Posting to the General Ledger Chapter 7. Bellringer Think about the process in writing a research paper. Why do we take notes before we write the paper?

Posting to the General Ledger

Chapter 7

Bellringer

• Think about the process in writing a research paper. Why do we take notes before we write the paper?

Enduring Understanding:

• The General Ledger is a permanent record that organizes the details of all business transactions and their accounts.

Essential Questions

• How do you set up the general ledger?

• How do managers use journals and ledgers?

What is a General Ledger?How do you set it up?• Permanent record organized by account

number.

• Chart of Accounts:– Assets 100’s– Liabilities 200’s– Owner’s Equity 300’s– Revenues 400’s– Expenses 500’s

What is a General Ledger?How do you set it up?• The “General Ledger” can be maintained

manually or electronically. (The book that holds each specific ledger account)

• Ledger - each “account” has it’s own page, file or card (All accounts together form the General Ledger).

• Ledger account form – Stationary used to record the specific information about each account.

Step 1: For Each Account…

Account Name: Cash in Bank (top of page)

Account Number: 101

(on ledger account form)

NOTE: Computerized accounting system similar, still need account name and number at a minimum

Starting a new page for an Existing Account…

Account Name: Cash in Bank ACCT #: 101

DateDescriptio

nPost

RefDebit Credit

Balance

Debit Credit

2010 Dec 31 Balance $25,000

Work on Problem 7-1 Pg 167 in Text and Workbook Pg 94

What is Posting?

• Fourth step in Accounting Cycle.

• Process of transferring information from the journal to individual general ledger accounts.

• Also known as “ recording”

• Creates a record of impact of business transaction on each account used by the business.

Why do we post?

• Managers continually use the information from accounting records.

• Can easily find the current balance of a specific account.– Cash Flow – which bills to pay due to short

funds (bad economy)

• Real World Example:

PIC’s cash on hand

What you already know….

• You know how to analyze a business transaction using the four analytical steps!– Identify– Classify– Increase or Decrease– Balance

• You know the Debits and Credits of Each Transaction

• You know how to Journalize

Today you will be able to….

• Locate the important information from a journal and move that information to it’s ledger

• Find the current (and ending) balance of each different account throughout an accounting period

• Correctly post each transaction to their appropriate ledger account

In your Notebooks…

Write a brief statement explaining the importance of Posting to the Ledger

&How it is useful to you as Accountants

(Give an example)

Please Take out your Packets

Step 2: Stay Organized….

• Find the similar account transactions first….

• Find it’s important information (date, whether it was debited or credited, and for what amount)

• Lastly …. Post it to it’s ledger

Date DescriptionPost

Ref Debit Credit

Jan 1 Cash in Bank $25,000

Mrs. Nemec, Capital $25,000

6 Maintenance Expense $5,000

Cash in Bank $5,000

Take that Information & put it into the “Cash in Bank” Ledger

Account Name: Cash in Bank ACCT #: 101

Date DescriptionPost

RefDebit Credit

Balance

Debit Credit

Jan 1 G1 $25,000

6 G1 $5,000

Remember to…

A new account balance is computed each time a transaction is posted to an account.

If you have a Debit Balance– ADD Debits– SUBTRACT Credits

• If you have a Credit Balance– ADD Credits – SUBTRACT Debits

• Lastly…. Find the Ending Balance!

Date DescriptionPost

RefDebit Credit

Balance

Debit Credit

Jan 1 G1 $25,000 $25,000

6 G1 $5,000 $20,000

Ending Balance as of January 25

Date DescriptionPost

RefDebit Credit

Balance

Debit Credit

Jan 1 G1 $25,000 $25,000

6 G1 $5,000 $20,000

8 G1 $15,000 $35,000

10 G1 $12,000 $47,000

25 G1 $7,000 $40,000

Now try it yourselves!!

Complete Problem 7-2 and show it to me when you are finished!

Continue then to work on Problem 7-5