FUNDAMENTALS OF ACCOUNTANCY,

BUSINESS AND MANAGEMENT 1

Week 6 and 7 (2nd Semester 4th Quarter)

Chapter 5: POSTING OF TRANSACTIONS IN THE GENERAL

AND SUBSIDIARY LEDGERS
Two (2) kinds of Accounting Books:
1. Journal - is referred to as the book of original entry. For each transaction
the journal shows the debit and credit effects on specific accounts.
2. Ledger - refers to the accounting book in which the accounts and their
related amounts as recorded in the journal are posted periodically. The ledger
is also called the ‘book of final entry’ because all the balances in the ledger
are used in the preparation of financial statements. This is also referred to as
the T-Account because the basic form of a ledger is like the letter ‘T’.

Two kinds of Ledgers:

1. General Ledger - (commonly referred by accounting professionals as GL) is
a grouping of all accounts used in the preparation of financial statements. The
GL is a controlling account because it summarizes all the activities that have
taken place as recorded in its subsidiary ledger.
2. Subsidiary Ledger - is a group of like accounts that contains the
independent data of a specific general ledger. A subsidiary ledger is created
or maintained if individualized data is needed for a specific general ledger
account. An example of a subsidiary ledger is the individual record of various Learning Task 1.6 (click/tap the link)
payables to suppliers. The total amount of these subsidiary ledgers should
equal the balance in the Accounts Payable general ledger. https://docs.google.com/forms/d/e/
1FAIpQLScx4PiO3riJjM01H1ugXQgbKeV2rLDixdtL0B3nA35NAGivFQ/
Two Main Subsidiary Ledgers: viewform?usp=sf_link
1. Accounts Payable Ledger – a subsidiary ledger containing only accounts for
vendors from whom merchandise or other items are purchased on account. It
records all of the accounts payables that a company owes. Learning Task 2.6
2. Accounts Receivable Ledger – a subsidiary ledger containing only accounts ABM Merchandising had the following transactions regarding purchases of
for charge customers. It is a summary of all current and outstanding accounts assets.
receivable at the end of a period. > > Part 1: Post it in a general ledger by using the specified format and by
using the following account codes: Furniture (1300), Office Supplies (1500),
Accounting cycle of a merchandising business: Equipment (1600), Accounts Payable (2000) and Purchases (5100). Use a
1. Transactions and/or Events 5. Worksheet separate sheet of paper for your answer.
2. Journal Entries 6. Adjusting Journal Entries (1 point per correct row entry (with correct balance amount) = TOTAL
3. Posting 7. Financial Statements 10pts
4. Trial Balance 8. Closing the Books ( 1 point per correct account HEADER (account name and number) =
TOTAL 5pts
(Note: This module focuses on the third step which is the transactions in a  January 06, 2020, purchased merchandise on account from ABC
merchandising business.) Company, Php24,000.00.
 January 07, 2020, purchased office supplies on account from DEF
In step 1, transactions are identified and measured. At this stage, the Bookstore, Php4,560.00
documents used by the business are analyzed to see whether these  January 12, 2020, purchased merchandise on account from GHI
transactions have financial impact or effect. Recall the rule that only financial Merchandising, Php15,000.00
transactions are recorded and that the amount can be measured. These two  January 17, 2020, purchased equipment on account from JKL Company,
conditions must exist in order for a particular transaction to be recognized or Php65,000.00
recorded. As defined, financial transactions are those activities that change  January 22, 2020, purchased furniture on account from MNO Home
the value of an asset, liability or equity. Center, Php12,500.00
Step 2 - is the Preparation of Journal Entries (Journalizing) A merchandising
company may use special and general journals to record its transactions.
Step 3 - Posting to the General Ledger. From the summary of transactions in
the special journals and general journals, the entries will now be posted in
each general ledger account.
Posting – means transferring the amounts from the journal to the appropriate
accounts in the ledger. > > Part 2: Post it in an Accounts Payable Subsidiary Ledger by using the
format below. Use the following code in vendor number . . . 001, 002, 003 etc.
The steps in posting journal entries to the ledger as follows: Use an imaginary address and contact number.
1. Transfer the date of the transaction from the journal to the ledger. (1 point for a complete header, and 1 point for the correct entry per row) =
2. Transfer the page number from the journal to the journal reference column TOTAL 10 points
of the ledger.
3. 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.
4. Enter the account number in the posting reference column of the journal
once the figure has been posted to the ledger.

Example:
ABM Merchandising had the following transactions regarding sales. Record
them in the sales journal, Post the totals in the general ledger accounts and
subsidiary ledger.
 January 03, 2020, Sold merchandise on account to TVL Merchandising
amounting to Php5,600.00. Invoice No. 1001.
 January 04, 2020, Sold merchandise on account to STEM Company
amounting to Php3,780.00. Invoice No. 1002
 January 05, 2020, Sold merchandise on account to SPORTS Company
amounting to 8,900.00. Invoice No. 1003.
Chapter 6: PREPARATION OF TRIAL BALANCE –
MERCHANDISING BUSINESS
The trial balance is a schedule or list of those debit and credit
balances which are extracted from various accounts in the ledger and
balances such as Cash On Hand and Cash In Bank as shown in the cash book
are also included in it. (R.N. Carter)
Trial Balance is prepared in a statement form that shows the debits
and credits of all accounts in the ledger and it is also called Statement of
Balances.

Objectives of a Trial Balance

1. to check the arithmetical accuracy of the ledger accounts.
2. to locate the errors.
3. to facilitate the preparation of the final accounts.

Purposes of a Trial Balance

1
 1. Trial Balance acts as the first step in the preparation of the financial
statements.
2. Trial Balance ensures that the account balances are accurately extracted
from the accounting ledgers.
3. Trial Balance assists in the identification and rectification of errors.
4. Trial Balance ensures that for every debit entry recorded, a
corresponding credit entry has been recorded in the books following the
double entry concept of accounting.

Format:

Learning Task 1.7 (click/tap the link)

https://docs.google.com/forms/d/e/
1FAIpQLSdaY_hq38EeLjUq81cex1lreccNuy41Cue4399GB7hFYR_3nw/
viewform?usp=sf_link

Learning Task 2.7

The learners may use the FORMAT and ACCOUNTS used on the sample given
on this module (under the topic: purpose of trial balance “Format”)

IMPORTANT NOTE: Create a BACKUP of your learning tasks

by taking its PCTURE.