Acctg.

Ed 1 - Financial Accounting & Reporting

Unit 2

Application of Accounting Concepts & Principles

Module 7

Posting to Ledger
Acctg. Ed 1 - Financial Accounting & Reporting

Unit 2 – Application of Accounting Concepts & Principles

Unit 2 applies accounting concepts and principles into real business transactions. It will
cover deeper discussion on accounting equation, types of major accounts, books of accounts
and double entry system, business transactions and their analysis, posting to ledger and
adjusting entries.

Module 7– Posting to the Ledger

This module covers concepts and practical application on how to post recorded
transactions and prepare unadjusted trial balance.

Objectives

At the end of the module, you should be able to:

1. Post transactions in the ledger.

2. Prepared the unadjusted trial balance.

Steps in the accounting cycle:

8. Closing entries
1. Identifying and analyzing
9. Post-closing trial balance
2. Journalizing
10. Reversing entries
3. Posting

4. Unadjusted trial balance

POSTING
5. Adjusting entries Finished
6. Adjusted trial balance (and/or worksheet)
This module
7. Financial statements
Posting, the 3rd step in the accounting cycle, is the process of transferring data from the
journal to the appropriate accounts in the ledger. More specifically, posting is done by
transferring the amounts of debits and credits in a recorded journal entry to the ledger
accounts.

The purpose of posting is to classify the effects of transactions on specific asset, liability,
equity, income and expense accounts in order to provide more meaningful information.

Illustration 1: Posting
A business had the following transactions during the second week of January:
Date Transactions

Jan. 8 Services worth P30,000 were rendered for cash.

Jan. 9 Services worth P50,000 were rendered on account.

Jan. 10 Cash amounting to P5,000 was disbursed for

supplies expense.

Jan. 11 Accounts receivable of P40,000 was collected.

Acctg. Ed 1 - Financial Accounting & Reporting

The transactions are recorded in the journal as follows:

JOURNAL
Date Debit Credit
Account titles
Jan. 8 Cash 30,000
Service fees 30,000
to record service fees

Jan. 9 Accounts receivable 50,000

Service fees 50,000
to record service fees

Jan. 10 Supplies expense 5,000

Cash 5,000
to record cash disbursement
for supplies expense
Jan. 11 Cash 40,000
Accounts receivable 40,000
to record collection of
accounts receivable

Although the transactions have already been recorded, the journal does not provide readily
information on, for example, the following:
• How much are the total service fees earned during the week?
• How much are the total expenses incurred during the week?
• How much are the total collections during the week?
• How much are the total cash disbursements during the week?
• If the cash balance at the beginning of the week was P40,000, how much is the cash
balance at the end of the week?
• How much accounts receivable are outstanding at the end of the week?

We need this information if we are to prepare meaningful accounting reports. To answer the
questions, we need to classify the effects of the transactions on specific asset, liability, equity,
income and expense accounts. This procedure is called posting.
Acctg. Ed 1 - Financial Accounting & Reporting

1. The Jan. 8 transaction is posted as follows:

FROM:
JOURNAL
Date Debit Credit
Account titles
Jan. 8 Cash 30,000
Service fees 30,000
to record service fees

TO:
GENERAL LEDGER

Cash Service Fees

Dr. Cr. Dr. Cr.
Beg. Bal. 40,000
Jan. 8 30,000 30,000 Jan. 8

Notes:
• Posting simply involves transferring the debit and credit amounts of a journal entry to the
affected accounts in the ledger.
• Accounts in the ledger resemble a “T-account.”

