Chapter 3
THE GENERAL JOURNAL AND
THE GENERAL LEDGER
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Learning Objective
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The General Journal
• The process of recording business transactions in a journal is
•
•
•
•
•
called ____________________.
In the journal, both the debits and the credits of the entire
transaction are recorded in one place.
A journal is called a ____________________ because the first
place an entry is recorded is in the journal.
A ____________________ is a book in which business
transactions are recorded as they happen.
Information about transactions come from ____________________
that furnish proof that a transaction has taken place.
The basic journal form is the ____________________.
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Transaction (a) – June1: J. Conner deposited
$90,000 in a bank account in the name of Conner’s
Whitewater Adventures.
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Decide which accounts should be debited and credited
Step 1: ___________________________________
Step 2: ___________________________________
Step 3: ___________________________________
___________________________
Step 4: ___________________________________
___________________________________
___________________________
Step 5: ___________________________________
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Analyze the Transaction Using the T- Account Approach
i
n
c
r
e
a
s
e
Cash
increases, so
it is debited
i
n
c
r
e
a
s
e
J. Conner,
Capital
increases, so
it is credited
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Journal Entry
3: ______________
2: _______
3: _____________
1: ______
4: ____________
4: ___________
_____________
5: __________
____________
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Transaction (b) – June 2: Conner’s Whitewater
Adventures bought equipment, paying cash, $38,000.
________________
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The Cost Principle
• When a business buys an asset, the asset should be
•
•
•
recorded at the _________________ (the agreed amount
of a transaction).
This is called the _________________ .
Assume in Transaction (c) that Signal Products had
been ______________ $7,500 for the equipment.
The _____ of the equipment to Conner’s Whitewater
Adventures is $4,320. It is recorded at ______________.
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Transaction (c) – June 3: Conner’s Whitewater
Adventures bought equipment on account from Signal
Products, $4,320.
Note that the month and year are not
repeated unless they change or a new
journal page begins
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Transaction (d) – June 4: Conner’s Whitewater
Adventures paid Signal Products, a creditor, on
account,$2,000.
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Posting to the General Ledger
• The journal is the __________________ because
each transaction must first be recorded in full in
the journal.
• The __________________ gives us a complete
record of the transactions recorded in each
individual account.
• The _______________ contains all the accounts.
• The process of transferring information from the
journal to the ledger is called _____________.
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© 2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Practice Exercise 1
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© 2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
© 2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Learning Objective
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The Posting Process
STEP 1. Write the ____________________ in the account’s
_______ column.
STEP 2. Write the ____________________ in the _______
or _______ column, and enter the _______ in the
_______ column under Debit or Credit.
STEP 3. Write the ___________ of the journal in the _______
_________ column of the ledger account. (This is a
_________________; it tells you where the amount
came from.)
STEP 4. Record the _______________ in the _________
column of the journal.
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 ___________________
 ___________________
 ___________________
 ___________________




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 ___________________
 ___________________
 ___________________
 ___________________




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__________________________
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Practice Exercise 2
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© 2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
© 2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Learning Objective
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Preparation of the Trial Balance
• The _______________ is
•
simply a list of accounts
that have balances.
Even when the debit and 1. ____________________
credit balances are
____________________
________ , other types of
_______.
errors may slip through—
2. ____________________
for example,
____________________
_______.
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Steps in the Accounting Process
STEP 1. ______________________________________
STEP 2. ______________________________________
STEP 3 ______________________________________
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Practice Exercise 3
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Learning Objective
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Source Documents
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© 2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
© 2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Practice Exercise 4
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Learning Objective
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Manual Ruling Method
An entry to record payment of $1,500 rent was
incorrectly debited to _____________________.
Manual Correcting Errors
___________ Posting Has
Taken Place
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Manual Ruling Method
An entry for $120 payment for _______________
was recorded as $210.
Manual Correcting Errors _______
Posting Has Taken Place
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Manual Ruling Method
An entry to record cash received for professional
fees was correctly journalized as $400. However, it
was posted as a debit to __________ and a credit
to __________ for $4,000.
Manual Correcting Errors _________
Posting Has Taken Place
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Correcting Entry Method—Manual or Computerized
The correcting entry method
is used when incorrectly
journalized amounts have
been posted. There are two
correcting entry methods.
_________ method. Simply
make ______ entry that
______ the error and
provides the ______
account.
_________ method. The first
step ______ the error made
by the ______ entry. The
second step includes the
______ entry.
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Transaction (Jan. 9) : A $620 payment for advertising was
incorrectly journalized and posted as a debit to Miscellaneous
Expense and a credit to Cash for $620. The error was discovered
on January 27. The following correction uses the one-step
method:
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The following correction uses the Two-step method
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Practice Exercise 5
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