Posting Journal Entries to General Ledger Accounts

Chapter 7

Step 4 – Posting to the Ledger

• Posting - the process of transferring information from the journal to individual general ledger accounts.
• General Ledger - a permanent record organized by account number.
• Shows changes in an account’s balance.

Accounts in the Ledger

• Opening a general ledger account for those listed in the chart of accounts (go in that order):
• Write the account name at the top of the ledger account form.
• Write the account number on the ledger account form.

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• Starting a new page for an existing account:
• Write the account name at the top of the ledger account form.
• Write the account number on the ledger account form.
• Enter the complete date in the date column.
• Write the word Balance in the description column.
• Place a checkmark in the Post. Ref. column to show the amount entered is not being posted from the journal.
• Enter the balance in the appropriate column

Posting

• Enter the date from the journal entry into the date column of the ledger (same format); not the posting date.
• The source document should be listed in the description column or is left blank.
• In the Posting Reference (Post. Ref.) column of the ledger, identify where the journal entry is recorded. Use a letter for the journal and the journal page number. (G1 – General Journal page 1)
• Enter the debit/credit amount in the proper column of the ledger.

Posting

• Compute and record the new account balance in the appropriate column (normal balance).
• Return to the journal and in the Post. Ref. column enter the account number of the ledger account you just posted to.
• This indicates that posting is complete.

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General Ledger Account Balances

• Computing a new account balance:
• When the existing account balance is a debit, and:
• the amount posted is a debit, ADD the amounts.
• the amount posted is a credit, SUBTRACT the amounts.
• When the existing account balance is a credit, and:
• the amount posted is a debit, SUBTRACT the amounts.
• the amount posted is a credit, ADD the amounts.

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• To show a zero balance of an account, draw a line across the center of the column where the normal balance would appear.

Step 5 – Prepare a Trial Balance

• Trial Balance – a list of all the account names and their current balances.
• Proving the Ledger – comparing the total of debits to the total of credits to see if they equal.

Finding Errors

• Finding errors when debits do not equal credits:
• Add the debit and credit columns again.
• Find the difference between the debit and credit columns.
• If this amount is 10, 100, 1000, and so on, you probably made an addition error. Add the columns again.
• Check if the difference amount is evenly divisible by 9. If it is, you may have a transposition error or a slide error. Check the trial balance amounts against the ledger.
• Transposition error – occurs when two digits within an amount are accidentally reversed, or transposed.
• Slide error – occurs when a decimal point is moved by mistake.

Finding Errors

• Finding errors when debits do not equal credits:
• Make sure that you included all general ledger accounts in the trial balance.
• One of the account balances could have been recorded in the wrong column.
• Divide the difference amount by 2 and check if that answer matches an account balance.
• Recompute the balance in each ledger account.
• Compare the ledger to the journal to make sure the correct amounts were posted in the correct column.

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Correcting Errors

• Never erase an error.
• The method for correcting an error depends on when and where the error is found.
• 3 types of errors:
• Error in a journal entry is not posted.
• Draw a single line through error and write correct information above in the journal.
• Error in posting to the ledger when the journal entry is correct.
• Draw a single line through error and write correct information above in the ledger.
• Error in a journal entry that is posted.
• Make a correcting entry to fix the error