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Beginning the

Accounting Cycle:Journalizing, Posting,and the Trial Balance

Chapter 3

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Learning Objective 1

Journalizing: analyzing and

recording business

transactions into a journal.

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Introduction

Accounting cycle

The accounting period

One year:

Calendar year

Fiscal year

Less than one year:

Quarterly

Monthly

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Learning Unit 3-1 (Analyzing andRecording Business Transactions)

Business transactions occurred.

Analyzing transactions and recording.

Posting to the general ledger.

Preparing the trial balance.

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Learning Unit 3-1 (Analyzing andRecording 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.

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Learning Unit 3-1 (Analyzing andRecording Business Transactions)

The accountant must refer to the chart of accounts

for the account name to be used in the journal.

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Learning Unit 3-1 (Analyzing andRecording 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.

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Learning Unit 3-1 (Analyzing andRecording Business Transactions)

Clarks Word Processing Services

General Journal Page 1

Date

Account Titles

and Description PR Dr. Cr.

200x

May 1 CashBrenda Clark, Capital

Initial investment of

cash by owner

10,00010,000

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Learning Unit 3-1 (Analyzing andRecording Business Transactions)

Clarks Word Processing Services

General Journal Page 1

Date

Account Titles

and Description PR Dr. Cr.

200x

May 1 EquipmentCash

Accounts Payable

Purchase of equipment

6,0001,000

5,000

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Learning Unit 3-1 (Analyzing andRecording Business Transactions)

Clarks Word Processing Services

General Journal Page 1

Date

Account Titles

and Description PR Dr. Cr.

200x

May 1 Prepaid RentCash

Rentpaid in advance

3 months

1,2001,200

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Learning Unit 3-1 (Analyzing andRecording Business Transactions)

Clarks Word Processing Services

General Journal Page 1

Date

Account Titles

and Description PR Dr. Cr.

200x

May 3 Office SuppliesAccounts Payable

Purchase of supplies on

account from Norris

600600

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Learning Objective 2

Posting: transferring information

from a journal to a ledger.

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Learning Unit 3-2(Posting to the Ledger)

Date

Post.

Ref. Debit Credit Debit Credit

Balance

May 1 GJ1 10,000 10,000

Clarks Word Processing Services

General LedgerCash Account No. 111

Insert the number of the journal page.

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Learning Unit 3-2(Posting to the Ledger)

Account Name: Cash Account Number: 111

Date Post. Balance

200x Description Ref. Debit Credit Debit Credit

May 1 GJ 1 10,000 10,000

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

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Learning Objective 3

Preparing a trial balance.

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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.

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Learning Unit 3-3(Preparing the Trial Balance)

Clarks Word Processing Services

Trial Balance, May 31, 200x

Cash

Accounts Receivable

Office Supplies

Prepaid Rent

Word Processing Equipment

Accounts Payable

Brenda Clark, CapitalBrenda Clark, Withdrawals

Word Processing Fees

Expenses

Totals

Debit Credit

6,155

5,000

600

1,200

6,000

3,350

10,000625

8,000

1,770

21,350 21,350

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Learning Unit 3-3(Preparing the Trial Balance)

Mathematical error in addition

Omission

Slide or transposition

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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 erasecross out errors and enter corrections.

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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 tocorrected amounts, and record balance changes.

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End of Chapter 3