MODULE 5B

The Accounting Cycle of the Process - Recording Phase (Posting - Service Business)

THE RECORDING PROCESS - POSTING TO THE LEDGER

▪ Step 4 -Transfer the journal information to the appropriate final book of accounts.
- This process is called posting to the ledger which is the final book of accounts.
▪ The ledger is the final book of accounts because this is the last accounting books where business transactions are
recorded.

- This process requires the transferring of information from the journal to the ledger that includes the following:
a) Date of the transactions
b) The amount debited from the account affected.
c) The amount credited from the account affected.
d) The posting reference or Folio (F) which is the source of entries posting to the ledger. This is the journal page
number. On the other hand, the account number will be posted under the posting reference or Folio (F) of the
journal.
e) The brief explanation of the transaction.

- This process involves the sorting of effects, both increase and decrease, of various transactions to a single or similar
account.
▪ After posting, all effects for each account recorded in the general journal are now grouped together in one
accounting record which is the ledger.
▪ By doing the process, it is now easy or more convenient to accounting personnel to prepare the financial
statements.

- Reminders:
a) If there are errors in journal entries recorded in the journal, postings to ledgers are also in error.
b) Errors in posting to the ledger may result to inequality of debit and credit entries.

Notes:
The different types of errors will be discussed in the next accounting process which is the preparation of preliminary
trial balance.

- Variations in number of money columns of ledgers

▪ Ledgers may have:
1) Two-money columns
- The left money column is for the debit while the right money column is for the credit column.
CASH ACT. NO. 101

Date Explanation F Debit Date Explanation F Credit

1 2022 2022 1
2 Jan. 1 Balance forwarded ✓ 1 0 0 0 0 - Jan. 22 Owner's withdrawal CDJ 2 50 0 0 - 2
3 5 Additional investment CRJ 1 2 0 0 0 0 0 - 31 Cash payments for January, 2022 CDJ 8 8 5 00 0 0 - 3
4 31 Cash receipts for January, 2022 CRJ 5 8 0 0 0 0 0 - 4
5 5

2) Three-money columns
- The first money column is for the debit while the second money column is for the credit column. The last
column is for the balance of the account.
CASH Act. No. 101

Date Explanation F Debit Credit Balance

1 2022 1
2 Jan. 1 Balance forwarded ✓ 1 0 0 0 0 - 2
3 5 Additional investment CRJ 1 2 0 0 0 0 0 - 2 1 0 0 0 0 - 3
4 22 Owner's withdrawal CDJ 2 5 0 0 0 - 2 0 5 0 0 0 - 4
5 31 Cash receipts for January, 2022 CRJ 5 8 0 0 0 0 0 - 1 0 0 5 0 0 0 - 5
6 31 Cash payments for January, 2022 CDJ 8 8 5 0 0 0 0 - 1 5 5 0 0 0 - 6
7 7
 3) Four-money columns
- The first money column is for the debit while the second money column is for the credit column. The last
two columns are for the balance of the account in which the left colum is for the debit balance of the
account while the right column is the credit balance of the account.
CASH Act. No. 101

Date Explanation F Debit Credit Debit Balance Credit Balance

1 2022 1
2 Jan. 1 Balance forwarded ✓ 1 0 0 0 0 - 2
3 5 Additional investment CRJ 1 2 0 0 0 0 0 - 2 1 0 0 0 0 - 3
4 22 Owner's withdrawal CDJ 2 5 0 0 0 - 2 0 5 0 0 0 - 4
5 31 Cash receipts for January, 2022 CRJ 5 8 0 0 0 0 0 - 1 0 0 5 0 0 0 - 5
6 31 Cash payments for January, 2022 CDJ 8 8 5 0 0 0 0 - 1 5 5 0 0 0 - 6
7 7

- There are two kinds of ledgers, namely: the general ledger and the subsidiary ledger.
▪ Regardless of its type, the format is either of the fornats discussed above.
1) General Ledger
▪ This is a set of numbered accounts a business uses to keep track of its financial transactions and to
prepare financial reports. (Techtarget)
- It is a numbered account because every account has a corresponding account number.
- These accounts and their respective balances are reported to the financial statements.
▪ This is a record-keeping system for a company's financial data, with debit and credit account records
validated by a trial balance. (Investopedia)

2) Subsidiary Ledger
▪ This is also called as subledger.
▪ This is the detailed record of each general ledger account. Examples include the following:

General Ledger Account Subsidiary Ledger Account

Accounts Receivable Individual customer's account
Accounts Payable Individual creditor's or supplier's account
Merchandise Inventory Individual items of merchandise inventory

▪ This is a group of similar accounts whose combined balances equal the balance in a specific general ledger
account.
- Therefore, the subsidiary ledger balances are the detailed balances of the general ledger balance.
- In all instances, the total of subsidiary ledger balances must be equal to corresponding general ledger
balance.

