ACCOUNTING CYCLE 3 & 4 – POSTING in the journals.

The process of recording

TO LEDGER AND PREPARING
UNADJUSTED TRIAL BALANCE
Learning Objectives:
1. Post transactions in the Ledger.
2. Prepare the Unadjusted Trial
Balance.
Steps in the accounting cycle:
1. Identifying and Analyzing
2. Journalizing
3. Posting
4. Unadjusted Trial Balance
5. Adjusting Entries
6. Adjusted Trial Balance
7. Financial Statements
8. Closing Entries
9. Post-closing Trial Balance
10. Reversing Entries
POSTING TO LEDGER
Posting– is the process of transferring
data from the journal to the appropriate
accounts in the ledger. More specifically,
posting is done by transferring the
amounts of debits and credits in a
recorded entry to the ledger accounts.
in the ledger is called "posting."
Kinds of ledgers
A. General ledger– contains all the
accounts appearing in the trial
balance.
B. Subsidiary ledger– provides a
breakdown of the balances of
controlling accounts.
*Controlling account (or control account)
is one which consists of a group of
accounts with similar nature. The
balance of the controlling account is
shown in the general ledger, while the
balances of accounts that comprise the
controlling account are shown in the
subsidiary ledger. Not all accounts in the
general ledger are controlling accounts.
Only those whose balances necessarily
need a breakdown are considered
controlling accounts.
Control Account

Purpose of posting– is to classify the

effects of transactions on specific asset,
liability, equity, income and expense Sample General Ledger
accounts in order to provide more Account 101 Account Title
meaningful information. Balance
Date Description PR Debit Credit
Dr. Cr.
Ledger– is a systematic compilation of a
group of accounts. It is used to classify the
effects of business transactions on the
accounts. The ledger is also called the
"book of secondary entries" or "book of • Account Number and Account Title
final entries" because it is used only after • Description/Particulars
business transactions are first recorded • Date
• Posting Reference
 • Debit and Credit amount prepared to check the equality of total
• Running Balance of the account debits and total credits in the ledger. The
preparation of the trial balance creates a
Example: starting point for the preparation of the
financial statements.

• Unadjusted Trial Balance or

Preliminary Trial Balance– is
prepared before adjusting entries are
made. Adjusting entries, and
consequently financial statements,
cannot be prepared unless the total
debit and credits in the unadjusted
trial balance are equal. Although
optional, a Preliminary trial balance
shall nevertheless be prepared
because it helps in revealing some
errors.

General Journal Page 1 Purpose of preparing a trial balance– is to

determine whether the total debits and
Account ACCOUNTS RECEIVABLE
120 total credits in the ledger are equal.
Balance • If total debits and total credits are not
Date Description PR Debit Credit
Dr. Cr. equal, an error surely exists.
Jan 9 Service rendered GJ-1 50,000 P50,000
on account • However, if total debits and total
credits are equal, it does not
necessarily mean that there are no
errors.

Errors revealed by a Trial Balance

The trial balance can reveal errors
that caused the total debits and total
credits to be unequal. Examples:
1. Journalizing or posting one-half of an
*(30,000+50,000=80,000) entry, i.e., a debit without a credit, or
*You may also use a T-Account to compute the vice versa.
ending balances. Refer to the previous installment 2. Recording one part of an entry for a
discussions. different amount than the other part.
3. Transplacement error on one side of
PREPARING THE “UNADJUSTED TRIAL an entry.
BALANCE” 4. Transposition error on one side of an
entry.
A trial balance is a list of general
ledger accounts and their balances. It is
➢ Transplacement error (Slide error) is 3. Equity;
committed when the number of digits 4. Income; and
in an amount is incorrectly increased 5. Expenses
or decreased. Example: A P1,000
amount is recorded as 100 or RECALL AGAIN!
P10,000.
Normal balances of accounts
➢ Transposition error is committed
when digits in an amount are The normal balance of an account is
Turista Travel and Tours
interchanged. Example: A P15,652 Unadjusted Trial Balance
amount is recorded as P15,625 or December 31, 20x1
____________________________________________________________________________
P15,265. ____
Accounts Debit Credit
s
Errors not revealed by a Trial Balance Cash
Accounts Receivable
P 280,000
100,000
Allowance for Bad Debts P 20,000
The trial balance cannot reveal errors Prepaid supplies 20,000
that do not cause the total debits and total Land 1,000,000
Building 2,000,000
credits to be unequal. Examples: Accumulated Depr.-Bldg. 600,000
Equipment 1,800,000
1. Omitting entirely the entry for a Accumulated Depr.-Equipt. 200,000
transaction. Accounts Paable 300,000
Salaries Payable 60,000
2. Journalizing or posting an entry Utilities Payable 20,000
twice. Owner’s, Capital
Owner’s, Drawings 40,000
500,000

3. Using a wrong account with the same Service Fees 3,000,000

Salaries Expense 630,000
normal balance as the correct Utilities Expense 23,000
account. Supplies Expense 30,000
Bad Debt Expense 10,000
4. Wrong computation with same Depreciation Expense 100,000
Advertising Expense 35,000
erroneous amount posted to both the Taxes and Licences 60,000
debit and credit sides Transportation and Travel Exp. 70,000
Miscellaneous Expense ________________2,000__________________________
Sample Unadjusted Trial Balance Totals P 6,200,000 P6,200,000

Heading of the Trial Balance the side where that account is increased.
The following are the normal balances of
1. Name of the business– answers the accounts:
question "Who?" (Ex. Turista Travel Type of Accounts Normal Balances
and Tours)
Asset Debit
2. Title of the report– answers the
Liability Credit
question "What?" (Ex. Unadjusted
Trial Balance or Preliminary Trial Equity Credit
Balance) Income Credit
3. Date of the report– answers the Expense Debit
question "When?" (Ex. December 31, *Contra Account Credit
20x1) *Adjunct Account Debit

Account titles listed in Unadjusted Rules of Debits and Credits

Trial Balance are in the following • To debit an account with a normal
order: debit balance means to increase that
1. Assets;
2. Liabilities;
 account. To credit it means to
decrease it.
• To credit an account with a normal
credit balance means to increase that
account. To debit it means to
decrease it.

References:

Millan, Z. V. B. (2019). Financial

Accounting & Reporting
(Fundamentals) (2nd Edition).
Bandolin Enterprise.

ICPAR Accounting Certification &

Training Institute Inc.
(2022). Certified
Bookkeeper Review Materials.