Chapter 7

Posting to
the Ledger
1
 The Balance Column Account

To-date, we have used a T-account

or simple two-sided ledger account.
The most commonly used ledger
account is the balance column
account.
It has three money columns: one
for debit amounts; one for credit
amounts; and a third that shows the
account balance. 2
 The Balance Column Account

To-date, we have used a T-account

or simple two-sided ledger account.
The most commonly used ledger
account is the balance column
account.
It has three money columns: one
for debit amounts; one for credit
amounts; and a third that shows the
account balance. 3
Opening an Account

An accounting entry often affects an

item for which there is no existing
account in the ledger. Opening an
account means you need to
prepare an account page and
place it in the ledger.

4
 Opening an Account
To open an account you:
 Obtain an unused account page;
 Write the name for the new account at the
top of the page. The account name is
known as the account title and will be
written on the back of the page as well.
 Write the account number (from the chart
of accounts).
 Insert new account in its proper place in
the ledger. 5
Comparison of Ledger
Accounts
Each entry is recorded by date
… identical to the date
T-Account Each entry hasused
conventions its own line.
in the
General Journal.

2007

The Balance Column Account

6
Comparison of Ledger
Accounts
The
The
Particulars
The
The
account
balance
debit
posting
and
column
name
isreference
credit
calculated
and
iscolumns
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number
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and
for
Records
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shown
recorded
additional
thethe
core
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atexplanations.
of
each
the
number
thetop
entry.
account.
of every
of the
The
Record
journal
Not“DR./CR.”
often
the
ledger
(where
used
debit/credit
column
account.
the
as transaction
particulars
indicates
from the
the
journalized
This
was
can
type
journalized).
information
beofobtained
balance.
transaction
isfrom
Write
available
Thisin
the
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the
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change
from appropriate
“J”
the
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and
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of
page
column.
accounts.
to number.
entry.

2007

7
 Formal Posting
 In Chapter 6, you learned that each
accounting entry is first recorded in
the journal (a.k.a. journalizing).
 These entries are then transferred, or
posted, to the ledger.
 Posting is the process of transferring
information from the journal to the
ledger.
 Every individual amount recorded in
the journal must be posted separately.8
 Six Steps in Posting Entries

 For each individual amount

entered in the journal, you must
follow six steps.
 Five of the steps are performed in
the ledger; one is performed in the
journal.

9
 Six Steps in Posting Entries

1. Turn to the proper account in the

ledger.
2. Record the date. Use the next
unused line in the account.
3. Record the page number of the
journal in the posting reference (PR)
column of the account.
4. Record the amount in the
appropriate debit or credit column.10
 Six Steps in Posting Entries

5. Calculate and enter the new account

balance in the balance column.
Indicate whether it is a debit (DR) or
credit (CR) balance.
6. In the journal, record the account
number to which the posting was
made. Enter this in the posting
reference (PR) column on the same
line as the amount being posted. 11
 Posting Entries - Example

2007
110

Step 2:
1: Record
3:
4:
5:
6: Select proper
Record the
$’s journal
new
account
the in
date.
balance
proper
account
number
page
and
col.#.
indicate
in journal.
if it is DR or CR.

2007

Aug. 14 J14 4 2 5 -- DR 1 3 0 2 06
12
 Posting Entries - Example

2007
110
101

Step 6:
1: Record
2:
3:
4:
5: Select proper
Record the
thejournal
$’s
new
account
in
date.
balance
proper
account
number
page
and
col.#.
indicate
in journal.
if it is DR or CR.

2007

14 J14 1 5 0 -- DR 1 0 5 6 15
13
 Posting Entries - Example

2007
110
101
212

Step 2:
1: Record
3:
4:
5:
6: Select proper
Record the
$’s journal
new
account
the in
date.
balance
proper
account
number
page
and
col.#.
indicate
in journal.
if it is DR or CR.

2007

Aug. 14 J14 2 7 5 -- CR 2 7 5 --
14
Posting Entries - Example

15
 Posting Cross-Referencing

2007
110
101
212

Cross-Reference: A posting
reference confirms that the entry
has been posted to the ledger. No
posting reference in the journal
indicates that the entry has not
yet been posted. 16
Posting Cross-Referencing

Cross-Referencing:
Makes it easy to trace
back to the General
Journal.
Entries in the journal
can be followed through
to the ledger.
If the posting process
is interrupted, it is easy
to see what still needs
to be posted.
17
 Correcting Errors in the
Ledger
 As a rule, accountants do not
erase mistakes.
 Errors found immediately are
neatly stroked through and the
correction is written above.
 Errors found later can be
corrected by means of an
accounting entry. 18
 Forwarding Procedure

 Forwarding is the process of

continuing an account, or a
journal, on a new page by carrying
forward the date and the balance
from the previous page.

19
 The Accounting Cycle
1. Analyse
transactions 2. Journalize
9. Prepare the transactions
post-closing
trial balance 3. Post to ledger
accounts
8. Journalize
and post 4. Prepare a trial
closing entries balance

5. Journalize
7. Prepare and post
financial adjusting
statements 6. Prepare
entries
adjusted trial
balance
20
 Trial Balance
Out of Balance

21
 Quick Tests for Detecting a
Single Error
The initial step in any of the quick tests is
to calculate the trial balance difference
– the amount by which the trial balance
is out.
1. If the trial balance difference is a
multiple of 10, such as 10 cents, 1
dollar, etc. An error in addition has
likely been made.
 Re-add the trial balance columns.
 Re-calculate the balance of each account.
22
 Quick Tests for Detecting a
Single Error
2. Check both the ledger and the journal
to see if the trial balance difference is
equal to an amount entered in the
ledger or the journal.
 Whenever you find such an amount, verify
it to make sure that it has been handled
correctly.

23
 Quick Tests for Detecting a
Single Error
3. Divide the trial balance difference by
two.
 Then search (1) the trial balance and (2)
the ledger accounts for this divided
amount.
 If an equivalent amount is found, check it
carefully. In particular, look to see if a
debit amount has been posted or
transferred as a credit, or vice versa.
24
 Quick Tests for Detecting a
Single Error
4. If the trial balance difference is a
multiple of 9,9 it is likely that a
transposition error or a decimal point
error has occurred.
 A transposition error is a mistake caused
by changing the order of digits when
transferring a figure from one place to
another (i.e. $35.60 is posted as $36.50).
 A decimal point error is a mistake caused
by misplacing the decimal (i.e. $1.19
entered as $119.00) 25
Balancing the General Ledger
Take off a
Trial Balance Sequence of Balancing Steps
Does
1. Re-add trial balance columns.
Trial Balance Yes 2. Check transfer of account
balance? balances from ledger to T/B.
No 3. Re-add File
accounts from point of
Apply the four previous
Trial Balancebalance. Double-check
account End
“Quick Tests” for future indicator (i.e. DR or CR).
4. Check
referencepostings from point of
Does previous balance. Watch for:
Trial Balance Yes
balance?  Incorrect amounts.
 Amounts not posted.
No
 Amounts posted twice.
Perform next
Steps.  Amounts posted in wrong
column.
Make corrections
No Any errors Yes 5. and
Check to see that each individual
recalculate
found?
journal
Trial entry balances (from
Balance.
point of previous balance). 26