Under step 12 we continue the general ledger posting and here again we will be looking into the company Zeta in these transactions and here we will be presenting how the transactions which were recorded in general journal are now being posted to the general ledger accounts, so we start from first transaction when company Zeta was established and cash into the bank and petty cash were enlisted by shareholders.
Then we have general journal entries which come from previous steps where we have indicated how the transactions are generalized. The next step is to post those transactions from general journal between general measure accounts so we should open separate accounts for each category of assets equity and liabilities and we start from the bank.
Here you can se see that opening balance is zero it is on the debit side since bank account is belonging to the category of the assets and from general journal we post the first transaction part of the first transaction to the general ledger and we do it on the debit side as it was done in the general journal and again also we indicate the reference to transactions number one near the $14,000 you can see the figure. One which is referenced to number of transaction in order to track later if it is necessary what exact transaction was supposed to the general ledger.
Next one is to post from general journal the remaining parts of the transaction is increase in cash again we have separate account for cash and the post to debit entry to the cash account and the other one is share capital and for share capital we would do the same as it was done and general journal so we transfer credit entry which was made for share capital to general ledger account share capital and we do it on credit and you can see that account of share capital for general ledger has opening balance zero and on the credit side since all equity accounts we have credit balances and increase in them as they are recorded on the credit site.
And in the next video we will continue with posting of the all the remaining transactions.
This is part 2 of the step 12. General ledger posting can we continue with transaction number two. Under this transaction you can remember there was an office space acquired and part of that was paid by cash and part was paid and will be paid later on so part of office space was acquired on credit. So again we start from general journal entries and we post through transactions into the general ledger accounts.
We use office space account and opening balances on the debit side since this is an asset category account and we transfer debit entry from general journal to the debit side or to the left side of office space account and near that amount we indicate a reference or number of the transaction. This is required in order to track data later on if it is necessary so those numbers will be showing numbers of transactions which were posted from general journal to general ledger.
The next step is to post decrease in bank account and it is done into the bank account and on the credit side and you can see that bank account it already has data so it is opening balance was zero but previous entry from the first transaction it was on the debit side and it was an establishment of Zeta. So we accumulate all the entries related to the account for bank for cashing bank in one account.
We are not opening separate accounts but one account for bank is opened and we post all the entries from general journal which relate to this account here either on debit side or on credit side and after we do all the steps we will calculate the final balance of this account and for accounts payable we open your accounts and the accounts payable were not impacted by previous transactions and this the first transaction impacting accounts payable and the post the increase in accounts payable on the credit side of this account.
And again we indicate reference to the transaction number of the transaction in order to be able to track it if it is necessary and you can see that in general ledger would not provide any descriptions of the transactions we only post entries. If we want to know more details on what exact transaction suppose that we can use reference number and find that transaction with general journal.
Here we continue with transaction number 3 and post it to the general ledger accounts. We start from the details of a transaction so there was an acquisition of inventory on credit and there was an acquisition of office stationary for cash and those items were recorded in the general journal and from general journal we will be transferring the data to appropriate accounts or general ledger.
We start from inventory and you can see that this is the first transaction which impacts inventory account. So what we do we kind of opening balance zero and goes to debit entry to the left side of the inventory account again on the debit side, left side and we include the reference to the transaction number of transaction.
And then we go to the stationary account again this is first transaction which impact this account and we post the data from general journal to the stationary general ledger account and we do the same with cash and you can see that cash was already impacted by the first transaction and here we accumulate data so we post the next entry from general journal to general ledger and here we have a decrease in cash by 670 and we are indicated in the credit side or on the right side of cash account and a reference to the number of the transactions.
So it is number three. This is required in order to be able to track transaction later and the last one from this transaction impact on the accounts payable account and you can see that accounts payable were already impacted by transaction number two and here we have an increase in accounts payable and we post the entry from general journal to general ledger account, accounts payable on the credit side and here we finish with the transaction number three.
Next one is transaction number 4. Under this transactions Zeta was paying for office space insurance in advance for 6 months and that was done by cash and around was $1,900 again we start form general journal where we see how this transaction was recorded and we transfer each item to the appropriate general ledger account. Prepaid insurance this account was not impacted by previous transactions so this is the first entry to the general ledger prepaid insurance account and this is done in the same way as it was in the journal.
So debit entries transferred on the left side of prepaid insurance account and we include the reference to the number of the transaction. The next step is to transfer change in cash or to post change in cash into the cash account and you can see that we are not starting from the beginning we are not opening – cash account but we use the one which already was impacted by previous transactions and we are here to accumulate all the impact on cash account.
So first and third transactions were already posted and we post the impact from transaction number 4 and it is on credit decreasing cash by $1,900 and transaction number 4.
The next transaction number 5 and here Zeta was paying from bank account part of the debt for inventory acquired and the amount paid is $1,900. What we do, we post from general journal the appropriate amounts to accounts payable and bank accounts of general ledger and the stats from accounts payable. You can see that they use the account which will or was already impacted by previous transactions number two and number three and they post the data from general journal on debit side as a decrease in accounts payable and indicate a number of transaction.
And next step, we post the entry to general ledger bank account we credit this account by $1,900. As you can see that there is a data from previous transactions number one and two which impacted bank accounts so we accumulate all the impacts of the previous transactions in one account afterwards we will be creating the final balance in this account.
We will continue with transaction number 6 under which Zeta sold all its inventory and received cash from customers and the sales income was $5,600. Again, the stat from the general journal and the post of all the amounts to the general ledger accounts. We start from cash. We use the data from previous transactions since this account was already impacted by transactions number one, three and four and the post cash receipt from customers to the debit side of cash account the same entry as it was done in the general journal.
Then we continue with income. You can see that accounting is open from the beginning and it was impacted with previous transactions so this is the first entry made to this account and it is on the credit side increasing income and here we put also a number of transaction in order to track it later on if it is necessary. The next one is cost of sales expenses account. This account was not also impacted by previous transactions and here we include cost of inventory sold.
So we transfer debit entry from general journal 2 to general ledger cost of sales account and inventory account. Here we have an impact on the inventory account transaction number 3 when inventory was acquired and now all the inventory is sold. So cost of inventory is included into the expenses in here it is included the credit side of inventory account while decreasing cost of inventory on hand so that was posting of the transaction number 6 to the general ledger accounts.
And the last transaction is number 7, here Zeta received the office space rent income and part of that was paid by cash and the remaining part will be paid by customers next month. We start from general journal and we make postings from general journal to the appropriate general ledger accounts. Bank account and we have a debit entry to the bank account and you can see that there is a data from previous transactions then we go to account receivable.
Accounts receivable was not impacted by previous transactions so we have no data opening balance is zero and we post the first entry here on the debit side increase in accounts receivable and income. Income account was impacted by transaction number 6 and here we make a posting and we transfer credit entry to the income or in general ledger account and although again we do the same as it was in the general journal.
We credit this account by $2,300 and then we keep number of transaction. So this was the final transaction, transaction number 7 and it is positing to general ledger accounts. The next step will be calculating balances of the general ledger accounts which means that we will summarize them and use the data for further steps of the accounting cycle.