The use of ledger accounts
A journal entry is similar to a set of instructions. The execution of these instructions is known as posting. Since stated earlier posting is recording in the ledger accounts the information contained in the journal. A journal entry express the entry of a certain dollar amount as a debit in a specific ledger account and directs the entry of a certain dollar amount as a credit in a specific ledger account. Earlier we posted the journal entries for Micro Train Company to T-accounts. In fact but companies post these journal entries to ledger accounts.
Using a new instance Jenks Company we illustrate posting to ledger accounts. Afterwards we show you how to post the Micro Train Company journal entries to ledger accounts. In Exhibit 10 the first journal entry for the Jenks Company directs that USD 10000 be posted in the ledger as a debit to the Cash account as well as as a credit to the Capital Stock account. We place the debit in the general ledger Cash account by using the following procedure Enter in the Cash account the date a short explanation the journal designation (G for general journal) and the journal page number from which the debit is posted and the USD 10000 in the Debit column. After that enter the number of the account to which the debit is posted in the Posting Reference column of the general journal. Post the credit in a alike manner but as a credit to Account No 300. The arrows in Exhibit 10 illustrate how these amounts were posted to the correct accounts. Exhibit 10 illustrates the ledger account. In compare to the two-sided T account format shown so far the three-column format has columns for debit, credit and balance. The three-column form has the benefits of showing the balance of the account after each item has been posted. Additionally in this section we indicate whether each balance is a debit or a credit. In later sections and in practice the nature of the balance is usually not indicated since it is understood. As well notice that we give an explanation for each item in the ledger accounts. Frequently accountants omit these explanations because each item can be traced back to the general journal for the explanation. Posting is forever as of the journal to the ledger accounts. Postings are able to be made (a) at the time the transaction is journalized (b) at the end of the day or week or month or (c) as each journal page is filled. The selection is a matter of personal taste. While posting the general journal the date used in the ledger accounts is the date the transaction was recorded in the journal not the date the journal entry was posted to the ledger accounts.