2. The Jan. 9 transaction is posted as follows:

FROM:
JOURNAL
Date Debit Credit
Account titles
Jan. 9 Accounts receivable 50,000
Service fees 50,000
to record service fees

TO:
GENERAL LEDGER

Accounts receivable Service Fees

Dr. Cr. Dr. Cr.
Jan. 9 50,000 30,000 Jan. 8
50,000 Jan. 9
Acctg. Ed 1 - Financial Accounting & Reporting
3. The Jan. 10 transaction is posted as follows:

FROM:
JOURNAL
Date Debit Credit
Account titles
Jan. 10 Supplies expense 5,000 Cash 5,000 to record cash disbursement
for supplies expense

TO:
GENERAL LEDGER

Supplies expense Cash

Dr. Cr. Dr. Cr.
Jan. 10 5,000 Beg. Bal. 40,000
Jan. 8 30,000
5,000 Jan. 10

4) The Jan. 11 transaction is posted as follows:

FROM:
JOURNAL
Date Debit Credit
Account titles
Jan. 11 Cash 40,000 Accounts receivable 40,000 to record collection of
accounts receivable

TO:
GENERAL LEDGER

Cash Accounts receivable

Dr. Cr. Dr. Cr.
Beg. Bal. 40,000 Jan. 10 50,000
Jan. 8 30,000 40,000 Jan. 11 5,000 Jan. 10
Jan. 11 40,000
Acctg. Ed 1 - Financial Accounting & Reporting

The ending balances of the accounts are determined as follows:

GENERAL LEDGER
ASSETS
Cash Accounts receivable
Dr. Cr. Dr. Cr.
Beg. Bal. 40,000 Jan. 10 50,000
Jan. 8 30,000 40,000 Jan. 11
5,000 Jan. 10
Jan. 11 40,000
End. Bal. 105,000 End. Bal. 10,000

INCOME (REVENUE) EXPENSE

Service fees Supplies expense
 Dr. Cr. Dr. Cr.
30,000 Jan. 8
50,000 Jan. 9
Jan. 10 5,000
80,000 End. Bal. 5,000

We can now readily answer the previous questions.

• How much is the total service fees for the week?
Answer: 80,000 (see ending balance in the general ledger)
• How much are the total expense incurred during the week?
Answer: 5,000 (see ending balance in the general ledger)
• How much is the total cash collections during the week?
Answer: 70,000

The total cash collections for the week is the sum of the debits to the “Cash” account during
the period:

Cash
Dr. Cr.
Total cash collections: Jan. 8 30,000
5,000 Jan. 10
(30,000 + 40,000) = 70,000
Jan. 11 40,000
Beg. Bal. 40,000
End. Bal. 105,000

• How much is the total cash disbursements during the week?

Answer: 5,000

The total cash disbursements for the week is the sum of the credits to the “Cash” account
during the period:
Acctg. Ed 1 - Financial Accounting & Reporting Jan. 11 40,000
End. Bal. 105,000

Cash
Dr. Cr.
Beg. Bal. 40,000
Jan. 8 30,000 Total cash disbursements: 5,000
5,000 Jan. 10

• If the cash balance at the beginning of the week was P40,000, how much is the cash
balance
Answer: 105,000

• How much accounts receivable is outstanding at the end of the week?

Answer: 10,000
To summarize the steps in recording transactions:
Step #1: Transaction analysis
• Identify the accounts (account titles) affected by the transaction and the
effects of the transaction these accounts (increase or decrease)

Step #2: Journalizing

• The transaction is recorded in debit/credit from (journal entry) in the
journal.

Step #3: Posting

• The debit(s) and credit(s) of the journal entry are transferred to the affected
accounts in the ledger.

Illustration 2: Overview of the Recording Process

Transaction:
On March 31, 20x1, the business pays employee salaries for the current month amounting to
P30,000.

Step #1: Transaction analysis

Accounts affected: “Salaries expense” (expense) and “Cash” (asset)

Effects on accounts: Expense is increased. Cash is decreased.

Debit/Credit: Expense is increased through debit. Asset is decreased

through credit.

Acctg. Ed 1 - Financial Accounting & Reporting

Step #2: Journal entry

JOURNAL
Date Debit Credit
Account titles
M ar. 31, 20x1 Salaries expense 30,000 Cash 30,000 to record salaries expense

Step #3: Posting

Cash Salaries expense

Dr. Cr. Dr. Cr.
30,000 Mar-31 30,000
Acctg. Ed 1 - Financial Accounting & Reporting

PREPARING THE UNADJUSTED TRIAL BALANCE

A trial balance is a list of general ledger accounts and their balances. It is prepared to check
the equality of total debits and total credits in the ledger. The preparation of the trial balance
creates a starting point for the preparation of the financial statements.

