Accounting Tutorial: Posting/Trial Balance Chapter 10
Cash Receipts Journal
Cash Payments Journal
Accounts Receivable Ledger
Accounts Payable Ledger
As we learned in the last lesson, each business transaction is recorded in a specialized journal. The journal does not sort the entries into accounts. The journal does not show in one place, for example, utilities expense. A journal does not supply account balances for preparing up-date financial records. In order to see how transactions have changed account balances, posting from the different journals to the accounts is necessary. Posting is a simple sorting process that transfers amounts from the journals to the appropriate accounts in the ledger. If you look at the Chart of Accounts scroll box below, you will see that the ledger is arranged in the same order as they appear in financial reports. The assets, liabilities and stockholders' equity accounts are on the balance sheet. The revenue and expense accounts are on the income statment, The ledger is arranged in the same manner. We need to look first at Bromley's Formal Wear General Ledger. Click on the link above to view the general ledger. Account names and numbers are filled in As you can see they match the chart of accounts. An Excel spreadsheet called Journal Summary has been prepared for you. You may wish to print it out and use it while you are posting. The information is the same that is contained in the all of the journals. POSTING FROM THE GENERAL JOURNAL We are going to post the entries from the general journal. The first one is to record the loan that we got from the VEC. The amount of the loan was for $15,800.00. The amount was determined by the items that we needed to start up our business: Furniture & Fixtures, Office Equipment, Supplies, and Merchandise Inventory. As you can see two accounts, Cash and Notes Payable are involved in this tranasaction. Let's Post the Cash account first. 1. In cell A8, type in the date of the posting , 11-1 2. In cell C8, type GJ1. This is the posting reference and states that this number came from the General Journal, Page 1 3. In Cell D8, type in 150,800. This where the first debit posting to this account goes. 4. The debit total column shows 150,800 5. The balance in the account shows 150,800 debit balance. 6. Find the Notes Payable account. It is a liability account so, scroll down until you see it. 7. In cell A103 enter the date, 11-1 8. In cell C103, type GJ1 as the posting reference 9. In cell E103, type in the amount of the posting, 150,800 10. The total of the credits posting to the account shows at the bottom 11. The account balance is a credit balance of 150,800. Post the second entry from the General Journal, the one relating to common stock and cash. Follow the same procedure as listed above. Cash Posting Cell A9 for the Date, 11-1 Cell C9 for posting reference, GJ1 Cell D9 For the debit amount of, 85,000 Common Stock Posting Cell A217 for the Date, 11-1 Cell C217 for the posting reference, GJ1 Cell E217 for the credit amount of 85,000 Post the next two entries for salary expense and payroll taxes in the same manner as instructed above. How do you know if you posted correctly? Read the short tutorial on trial balance, then scroll down to the bottom of the worksheet to see if you are in balance after posting these four entries. Save your file. Post the entry to record your salary expense in the same manner as instruted above . Make sure to include the date, posting reference and proper debit or credit amounts. POSTING FROM THE CASH RECEIPTS JOURNAL Look at the bottom row of the sales journal to find the amounts that need to be posted. These are the numbers we want to post. They are summarized for your convenience. The cell locations on the ledger spreadsheet, posting references, date and amounts are summarized below. Sales Posting Cell A236 for the date, 11-30 Cell C236 for the posting reference, CR1 Cell E236 for the credit to sales, 257,246.61 Sales Tax Payable Posting Cell A179 for the date, 11-30 Cell C179 for the posting reference, CR1 Cell E179 for the credit to sales tax payable, 9,687.50 Accounts Receivable Credit Posting Cell G8 for the date, 11-30 Cell I8 for the posting reference, CR1 Cell K8 for the credit of 1,080.47 Cash Debit Posting A10 for the date, 11-30 C10 for the posting reference, CR1 D10 for the debit to cash of 268,014.58 Scroll down to the trial balance and see that you are still in balance after posting the cash receipts journal. Save your file. POSTING FROM THE CASH PAYMENTS JOURNAL If you will remenber in the cash payments journal, we used account numbers as codes to record the debit part of the transaction. These code numbers are the account numbers where we want to post these amounts. For example, if we want to post the total amount of salaries we would post it to account 611. To begin the posting process, follow these steps. 1. Click on the link for the Cash Payments Journal 2. Scroll down to row 76 3. The first amount of $260,606.38 is to be posted to Cash Account 111 as a credit. It represents the total of the checks written and withdrawls for Bromley's Account. 