SOURCE:
https://accounting12atdt.wordpress.com/category/chapter-11-modifying-accounting-systems/

▪ ILLUSTRATION
To illustrate, let us use the journal entries recorded in the general journal of Your Home NetSolutions during the month
of July, 2022. For this purpose. Let us assume the following account numbers based on its chart of accounts:

101 Cash 401 Service Revenue

102 Accounts Receivable
103 Supplies 501 Salaries Expense
131 Land 502 Rent Expense
503 Utilities Expense
201 Accounts Payable 504 Supplies Expense
202 Utilities Payable 505 Miscellaneous Exp.

301 Harry Jasper, Capital

302 Harry Jasper, Drawing
 Posting of Transaction 1 Journal Entry (July 1):

GENERAL JOURNAL 1

Date Account Names F Debit Credit

1 2022 1
2 Jul 1 Cash 101 2 0 0 0 0 0 0 - 2
3 Harry Jasper Capital 301 2 0 0 0 0 0 0 - 3
4 Initial investment by owner. 4
5 5

CASH ACT. NO. 101

Date Explanation F Debit Date Explanation F Credit

1 2022 2022 1
2 Jul. 1 Initial cash investment GJ 1 2 0 0 0 0 0 0 - 2
3 3
4 4
5 5

HARRY JASPER, CAPITAL ACT. NO. 301

Date Explanation F Debit Date Explanation F Credit

1 2022 2022 1
2 Jul. 1 Initial cash investment GJ 1 2 0 0 0 0 0 0 - 2
3 3
4 4
5 5

Posting of Transaction 2 Journal Entry (July 1):

GENERAL JOURNAL 1

Date Account Names F Debit Credit

1 2022 1
6 2 Land 131 1 5 0 0 0 0 0 - 6
7 Cash 101 1 5 0 0 0 0 0 - 7
8 Acquisition of land for cash. 8
9 9

LAND ACT. NO. 131

Date Explanation F Debit Date Explanation F Credit

1 2022 2022 1
2 Jul. 2 Acquisition of land GJ 1 1 5 0 0 0 0 0 - 2
3 3
4 4

CASH ACT. NO. 101

Date Explanation F Debit Date Explanation F Credit

1 2022 2022 1
2 Jul. 1 Initial cash investment GJ 1 2 0 0 0 0 0 0 - Jul. 2 Acquisition of land GJ 1 1 5 0 0 0 0 0 - 2
3 3
4 4

Posting of Transaction 3 Journal Entry (July 3):

GENERAL JOURNAL 1

Date Account Names F Debit Credit

1 2022 1
10 3 Supplies 103 1 3 5 0 0 - 10
11 Accounts Payable 201 1 3 5 0 0 - 11
12 Acquisition of supplies on credit. 12
13 13

SUPPLIES ACT. NO. 103

Date Explanation F Debit Date Explanation F Credit

1 2022 2022 1
2 Jul. 3 Acquisition of supplies for cash GJ 1 1 3 5 0 0 - 2
3 3
4 4

ACCOUNTS PAYABLE ACT. NO. 201

Date Explanation F Debit Date Explanation F Credit

1 2022 2022 1
2 Jul. 3 Acquisition of supplies for cash GJ 1 1 3 5 0 0 - 2
3 3
4 4
 Date Explanation F Debit Date Explanation F Credit
1 2022 2022 1
2 Jul. 3 Acquisition of supplies for cash GJ 1 1 3 5 0 0 - 2
3 3
4 4

Posting of Transaction 4 Journal Entry (July 4):

GENERAL JOURNAL 1

Date Account Names F Debit Credit

1 2022 1
14 4 Cash 101 7 5 0 0 0 - 14
15 Service Revenue 401 7 5 0 0 0 - 15
16 Cash received for house painting. 16
17 17

