Financial Accounting and Reporting Posting and Unadjusted Trial Balance

MODULE VII
TITLE: POSTING TO THE LEDGER AND
PREPARATION OF TRIAL BALANCE

Introduction

This unit covers the knowledge, skills, and attitudes in posting

transactions manually
We have already discussed the first two steps in the accounting
cycle in the previous modules. In this unit, we will be discussing steps (3)
and (4)
Steps in the accounting cycle:

1. Identifying and analysing Finished

2. Journalizing

3. Posting You are

4. Unadjusted trial balance here

5. Adjusting entries
6. Adjustedtrialbalance
7. Financial statements
8. Closing entries
9. Post-closing trialbalance
10. Reversing entries

Unit Learning Outcomes:

1. Prepare ledger
2. Transfer journal entries to the ledger
3. Summarize ledger
4. Prepare unadjusted trial balance

Topic 1: POSTING TO THE LEDGER

Time Allotment: 2 hours

Learning Objectives:
At the end of the module, you will be able to:
a. Analyze the steps in posting journal entries to the ledger
b. Post journal entries to the ledger
c. Summarize the ledger

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Financial Accounting and Reporting Posting and Unadjusted Trial Balance

Activating Prior Learning

The statements below are the steps in posting a journal entry in the ledger.
Arrange the steps in proper order. Write the letter of your anaswer in the ladder
below.
A. Explain the transactions briefly. (e.g. Investment by the owner.)
B. Transfer the page number from the journal to the journal
reference (J.R.) column of the ledger.
C. Transfer the date of the transaction from the journal to the ledger.
(Note: Transferring of journal entries should be done
chronologically, meaning, it is arranged according to the date of
transactions.)
D. Post the debit amount in the journal as debit in the ledger and the
credit amount in the journal as a credit in the ledger.
E. Enter the account number in the posting reference (P.R.) column
in the journal. This is in order for you to check if all transactions
in the journal are already posted into the ledger.

Step 5

Step 4

Step 3

Step 2
Answer here

Step 1

Answer
Steps;
1C
2A
3B
4D
5E
How much score did you get?
Try to assess your performance based on the given scores and their descriptive
value.
4 - Excellent
3 - Good
2 - Fair
0-1 - Poor

Congratulations! You did a great job.

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Financial Accounting and Reporting Posting and Unadjusted Trial Balance

Presentation of Content

THE LEDGER

Ledger is a tool used for classifying and summarizing information

about increases, decreases, and balances of items in the chart of
accounts.

Accounts in the ledger are classified into two (2), namely:

1. Permanent accounts – also called the balance sheet accounts
which is composed of the asset, liabilities and owner’s equity.
2. Temporary accounts – also called income statement accounts
or nominal accounts (income and expenses). These accounts
are used to gather information for a particular accounting
period. At the end of the period, the balances of these accounts
are transferred to a permanent owner’s equity account.
A ledger organizes information in the journal entries per account.
The ledger contains the account title, account number, the date, the
explanation of the transactions, the journal reference, the debit and the
credit amount and the balance of the accounts. Below is an example of a
ledger.

Preparation of Ledger
Every account in the chart of accounts has its own ledger. In the
preparation of ledger, the following steps must be taken:
1. Prepare a template of a ledger containing the following
information:
a. Account title
b. Account number
c. Date
d. Explanation
e. Journal Reference (J.R.)
f. Debit
g. Credit
h. Balance (Debit and Credit)

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Financial Accounting and Reporting Posting and Unadjusted Trial Balance

Sample ledger:

2. Get the account title and account number from the chart of
accounts.

Note: All accounts in the chart should have its own ledger.

110

POSTING TO THE LEDGER

POSTING TO THE LEDGER

After the analysis and the preparation of journal entries of
transactions, the next step will be the posting or transferring of data
from the journal to the appropriate accounts in the ledger. This step is
called posting. This step is done through transferring the amount of
debit and credit in the journal entry to the ledger accounts. The purpose
of posting is to classify the effects of transactions on specific accounts
(assets, liabilities, owner’s equity, income and expenses) in order to
produce a meaningful information. Since data in the journal does not
provide information on the total effect of all the transactions in each
account, there is a need to classify each transaction in order to produce
the needed information.

The following are the steps in posting of transactions to the ledger:

1. Transfer the date of the transaction from the journal to the ledger.
(Note: Transferring of journal entries should be done
chronologically, meaning, it is arranged according to the date of
transactions.)

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Financial Accounting and Reporting Posting and Unadjusted Trial Balance

2. Explain the transactions briefly. (e.g. Investment by the owner.)

3. Transfer the page number from the journal to the journal
reference (J.R.) column of the ledger.
4. Post the debit amount in the journal as debit in the ledger and the
credit amount in the journal as a credit in the ledger.

5. Enter the account number in the posting reference (P.R.) column

in the journal. This is in order for you to check if all transactions
in the journal are already posted into the ledger.