4. Scroll the the right to see the other numbers and account names that will need to be posted from this journal. Here is a summary of that information. Use the first available row for each account for the postings. Account Name Debit Posting Furniture & Equip 45,000.00 Office Supplies 635.00 Office Equipment 5,300.00 Prepaid Insurance 1,200.00 Mdse. Inventory 100,000.00 Notes Payable 655.54 Fed Inc Tax Pay 16,011.41 FICA 10,333.06 Medicare 2,416.60 FUTA 666.65 SUTA 2,833.26 Sales Tax Payable 10,640.96 SDI 416.66 State Income Tax 4,825.31 State Employ Train 83.33 Sales Returns 47.95 Purchases 48,915.41 Rent 4,000.00 Repairs 350.00 Advertising Expense 1,000.00 Misc. Expense 200.00 Utilities Expense 3,082.99 Alterations Expense 459.25 Interest Expense 1,508.00 Delivery Expense 25.00 Scroll down to the trial balance section and verify that you are still in balance before continuing. When you are in balance, save your file. POSTING FROM THE SALES JOURNAL Look at the bottom row of the sales journal to find the amounts that need to be posted. The cell locations on the ledger spreadsheet, posting references, date and amounts are summarized below. Sales Posting Cell A237 Date, 11-30 Cell C237 Posting reference, SJ1 Cell E237 Credit of 17,302.75 Sales Tax Posting Cell A180 Date, 11-30 Cell C180 Posting reference, SJ1 Cell E180 Credit 1,340.97 Accounts Receivable Posting Cell G9 Date, 11-30 Cell I9, Posting reference, SJ1 Cell J9, Debit of 18,643.72 Scroll down to the trial balance section and verify that you are still in balance before continuing. When you are in balance, save your file. POSTING TO THE ACCOUNTS RECEIVABLE LEDGER FROM THE SALES JOURNAL In addition to our posting to the general ledger, we need to post individual charge sales and payments to our charge sales customers' accounts. Remeber that accounts receivable is an asset account. The money listed here represents money that you need to collect from customers that bought merchandise from you on account. The accounts receivable ledger is where you keep track of all of these charge sales. The debit posting to the accounts receivable ledger comes from the sales journal. Click on the sales journal link to see the sales journal again. The people's name listed here are the accounts that need to have amounts posted to the accounts receivable ledger. Scroll over in the sales journal until you see the column headed "A/R Debit" .The amounts listed in this column will be posted as debits to their individual accounts. The first customer that charged some merchandise is Jerome Stevens. He owes us $1,616.25. Proceed as follows to post this amount to Jermone Stevens' account. 1. Click on the Accounts Receivable Ledger link. 2. You should now see the accounts receivable ledger. 3. Find his account 4. On the first line under the heading "Date Item Post Ref Debit Credit", key in the date 11-1 the post reference SJ1 the debit amount 1,616.25 5. Continue to post the individual AR Debit amounts to all of the customers listed in the sales journal. POSTING TO THE ACCOUNTS RECEIVABLE LEDGER FROM THE CASH RECEIPTS JOURNAL The cash receipts journal shows cash received from cash sales and received on account amounts from charge sales customers. We are interested here in the payments made to Bromley's Formal Wear from our charge sales customers. Click on the link for the Cash Receipts Journal. There are four entries. The ones we are interested at this time are number 2 and number 4. On November 6, Rob Jones sent us a check for 703.34. We need to post this payment to his accounts receivable ledger card to show that he has paid us. Proceed as follows. 1. Open up the accounts receivable ledger, by clicking on the link 2. Find Rob Jones account. As you can see, he owes us 703.34 3. Find the first available blank line under the "Date Item Post Ref Debit Credit" heading. 4. Enter the Date 11-6 5. Enter the posting reference CR1 6. Enter the Credit amount amount of 703.34 7. His balance should now be zero. We realize that he charged and also paid off this transaction on the same day. Normally a bill would be sent at the end of the month and then the check would come in. Now it is time to verify that the total of the schedule of Accounts Receivable, from the accounts receivable ledger matches the accounts receivable total in the general ledger. The number should be the same. This total is $17,563.25 The answer key file to this ledger is at janetbelch.com, Free VE software link, accounting answer keys link. ACCOUNTS PAYABLE LEDGER The accounts payable ledger works just like the accounts receivable ledger. The credit posting to the individual accounts comes from the Purchases Journal and the debit postings come from the Cash Payment Journal. Bromley's Formal Wear sometimes buys merchandise from suppliers on account. POSTING FROM THE PURCHASES JOURNAL TO THE ACCOUNTS PAYABLE LEDGER Bromley's had one purchase on account to replenish its inventory of suits, tuxedos, etc. Date 7/9/ Account Oscar De La Renta Post Ref PJ1 A/P Credit $60,000.00 Purchases Debit $60,000 Post this entry to the accounts payable ledger. YOUR OWN COMPANY'S POSTINGS Using the specialized journals that you created for your company in the last lesson, post all amounts to the appropriate ledgers.
