00
3,400.00
2,500.00
Posting
Copyright © Houghton Mifflin Company. All rights reserved.
3 - 75
Trans. (d), 6/9/05: Paid Louie's Trucks & Campers, a
creditor, $1,500, Ck. No. 4300
General Ledger
Line #
Account:
Cash
Date
Item
1
2005
2 June
1
3
5
4
9
5
6
7
Account No:
Post.
Ref.
1
1
1
111
Balance
Debit
Credit
Debit
23,000.00
1,500.00
43,000.00
20,000.00
18,500.00
43,000.00
Credit
Posting
Copyright © Houghton Mifflin Company. All rights reserved.
3 - 76
Trans. (d), 6/9/05: Paid Louie's Trucks & Campers, a
creditor, $1,500, Ck. No. 4300
Line #
General Journal
Date
1 2005
2 June
1
3
4
5
6
5
7
8
9
10
6
11
12
13
14
9
15
16
17
18
9
19
20
21
22
14
23
24
Page 1
Post.
Ref.
Description
Debit
Credit
Cash
R. P. Nelson, Capital
Original investment by Nelson in WindSport Boomerang and Kite Demos.
111
311
43,000.00
Equipment
Cash
Bought equipment for cash.
124
111
23,000.00
Equipment
Accounts Payable
Bought equipment on account from Louie's Trucks & Campers.
124
221
2,500.00
Accounts Payable
Cash
Paid Louie's Trucks & Campers on account, Ck. No. 4300.
221
111
1,500.00
43,000.00
23,000.00
2,500.00
1,500.00
Equipment
R. P. Nelson, Capital
Investment by Nelson in WindSport Boomerang & Kite Demos.
3,400.00
Accounts Receivable
Income from Demos
Cash revenue received from Girl Scouts, Ck. No. 12655.
2,500.00
3,400.00
2,500.00
Posting
Copyright © Houghton Mifflin Company. All rights reserved.
3 - 77
After Posting All Transactions and Footing All Accounts,
Create the Trial Balance
WindSport Boomerang & Kite Demos
Trial Balance
June 30, 2005
Cash
Accounts Receivable
Prepaid Insurance
Equipment
Accounts Payable
R. P. Nelson, Capital
R. P. Nelson, Drawing
Income from Demos
Wages Expense
Rent Expense
Supplies Expense
Advertising Expense
Traveling Expense
Copyright © Houghton Mifflin Company. All rights reserved.
17,860
1,650
2,000
31,020
2,100
46,400
2,500
9,220
1,030
700
600
200
160
57,720
57,720
3 - 78