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Notes: 6311 Accounting I Summer 2010, Version 2

The document provides information about journal entries, general ledgers, and accounting procedures. It discusses recording journal entries, correcting errors, posting entries to general ledgers, and using multicolumn journals. Key steps are outlined, such as analyzing transactions, determining debits and credits, journalizing, and posting to accounts.

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58 views8 pages

Notes: 6311 Accounting I Summer 2010, Version 2

The document provides information about journal entries, general ledgers, and accounting procedures. It discusses recording journal entries, correcting errors, posting entries to general ledgers, and using multicolumn journals. Key steps are outlined, such as analyzing transactions, determining debits and credits, journalizing, and posting to accounts.

Uploaded by

api-262218593
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© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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NOTES

Students must understand the concepts listed below to be able to apply the procedures
to prepare journal entries and to post the journal entries to the General Ledger.

 Recording Journal Entries for a Sole Proprietorship


 A journal will be used to record all transactions in this accounting cycle.
 Source documents will be used to document these transactions.
 Transactions will be recorded by date.

 Correcting Errors While Recording Transactions in the General Journal – Standard


Accounting Practices
 Errors should be corrected so there is no doubt as to what the correct entry
should have been.
 If one item in the entry is incorrect, draw a line through the incorrect item and write
the correct item above the line.
 If the entire entry is incorrect, draw a line through the entire entry and then record
the correct entry on the blank journal lines immediately below the incorrect entry.
 If there are correct entries already recorded below the incorrect entry, draw lines
through all the incorrect items and record the correct information directly above
the line.

 Posting From a Journal to the General Ledger


 Posting is the transferring of information from a journal entry to a ledger account.
It is used to summarize and show in one place all the changes made to a single
account.
 Correcting Entries are used when a journal entry has a mistake and has already
been posted. The source document for a correcting entry is a memorandum. A
new journal entry is made to reverse the original entry for the account(s) in error
and to enter the correct account(s) and amount. This new journal entry must then
be posted.
 Proving Cash is the process of determining that the amount of available cash
agrees with the balance of the cash account. Cash can be proved at any time by
comparing the cash balance in the checkbook to the balance in the cash account.
If the balances agree, then cash is proved.

6311 Accounting I Summer 2010, Version 2 Page 55


CONTENT

I. Procedure for Journalizing Transactions


A. Analyze the transaction. Identify the accounts affected, classify the accounts
affected, and determine how each account increases or decreases.
B. Determine which account is debited and which account is credited and the
dollar amount of this transaction.
C. Draw a T-account and record the debit(s) and credit(s).
D. Journalize the transaction.
1. Record the date in the Date column.
2. Record the name of the account to be debited in the Account Title column.
3. Record the debit amount in the Debit column on the same line as the
account title.
4. On the next line, record the name of the account to be credited in the
Account Title column.
5. Record the credit amount in the Credit column on the same line as the
account title.
6. Record the source document in the Document Number column.

II. Procedure for Posting From a Journal to the General Ledger


A. Write the date of the journal entry in the Date column of the account.
B. Write the journal page number in the post reference column of the account.
C. Write the debit amount or the credit amount (whichever applies to this account)
under the appropriate column (Debit or Credit) of the account.
D. Write the new account balance in the appropriate amount column (Balance
Debit or Balance Credit).
E. Return to the journal. In the Post Reference column of the journal record the
account number of the account to which the entry was posted.

III. Procedures for Posting From a Multicolumn Journal to the General Ledger
A. Posting the total of the Sales Credit column
1. Write the date in the Date column of the ledger account Sales.
2. Write the journal page number in the Post. Ref. column of the account.
3. Write the column total from the journal in the Credit column of the account.
4. Write the new balance in the Balance Credit column of the account.
5. Return to the journal and write the Sales account number (410) in
parentheses below the Sales Credit column total.
B. Posting the total of the Cash Debit column
1. Write the date in the Date column of the ledger account Cash.
2. Write the journal page number in the Post. Ref. column of the account.
3. Write the column total from the journal in the Debit column of the account.
4. Write the new account balance in the Balance Debit column of the account.
5. Return to the journal and write the Cash account number (110) in
parentheses below the Cash Debit column total.

