General Ledger Example names into the appropriate sections of the journal into the ledger.Posting is done in order to get an overview of the effect of transactions on each asset, liability, or equity account. At the end of the period, the total balances of each account will be summarized for preparation of trial balances and financial statements.
How to Post Ledgers;General Ledger Example
Here are the steps for posting to the ledger:
- Record the opening balance of the ledger from the beginning balance, provided the company has financial statements for the previous period. The accounts that are on the debit side of the balance sheet are recorded as opening balance for debit ledger accounts, and the accounts on the credit side of the balance sheets are recorded as beginning credits for the ledger accounts.
- Record the date on the ledger by taking it from the transaction date column in the journal, then moving it to the ledger account date column, in a sequence starting from the youngest date.
- Record the ledger information taken from the journal description or description in the description column on the ledger account.
- Record the debit account amount in the journal into the ledger account debit column and record the account credit amount in the journal into the ledger account credit column.
- Record the posted journal page number into the reference column (Ref) on the ledger account.
- If the account in the journal has been transferred or posted to the ledger account, record the account code number in the journal reference column, so that it indicates that the account has been posted.
- If using a 3-point or 4-column ledger account, find the balance by comparing the total debit balance with the transaction credit before entering the new transaction period, to get the ending balance for each account.
A general ledger is a record of all financial transactions of a company. It contains all the accounts that a company uses to record its financial transactions.
Here is an example of a general ledger:
| Account Name | Debit | Credit |
|---|---|---|
| Cash | 10,000 | |
| Accounts Receivable | 5,000 | |
| Inventory | 8,000 | |
| Equipment | 25,000 | |
| Accounts Payable | 2,500 | |
| Note Payable | 10,000 | |
| Sales | 20,000 | |
| Cost of Goods Sold | 12,000 | |
| Rent Expense | 1,000 | |
| Salaries Expense | 3,000 | |
| Utilities Expense | 500 | |
| Interest Expense | 500 |
In this example, the left column lists the account names, the center column lists the debits (amounts that are recorded as increases in assets or decreases in liabilities), and the right column lists the credits (amounts that are recorded as increases in liabilities or decreases in assets).
The debits and credits must always balance, meaning that the total of all debits must equal the total of all credits. In this example, the total of the debit column is 60,500, and the total of the credit column is 60,500. This ensures that the ledger is accurate and complete.