How to Post Journal Entries to the General Ledger + Examples

For account titles, we will be using the chart of accounts presented in an earlier lesson. Let’s look at a payment of $1,000 with $800 going towards the loan balance and $200 being interest expense. This happens when the debit or credit amount is made up of multiple lines. Description includes relevant notes about the business transaction—so you know where the money is coming from or going to. You’re going to meet up with a client, pick up some office supplies, and stop by the bank to make a loan payment. Chartered accountant Michael Brown is the founder and CEO of Double Entry Bookkeeping.

Journal entries: Example

The carrying out of these instructions is known as posting. The video provides a clear description of where in the accounting cycle posting occurs. As stated earlier, posting is recording in the ledger accounts the information contained in the journal. The good news is you have already done the hard part — you have analyzed the transactions and created the journal entries.

• As a smaller grocery store, Colfax does not offer the variety of products found in a larger supermarket or chain.
• He has been a manager and an auditor with Deloitte, a big 4 accountancy firm, and holds a degree from Loughborough University.
• Recall that the general ledger is a record of each account and its balance.
• The next transaction figure of $100 is added directly below the January 12 record on the credit side.

Calculating Account Balances

This is posted to the Cash T-account on the debit side beneath the January 17 transaction. Accounts Receivable has a credit of $5,500 (from the Jan. 10 transaction). The record is placed on the credit side of the Accounts Receivable T-account across from the January 10 record. In the last column of the Cash ledger account is the running balance.

• The source journal is placed in this field, e.g., GJ for general journal, SJ for sales journal, CRJ for cash receipts journal, etc.
• And we take the total of cash payments from the cash payments journal (column «bank») and insert this on the credit side of the «bank» T-account.
• When posting entries to the ledger, move each journal entry into an individual account.
• Prepare Sun Ltd.’s account in Ted Ltd.’s books of ledger.
• How do we know on which side, debit or credit, to input each of these balances?

Steps in Posting in Accounting

For example, MicroTrain saw a 57.73% rise in Service Revenue and a 53.55% drop in Salaries Expense. Following the cycle closely gives a true picture of a company’s finances. This helps potential investors and the management team.

• The next transaction figure of $300 is added on the credit side.
• It is used in the process of posting transactions from the general journal to the general ledger.
• Transfer in general ledger takes place with the name of the account and amount carried forward in subledger or general journal along with entry details.
• There can be two accounts in the debit and one in the credit or one in the debit and two in credit part.
• This is posted to the Service Revenue T-account on the credit side.
• The balance at that time in the Common Stock ledger account is $20,000.

Keeping your ledger up-to-date can help you avoid penalties and ensure that your records give you an accurate picture of your business’s finances. There was a debit to Taxes and Licenses so posting in accounting we posted that in the left side (debit side) of the account. Cash was credited so we posted that on the right side of the account. Prepare Sun Ltd.’s account in Ted Ltd.’s books of ledger.

Below is an example of what the T-Accounts would look like for a company. It’s a crucial step where journal entries are transferred to the general ledger. Posting ensures each transaction is accurately recorded, maintaining the integrity of financial records. While modern accounting software streamlines the process, the principles of double-entry bookkeeping remain essential. Mastering posting is key to keeping your business finances in order and producing reliable financial statements.

We’ll be using double-entry examples to explain how journal entries work. Every journal entry in the general ledger will include the date of the transaction, amount, affected accounts with account number, and description. The journal entry may also include a reference number, such as a check number, along with a brief description https://www.bookstime.com/ of the transaction. Every transaction your business makes requires journal entries. They take transactions and translate them into the information you, your bookkeeper, or accountant use to create financial reports and file taxes. This is posted to the Cash T-account on the credit side beneath the January 18 transaction.

The general journal contains entries that don’t fit into any of your special journals—such as income or expenses from interest. It can also be the place you record adjusting entries. At the end of the accounting period, these items would be consolidated and posted into one line item in the general ledger. Let’s say a company has $3,000 worth of rent expenses per month that needs to be posted for the annual general ledger. A subsidiary ledger would contain details of the rent expenses, including a line item per month debited in “Rent” and credited in “Accounts Payable”. This will go on the debit side of the Supplies T-account.

Can Modern Accounting Software like QuickBooks Automate the Posting Process?

There is a T-account for each category in your accounting journal. After journal entries are made, the next step in the accounting cycle is to post the journal entries into the ledger. Posting refers to the process of transferring entries in the journal into the accounts in the ledger. Posting to the ledger is the classifying phase of accounting. In the ledger, two PR columns are found on each account – one after the particulars column of the debit side and one after that of the credit side.