3 - 1 2004 Prentice Hall Business Publishing, College Accounting: A Practical Approach, 9e by Slater

Beginning the
Accounting Cycle:
Journalizing, Posting,
and the Trial Balance
Chapter 3
3 - 2 2004 Prentice Hall Business Publishing, College Accounting: A Practical Approach, 9e by Slater
Learning Objective 1
Journalizing: analyzing and
recording business
transactions into a journal.
3 - 3 2004 Prentice Hall Business Publishing, College Accounting: A Practical Approach, 9e by Slater
Introduction
Accounting cycle
The accounting period
One year:
Calendar year
Fiscal year
Less than one year:
Quarterly
Monthly
3 - 4 2004 Prentice Hall Business Publishing, College Accounting: A Practical Approach, 9e by Slater
Learning Unit 3-1 (Analyzing and
Recording Business Transactions)
Business transactions occurred.
Analyzing transactions and recording.
Posting to the general ledger.
Preparing the trial balance.
3 - 5 2004 Prentice Hall Business Publishing, College Accounting: A Practical Approach, 9e by Slater
Learning Unit 3-1 (Analyzing and
Recording Business Transactions)
What is the general journal?
It is the book of original entry.
Transactions are written in a
journal in chronological order.
Journalizing is the process of entering
information as debits and credits
to the correct accounts.
3 - 6 2004 Prentice Hall Business Publishing, College Accounting: A Practical Approach, 9e by Slater
Learning Unit 3-1 (Analyzing and
Recording Business Transactions)
The accountant must refer to the chart of accounts
for the account name to be used in the journal.
3 - 7 2004 Prentice Hall Business Publishing, College Accounting: A Practical Approach, 9e by Slater
Learning Unit 3-1 (Analyzing and
Recording Business Transactions)
What is the general ledger?
It is the book of final entry.
The information from the journal is transferred
to the ledger in the posting process.
Debits and credits in the journal
remain exactly the same when posted
to the accounts in the ledger.
3 - 8 2004 Prentice Hall Business Publishing, College Accounting: A Practical Approach, 9e by Slater
Learning Unit 3-1 (Analyzing and
Recording Business Transactions)
Clarks Word Processing Services
General Journal Page 1
Date
Account Titles
and Description PR Dr. Cr.
200x
May 1

Cash
Brenda Clark, Capital
Initial investment of
cash by owner

10,000


10,000
3 - 9 2004 Prentice Hall Business Publishing, College Accounting: A Practical Approach, 9e by Slater
Learning Unit 3-1 (Analyzing and
Recording Business Transactions)
Clarks Word Processing Services
General Journal Page 1
Date
Account Titles
and Description PR Dr. Cr.
200x
May 1

Equipment
Cash
Accounts Payable
Purchase of equipment

6,000


1,000
5,000
3 - 10 2004 Prentice Hall Business Publishing, College Accounting: A Practical Approach, 9e by Slater
Learning Unit 3-1 (Analyzing and
Recording Business Transactions)
Clarks Word Processing Services
General Journal Page 1
Date
Account Titles
and Description PR Dr. Cr.
200x
May 1

Prepaid Rent
Cash
Rent paid in advance
3 months

1,200


1,200
3 - 11 2004 Prentice Hall Business Publishing, College Accounting: A Practical Approach, 9e by Slater
Learning Unit 3-1 (Analyzing and
Recording Business Transactions)
Clarks Word Processing Services
General Journal Page 1
Date
Account Titles
and Description PR Dr. Cr.
200x
May 3

Office Supplies
Accounts Payable
Purchase of supplies on
account from Norris

600


600
3 - 12 2004 Prentice Hall Business Publishing, College Accounting: A Practical Approach, 9e by Slater
Learning Objective 2
Posting: transferring information
from a journal to a ledger.
3 - 13 2004 Prentice Hall Business Publishing, College Accounting: A Practical Approach, 9e by Slater
Learning Unit 3-2
(Posting to the Ledger)
Date
Post.
Ref. Debit Credit Debit Credit
Balance
May 1 GJ1 10,000 10,000
Clarks Word Processing Services
General Ledger
Cash Account No. 111
Insert the number of the journal page.
3 - 14 2004 Prentice Hall Business Publishing, College Accounting: A Practical Approach, 9e by Slater
Learning Unit 3-2
(Posting to the Ledger)
Account Name: Cash Account Number: 111
Date Post. Balance
200x Description Ref. Debit Credit Debit Credit
May 1 GJ 1 10,000 10,000
General Journal Page 1
Date Post.
200x Description Ref. Debit Credit
May 1 Cash 111 10,000
Brenda Clark, Capital 311 10,000
To record initial investment
3 - 15 2004 Prentice Hall Business Publishing, College Accounting: A Practical Approach, 9e by Slater
Learning Objective 3
Preparing a trial balance.
3 - 16 2004 Prentice Hall Business Publishing, College Accounting: A Practical Approach, 9e by Slater
Learning Unit 3-3
(Preparing the Trial Balance)
The trial balance lists the accounts which
have balances in the same order as
they appear in the chart of accounts.
The trial balance will show if
debits/credits have been interchanged.
It will show if amounts have been
transposed, or if a debit/credit
was omitted or recorded twice.
3 - 17 2004 Prentice Hall Business Publishing, College Accounting: A Practical Approach, 9e by Slater
Learning Unit 3-3
(Preparing the Trial Balance)
Clarks Word Processing Services
Trial Balance, May 31, 200x

Cash
Accounts Receivable
Office Supplies
Prepaid Rent
Word Processing Equipment
Accounts Payable
Brenda Clark, Capital
Brenda Clark, Withdrawals
Word Processing Fees
Expenses
Totals
Debit Credit
6,155
5,000
600
1,200
6,000
3,350
10,000
625
8,000
1,770
21,350 21,350
3 - 18 2004 Prentice Hall Business Publishing, College Accounting: A Practical Approach, 9e by Slater
Learning Unit 3-3
(Preparing the Trial Balance)
Mathematical error in addition
Omission
Slide or transposition
3 - 19 2004 Prentice Hall Business Publishing, College Accounting: A Practical Approach, 9e by Slater
Learning Unit 3-3
(Preparing the Trial Balance)
Some errors do not show, such as omissions
or recording to the wrong account.
Corrections before posting are made in the journal.
An audit trail must be left.
Do not erase cross out errors and enter corrections.
3 - 20 2004 Prentice Hall Business Publishing, College Accounting: A Practical Approach, 9e by Slater
Learning Unit 3-3
(Preparing the Trial Balance)
What about corrections after posting?
This means that errors are also in the ledger accounts.
Cross out incorrect amounts, change to
corrected amounts, and record balance changes.
3 - 21 2004 Prentice Hall Business Publishing, College Accounting: A Practical Approach, 9e by Slater
End of Chapter 3