Accounting1 Chapter 7 (Journal and Ledger Accounts)

Accounting1 Chapter 7 (Transferring Journal Entries to Ledger Accounts)

Grade 11 Accounting

Textbook: Accounting 1 (7th edition) By: George Syme, Tim Ireland and Colin Dodds.

7.1 Posting

The Balance Column Account 

• Another style of ledger accounts that is more useful and convenient for keeping information about each account balance and changes in it

• Three money accounts (one for debits, one for credits, one for balance)

Opening an Account 

• Preparing an accounting page and placing it in its proper place in the ledger (for an account does not have a page in the journal)

Steps

1. Obtain an unused account page 
2. Write the name for the new account at the top of the page (Account name=Account title)
3. Write the account number (eg assets 101) 
4. Insert the new account in its proper place in the ledger 

Formal Posting 

• Each account is first recorded in the journal and then it is “posted” to the ledger
• Every dollar account recorded in the journal must be posted separately 

 Posting: Process of transferring information from the journal to the ledger

Steps

1. Turn to the proper account in the ledger
2. Record the date
3. Record the page number of the journal in the posting reference column of the account (J14)
4. Record the amount. Debits in the debit column and credits in the credits column
5. Calculate and enter the new account balance and indicate if it is a debit or credit balance
6. Record the account number to which the posting was made in the journal under the PR column.

Cross- Referencing (P.R. Column)- Post reference

• Recording the journal page number (eg J10) in the account 
• Recording the account number (eg 101 for assets-Bank) in the journal 

This is done for three reasons: 

1. Entries can easily be traced back to their source in the general journal 
2. Entries can be followed through to see if they’re posted or not 
3. If the posting process is interrupted, you are able to tell where you left off 

Forwarding Procedure

• When an account page is full, the account must be continued onto the next page 

Forwarding: process of continuing an account on the next page by carrying forward the date and balance from the completed page.

The Accounting Cycle (so far) 

1. Transactions occur/ source documents 
2. Accounting entries are recorded in the journal 
3. Journal entries are posted to the ledger accounts 
4. Ledger is balanced by means of a trial balance 

7.2 Overcoming Errors 

• Accountants have a rule not to erase errors made in the books 
• Erased errors might create suspicion from the auditors 
• Even accounting softwares do not delete or cover up what was written down in the past

Upon immediately making an error 

Neatly stroke through the incorrect figures and write in the correct ones

Errors found later

If an error is discovered after some time, a correcting journal entry must be made (like the one below) 

It is posted in the general journal and the explanation will be as follows: 

"To correct posting error made on _____"