baf3m accounting chapter 7 – posting source documents record in journal financial statements...

BAF3M Accounting

Chapter 7 – Posting

Source documents

Record in Journal

Financial Statements

Transaction Analysis

Post to Ledger

Unadjusted Trial Balance

Record & Post Adjusting

Entries

Adjusted Trial Balance

Close Temporary Accounts

Post-Closing Trial Balance

The Accounting

Cycle

7.1 Posting• You now know both the ledger and the

journal, but now it’s time to use them more ‘formally’ as accountants do

• 7.1 is a relatively large subsection … • Balance column account• Opening an account• Steps in the Posting process• Cross-Referencing• Correcting Errors• Forwarding Procedure

7.1 Posting

• The Balance Column Account– Has three money

columns– One for Debits– One for Credits– One for the Balance

Page 228

7.1 Posting

• Opening an Account preparing an account page and placing it in its proper place in the ledger

7.1 Posting

• Formal Posting– “POSTING” the process of transferring

information from the journal to the ledger– 6 step process on p. 229– 5 steps in ledger, 1 in journal

7.1 Posting

1) Turn to proper account in ledger

2) Record 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. Write the letter “J” in front of the page number (ex “J14”)

Cont

7.1 Posting

4) Record the amount. Debit amounts go in debit column, credit amounts in credit column

5) Calculate and enter the new account balance in the balance column, indicate whether it is a debit or credit balance in the DR/CR column

6) In the journal: record the account number to which the posting was made in the PR column on the same line as the amount being posted

7.1 Posting

• Follow these steps through the visual examples in Figure 7.3 starting on p. 230

7.1 Posting

7.1 Posting

• Cross Referencing (p. 231)– The recording of the journal page number in

the account and the recording of the account number in the journal

– Three reasons:• Account entries can be traced back to the journal• Journal entries can be traced to their accounts• If the posting process is interrupted it is easy to tell

where to begin again

7.1 Posting

• Correcting Errors in the Books– Accounts don’t just “erase” suspicion – So other methods have been developed

– Two types:• Errors found Immediately• Errors found Later

7.1 Posting

• Errors Found Later– Usually requires an offsetting entry – This entry is called a correcting journal

entry, its purpose is to cancel the effect of an error

– Explained well on p. 235

7.1 Posting• Forwarding Procedure

– Forwarding is just the process of continuing and account or journal on a new page by carrying forward the date and the balance from the completed page

7.2 Trial Balance Out of Balance• If your trial balance is off, no need to worry• Quick tests to detect a single error…

– 1) if balance difference is a multiple of 10• Likely an addition 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

• Likely an amount was omitted or added twice– 3) Divide the trial balance difference by two

• A DR may have been posted as a CR or vice versa– 4) If the trial balance difference is a multiple of 9

• Likely a transposition error or decimal point error