ACCOUNTING CYCLE: Service Business

STEP NO. 3
OBJECTIVES:
1) define posting;

2) illustrate the format of general ledger;

3) learn the steps in posting journal entries to general ledger;

4) post journal entries involving in a service business into a

general ledger; and

5) participate actively in class discussion and activities.

SHORT REVIEW:
1) What did we discuss last meeting?

2) Define journalizing.

3) Illustrate the format of General Journal.

4) What are the steps in journalizing?

TODAY’S TOPIC:

After the business transaction or event has been journalized,

the next step will be …
Step 3: POSTING JOURNAL ENTRIES
Can you still define LEDGER?

The ledger is referred to as the book of final entry.

A ledger organized information by accounts.

A general ledger is the “reference book” of the accounting

system and is used to classify and summarize transactions, and to
prepare data for basic financial statements.
POSTING:

 is a process in which entries from general journal are

periodically transferred to ledger accounts (also known as T-
accounts)
It is the third step of accounting cycle because after the second
step which is recording business transactions in the journal,
journal entries are then posted to respective ledger accounts in
the general ledger.
 FORMAT OF A GENERAL LEDGER
The DEBIT and CREDIT COLUMN are
used in recording the amount of
transactions from the general journal
or special journal.

The ACCOUNT NUMBER

is an assigned number
for each account title to
The ACCOUNT portion facilitate ease in
refers to the account title recording and cross-
for example: cash, referencing.
accounts receivable.

The DATE COLUMN

identifies when the The BALANCE COLUMN
transaction happened. represents the running
balance of the Account
after considering the debit
and credit amounts. If the
running balance amount is
positive, the account has a
debit balance whereas if it
The REFERENCE identifies has a negative running
The ITEM represents the the page number of the balance, the accounts has
source journal and the general our special journal a credit balance.
nature of the transactions from which the
information was taken.
STEPS IN POSTING JOURNAL ENTRIES
TO THE LEDGER:
1. Write the ACCOUNT in the upper left side of the ledger and its corresponding ACCOUNT
NO. in the upper right side of the ledger. (The sequence of the accounts will be based on
the Chart of Accounts. )
2. Transfer the DATE of the transaction from the journal to the ledger.
3. Transfer the page number from the journal to the REFERENCE COLUMN of the ledger.
4. Post the debit figure from the journal as debit figure in the ledger and the credit figure from the
journal as a credit figure in the ledger.
5. Compute the BALANCE. NORMAL
BALANCE
DEBIT COLUMN
(Ledger)
CREDIT COLUMN
(Ledger)

ASSETS Debit
add minus
EXPENSES Debit
DRAWINGS Debit

LIABILITIES Credit
minus add
CAPITAL Credit

INCOME Credit

6. Enter the account number in the REFERENCE COLUMN of the journal once the
figure has been posted to the ledger.
 LET’S DO THESE!
Instruction: Post journal entries of Digao Wedding Services in the General Ledger.
Transaction No. 1:
General Journal

110
310

General Ledger
Account Title: CASH Account No.: 110
Date Explanation J.R. Debit Credit Balance
2018
May 1 GJ-1 250, 000 250, 000

Account Title: DIGAO, CAPITAL Account No.: 310

Date Explanation J.R. Debit Credit Balance
2018
May 1 GJ-1 250, 000 250, 000
 Transaction No. 2:
General Journal

112
110

General Ledger
Accont Title: PREPAID RENT Account No.: 112
Date Explanation J.R. Debit Credit Balance
2018
May 2 GJ-1 8, 000 8, 000

Accont Title: CASH Account No.: 110

Date Explanation J.R. Debit Credit Balance
2018
May 2 GJ-1 8, 000 8, 000
 Transaction No. 3:
General Journal

110
211

General Ledger

Accont Title: CASH Account No.: 110

Date Explanation J.R. Debit Credit Balance
2018
May 2 GJ-1 210, 000 210, 000

Accont Title: NOTES PAYABLE Account No.: 211

Date Explanation J.R. Debit Credit Balance
2018
May 2 GJ-1 210, 000 210, 000
 Transaction No. 4:
General Journal

115
110

General Ledger

Accont Title: SERVICE VEHICLE Account No.: 115

Date Explanation J.R. Debit Credit Balance
2018
May 4 GJ-1 420, 000 420, 000

Accont Title: CASH Account No.: 110

Date Explanation J.R. Debit Credit Balance
2018
May 4 GJ-1 420, 000 420, 000
 Transaction No. 5:
General Journal

