Beginning the

Accounting Cycle:
Journalizing,
Posting,
and the Trial Balance

Chapter 3

© 2004 Prentice Hall Business Publishing, College Accounting: A Practical Approach, 9e by Slater 3-1
 Learning Objective 1

Journalizing: analyzing and

recording business
transactions into a journal.

© 2004 Prentice Hall Business Publishing, College Accounting: A Practical Approach, 9e by Slater 3-2
 Introduction

The accounting period

One year: Less than one year:

Calendar year Quarterly
Fiscal year Monthly

Accounting cycle

© 2004 Prentice Hall Business Publishing, College Accounting: A Practical Approach, 9e by Slater 3-3
 Learning Unit 3-1 (Analyzing and
Recording Business Transactions)

Business transactions occurred.

Analyzing transactions and recording.

Posting to the general ledger.

Preparing the trial balance.

© 2004 Prentice Hall Business Publishing, College Accounting: A Practical Approach, 9e by Slater 3-4
 Learning Unit 3-1 (Analyzing and
Recording Business Transactions)

What is the general journal?

It is the book of original entry.

Transactions are written in a

journal in chronological order.

Journalizing is the process of entering

information as debits and credits
to the correct accounts.
© 2004 Prentice Hall Business Publishing, College Accounting: A Practical Approach, 9e by Slater 3-5
 Learning Unit 3-1 (Analyzing and
Recording Business Transactions)

The accountant must refer to the chart of accounts

for the account name to be used in the journal.

© 2004 Prentice Hall Business Publishing, College Accounting: A Practical Approach, 9e by Slater 3-6
 Learning Unit 3-1 (Analyzing and
Recording Business Transactions)

What is the general ledger?

It is the book of final entry.

The information from the journal is transferred

to the ledger in the posting process.

Debits and credits in the journal

remain exactly the same when posted
to the accounts in the ledger.
© 2004 Prentice Hall Business Publishing, College Accounting: A Practical Approach, 9e by Slater 3-7
 Learning Unit 3-1 (Analyzing and
Recording Business Transactions)

Clark’s Word Processing Services

General Journal Page 1

Account Titles
Date and Description PR Dr. Cr.
200x
May 1 Cash 10,000
Brenda Clark, Capital 10,000
Initial investment of
cash by owner
© 2004 Prentice Hall Business Publishing, College Accounting: A Practical Approach, 9e by Slater 3-8
 Learning Unit 3-1 (Analyzing and
Recording Business Transactions)

Clark’s Word Processing Services

General Journal Page 1

Account Titles
Date and Description PR Dr. Cr.
200x
May 1 Equipment 6,000
Cash 1,000
Accounts Payable 5,000
Purchase of equipment
© 2004 Prentice Hall Business Publishing, College Accounting: A Practical Approach, 9e by Slater 3-9
 Learning Unit 3-1 (Analyzing and
Recording Business Transactions)

Clark’s Word Processing Services

General Journal Page 1

Account Titles
Date and Description PR Dr. Cr.
200x
May 1 Prepaid Rent 1,200
Cash 1,200
Rent paid in advance
– 3 months
© 2004 Prentice Hall Business Publishing, College Accounting: A Practical Approach, 9e by Slater 3 - 10
 Learning Unit 3-1 (Analyzing and
Recording Business Transactions)

Clark’s Word Processing Services

General Journal Page 1

Account Titles
Date and Description PR Dr. Cr.
200x
May 3 Office Supplies 600
Accounts Payable 600
Purchase of supplies on
account from Norris
© 2004 Prentice Hall Business Publishing, College Accounting: A Practical Approach, 9e by Slater 3 - 11
 Learning Objective 2

Posting: transferring information

from a journal to a ledger.

© 2004 Prentice Hall Business Publishing, College Accounting: A Practical Approach, 9e by Slater 3 - 12
 Learning Unit 3-2
(Posting to the Ledger)

Clark’s Word Processing Services

General Ledger
Cash Account No. 111
Post. Balance
Date Ref. Debit Credit Debit Credit
May 1 GJ1 10,000 10,000

Insert the number of the journal page.

© 2004 Prentice Hall Business Publishing, College Accounting: A Practical Approach, 9e by Slater 3 - 13
 Learning Unit 3-2
(Posting to the Ledger)

General Journal Page 1

Date Post.
200x Description Ref. Debit Credit

May 1 Cash 111 10,000

Brenda Clark, Capital 311 10,000
To record initial investment

Account Name: Cash Account Number: 111

Date Post. Balance
200x Description Ref. Debit Credit Debit Credit
May 1 GJ 1 10,000 10,000

© 2004 Prentice Hall Business Publishing, College Accounting: A Practical Approach, 9e by Slater 3 - 14
 Learning Objective 3

Preparing a trial balance.

© 2004 Prentice Hall Business Publishing, College Accounting: A Practical Approach, 9e by Slater 3 - 15
 Learning Unit 3-3
(Preparing the Trial Balance)

The trial balance lists the accounts which

have balances in the same order as
they appear in the chart of accounts.

The trial balance will show if

debits/credits have been interchanged.

It will show if amounts have been

transposed, or if a debit/credit
was omitted or recorded twice.
© 2004 Prentice Hall Business Publishing, College Accounting: A Practical Approach, 9e by Slater 3 - 16
 Learning Unit 3-3
(Preparing the Trial Balance)
Clark’s Word Processing Services
Trial Balance, May 31, 200x
Debit Credit
Cash 6,155
Accounts Receivable 5,000
Office Supplies 600
Prepaid Rent 1,200
Word Processing Equipment 6,000
Accounts Payable 3,350
Brenda Clark, Capital 10,000
Brenda Clark, Withdrawals 625
Word Processing Fees 8,000
Expenses 1,770
Totals 21,350 21,350
© 2004 Prentice Hall Business Publishing, College Accounting: A Practical Approach, 9e by Slater 3 - 17
 Learning Unit 3-3
(Preparing the Trial Balance)

Mathematical error in addition

Omission

Slide or transposition

© 2004 Prentice Hall Business Publishing, College Accounting: A Practical Approach, 9e by Slater 3 - 18
 Learning Unit 3-3
(Preparing the Trial Balance)

Some errors do not show, such as omissions

or recording to the wrong account.

Corrections before posting are made in the journal.

An audit trail must be left.

Do not erase – cross out errors and enter corrections.

© 2004 Prentice Hall Business Publishing, College Accounting: A Practical Approach, 9e by Slater 3 - 19
 Learning Unit 3-3
(Preparing the Trial Balance)

What about corrections after posting?

This means that errors are also in the ledger accounts.

Cross out incorrect amounts, change to

corrected amounts, and record balance changes.

© 2004 Prentice Hall Business Publishing, College Accounting: A Practical Approach, 9e by Slater 3 - 20
 End of Chapter 3

© 2004 Prentice Hall Business Publishing, College Accounting: A Practical Approach, 9e by Slater 3 - 21