Illustartion: Post the following transactions to the ledger

GJ-1
Account Titles and P.R
Date Debit Credit
Explanation .
2018

100,000.0
Cash   0  
Store Furniture and
July
Equipment   30,000.00  
1
130,000.0
SDB, Capital     0
To record the initial investment.
 

Supplies   25,000.00  
July
3
Cash     25,000.00
To record the purchase of supplies.
 
July
4 Rent Expenses   15,000.00  
Cash    
15,000.00

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Financial Accounting and Reporting Posting and Unadjusted Trial Balance

To record payment of rent.

 

Purchases   45,000.00  
July
5
Cash     45,000.00
To record the acquisition of merchandise.
 

Cash   30,000.00  
July
6
Sales     30,000.00
To record the sales of inventory.

Solutions:

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Financial Accounting and Reporting Posting and Unadjusted Trial Balance

Posting using a T-Account:

Example

SUMMARIZING THE LEDGER

After posting the journal entries to the ledger, the balance of the
account should be computed. Take note that the balance should be a
running balance, meaning, balances are computed after every
transaction. The balances of each account should be placed on their
appropriate normal balnce column (either debit or credit).

Let
us
summarize the illustration above using a T-account

CASH
1-Jul-18 125,000  
2-Jul 105,000  
3-Jul 30000
4-Jul   50000
230,000 80000
Balance 150,000  

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 Financial Accounting and Reporting Posting and Unadjusted Trial Balance

Application
Congratulations! You have just completed Topic 1.
I prepared some activities for you to refresh your thoughts. These activities
serve as an assessment if you understood the discussions. Though this
will not be recorded, it will still form part of your class standing so make
sure to accomplish the tasks given to you. 

Complete the table below. Compute the balance of the account. Ensure that the
balance is placed on the appropriate column (dr or cr).

Account: ACCOUNTS RECEIVABLE Account No. 102

Balance
Date Explanation J.R. Debit Credit Debi
Credit
t
2018
Sales of merchandise on GJ- 20,000.0
July 7  
account. 1 0    
GJ- 10,000.0
July 12 Partial collection of receivable.  
1 0    
Sales of merchandise on GJ- 25,000.0
July 16  
account. 1 0    
GJ- 25,000.0
July 26 Collection of receivable.  
2 0    

*What is the balance of the Accounts Receivable account?

Topic 2: Preparing Unadjusted Trial Balance

Time Allotment: 45 Minutes

Learning Objectives:
At the end of this topic, you will be able to:
a. Define trial balance
b. Describe the use of trial balance
c. Transfer ledger balances to trial balance
d. Prepare unadjusted trial balance

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Financial Accounting and Reporting Posting and Unadjusted Trial Balance

Activating Prior Learning

Below is an incomplete trial balance. Fill up the missing items

Answer:
1. Debit
2. Credit
3. 10,000
4. 5,000
5. 150,000
How much score did you get?
Try to assess your performance based on the given scores and their descriptive
value.
5 - Excellent
3-4 - Good
0-2 - Poor

Congratulations! You did a great job.

Presentation of Content

The Trial Balance

A trial balance is a list of general ledger accounts and their balances.
It is prepared to check the equality of total debits and total credits in the

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Financial Accounting and Reporting Posting and Unadjusted Trial Balance

ledger. The preparation of the trial balance creates a starting point for
the preparation of the financial statements.

Types of trial Balance

1. Unadjusted Trial Balance –This is prepared before adjusting
entries are made.

2. Adjusted trial balance – this is prepared after adjusting entries but

before the financial statements are prepared.

3. Post-closing trial balance – this is prepared after closing entries

are made.

Errors revealed by a trial balance

The trial balance can reveal errors that caused the total debits and total
credits to be unequal. Examples:

1. Journalizing or posting one-half of an entry, without a credit, or vice

versa.
2. Recording one part of an entry for a different other part.
3. Transplacement error on one side of an entry.
4. Transposition error on one side of an entry.

 Transplacement error (Slide error) is committed when the number

of digits in an amount is incorrectly increased decreased, for
example, a P2,000 amount is recorded as P20,000.

 Transposition error is committed when digits in an amount

interchanged, for example, a P15,352 amount is recorded P15,325
or P15,235.

Errors not revealed by a trial balance

The trial balance cannot reveal errors that do not cause the total debits
and total credits to be unequal. Examples:

 Omitting entirely the entry for a transaction

 Journalizing or posting an entry twice
 Using a wrong account with the same normal balance as the
correct account
 Wrong computation with same erroneous amount posted to both
the debit and credit sides

Preparing the trial balance

Before preparing the trial balance it is important that you should know its basic
parts. They are as follows:

1. Heading
a. Company Heading ( example, SDB Company)
b. The report title (Unadjusted Tria Balance)
c. The report date ( December 31, 2018)

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Financial Accounting and Reporting Posting and Unadjusted Trial Balance

2. Account titles which are listed in the following order (Order may vary
depending on company’s practice or whichever is more applicable).

a. Assets;
b. Liabilities;
c. Equity;
d. Income; and
e. Expenses

3. Account balances which are lifted from respective ledgers and are reflected
in the trial balance with their corresponding normal balance as either debit or
credit, that is, assets and expenses are in the debit column, while liabilities, equity
and income are in the credit column

4. Totals- These are the summation of the debits and credits. The total debits and
total credits should be equal. If they are not equal, an error surely exists.
However, the equality of total debits and total credits does not guarantee that
accounts or accounting process has no error at all, errors may still occur which
trial balance cannot reveal.

