CHAPTER 5 Postings to ledger

accounts and the trial balance

Learning outcome
To be able to post journal entries for a
double-entry system to the general
ledger accounts to prepare a trial
balance

PPTs to accompany Accounting and Bookkeeping Principles and Practice by AAT & David Willis
 2011 McGraw-Hill Australia Pty Ltd 5-1
KEY TERMS
• Creditors
• Debtors
• Control accounts
• Rules of double entry
• Trial balance
• Errors in a trial balance

PPTs to accompany Accounting and Bookkeeping Principles and Practice by AAT & David Willis
 2011 McGraw-Hill Australia Pty Ltd 5-2
GENERAL LEDGER ACCOUNTS
Journal totals posted to ledgers to:
– summarise information
– classify information

Facilitates:
– locating information
– extracting information

PPTs to accompany Accounting and Bookkeeping Principles and Practice by AAT & David Willis
 2011 McGraw-Hill Australia Pty Ltd 5-3
TRANSACTION FLOWCHART

Figure 5.1 Flowchart of transactions into accounting records

PPTs to accompany Accounting and Bookkeeping Principles and Practice by AAT & David Willis
 2011 McGraw-Hill Australia Pty Ltd 5-4
DOUBLE-ENTRY RULES
DEBIT SIDE (DR) CREDIT SIDE (CR)

Increases ASSETS
Decreases

Increases EXPENSES Decreases

Decreases EQUITY Increases

Decreases REVENUE Increases

Decreases LIABILITIES Increases

PPTs to accompany Accounting and Bookkeeping Principles and Practice by AAT & David Willis
 2011 McGraw-Hill Australia Pty Ltd 5-5
DOUBLE-ENTRY RULES cont.
Debit Credit
ASSETS
EXPENSES
Increases Decreases

Debit Credit
EQUITY
REVENUE
LIABILITIES
Decreases Increases

PPTs to accompany Accounting and Bookkeeping Principles and Practice by AAT & David Willis
 2011 McGraw-Hill Australia Pty Ltd 5-6
SUMMARY OF DOUBLE-ENTRY
RULES
Account balance
ASSETS Debit increase Credit decrease
EXPENSES Debit increase Credit decrease

EQUITY Debit decrease Credit increase

REVENUE Debit decrease Credit increase

LIABILITIES Debit decrease Credit increase

PPTs to accompany Accounting and Bookkeeping Principles and Practice by AAT & David Willis
 2011 McGraw-Hill Australia Pty Ltd 5-7
DEBTORS CONTROL ACCOUNT
DEBIT CREDIT
 Total sales return
 Opening balance
journal
 Total of sales  Cash received from
journal debtors

 Interest on overdue
 Discount allowed
accounts

 Dishonoured
 Bad debts
cheques
 Bad debt recovered  Contras
 Closing balance

PPTs to accompany Accounting and Bookkeeping Principles and Practice by AAT & David Willis
 2011 McGraw-Hill Australia Pty Ltd 5-8
CREDITORS CONTROL
ACCOUNT
DEBIT CREDIT
 Cash paid to creditors  Opening balance
 Discount received  Total of purchases
 Contras journal
 Closing balance  Interest charged on
overdue accounts

PPTs to accompany Accounting and Bookkeeping Principles and Practice by AAT & David Willis
 2011 McGraw-Hill Australia Pty Ltd 5-9
TRIAL BALANCE
• Ensures ledgers are balanced
• Every debit has a corresponding credit
• Lists all general ledger accounts, with
balances, in numerical order

PPTs to accompany Accounting and Bookkeeping Principles and Practice by AAT & David Willis
 2011 McGraw-Hill Australia Pty Ltd 5-10
TRIAL BALANCE cont.
• Separate columns for debit balances and
credit balances show if total debits equal total
credits
• Control accounts, not subsidiary accounts,
appear in trial balance
• ‘Nil’ balances usually not included

PPTs to accompany Accounting and Bookkeeping Principles and Practice by AAT & David Willis
 2011 McGraw-Hill Australia Pty Ltd 5-11
CHECKLIST FOR POSTING FROM
JOURNALS TO LEDGER ACCOUNTS
JOURNAL POSTINGS

Purchases (PJ) CREDIT

• Creditors control account
DEBIT
• Purchases column to the Purchases a/c
• Total GST column to the GST input a/c
• From ‘Other’ column, debit asset purchases
and expenses to the relevant accounts

PPTs to accompany Accounting and Bookkeeping Principles and Practice by AAT & David Willis
 2011 McGraw-Hill Australia Pty Ltd 5-12
CHECKLIST FOR POSTING FROM
JOURNALS TO LEDGER ACCOUNTS cont.
SALES (SJ) DEBIT
• Debtors control account
CREDIT
• Sales column to the Sales account
• Total GST column to the GST collected account
• From ‘Other’ column for asset sales, credit to the
relevant accounts

CASH RECEIPTS DEBIT

(CRJ)
• Totalcash received to Cash at bank account
• Discount allowed column
CREDIT
• Debtors control account
• Sales column to the Sales account
• Total GST column to the GST collected account
• From ‘Other’ column, credit each account for the
amounts shown

PPTs to accompany Accounting and Bookkeeping Principles and Practice by AAT & David Willis
 2011 McGraw-Hill Australia Pty Ltd 5-13
CHECKLIST FOR POSTING FROM
JOURNALS TO LEDGER ACCOUNTS cont.
CASH PAYMENTS CREDIT
(CPJ)
• Total cash paid to Cash at bank account
• Discount revenue column
DEBIT
• Creditorscontrol account
• Purchases column to the Purchases a/c
• Total GST column to the GST input a/c
• From ‘Other’ column, debit each account for the
amounts shown

GENERAL (GJ) Post these in date order:

DEBIT every a/c in the debit column
CREDIT every a/c in the credit column

PPTs to accompany Accounting and Bookkeeping Principles and Practice by AAT & David Willis
 2011 McGraw-Hill Australia Pty Ltd 5-14