Ads Area

Posting Journal Entries to Ledger Accounts

Posting Journal Entries to Ledger Accounts

The second step of accounting cycle is to post the journal entries to the ledger accounts.
The journal entries recorded during the first step provide information about which accounts are to be debited and which to be credited and also the magnitude of the debit or credit (see debit-credit-rules). The debit and credit values of journal entries are transferred to ledger accounts one by one in such a way that debit amount of a journal entry is transferred to the debit side of the relevant ledger account and the credit amount is transferred to the credit side of the relevant ledger account.
After posting all the journal entries, the balance of each account is calculated. The balance of an asset, expense, contra-liability and contra-equity account is calculated by subtracting the sum of its credit side from the sum of its debit side. The balance of a liability, equity and contra-asset account is calculated the opposite way i.e. by subtracting the sum of its debit side from the sum of its credit side.


The ledger accounts shown below are derived from the journal entries of Company A.

Asset Accounts

Cash Accounts Receivable
$100,000$36,000 $21,200$15,300
$20,430  $5,900 
Office Supplies Prepaid Rent
$17,600  $36,000 
$22,800  $36,000 

Liability Accounts

Accounts Payable Notes Payable
$17,600$17,600  $20,000
 $5,200  $20,000
Utilities Payable Unearned Revenue
 $2,470  $4,000
 $3,964  $4,000

Equity Accounts

Common Stock

Revenue, Dividend and Expense Accounts

Service Revenue Dividend
 $28,500 $5,000 
 $82,600 $5,000 
Wages Expense Miscellaneous Expense
$19,100  $3,470 
$38,200  $3,470 
Electricity Expense Telephone Expense
$2,470  $1,494 
$2,470  $1,494 
The ledger accounts step of accounting cycle completes here. The next step is the preparation of unadjusted trial balance.

Post a Comment

* Please Don't Spam Here. All the Comments are Reviewed by Admin.

Top Post Ad