Using the ledger balances in (Topic I), the unadjusted trial balance is prepared
as illustrated below

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Financial Accounting and Reporting Posting and Unadjusted Trial Balance

Application

Congratulations! You have just completed Topic 2.

I prepared some activities for you to refresh your thoughts. These activities
serve as an assessment if you understood the discussions. Though this
will not be recorded, it will still form part of your class standing so make
sure to accomplish the tasks given to you. 

1. What is the importance of ledger in the accounting process

2. What is the use of trial balance?

Unit Summary
In this unit, we discussed:
 The third and fourth step in the accounting process; the posting
and unadjusted trial balance
 Posting is the process of transaferring the amounts of debits and
credit balances in the recorded journal entries to the ledger
accounts
 The ending balance, which is reflected in the normal balance of an
account, is the difference between the total debits and total credits
in that account
 A trial balance is a list of general ledger accounts and their
balances. It is prepared to check the equality of the total debits
and total credits in the ledger.
 The three types of trial balance are: a) unadjusted trial balance, b)
adjusted trial balance,and c) post-closing trial balance

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Financial Accounting and Reporting Posting and Unadjusted Trial Balance

Feedback
Name: _________________________ Section: ____________ Score:_______

I: JOURNALIZING & POSTING

The following were the transactions of Baxter Entity during the period:

Date Transactions

Jan. Services worth ₱150,000 were rendered for cash.

8
Jan. Services worth ₱200,000 were rendered on account.
9
Jan. Cash amounting to ₱25,000 was disbursed for advertising
10 expense.

Jan. Accounts receivable of ₱180,000 was collected.

11
Jan. The owner made a temporary withdrawal of ₱10,000 cash
12 from the business.

Requirements:

a. Provide the journal entries.

b. Post the journal entries to the ledger then determine the ending
balances of the accounts. Use T-accounts for this purpose. Arrange
your T-accounts in this order: Assets, Liabilities, Equity, Income and
Expenses.

II: UNADJUSTED TRIAL BALANCE

The ledger accounts of ANA Salon have the following balances on
December 31, 2020:

Account titles Balances

Accounts payable 480,000

Accounts receivable 210,000
1,250,00
Accumulated depreciation - Bldg.
0
1,800,00
Accumulated depreciation - Equipt.
0
Advertising expense 70,000
Allowance for bad debts 30,000
Bad debt expense 20,000

Building 5,000,00

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Financial Accounting and Reporting Posting and Unadjusted Trial Balance

0
Cash 770,000
Depreciation expense 200,000
3,600,00
Equipment
0
2,000,00
Land
0
Miscellaneous expense 4,000

Notes receivable
420,000
Owner’s drawings 80,000
4,200,00
Owner’s equity
0
Prepaid supplies 40,000
1,140,00
Salaries expense
0
Salaries payable 120,000
6,000,00
Service fees
0
Supplies expense 60,000
Taxes and licenses 120,000
Transportation and travel expense 140,000
Utilities expense 46,000
Utilities payable 40,000

Requirement: Prepare the unadjusted trial balance. Be sure to provide a

proper heading for the report and arrange the accounts in the correct
sequence.

III: POSTING & UNADJUSTED TRIAL BALANCE

Mr. Bernardo opened a management consulting firm called “Bernardo
Consulting” on October 1, 2020. The following were the transactions
during the first week of operations:

Oct. Transactions

1 Provided ₱300,000 cash as initial investment to the business.

2 Acquired furniture and fixture for ₱200,000 cash.
4 Purchased supplies for ₱30,000 cash.
5 Rendered services worth ₱20,000 on cash basis.
15 Paid ₱10,000 salaries of employees.

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Financial Accounting and Reporting Posting and Unadjusted Trial Balance

Requirements:

a. Provide the journal entries.

b. Post the entries to the ledger (use T-accounts).
c. Prepare the unadjusted trial balance on October 15, 2020.

Reflection

This part of the module will be a time for you to look back, and reflect on
what you have learned from this unit. Though, this will not be checked
and recorded, I would appreciate if you will do this wholeheartedly and
with all seriousness.

Your task!
Draw a T-account in a whole sheet of paper, on the left side, write all the
things that you learned in this unit and in the right side, write those that
you think you did not undestand. Count each items in both sides and
write the totals, (left and right). Which is greater? If right side’s total is
greater than left, you need to study the learning material again, and once
you are done, go back to this reflection.

References:
Millan, Zeus Vernon B. (2019). Financial Accounting and Reporting
Baguio City, Philippines: Bandolin Enterprise Publishing and Printing

Teaching Guide for Senior High School, Fundamentals of Accountancy,

Business and Management I,. Published by Commission on Higher
Education (2016)

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