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©2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
College
Accounting
Heintz & Parry20th Edition
©2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Journalizing
and Posting Transactions
4Chapter
©2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
1
Describe the flow of
data from source
documents through
the trial balance.
©2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
INPUT
Analyze transactions
using
SOURCE DOCUMENTS and
CHART OF ACCOUNTS
STEP #1
©2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
PROCESSING
Enter business
transactions in
the
GENERAL
JOURNAL
“Journalizing”
Post the entries
in the journal to
the
GENERAL
LEDGER
“Posting”
From the
general ledger,
prepare a
TRIAL
BALANCE
©2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
2
Describe the chart of
accounts as a means
of classifying
financial information.
©2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
• A list of ALL accounts used by a business
• In numeric order
• Used to determine which accounts are affected by a given transaction
©2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Assets (100–199)
101 Cash
122 Accts. Rec.
141 Supplies
145 Prepaid Ins.
185 Delivery Eq.
Assets begin with 1
©2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Assets (100–199)
101 Cash
122 Accts. Rec.
141 Supplies
145 Prepaid Ins.
185 Delivery Eq.
Liabilities (200–299)
202 Accts. Pay. Liabilities begin with 2
©2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Assets (100–199)
101 Cash
122 Accts. Rec.
141 Supplies
145 Prepaid Ins.
185 Delivery Eq.
Liabilities (200–299)
202 Accts Pay.
Owner’s Eq. (300–399)
311 Jessica Jane, Capital
312 Jessica Jane, Drawing
©2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Assets (100–199) Revenues (400–499)
101 Cash 401 Delivery Fees
122 Accts. Rec.
141 Supplies
145 Prepaid Ins.
185 Delivery Eq.
Liabilities (200–299)
202 Accts Pay.
Owner’s Eq. (300–399)
311 Jessica Jane, Capital
312 Jessica Jane, Drawing
©2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Assets (100–199) Revenues (400–499)
101 Cash 401 Delivery Fees
122 Accts. Rec.
141 Supplies Expenses (500–599)
145 Prepaid Ins. 511 Wages Exp.
185 Delivery Eq. 521 Rent Exp.
525 Tele. Exp.
Liabilities (200–299)
202 Accts Pay.
Owner’s Eq. (300–399)
311 Jessica Jane, Capital
312 Jessica Jane, Drawing
©2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Assets (100–199) Revenues (400–499)
101 Cash 401 Delivery Fees
122 Accts. Rec.
141 Supplies Expenses (500–599)
145 Prepaid Ins. 511 Wages Exp.
185 Delivery Eq. 521 Rent Exp.
525 Tele. Exp.
Liabilities (200–299)
202 Accts Pay.
Owner’s Eq. (300–399)
311 Jessica Jane, Capital
312 Jessica Jane, Drawing
©2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
3
Describe and
explain the
purpose of source
documents.
©2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
• Trigger the analysis of what happened
• Begin the process of entering transactions in
the accounting system
• Serve as objective evidence of business
transactions
• Filed for possible future reference
©2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
1. Check stubs
or copies of
checks Cash payments
EXAMPLE
2. Receipt stubs,
copies of receipts,
cash register tapes,
or memos of cash
register totals
Cash receipts
PROVIDES
INFORMATION ABOUT
©2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
1. Copies of
sales tickets
or sales
invoices
issued to
customers or
clients
Sales of goods or services
2. Purchases
invoices received
from suppliers
Purchases of goods or
services
EXAMPLE PROVIDES
INFORMATION ABOUT
©2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
4
Journalize
transactions.
©2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
• A day-by-day listing of transactions
• Purpose: To provide a record of all transactions
completed by the business
• Commonly referred to as a book of original entry
• The simplest journal form is a two-column general
journal
• The act of entering transactions in a journal is called
journalizing
©2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Jessie invested $2,000 in the
business on June 1, 20--.
NEW!
DATED TRANSACTIONS
©2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
DR.
J. JANE, CAPITAL
2,000
CR.
CASH
DR. CR.
2,000
NOW WE WILL“JOURNALIZE”
THIS TRANSACTION
+ +– –
20--JUNE 1
DATE DESCRIPTION PR DEBIT CREDIT
1
2
Step #1ENTER THE DATE
The year and month are only written on the first line of each page.