6311 Accounting I Summer 2010, Version 2 Page 56


C. Posting the total of the Cash Credit column
1. Write the date in the Date column of the ledger account Cash.
2. Write the journal page number in the Post. Ref. column of the account.
3. Write the column total from the journal in the Credit column of the account.
4. Write the new account balance in the Balance Debit column of the account.
5. Return to the journal and write the Cash account number (110) in
parentheses below the Cash Credit column total.

KEY TERMS

 Ledger  Opening an account


 General ledger  Posting
 Account number  Correcting entry
 File maintenance  Proving cash

6311 Accounting I Summer 2010, Version 2 Page 57


2.01 General Journal

GENERAL JOURNAL PAGE


1 2

DOC POST
DATE ACCOUNT TITLE DEBIT CREDIT
# REF

1 1

2 2

3 3

4 4

5 5

6 6

7 7

8 8

9 9

10 10

11 11

12 12

13 13

14 14

15 15

16 16

6311 Accounting I Summer 2010, Version 2 Page 58


2.01 Multicolumn Journal
JOURNAL PAGE
1 2 3 4 5

DOC. POST. GENERAL SALES CASH


DATE ACCOUNT TITLE NO. REF. DEBIT CREDIT CREDIT DEBIT CREDIT

1 1

2 2

3 3

4 4

5 5

6 6

7 7

8 8

9 9

10 10

11 11

12 12

13 13

14 14

6311 Accounting I Summer 2010, Version 2 Page 59


2.01 Key Terms

Term Definition

Ledger A group of accounts

A ledger that contains all the accounts needed to prepare


General ledger
financial statements

The number assigned to the account


Account number

The procedure for arranging accounts in a general


File maintenance ledger, assigning account numbers, and keeping records
current

Writing an account title and number on the heading of an


Opening an account account

Transferring information from a journal entry to a ledger


Posting account

An entry made to correct an error that is discovered after


Correcting entry
posting is completed

Determining that the amount of available cash agrees


Proving cash
with the balance of the cash account

6311 Accounting I Summer 2010, Version 2 Page 60


2.01 Posting From a Journal to the General Ledger

Steps for Posting From a Journal to the General Ledger


1. Write the date of the journal entry in the Date column of the account.

2. Write the journal page number in the Post Reference column of the account.

3. Write either the debit amount or the credit amount in the Debit column or the
Credit column of the account.

4. Write the new account balance in either the Debit amount column or the
Credit amount column.

5. Record the account number of the account to which the entry was posted in
the Post Reference column of the journal.

6311 Accounting I Summer 2010, Version 2 Page 61


2.01 Additional Steps for Posting From a Multicolumn Journal
Posting the Total of the Sales Credit Column
1. Write the date in the Date column of the ledger account Sales.
2. Write the journal page number in the Post. Ref. column of the account.
3. Write the column total from the journal in the Credit amount column of the
account.
4. Write the new balance in the Balance Credit column of the account.
5. Return to the journal and write the Sales account number in parentheses
below the Sales Credit column total.

Posting the Total of the Cash Debit Column


1. Write the date in the Date column of the ledger account Cash.
2. Write the journal page number in the Post. Ref. column of the account.
3. Write the column total from the journal in the Debit amount column of the
account.
4. Write the new account balance in the balance Debit column of the account.
5. Return to the journal and write the Cash account number in parentheses
below the Cash Debit column total.

Posting the Total of the Cash Credit Column


1. Write the Date in the Date column of the ledger account Cash.
2. Write the journal page number in the Post. Ref. column of the account.
3. Write the column total from the journal in the Credit amount column of the
account.
4. Write the new account balance in the Balance Debit column of the account.
5. Return to the journal and write the Cash account number in parentheses
below the Cash Credit column total.

6311 Accounting I Summer 2010, Version 2 Page 62

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