Types of Trial Balance

a. Unadjusted trial balance – this is prepared before adjusting entries are made.
 Adjusting entries, and consequently financial statements, cannot be prepared unless
the total debits and credits in the unadjusted trial balance are equal.
b. Adjusted trial balance – this is prepared after adjusting entries but before the
financial statements are prepared.
c. Post-closing trial balance – this is prepared after the closing process.

Errors revealed by a trial balance

The trial balance can reveal errors that caused the total debits and total credits to be unequal.
Examples:
1. Journalizing or posting one-half of an entry, i.e., a debit without a credit, or vice versa.
2. Recording one part of an entry for a different amount than the other part. 3.
Transplacement error on one side of an entry.
4. Transposition error on one side of an entry

Transplacement error (Slide error) is committed when the number of digits in an amount is
incorrectly increased or decreased, for example, a P1,000 amount is recorded as P100 or
P10,000.

Transposition error is committed when digits in an amount are interchanged, for

example, a P15,652 amount is recorded as P15,625 or P15,265.

Errors not revealed by a trial balance

The trial balance cannot reveal errors that do not cause the total debits and total credits to
be unequal. Examples:
1. Omitting entirely the entry for a transaction
2. Journalizing or posting an entry twice
3. Using a wrong account with the same normal balance as to the correct account. 4.
Wrong computation with same erroneous amount posted to both the debit and credit sales.

Illustration 1: Unadjusted Trial Balance Preparation

On January 1, 20x1, Mr. Tiger Astig started a laundry business called “Tiga Laba Laundry
Shop.” The following were the transactions during the first week of operations:
Jan. Transactions

1 Provided P500,000 cash as initial investment to the business

2 Acquired a washing machine for P200,000 cash.

3 Acquired a dryer machine for P100,000 cash.

4 Purchased supplies for P20,000 cash.

5 Rendered laundry services worth P15,000 on cash basis.

6 Rendered laundry services worth P10,000 on account.

Acctg. Ed 1 - Financial Accounting & Reporting

7 Paid P2,500 to an employee representing her week’s salary.

The journal entries for the above transactions are as follows:

 JOURNAL
Date Debit Credit
Account titles
Jan. 1 Cash 500,000
Astig, Capital 500,000
to record the owner's contribution

2 Equipment - Washing machine 200,000

Cash 200,000
to record the acquisition of
equipment
3 Equipment - Dryer 100,000
Cash 100,000
to record the acquisition of
equipment
4 Prepaid supplies 20,000
Cash 20,000
to record the purchase of
supplies
5 Cash 15,000
Service fees 15,000
to record service fees

6 Accounts receivable 10,000

Service fees 10,000
to record service fees

7 Salaries expense 2,500

Cash 2,500
to record salaries expense

The journal entries are posted to the ledger as follows:

Acctg. Ed 1 - Financial Accounting & Reporting

ASSETS
Cash Accounts receivable
1 500,000 6 50,000
200,000 2 5 15,000 20,000 4 2,500 7
100,000 3 10,000

Bal. 192,500 Bal. 10,000

Prepaid supplies
4 20,000
Bal. 20,000
 Equipment - Washing Equipment - Dryer
2 200,000 3 100,000
Bal. 200,000 Bal. 100,000

EQUITY (CAPITAL)
Astig, Capital
500,000 1
500,000 Bal.

INCOME (REVENUE) EXPENSE

Service fees Supplies expense
7 2,500
15,000 5
10,000 6
25,000 Bal. 2,500

Tiga Laba Laundry Shop

Unadjusted Trial Balance
January 7, 20x1
Accounts Debit Credit
Cash P 192,500
Accounts receivable 10,000
Prepaid supplies 20,000
Equipment - Washing 200,000
Equipment - Dryer 100,000
Astig, Capital P 500,000
Service fees 25,000
Salaries expense 2,500
Totals 525,000 525,000

Notes:
• The unadjusted trial balance is simply a list of the ending balances of accounts in the
general ledger.