Chart of Accounts
Bromley's Formal Wear Chart of Accounts ASSETS (1) 111 Cash 112 Accounts Receivable 113 Furniture and Fixtures 114 Accumulated Depreciations Furniture 115 Office Supplies 116 Other Assets 117 Office Equipment 118 Accumulated Depreciation Office Equipment 119 Prepaid Insurance 120 Merchandise Inventory LIABILITIES (2) 211 Notes Payable 212 Accounts Payable 213 Workers' Comp Payable 214 Federal Income Tax Payable 215 FICA Tax Payable 216 Medicare 217 Federal Unemployment Tax Payable 218 State Unemployment Tax Payable 219 Sales Tax Payable 220 SDI Tax Payable 221 State Income Tax Payable 222 State Employment Training STOCKHOLDERS' EQUITY (3) 311 Common Stock 312 Retained Earnings REVENUE (4) 411 Sales 412 Sales Returns and Allowances 413 Other Income COST OF MERCHANDISE (5) 511 Purchases 512 Purchase Returns and Allowances EXPENSES (6) 611 Salary Expense 612 Rent Expense 613 Repairs Expense 614 Advertising Expense 615 Supplies Expense 616 Depreciation Expense 617 Insurance Expense 618 Miscellaneous Expense 619 Payroll Taxes Expense 620 Legal and Accounting Expense 621 Utilities Expense 622 Alterations Expense 623 Interest Expense 624 Delivery Expense
Trial Balance and Schedule of Accounts Tutorial
A trial balance is merely a listing of all of your accounts in the general ledger. One column contains accounts with debit balances, the other credit balances. You must be in balance in order to continue. There a number of ways to find your errors if you are not in balance, ie debit total does not equals credit total. 1. First find the difference between the total debits and total credits 2. Look for that amount in the journal. If you see that exact amount, it means that you forgot to post it. 3. Divide the difference by 2. Look for that amount. If you find it, it means that you have posted a debit as a credit or vice verse. 4. Another trick includes dividing the difference by the number 9. If the answer comes out even, then you have transposed a number. 5. Since you have saved your file after verifying that you are in balance after posting each journal you can bring in the previous file and post that journal again. 6. You can also recheck all of your posting 7. If all else fails, go to janetbelch.com. Click on the Free VE Software Link, scroll down until you see accounting answer keys link. Click on that link. Find the key file from the list and click on it. SCHEDULE OF ACCOUNTS RECEIVABLE AND ACCOUNTS PAYABLE After posting all of the individual amounts to the accounts receivable ledger from the cash receipts and sales journals, a schedule or listing of all charge customers and the amounts owed to Bromley's Formal Wear is prepared. This is called a schedule of accounts receivable. The total of the schedule of accounts receivable should match the amount listed under accounts receivable in the general ledger. There is also an accounts payable ledger. This is a series of accounts for each customer that Bromley's Formal Wear buys from on account. The numbers that are posted to this ledger come from the purchases journal and the cash payments journal. After the posting for the month is completed, a schedule of accounts payable is prepared. The total of this scheudle should match exactly the number listed in the general ledger under accounts payable.
1. The process that transfers amounts from the journals to the appropriate accounts in the ledger is called?
Preparing a trial balance
2. Which accounts are balance sheet accounts?
Assets, liabilities, stockholders' equity
Revenue and expense
Assets, expenses, liabilities
3. What should you do after posting from one of the specialized journals to the general ledger?
Save the file
See if trial balance is in balance
Check to see if chart of accounts matches the general ledger
4. When posting from the cash receipts journal, there are four accounts that need to be posted.
Sales credit, sales tax credit, accounts receivable credit, cash debit
Sales debit, cash credit, sales tax debit, accounts receivable debit
Sales credit, sales tax debit, accounts receivable debit, cash credit