Fundamentals of Accounting

Chapter 7

Posting to the Ledger

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Chapter 7
Posting to the Ledger
Specific Objectives

At the end of the lesson, the students should be able to:

1. Post transactions in the ledger

2. Prepare the unadjusted trial balance

Duration
(Specify the number of hours allotted for this chapter/lesson.)

Sample:

Chapter 7: Posting to the ledger = 3 hours

(2 hours discussion; 1 hour
assessment)

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Lesson Proper

I. POSTING (STEP 3)

After journal entries are made, the next step (3) in the accounting cycle is to post the journal
entries into the ledger. Posting refers to the process of transferring entries in the journal into
the accounts in the ledger. Posting to the ledger is the classifying phase of accounting.

While the journal is known as Books of Original Entry, the ledger is known as Books of
Final Entry.

II. THE POSTING PROCESS

Let us illustrate how accounting ledgers and the posting process work using the transactions
we had in the previous lesson (Chapter 6).

Identify accounts to be debited and accounts to be credited for each accountable transactions
using T-account form.

Jan 1 Aldin invested P 60,000 and P 12,000 tables and chairs for his business, Bae
Consulting.
Jan 4 Purchased a laptop P 30,000 on account from ASUS. Downpayment of P 5,000 was
made and the balance to be paid within 15 days.
Jan 7 Bought office supplies from STAPLES for cash, P 3,000.
Jan 8 Received cash from a client for consultancy services, P 25,000.
Jan 15 Paid salaries of employees, P 10,000.
Jan 19 Paid the account in full to ASUS.
Jan 24 Performed consultancy services to Don Facundo & Associates on account, P 50,000.
Jan 28 Aldin withdrew cash of P 2,000 for personal use.
Jan 29 Paid utilities for P 6,000.
Jan 30 Paid salaries of employees P 10,000 and rent P 15,000.

Let’s start!

Jan 1 Aldin invested P 60,000 and P 12,000 tables and chairs for his business, Bae
Consulting.

From: Journal

DATE DEBIT CREDIT

JAN 1 Cash 60,000
Furnitures 12,000
Aldin, Capital 72,000

Now, go to the ledger and find the accounts. Post the amounts debited and credited to the
appropriate side. Debits go to the left and credits to the right.

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The Jan. 1 transaction is posted as follows:

To: Ledger

Cash Furnitures Aldin, Capital

01-Jan 60,000 01-Jan 12,000 72,000 01-Jan

Explanation: First, we posted the entry to Cash. Cash in the journal entry was debited so we
placed the amount on the debit side (left side) of the account in the ledger. Furnitures was
also debited so we placed the amount on the debit side of the account in the ledger. For Mr.
Aldin, Capital, it was credited so the amount is placed on the credit side (right side) of the
account. And that's it. Posting is simply transferring the amounts from the journal to the
respective accounts in the ledger.

Next transaction!

Jan 4 Purchased a laptop P 30,000 on account from ASUS. Downpayment of P 5,000 was
made and the balance to be paid within 15 days.

From: Journal

DATE DEBIT CREDIT

JAN 4 Office Equipment 30,000
Cash 5,000
Accounts Payable 25,000

To: Ledger

Accounts
Cash Office Equipment Payable
01-
Jan 60,000 04-Jan 30,000 25,000 04-Jan
5,000 04-Jan

Notice that after posting January 4 transaction , we now can get a more updated balance for
each account. Cash now has a balance of P55,000 (P60,000 debit and 5,000 credit). Post all
the other entries and we will be able to get the balances of all the accounts.

Jan 7 Bought office supplies from STAPLES for cash, P 3,000.

From: Journal

DATE DEBIT CREDIT

JAN 7 Office Supplies 3,000
Cash 3,000

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To: Ledger

Cash Office Supplies

01- 04-
Jan 60,000 Jan 3,000
5,00
0 04-Jan
3,00
0 07-Jan

Jan 8 Received cash from a client for consultancy services, P 25,000.

From: Journal

DATE DEBIT CREDIT

JAN 8 Cash 25,000
Service Revenue 25,000

To: Ledger

Cash Service Revenue

01- 60,00 25,00 08-
Jan 0 0 Jan
5,00 04-
0 Jan
3,00 07-
0 Jan
08- 25,00
Jan 0

Jan 15 Paid salaries of employees, P 10,000.

From: Journal

DATE DEBIT CREDIT

JAN Salaries 10,000
15 expense
Cash 10,000

TO:
LEDGE
R
Salaries
Cash Expense
60,0 15-
01-JAN 00 Jan 10,000

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5,00 04-
0 Jan
3,00 07-
0 Jan
25,0
08-JAN 00
10,0 15-
00 Jan

Jan 19 Paid the account in full to ASUS.