• The heading of the trial balance consists of the following:

1. Name of the business (i.e., Tiga Laba Laundry Shop) – answer the question “Who?”
2. Title of the report (i.e., Unadjusted Trial Balance) – answer the question “Wha?t” 3.
Date of the report (i.e., January 7, 20x1) – answers the question “When?”
Acctg. Ed 1 - Financial Accounting & Reporting

• Account titles are listed in the unadjusted trial balance in the following order
1. Assets;
2. Liabilities;
3. Equity (Capital);
4. Income (Revenue); and
5. Expenses.

• Recall again the normal balances of accounts:

1. Assets and Expenses DEBIT
2. Liabilities, Equity and Income CREDIT

Illustration 2: Unadjusted Trial Balance Preparation

“Turista Travel and Tours” have the following account balances on December 31, 20x1:
Accounts Balances Accounts payable 300,000
Accounts receivable 100,000 Accumulated depreciation -
Building 600,000 Accumulated depreciation - Equipment
200,000 Advertising expense 35,000 Allowance for bad
debts 20,000 Bad debt expense 10,000 Building
2,000,000 Cash 280,000 Depreciation expense
100,000 Equipment 1,800,000 Land 1,000,000
Miscellaneous expense 2,000 Owner's capital
2,000,000 Owner's drawings 40,000 Prepaid supplies
20,000 Salaries expense 630,000 Salaries payable
60,000 Service fees 3,000,000 Supplies expense
30,000 Taxes and licenses 60,000 Transportation and
travel expense 70,000 Utilities expense 23,000 Utilities
23,000
payable 20,000
Requirement: Prepare the unadjusted trial balance.
Acctg. Ed 1 - Financial Accounting & Reporting

Turista Travel and Tours

Unadjusted Trial Balance
December 31, 20x1

Debit Credit
Cash 280,000
Accounts receivable 100,000
Allowance for bad debts 20,000 Prepaid supplies 20,000
Land 1,000,000
Building 2,000,000
Accumulated depreciation - Bldg. 600,000 Equipment 1,800,000
Accumulated depreciation - Equipment 200,000 Accounts payable 300,000
Salaries payable 60,000 Utilities payable 20,000 Owner's capital 2,000,000
Owner's drawing 40,000
Service fees 3,000,000 Salaries expense 630,000
Utilities expense 23,000
Supplies expense 30,000
Bad debt expense 10,000
Depreciation expense 100,000
Advertising expense 35,000
Taxes and licenses 60,000
Transportation & Travel expense 70,000
Miscellaneous expense 2,000
Totals 6,200,000 6,200,000
SAQ # 1

Identify the following:

1. ___________ is the process of transferring the amounts of debits and credits in a
recorded journal entry to the ledger accounts
2. _______________ of an account is the difference between the total debits and total
credits in that account.
3. The 10 steps in the accounting cycle are:
a. _________________________

20,000
Acctg. Ed 1 - Financial Accounting & Reporting

b. _________________________
c. __________________________
d. __________________________
e. __________________________
f. __________________________
g. __________________________
h. __________________________
i. __________________________
j. __________________________
4. A __________________ is a list of general ledger accounts and their balances. 5.
The three (3) types of trial balances are:
a. ______________________;
b. ______________________;
c. ______________________.