CASH ACT. NO. 101

Date Explanation F Debit Date Explanation F Credit

1 2022 2022 1
2 Jul. 1 Initial cash investment GJ 1 2 0 0 0 0 0 0 - Jul. 2 Acquisition of land GJ 1 1 5 0 0 0 0 0 - 2
3 4 Cash received for house painting GJ 1 7 5 0 0 0 - 3
4 4

SERVICE REVENUE ACT. NO. 401

Date Explanation F Debit Date Explanation F Credit

1 2022 2022 1
2 Jul. 4 Cash received for house painting GJ 1 7 5 0 0 0 - 2
3 3
4 4

Posting of Transaction 5 Journal Entry (July 5):

GENERAL JOURNAL 1

Date Account Names F Debit Credit

1 2022 1
18 5 Accounts Receivable 102 5 0 0 0 0 - 18
19 Service Revenue 401 5 0 0 0 0 - 19
20 Customer billing for services 20
21 rendered. 21
22 22

ACCOUNTS RECEIVABLE ACT. NO. 102

Date Explanation F Debit Date Explanation F Credit

1 2022 2022 1
2 Jul. 5 Billed customer services rendered.GJ 1 5 0 0 0 0 - 2
3 3
4 4

SERVICE REVENUE ACT. NO. 401

Date Explanation F Debit Date Explanation F Credit

1 2022 2022 1
2 Jul. 4 Cash received for house painting GJ 1 7 5 0 0 0 - 2
3 5 Billed customer services rendered. GJ 1 5 0 0 0 0 - 3
4 4
5 5

Posting of Transaction 6 Journal Entry (July 6):

GENERAL JOURNAL 1

Date Account Names F Debit Credit

1 2022 1
23 6 Salaries Expense 501 2 1 5 0 0 - 23
24 Rent Expense 502 1 0 0 0 0 - 24
25 Utilities Expense 503 9 0 0 0 - 25
26 Miscellaneous Expense 505 2 5 0 0 - 26
27 Cash 101 4 3 0 0 0 - 27
28 Payment of various expenses. 28
29 29

SALARIES EXPENSE ACT. NO. 501

Date Explanation F Debit Date Explanation F Credit

1 2022 2022 1
2 Jul. 6 Payment of salaries GJ 1 2 1 5 0 0 - 2
3 3
 RENT EXPENSE ACT. NO. 502

Date Explanation F Debit Date Explanation F Credit

1 2022 2022 1
2 Jul. 6 Payment of rent GJ 1 1 0 0 0 0 - 2
3 3

UTILITIES EXPENSE ACT. NO. 503

Date Explanation F Debit Date Explanation F Credit

1 2022 2022 1
2 Jul. 6 Payment of utilities GJ 1 9 0 0 0 - 2
3 3

MISCELLANEOUS EXPENSE ACT. NO. 505

Date Explanation F Debit Date Explanation F Credit

1 2022 2022 1
2 Jul. 6 Payment of various expenses, GJ 1 2 5 0 0 - 2
3 3

Posting of Transaction 7 Journal Entry (July 7):

GENERAL JOURNAL 1

Date Account Names F Debit Credit

1 2022 1
30 7 Accounts Payable 201 9 0 0 0 - 30
31 Cash 101 9 0 0 0 - 31
32 Payment to creditors. 32
33 33

ACCOUNTS PAYABLE ACT. NO. 201

Date Explanation F Debit Date Explanation F Credit

1 2022 2022 1
2 Jul. 7 Payment to creditors. GJ 1 9 0 0 0 - Jul. 3 Acquisition of supplies for cash GJ 1 1 3 5 0 0 - 2
3 3
4 4

CASH ACT. NO. 101

Date Explanation F Debit Date Explanation F Credit

1 2022 2022 1
2 Jul. 1 Initial cash investment GJ 1 2 0 0 0 0 0 0 - Jul. 2 Acquisition of land GJ 1 1 5 0 0 0 0 0 - 2
3 4 Cash received for house painting GJ 1 7 5 0 0 0 - 7 Payment to creditors. GJ 1 9 0 0 0 - 3
4 4

Posting of Transaction 8 Journal Entry (July 8):

GENERAL JOURNAL 1

Date Account Names F Debit Credit

1 2022 1
34 8 Cash 101 2 0 0 0 0 - 34
35 Accounts Receivable 102 2 0 0 0 0 - 35
36 Collection from charge customers. 36