©2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
CASH20--
JUNE 1
DATE DESCRIPTION PR DEBIT CREDIT
1
2
Step #2aENTER THE NAME OF THE ACCOUNT BEING DEBITEDAlign with the left margin
©2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
2000 00CASH20--
JUNE 1
DATE DESCRIPTION PR DEBIT CREDIT
1
2
Step #2bENTER THE AMOUNT
OF THE DEBIT
©2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
DATE DESCRIPTION PR DEBIT CREDIT20--JUNE 1 CASH
J. JANE, CAPITAL 2000 00
2000 001
2
Step #3ENTER THE ACCOUNT
NAME AND THE AMOUNTOF THE CREDIT
©2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
DATE DESCRIPTION PR DEBIT CREDIT20--JUNE 1 CASH
J. JANE, CAPITAL 2000 00
2000 00
Owner’s original
investment in business
Step #4 ENTER THE EXPLANATION
Indent even further
1
2
3
4
©2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
DATE DESCRIPTION PR DEBIT CREDIT20--JUNE 1 CASH
J. JANE, CAPITAL 2000 00
2000 00
Owner’s original
investment in business
Step #5SKIP A LINE
Leave a blank line between transactions
1
2
3
4
5
©2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
©2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
• An entry requiring more than one debit
and/or more than one credit
• All debits come before any credits
©2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
On June 10, 20--,
purchased a $1,500
scooter for $300 cash
and $1,200 on
account.
©2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
CASH DELIVERY EQUIP.
Both are asset accounts
DR. CR. DR. CR.
+ +– –
©2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
ACCOUNTS PAYABLE
DR. CR.
A liability account
+–
©2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Eachaccount?
Increase orDecrease?
On June 10,
20--,
purchased a
$1,500
scooter for
$300 cash
and $1,200
on account.
©2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
On June 10, 20--, purchased a $1,500 scooter for $300 cash and $1,200 on
account.
DELIVERY EQUIPMENT
DR. CR.
INCREASED
1,500+ –
©2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
On June 10, 20--, purchased a $1,500
scooter for $300 cash and $1,200 on
account.
CASH
DR. CR.
DECREASED
300+ –
©2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
On June 10, 20--, purchased a $1,500
scooter for $300 cash and $1,200 on
account.ACCOUNTS PAYABLE
DR. CR.
INCREASED
1,200– +
©2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
DELIVERY EQUIP. CASH
ACCOUNTS PAYABLE
DR. CR.
DR. CR.
DR. CR.
1,500 300
1,200
+ +– –
– +
©2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
DATE DESCRIPTION PR DEBIT CREDIT20--JUNE 10 DELIVERY EQUIPMENT
ACCOUNTS PAYABLE
1500 00
CASH
Purchased scooter with
down payment; balance
on account
The order of the credits does not matter, but ALL credits must
come after any debits
1
2
3
4
5
300 00
1200 00
©2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
©2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
5
Post to the general
ledger and prepare
a trial balance.
©2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
• A complete set of all accounts used by a
business
• Similar to T accounts
• Used to keep a complete record of the
debits and credits made to each account as
a result of entries made in the journal
• Numbered and arranged in the same order
as the chart of accounts
©2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
• The process of copying debits and credits
from the journal to the ledger accounts
• Done daily or at frequent intervals
• Five-step process
DATE DESCRIPTION PR DEBIT CREDIT
20--JUNE 1 CASH
J. JANE, CAPITAL 2000 00
2000 00
Owner’s original
investment in business
LET’S POST THE DEBIT PORTION OF THIS ENTRY
TO THE GENERAL LEDGER
1
2
3
4
5
©2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Account: Account No.
DATE ITEM PR DR. CR.BALANCE
DR. CR.
CASH 101
ACCOUNTNAME
EACH ACCOUNTIS NUMBERED
©2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Account: Account No.
DATE ITEM PR DR. CR.BALANCE
DR. CR.
CASH 101
20--
June 1
STEP #1 RECORD THE DATEThe year and month are only written for
the first entry
©2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Account: Account No.
DATE ITEM PR DR. CR.BALANCE
DR. CR.
CASH 101
20--
LEAVE “ITEM”COLUMN BLANKUsed for special transactions only
June 1
©2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Account: Account No.
DATE ITEM PR DR. CR.BALANCE
DR. CR.
CASH 101
20--
STEP #2 ENTER THE
DEBIT AMOUNT
2,000June 1
©2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Account: Account No.
DATE ITEM PR DR. CR.BALANCE
DR. CR.
CASH 101
20--
STEP #3 ENTER THE NEW BALANCE OF THE
ACCOUNT
2,000 2,000June 1
©2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Account: Account No.
DATE ITEM PR DR. CR.BALANCE
DR. CR.