ASAQ # 1

Identify the following:

1. __POSTING__ is the process of transferring the amounts of debits and credits in a
recorded journal entry to the ledger accounts
2. __ENDING BALANCE___ of an account is the difference between the total debits and
total credits in that account.
3. The 10 steps in the accounting cycle are:
a. __IDENTIFYING AND ANALYZING__
b. __JOURNALIZING___
c. __POSTING___
d. __UNADJUSTED TRIAL BALANCE____
e. __ADJUSTING ENTRIES_____
f. __ADJUSTED TRIAL BALANCE (and/or WORKSHEET)___
g. __FINANCIAL STATEMENTS______
h. __CLOSING ENTRIES______
i. __POST-CLOSING TRIAL BALANCE_____
j. __REVERSING ENTRIES______
4. A __TRIAL BALANCE _ is a list of general ledger accounts and their balances. 5.
The three (3) types of trial balances are:
a. __Unadjusted trial balance__;
b. __Adjusted trial balance___;
c. __Post-closing trial balance__.
Acctg. Ed 1 - Financial Accounting & Reporting
 Activity No. 1
Journalizing, Posting & Unadjusted Trial Balance
Requirement: Provide the journal entries to record the transactions.
Feb. 1 The sole proprietor of Entity A invested P200,000 cash and new equipment
worth P100,000 to the business.

Feb. 12 Entity A rendered services worth P70,000, on account.

Feb. 17 Entity A rendered services worth P20,000, on cash basis.

Feb. 23 Entry A collected accounts receivable of P12,000.

Feb. 27 The sole proprietor of Entity A withdrew P4,000 cash from the business

Feb. 28 Entity A paid salaries expense of P10,000, supplies expense of P3,000 and
rent expense of P18,000 for the month of February 20x1

Requirements:
a. Provide the journal entries.
b. Post the entries to the ledger (use T-accounts).
c. Prepare the unadjusted trial balance as of February 28, 20x1

Activity No. 2
Posting
Entity B had the following transactions during the period:
1. The sole owner provided P800,000 capital to the business.
2. Entity B rendered services worth P300,000, on account.
3. Entity B rendered services worth P40,000, on cash basis.
4. Entity B collected P120,000 accounts receivable.
5. Entity B paid utilities expense of P10,000.

Requirements:
a. Provide the journal entries.
b. Post the entries to the ledger. Use T-accounts for this purpose. Arrange the T-accounts in
this order: Assets, Liabilities, Equity, Income and Expenses.
c. Answer the questions below:
1) How much are the total service fees earned during the period?
2) How much are the total collections from clients during the period?
3) How much are the total disbursements during the period?
4) How much cash does the business have at the end of the period?
5) How much are the outstanding accounts receivable from clients at the end of the
period?
Acctg. Ed 1 - Financial Accounting & Reporting

Activity 3
Posting
 Entity C had the following transactions during the period:
1. Owner invested P1,000,000 cash to the business.
2. Purchased equipment worth P58,000 for cash.
3. Purchased office supplies worth P300,000 on account (use an asset account).
4. Paid P100,000 accounts payable.
5. Rendered services worth P500,000, on cash basis.
6. Rendered services worth P800,000, on account.
7. Collected P700,000 accounts receivable.
8. Paid salaries expense of P70,000.
9. Paid interest expense of P5,000.
10.Owner withdrew P10,000 cash from the business.

Requirements:
a. Provide the journal entries.
b. Post the entries to the ledger (use T-accounts)

Activity 4
Unadjusted Trial Balance

George Handyman Services had the following account balances as of December 31, 20x1:

Accounts payable 32,000

Accounts receivable 320,000

Accumulated depreciation 400,000

Building 500,000

Cash 970,000

Interest expense 96,000

Land 700,000

Notes payable 800,000

Capital (Owner’s Equity) 920,000

Prepaid rent 50,000

Salaries expense 240,000

Service fees 796,000

Utilities expense 72,000

.
Requirement: Prepare the unadjusted trial balance. Make sure you provide a proper heading
for the report and present the accounts in their correct sequence.
Acctg. Ed 1 - Financial Accounting & Reporting
Activity 5
Unadjusted Trial Balance

Entity A’s accounts have the following balances as of December 31, 20x1:

Accounts payable 100,000

Accounts receivable 400,000

Accumulated depreciation 400,000

Allowance for bad debts 16,000

Bad debts expense 2,000

Cash 890,000

Depreciation expense 200,000

Office equipment 1,000,000

Owner’s drawings 10,000

Owner’s equity (Capital) 291,000

Prepaid insurance 30,000

Prepaid supplies 50,000

Salaries expense 420,000

Salaries payable 60,000

Service fees 2,200,000

Supplies expense 5,000

Taxes and licenses 60,000

Requirement: Prepare the unadjusted trial balance. Make sure you provide a proper heading
for the report and present the accounts in their correct sequence.