113
110

General Ledger

Accont Title: PREPAID INSURANCE Account No.: 113

Date Explanation J.R. Debit Credit Balance
2018
May 4 GJ-1 14, 400 14, 400

Accont Title: CASH Account No.: 110

Date Explanation J.R. Debit Credit Balance
2018
May 4 GJ-1 14, 400 14, 400
 Transaction No. 6:
General Journal

116
110
210

General Ledger
Accont Title: OFFICE EQUIPMENT Account No.: 116
Date Explanation J.R. Debit Credit Balance
2018

May 5 GJ-1 60, 000 60, 000

Accont Title: CASH Account No.: 110

Date Explanation J.R. Debit Credit Balance
2018

May 5 GJ-1 15, 000 15, 000

Accont Title: ACCOUNTS PAYABLE Account No.: 210

Date Explanation J.R. Debit Credit Balance
2018

May 5 GJ-1 45, 000 45, 000

 Transaction No. 7:
General Journal

114
210

General Ledger

Accont Title: SUPPLIES Account No.: 114

Date Explanation J.R. Debit Credit Balance
2018
May 7 GJ-1 18, 000 18, 000

Accont Title: ACCOUNTS PAYABLE Account No.: 210

Date Explanation J.R. Debit Credit Balance
2018
May 7 GJ-1 18, 000 18, 000
 Transaction No. 8:
General Journal

210
110

General Ledger

Accont Title: ACCOUNTS PAYABLE Account No.: 210

Date Explanation J.R. Debit Credit Balance
2018
May 9 GJ-1 10, 000 10, 000

Accont Title: CASH Account No.: 110

Date Explanation J.R. Debit Credit Balance
2018
May 9 GJ-1 10, 000 10, 000
 Transaction No. 9:
General Journal

110
410

General Ledger

Accont Title: CASH Account No.: 110

Date Explanation J.R. Debit Credit Balance
2018
May 10 GJ-1 8, 800 8, 800

Accont Title: CONSULTING REVENUES Account No.: 410

Date Explanation J.R. Debit Credit Balance
2018
May 10 GJ-1 8, 800 8, 800
 Transaction No. 10:
General Journal

510
110

General Ledger

Accont Title: SALARIES EXPENSE Account No.: 510

Date Explanation J.R. Debit Credit Balance
2018
May 13 GJ-1 6, 600 6, 600

Accont Title: CASH Account No.: 110

Date Explanation J.R. Debit Credit Balance
2018
May 13 GJ-1 6, 600 6, 600
 Transaction No. 11:
General Journal

111
410

General Ledger

Accont Title: ACCOUNTS RECEIVABLE Account No.: 111

Date Explanation J.R. Debit Credit Balance
2018
May 13 GJ-1 12, 000 12, 000

Accont Title: CONSULTING REVENUE Account No.: 410

Date Explanation J.R. Debit Credit Balance
2018
May 13 GJ-1 12, 000 12, 000
 Transaction No. 12:
General Journal

110
111

General Ledger
Accont Title: CASH Account No.: 110
Date Explanation J.R. Debit Credit Balance
2018
May 30 GJ-1 12, 000 12, 000

Accont Title: ACCOUNTS RECEIVABLE Account No.: 111

Date Explanation J.R. Debit Credit Balance
2018
May 30 GJ-1 12, 000 12, 000
 Transaction No. 12:
General Journal

511
110

General Ledger

Accont Title: UTILITIES EXPENSE Account No.: 511

Date Explanation J.R. Debit Credit Balance
2018
May 31 GJ-1 3, 000 3, 000

Accont Title: CASH Account No.: 110

Date Explanation J.R. Debit Credit Balance
2018
May 31 GJ-1 3, 000 3, 000
 Summary:

Accont Title: CASH Account No.: 110

Date Explanation J.R. Debit Credit Balance
2018
May 1 GJ-1 250, 000 250, 000
2 GJ-1 8, 000 242, 000
2 GJ-1 210, 000 452, 000
4 GJ-1 420, 000 32, 000
4 GJ-1 14, 400 17, 600
5 GJ-1 15, 000 2, 600
9 GJ-1 10, 000 (7, 400)
10 GJ-1 8, 800 1, 400
13 GJ-1 6, 600 (5, 200)
30 GJ-1 12, 000 6, 800
31 GJ-1 3, 000 3, 800
 Summary:

Accont Title: ACCOUNTS RECEIVABLE Account No.: 111

Date Explanation J.R. Debit Credit Balance
2018
May 19 GJ-1 12, 000 12, 000
30 12, 000 0
 Summary:

Accont Title: PREPAID RENT Account No.: 112

Date Explanation J.R. Debit Credit Balance
2018
May 2 GJ-1 8, 000 8, 000
 Summary:

Accont Title: PREPAID INSURANCE Account No.: 113

Date Explanation J.R. Debit Credit Balance
2018
May 4 GJ-1 14, 400 14, 400
 Summary:

Accont Title: SUPPLIES Account No.: 114

Date Explanation J.R. Debit Credit Balance
2018
May 7 GJ-1 18, 000 18, 000
 Summary:

Accont Title: SERVICE VEHICLE Account No.: 115

Date Explanation J.R. Debit Credit Balance
2018
May 4 GJ-1 420, 000 420, 000
 Summary:

Accont Title: OFFICE EQUIPMENT Account No.: 116

Date Explanation J.R. Debit Credit Balance
2018
May 5 GJ-1 60, 000 60, 000
 Summary:

Accont Title: ACCOUNTS PAYABLE Account No.: 210

Date Explanation J.R. Debit Credit Balance
2018
May 5 GJ-1 45, 000 45, 000
7 GJ-1 18, 000 63, 000
9 GJ-1 10, 000 53, 000
 Summary:

Accont Title: NOTES PAYABLE Account No.: 211

Date Explanation J.R. Debit Credit Balance
2018
May 2 GJ-1 210, 000 210, 000
 Summary:

Accont Title: DIGAO, CAPITAL Account No.: 310

Date Explanation J.R. Debit Credit Balance
2018
May 1 GJ-1 250, 000 250, 000
 Summary:

Accont Title: CONSULTING REVENUES Account No.: 410

Date Explanation J.R. Debit Credit Balance
2018
May 10 GJ-1 8, 800 8, 800
19 12, 000 20, 800
 Summary:

Accont Title: SALARIES EXPENSE Account No.: 510

Date Explanation J.R. Debit Credit Balance
2018
May 13 GJ-1 6, 600 6, 600
 Summary:

Accont Title: UTILITIES EXPENSE Account No.: 511

Date Explanation J.R. Debit Credit Balance
2018
May 31 GJ-1 3, 000 3, 000
GENERALIZATION:

1) What have you learned from our lesson today?

2) Define General Ledger and Posting.

3) illustrate the format of general leger.

4) Discuss the steps in posting journal entries to the general ledger.

 YOU CAN DO THESE!
Instruction: Post the journal entries of Visperas Computer Shop for the month of July, 2015. Use the chart of accounts below as basis of the sequence of accounts in the
ledger. Write your answer on your columnar notebook.

R. VISPERAS COMPUTER SHOP

Chart of Accounts
Account Name Account No.
Cash ---------------------- 101
Accounts Receivable ---------------------- 102
Office Equipment ---------------------- 103
Furniture and Fixtures ---------------------- 104
Accounts Payable ---------------------- 201
Loans Payable ---------------------- 202
R. Visperas, Capital ---------------------- 301
R. Visperas, Darwings ---------------------- 302
Service Revenue ---------------------- 303
Salaries, wages & benefits ---------------------- 401
Communication Expense ---------------------- 402
Rent Expense ---------------------- 403
Light and water expense ---------------------- 404
 SELF CHECK:
Instruction: Choose the letter of the correct answer.
1) Where can you find a list of accounts that should be listed in the general ledger?
a. Journal
b. Chart of Accounts
c. Invoices
d. Trial Balance

2) The general ledger is used to directly create which financial document?

a. Statement of Owner’s Equity
b. Statement of Cash Flows
c. Trial Balance
d. Income Statement
3) What is the name of the reference that indicates where an entry into the general ledger came from?
a. Account Reference
b. Posting Reference
c. Personal Reference
d. Numerical Reference
4) The process of transferring the debit and credit items from a journal to their
respective account in the ledger is termed as?
a. Balancing
b. Posting
c. Arithmetic
d. Entry

5) Ledger is a book of?

a. Original Entry
b. Final Entry
c. Secondary Entry
d. All cash transactions

6) Where is the information in the general ledger posted from?

a. Accounting source documents
b. General Journal
c. Bank Account
d. Option 4
7) Which side of any ledger do debits go on?
a. Left
b. Right
c. Middle
d. None of the above

8) Which of the following accounts is expected to have a debit balance?

a. Assets
b. Income
c. Equity
d. All of the above

9) An account having a credit balance in general ledger will be classified as:

a. An asset account
b. An expense account
c. A liability account
d. All of the above
10) The difference between the total of debit side and the total of credit
side of a ledger account is known as:
a. Deficit
b. Debit Balance
c. Balance
d. Credit Balance