From: Journal

DATE DEBIT CREDIT

JAN 19 Accounts Payable 25,000
Cash 25,000

To: Ledger

Accounts
Cash Payable
01- 60,00 25,0 04-
Jan 0 00 Jan
04- 19-
5,000 Jan Jan 25,000
07-
3,000 Jan
08- 25,00
Jan 0
10,00 15-
0 Jan
25,00 19-
0 Jan

Jan 24 Performed consultancy services to Don Facundo & Associates on account, P 50,000.

From: Journal

DATE DEBIT CREDIT

JAN 24 Accounts Receivable 50,000
Service Revenue 50,000

To: Ledger

Accounts Service

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Receivable Revenue
24- 25,00 08-
Jan 50,000 0 Jan
50,00 24-
0 Jan

Jan 28 Aldin withdrew cash of P 2,000 for personal use.

From: Journal

DATE DEBIT CREDIT

JAN Aldin, Drawing 2,000
28
Cash 2,000

TO:
LEDGER
Aldin,
Cash Drawing
60,00
01-JAN 0 28-Jan 2,000
04-
5,000 Jan
07-
3,000 Jan
25,00
08-JAN 0
10,00 15-
0 Jan
25,00 19-
0 Jan
28-
2,000 Jan

Jan 29 Paid utilities for P 6,000.

From: Journal

DATE DEBIT CREDIT

JAN 29 Utilities Expense 6,000
Cash 6,000

To: Ledger

Cash Utilities Expense

01- 60,00
Jan 0 29-Jan 6,000

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04-
5,000 Jan
07-
3,000 Jan
08- 25,00
Jan 0
10,00 15-
0 Jan
25,00 19-
0 Jan
28-
2,000 Jan
29-
6,000 Jan

Jan 30 Paid salaries of employees P 10,000 and rent P 15,000.

From: Journal

DATE DEBIT CREDIT

JAN 30 Salaries Expense 10,000
Rent Expense 15,000
Cash 25,000

Cash Salaries Expense Rent Expense

01-
JAN 60,000 15-Jan 10,000 30-Jan 15,000
5,000 04-Jan 30-Jan 10,000
3,000 07-Jan
08-
JAN 25,000
10,00
0 15-Jan
25,00
0 19-Jan
2,000 28-Jan
6,000 29-Jan
25,00
0 30-Jan

After all accounts are posted, we can now derive the balances of each account. So how much
Cash do we have at the end of the month? As shown in the ledger above, the company has
P9,000 cash at the end of the month. The total debit for cash account has P85,000 and the
total credit is P76,000.

How about accounts receivable? Accounts payable? You can find them all in the ledger.

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III. PREPARATION OF THE UNADJUSTED TRIAL BALANCE (STEP 4)

The unadjusted trial balance is the listing of general ledger account balances at the end of a
reporting period, before any adjusting entries are made to the balances to create financial
statements. The unadjusted trial balance is used as the starting point for analyzing account
balances and making adjusting entries.

The primary purpose of preparing the trial balance format in excel is to reconcile all the
ledger balances.

Errors revealed by a trial balance:

1. Journalizing or posting one-have of an entry, i.e., a debit without a credit, or vice versa
2. Recording one part of an entry for a different amount than the other part
3. Transplacement error is when the numbers of digits in an amount is incorrectly increase or
decreased for example, a P1,000 amount is recorded as P100 or P10,000.
4. Transposition error is when an amount in a ledger account or a balance on a ledger account
has been transposed and incorrectly recorded then the trial balance will not balance. For
example, a debit entry was recorded correctly as P5,276 but the related credit entry was
entered as P5,726.

Errors not revealved by a trial balance:

1. Omitting entirely the entry for a transaction

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

Let us prepare the unadjusted trial balance using the illustration in the previous lesson
(Chapter 6).

Bae Consulting Services

Unadjusted Trial Balance
January 31, 2021

Accounts Debit Credit

Cash 9,000
Accounts receivable 50,000
Office supplies 3,000
Furnitures 12,000
Office equipment 30,000

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Aldin, capital 72,000

Aldin, drawing 2,000
Service revenue 75,000
Utilities expense 6,000
Salaries expense 20,000
Rent expense 15,000

Totals 147,000 147,000

The heading of the trial balance consists of the following:

1. Name of the business
2. Title of the report
3. Date of the report

Account titles are listed in the unadjusted trial balance in the following order: Assets,
Liabilities, Equity, Income and Expenses.

References/Additional Resources/Readings

Course Learning Module in Fundamentals of Accounting (FUNACC)