CASH 101
20--
STEP #4ENTER THE JOURNAL
PAGE NUMBER“J” for journal and “1” for page 1
2,000 2,000J1June 1
©2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
DATE DESCRIPTION PR DEBIT CREDIT
20--JUNE 1 CASH
J. JANE, CAPITAL 2000 00
2000 00
Owner’s original
investment in business
STEP #5ENTER THE LEDGER
ACCOUNT NUMBER IN THE GENERAL JOURNAL
1
2
3
4
5
101
©2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
©2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
• Used to prove the equality of the debits and credits
in the ledger accounts
• Can be prepared daily, weekly, monthly, or
whenever desired
• Prepared after all transactions have been
journalized and posted
Jessie Jane’s Campus Delivery
Trial Balance
June 30, 20--
Account Title Acct No. Debit Balance Credit BalanceCash
Accounts Receivable
Supplies
Prepaid Insurance
Delivery Equipment
Accounts Payable
Jessica Jane, Capital
Jessica Jane, Drawing
Delivery Fees
Wages Expense
Rent Expense
Telephone Expense
101
122
141
145
185
202
311
312
401
511
521
525
370 00
650 00
200 00
3600 00
1800 00
2000 00
80 00
150 00
2150 00
650 00
200 00
50 00
5950 00 5950 00©2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
©2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
6
Explain how to find
and correct errors.
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Sloppy Steve’s Trial Balance
December 31, 20--
Account Title Acct No. Debit Balance Credit BalanceCash
Accounts Receivable
Supplies
Prepaid Insurance
Office Equipment
Accounts Payable
Steve, Capital
Steve, Drawing
Delivery Fees
Wages Expense
Rent Expense
Telephone Expense
101
122
141
145
185
202
311
312
401
511
521
525
850 00
1650 00
600 00
6300 00
1800 00
3500 00
230 00
500 00
5550 00
450 00
200 00
70 00
10580 00 10700 00
Help!! My Trial Balance Doesn’t
Balance
©2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
©2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
• Double check your addition
Review balances:
o See if any are too large or small, relative to
other accounts, or entered in the wrong column
©2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
• Find the difference between the debits and
the credits
Is the difference the amount
of a specific transaction?
Perhaps I forgot to post the debit or credit part of that
transaction?
©2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
• Divide the difference by 2
Is this number the amount of a specific
transaction?
©2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Did I post the debit or credit twice, OR post the debit as a credit or vice
versa?
©2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
• Divide the difference by 9
If the difference is evenly divisible by 9,
you could have a slide error or a
transposition error
©2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
• Occur when the decimal point is “slid”
a digit or two to the right or left
• For example:
The amount was $250, but recorded as $25
The difference is $225 ($250 ÷ $25)
The difference is evenly divisible by 9
($225 ÷ 9 = 25)
©2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
• Occur when two digits are reversed
• For example:
The amount was $520, but recorded as
$250
The difference is $270 ($520 – $250)
The difference is evenly divisible by 9
($270 ÷ 9 = 30)
©2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
• If steps #1 and #2 don’t work:
Double check your addition for the
ledger accounts
Trace all postings
©2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
• Two methods:
Ruling method
Correcting entry method
• Erasing is NOT acceptable
It may suggest that you are trying to
hide something
©2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
• Used for two types of errors:
When an incorrect journal entry has been
made, but not yet posted
When a proper entry has been made but
posted to the wrong account or for the
wrong amount
DATE DESCRIPTION PR DEBIT CREDIT
20--SEPT 17 Entertainment Expense
Cash 650 00
650 00
Paid employees
1
2
3
4
5 18
6
Prepaid Insurance
Cash7 Paid premium for
8 eight-month insurance
9 policy
Wages Expense
©2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
©2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
• Used when an incorrect entry has been:
Journalized and
Posted to the wrong account
• A whole new entry must be made to correct
the accounts
©2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Assume that a $400 payment
for rent was incorrectly debited
to Repair Expense but correctly
credited to Cash.
©2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
I need to get $400 out of
Repair Expense and
into Rent Expense
DATE DESCRIPTION PR DEBIT CREDIT20--Sept. 25 Rent Expense 400 001
2
3
4
5
6
7
8
9
To put the $400 spenton rent into the
proper account
©2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
DATE DESCRIPTION PR DEBIT CREDIT
20--Sept. 25 Rent Expense
Repair Expense 400 00
400 001
2
3
4
5
6
7
8
9
To remove the $400 put in Repair Expense
by error
©2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
DATE DESCRIPTION PR DEBIT CREDIT
20--Sept. 25 Rent Expense
Repair Expense 400 00
400 00
To correct error in which
1
2
3
4
5
6
7
8
9
payment for rent was
debited to Repair Expense
To explain that this entry was made to correct an error in a prior transaction
©2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Account: Account No.
DATE ITEM PR DR. CR.BALANCE
DR. CR.
Rent Expense 521
20--Sept. 25 400 400J6Correcting
Indicates this came froma correcting entry in the
general journal
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Account: Account No.
DATE ITEM PR DR. CR.BALANCE
DR. CR.
Repair Expense 537
20--
Sept. 10 50 50J5
Correcting
15
25
J5
J6
400 450
400 50
The balance is now correct;the $400 error has been
removed©2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.