BBAW2103

Financial Accounting

Topic 3 : Recording
Process

Prepared by Liana Mohamad

[email protected]
Learning Outcomes

• Journal
• Ledger
• Trial Balance
Journalising and Posting Transactions

Assets = Liabilities + Equity

T- Account
(Left side) (Right side)
Debit Credit

Step 1: Analyze
Step 2: Apply double-entry
transactions and source
accounting
documents.

ACCOUNT NAME: ACCOUNT No.

Date Description PR Debit Credit Balance GENERAL JOURNAL G123

Post.
Date Description Ref. Debit Credit

Step 4: Post entry to ledger

Step 3: Record journal entry
Steps in Recording Process

Column
T-Account
Ledger

Posting
to Ledger

Trial
Journal Ledger
Balance
Rules of Debits and Credits

Assets = Liabilities + Equity

ASSETS LIABILITIES EQUITIES

Debit Credit Debit Credit Debit Credit

+ - - + - +
Rules of Debits and Credits

Equity
Owner’s Capital _ Owner’s _
Withdrawals + Revenues Expenses

Capital Withdrawals Revenues Expenses

Debit Credit Debit Credit Debit Credit Debit Credit

- + + - - + + -
Journalising Transactions

1. Transaction Date 2. Titles of Affected Accounts

GENERAL JOURNAL G1
Date Description REF Debit Credit
2019
Dec. 1 Cash 30,000
Taylor, Capital 30,000
Investment by owner

Dec. 2 Supplies
4. Transaction 3. Dollar2,500
amount of
explanation debits and credits
Cash 2,500
Purchased store supplies
Posting to T-accounts

A T-account represents a ledger account and is a tool used

to understand the effects of one or more transactions.

T- Account
(Left side) (Right side)
Debit Credit
Analysing Transactions – An Illustration

Chuck Taylor invested $30,000 in FastForward on 1

Transaction: Dec.
Analysis:

Assets = Liabilities + Equity

Cash Capital
30,000 30,000

Double entry:

(1) Cash 101 30,000

C. Taylor, Capital 301 30,000
Posting:
Cash 101 C. Taylor, Capital 301
(1) 30,000 (1) 30,000
Analysing Transactions – An Illustration

FastForward purchases supplies by paying $2,500

Transaction: cash.
Analysis:

Assets = Liabilities + Equity

Cash Supplies Capital
(2,500) 2,500

Double entry:

(2) Supplies 126 2,500

Cash 101 2,500
Posting:
Supplies 126 Cash 101
(2) 2,500 (1) 30,000 (2) 2,500
Analysing Transactions – An Illustration

FastForward purchases equipment by paying $26,000

Transaction: cash.
Analysis:

Assets = Liabilities + Equity

Cash Equipment Capital
(26,000) 26,000

Double entry:

(3) Equipment 167 26,000

Cash 101 26,000
Posting:
Equipment 167 Cash 101
(3) 26,000 (1) 30,000 (2) 2,500
(3) 26,000
Analysing Transactions – An Illustration

Transaction: FastForward purchases $7,100 of supplies on credit.

Analysis:

Assets = Liabilities + Equity

Supplies Accounts Payable Capital
7,100 7,100

Double entry:

(4) Supplies 126 7,100

Accounts payable 201 7,100
Posting:
Supplies 126 Accounts Payable 201
(2) 26,000 (4) 7,100
(4) 7,100
Analysing Transactions – An Illustration

FastForward provides consulting services and

Transaction: immediately collects $4,200 cash.
Analysis:

Assets = Liabilities + Equity

Cash Revenue
4,200 4,200

Double entry:

(5) Cash 101 4,200

Consulting Revenue 403 4,200

Posting:
Consulting Revenue 403 Cash 101
(5) 4,200 (1) 30,000 (2) 2,500
(5) 4,200 (3) 26,000
Balancing T-accounts

Compare the total debit DR and credit CR

Place the bigger amounts as total amount in both

Dr and Cr sides.

Deduct the amount on the smaller side.

Different in balance will be transferred to the

bottom.

This balance will be brought forward to the

opposite side.
Sample - Trial Balance

FastForward
Trial Balance
31 December 2019
Debits Credits The trial balance lists all
Cash RM 3,950 account balances in the
Accounts receivable - general ledger. If the books
Supplies 9,720 are in balance, the total
Prepaid Insurance 2,400 debits will equal the total
Equipment 26,000 credits.
Accounts payable RM 6,200
Unearned consulting revenue 3,000
C. Taylor, Capital 30,000
C. Taylor, Withdrawals 600
Consulting revenue 5,800
Rental revenue 300
Salaries expense 1,400
Rent expense 1,000
Utilities expense 230
Total RM 45,300 RM 45,300
Posting to Column Ledger

T-accounts are useful illustrations,

but balance column ledger accounts are used in
practice.