Activity 6
Posting & Unadjusted Trial Balance

The following were Entity D’s transactions during the first week of its operations:
Feb Transactions
.

1 The owner contributed P400,000 cash to the business.

2 Acquired computer equipment for P180,000 cash.

 4 Purchased office supplies for P20,000 cash.

5 Rendered services worth P40,000 on cash basis.

7 Paid P8,000 salaries of employees

Requirements:
a. Provide the journal entries.
b. Post the entries to the ledger (use T-accounts).
c. Prepare the unadjusted trial balance on February 7, 20x1.
Acctg. Ed 1 - Financial Accounting & Reporting

Activity 7
Posting & Unadjusted Trial Balance

You opened a servicing business on January 1, 20x1. Your business’ DTI-registered name is
“Mind Your Own Business” (MYOB). MYOB’s transactions during the year are summarized
below:

1. You invested P400,000 cash to the business.

2. MYOB obtained a P500,000 loan.
3. MYOB placed a newspaper ad worth P35,000.
4. MYOB purchased equipment worth P380,000 for cash.
5. MYOB rendered services worth P200,000, on cash basis.
6. MYOB rendered services worth P420,000, on account.
7. MYOB collected P300,000 accounts receivable.
8. MYOB paid half of the loan in #2 above plus interest expenses of P60,000.
9. MYOB paid supplies expense of P16,000.
10.MYOB paid utilities expense of P72,000.
11.MYOB paid salaries expense of P120,000.
12.You withdrew P90,000 cash from the business.

Requirements:
a. Provide the journal entries.
b. Post the entries to the ledger (use T-accounts).
c. Prepare the unadjusted trial balance.

Activity 8
Posting & Unadjusted Trial Balance

Entity A started operations on January 1, 20x1. The following were the transactions during
the first week of operations:
Jan. Transactions

1 The owner provided P600,000 cash as initial investment to the business.

2 The business acquired a building for P400,000 cash.

3 The business acquired office equipment for P100,000 cash.

 4 The business purchased supplies for P20,000 cash. The business uses a prepaid
asset account.

5 The business rendered services worth P150,000 on cash basis.

6 The business rendered services worth P100,000 on account.

7 The business paid P25,000 salaries expense.

Requirements:
a. Provide the journal entries.
b. Post the journal entries to the ledger.
c. Prepare the unadjusted trial balance.
Acctg. Ed 1 - Financial Accounting & Reporting

Activity 9
Posting & Unadjusted Trial Balance

Mr. Uhtred opened a business called Bebbanburg Merchandising. The following were the
transactions for the year ended December 31, 20x1.

1. Mr. Uhtred contributed P600,000 to the business.

2. Bebbanburg obtained a loan of P400,000.
3. Bebbanburg purchased inventory worth P200,000 on cash basis.
4. Bebbanburg purchased inventory worth P500,000 on account.
5. Bebbanburg sold goods for P900,000, on account. The cost of the goods sold is
P400,000. 6. Bebbanburg paid P400,000 accounts payable.
7. Bebbanburg collected P500,000 accounts receivable.
8. Bebbanburg purchased equipment for P480,000 cash.
9. Bebbanburg distributed P10,000 cash to Mr. Uhtred.
10.Bebbanburg paid interest expense of P5,000.

Requirements:
a. Provide the journal entries.
b. Post the entries to the ledger (use T-accounts).
c. Prepare the unadjusted trial balance.

Reference:

Millan, Z.V. (2018). Financial Accounting & Reporting (Fundamentals) (2 nd ed.). Baguio City:
Bandolin Enterprise.