basics-of-accounting-information-processing

Services to customers for cash general journal date 1

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Unformatted text preview: on the receivable that was established on January 17 1-28-X3 Land 15,000 Cash 5,000 Notes Payable 10,000 Purchased land by giving $5,000 cash, and promising to pay the remainder in 90 days Download free eBooks at bookboon.com 35 Basics of Accounting & Information Processing The Journal 7.3 Page Numbering Second, notice that the illustrated journal consisted of two pages (labeled page 1 and page 2). Although the journal is chronological, it is helpful to have the page number indexing for transaction cross referencing and working backward from financial statement amounts to individual transactions. 7.4 But, What are the Account Balances? Please click the advert The general journal is a great tool to capture transaction and event details, but it certainly does nothing to tell a company about the balance in each specific account. For instance, how much cash does Xao Corporation have at the end of January? One could go through the journal and net the debits and credits to Cash ($25,000 - $2,000 + $4,000 - $500 + $4,800 - $5,000 = $26,300). But, this is tedious and highly susceptible to error. It would become virtually impossible if the journal were hundreds of pages long. A better way is needed. This is where the general ledger comes into play. We will turn your CV into an opportunity of a lifetime Do you like cars? Would you like to be a part of a successful brand? We will appreciate and reward both your enthusiasm and talent. Send us your CV. You will be surprised where it can take you. Send us your CV on www.employerforlife.com Download free eBooks at bookboon.com 36 Basics of Accounting & Information Processing The General Ledger 8. The General Ledger As you just saw, the general journal is, in essence, a notebook that contains page after page of detailed accounting transactions. In contrast, the general ledger is, in essence, another notebook that contains a page for each and every account in use by a company. The ledger account for Xao would include the Cash page as illustrated below: ACCOUNT: Cash Date Description Jan. 1, 20X3 Jan. 1, 20X3 Journal page 1 Journal page 1 Jan. 18, 20X3 Journal page 2 Jan. 25, 20X3 Journal page 2 Jan. 28, 20X3 Balance $ Journal page 1 Jan. 4, 20X3 Credit Balance forward Jan. 8, 20X3 * Debit Journal page 2 $ 25,000 25,000 $ 2,000 4,000 23,000 27,000 500 4,800 26,500 31,300 5,000 26,300 Xao’s transactions utilized all of the following accounts: Cash Accounts Receivable Land Accounts Payable Notes Payable Capital Stock Service Revenue Advertising Expense Utilities Expense Therefore, Xao Corporation’s general ledger will include a separate page for each of these nine accounts. Download free eBooks at bookboon.com 37 Basics of Accounting & Information Processing The General Ledger 8.1 Posting Before diving into the details of each account, let’s consider what we are about to do. We are going to determine the balance of each specific account by posting. To do this, we will copy (“post”) the entries listed in...
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