CASH ACCOUNT No. 101

Date Description REF Debit Credit Balance

2019
Dec. 1 Investment by owner 30,000 30,000
Dec. 2 Purchased supplies 2,500 27,500
Dec. 3 Purchased equipment 26,000 1,500
Dec. 10 Collection from customer 1,900 3,400
Analysing Transactions – An Illustration

Chuck Taylor invested $30,000 in FastForward on 1

Transaction: Dec.
Analysis:

Assets = Liabilities + Equity

Cash Capital
30,000 30,000

Double entry:

(1) Cash 101 30,000

C. Taylor, Capital 301 30,000
Posting to Column Ledger

GENERAL JOURNAL G1
Date Description REF Debit Credit
2019
Dec. 1 Cash 30,000
C. Taylor, Capital 30,000
Investment by owner

1
Dec. 2 Identify
Suppliesthe account. 2,500
Cash 2,500
CASH ACCOUNT No. 101
Purchased store supplies
for cash
Date Description REF Debit Credit Balance
2019

Dec. 3 Purchased equipment G1 20,000.00 ########

 Posting to Column Ledger

GENERAL JOURNAL G1
Date Description REF Debit Credit
2019
Dec. 1 Cash 30,000
C. Taylor, Capital 30,000
Investment by owner

Enter the date.

2Dec. 2 Supplies 2,500
Cash 2,500
CASH Purchased store supplies ACCOUNT No. 101
for cash
Date Description REF Debit Credit Balance
2019
Dec. 1

Dec. 3 Purchased equipment G1 20,000.00 ########

Posting to Column Ledger

GENERAL JOURNAL G1
Date Description REF Debit Credit
2019
Dec. 1 Cash 30,000
C. Taylor, Capital 30,000
Investment by owner

Enter the amount and description.

Dec. 2 Supplies 3
2,500
Cash 2,500
CASH Purchased store supplies ACCOUNT No. 101
for cash
Date Description REF Debit Credit Balance
2019
Dec. 1 Investment by owner 30,000

Dec. 3 Purchased equipment G1 20,000 (20,000)

Posting to Column Ledger

GENERAL JOURNAL G1
Date Description REF Debit Credit
2019
Dec. 1 Cash 30,000
C. Taylor, Capital 30,000
Investment by owner

Dec. 2 Supplies Enter the journal reference. 4 2,500

Cash 2,500
CASH Purchased store supplies ACCOUNT No. 101
for cash
Date Description REF Debit Credit Balance
2019
Dec. 1 Investment by owner G1 30,000

Dec. 3 Purchased equipment G1 20,000 (20,000)

Posting to Column Ledger

GENERAL JOURNAL G1
Date Description REF Debit Credit
2019
Dec. 1 Cash 101 30,000
C. Taylor, Capital 30,000
Investment by owner

Dec. 2 Supplies Enter the ledger reference.

2,500
6
Cash 2,500
CASH Purchased store supplies ACCOUNT No. 101
for cash
Date Description REF Debit Credit Balance
2019
Dec. 1 Investment by owner G1 30,000 30,000

Dec. 3 Purchased equipment G1 20,000 (20,000)

Posting to Column Ledger

GENERAL JOURNAL G1
Date Description REF Debit Credit
2019
Dec. 1 Cash 101 30,000
C. Taylor, Capital 30,000
Investment by owner

Dec. 2 Supplies Enter the ledger reference.

2,500
6
Cash 2,500
CAPITAL Purchased store supplies ACCOUNT No. 301
for cash
Date Description REF Debit Credit Balance
2019
Dec. 1 Investment by owner G1 30,000 30,000

Dec. 3 Purchased equipment G1 20,000 (20,000)

Analysing Transactions – An Illustration

Continue posting the journal entries to the

column ledger for the following transactions
Analysing Transactions – An Illustration

FastForward purchases supplies by paying $2,500

Transaction: cash.
Analysis:

Assets = Liabilities + Equity

Cash Supplies Capital
(2,500) 2,500

Double entry:

(2) Supplies 126 2,500

Cash 101 2,500
Analysing Transactions – An Illustration

FastForward purchases equipment by paying $26,000

Transaction: cash.
Analysis:

Assets = Liabilities + Equity

Cash Equipment Capital
(26,000) 26,000

Double entry:

(3) Equipment 167 26,000

Cash 101 26,000
Analysing Transactions – An Illustration

Transaction: FastForward purchases $7,100 of supplies on credit.

Analysis:

Assets = Liabilities + Equity

Supplies Accounts Payable Capital
7,100 7,100

Double entry:

(4) Supplies 126 7,100

Accounts payable 201 7,100
Analysing Transactions – An Illustration

FastForward provides consulting services and

Transaction: immediately collects $4,200 cash.
Analysis:

Assets = Liabilities + Equity

Cash Revenue
4,200 4,200

Double entry:

(5) Cash 101 4,200

Consulting Revenue 403 4,200
Sample - Trial Balance

FastForward
Trial Balance
31 December 2019
Debits Credits The trial balance lists all
Cash RM 3,950 account balances in the
Accounts receivable - general ledger. If the books
Supplies 9,720 are in balance, the total
Prepaid Insurance 2,400 debits will equal the total
Equipment 26,000 credits.
Accounts payable RM 6,200
Unearned consulting revenue 3,000
C. Taylor, Capital 30,000
C. Taylor, Withdrawals 600
Consulting revenue 5,800
Rental revenue 300
Salaries expense 1,400
Rent expense 1,000
Utilities expense 230
Total RM 45,300 RM 45,300
Searching for and Correcting Errors
If the trial balance does not balance, the
error(s) must be found and corrected.

Make sure the trial balance columns Recompute each account

are correctly added. balance in the ledger.

Make sure account balances are Verify that each journal entry is
correctly entered into the ledger. posted correctly.

See if debit or credit accounts are

Verify that each original journal
mistakenly placed on the trial
entry has equal debits and credits.
balance.
Thank You