CASH ACT. NO. 101

Date Explanation F Debit Date Explanation F Credit

1 2022 2022 1
2 Jul. 1 Initial cash investment GJ 1 2 0 0 0 0 0 0 - Jul. 2 Acquisition of land GJ 1 1 5 0 0 0 0 0 - 2
3 4 Cash received for house painting GJ 1 7 5 0 0 0 - 7 Payment to creditors. GJ 1 9 0 0 0 - 3
4 8 Collection from charge customers GJ 1 2 0 0 0 0 - 4
5 5

ACCOUNTS RECEIVABLE ACT. NO. 102

Date Explanation F Debit Date Explanation F Credit

1 2022 2022 1
2 Jul. 5 Billed customer services rendered. GJ 1 5 0 0 0 0 - Jul. 8 Collection from charge customers GJ 1 2 0 0 0 0 - 2
3 3
4 4
Posting of Transaction 9 Journal Entry (July 9):
GENERAL JOURNAL 2

Date Account Names F Debit Credit

1 2022 1
2 Jul. 9 Harry Jasper, Drawing 302 1 0 0 0 0 - 2
3 Cash 101 1 0 0 0 0 - 3
4 Cash withdrawal for personal use. 4
5 5

HARRY JASPER, DRAWING ACT. NO. 302

Date Explanation F Debit Date Explanation F Credit

1 2022 2022 1
2 Jul. 9 Cash withdrawal for personal use GJ 2 1 0 0 0 0 - 2
3 3

CASH ACT. NO. 101

Date Explanation F Debit Date Explanation F Credit

1 2022 2022 1
2 Jul. 1 Initial cash investment GJ 1 2 0 0 0 0 0 0 - Jul. 2 Acquisition of land GJ 1 1 5 0 0 0 0 0 - 2
3 4 Cash received for house painting GJ 1 7 5 0 0 0 - 7 Payment to creditors. GJ 1 9 0 0 0 - 3
4 8 Collection from charge customers GJ 1 2 0 0 0 0 - 9 Cash withdrawal for personal use GJ 2 1 0 0 0 0 - 4
5 5

Posting of Transaction 10 Journal Entry (July 10):

GENERAL JOURNAL 2

Date Account Names F Debit Credit

1 2022 1
6 10 Supplies Expense 504 1 1 5 0 0 - 6
7 Supplies 103 1 1 5 0 0 - 7
8 Used portion of supplies. 8
9 9

SUPPLIES EXPENSE ACT. NO. 504

Date Explanation F Debit Date Explanation F Credit

1 2022 2022 1
2 Jul. 10 Used portion of supplies GJ 2 1 1 5 0 0 - 2
3 3

SUPPLIES ACT. NO. 103

Date Explanation F Debit Date Explanation F Credit

1 2022 2022 1
2 Jul. 3 Acquisition of supplies for cash GJ 1 1 3 5 0 0 - Jul. 10 Used portion of supplies GJ 2 1 1 5 0 0 - 2
3 3
4 4

Posting of Transaction 11 Journal Entry (July 11):

GENERAL JOURNAL 2

Date Account Names F Debit Credit

1 2022 1
10 11 Utilities Expense 503 5 0 0 0 - 10
11 Utilities Payable 202 5 0 0 0 - 11
12 Unpaid utilities for the month. 12
13 13

UTILITIES EXPENSE ACT. NO. 503

Date Explanation F Debit Date Explanation F Credit

1 2022 2022 1
2 Jul. 6 Payment of utilities GJ 1 9 0 0 0 - 2
3 11 Unpaid utilities for the month GJ 2 5 0 0 0 - 3
4 4

UTILITIES PAYABLE ACT. NO. 202

Date Explanation F Debit Date Explanation F Credit

1 2022 2022 1
2 Jul. 11 Unpaid utilities for the month GJ 2 5 0 0 0 - 2
3 3
▪ THE ACCOUNT BALANCES
- This is the difference between total debit entries and total credit entries.
- If the total debit entries of the account exceed the total credit entries, the difference is the debit balance of the
account.
- If the total credit entries of the account exceed the total debit entries, the difference is the credit balance of the
account.
- If the total debit entries of the account are equal the total credit entries, the account is daid to be in balance.
- If interim financial statement are prepared, the total debit entries, the total credit entries, and the account balances are
written only in pencil. This is called pencil posting.
- Every end of the accounting period, the total debit entries and total credit entries, including the account balance are
required to be computed to prepare annual financial statements. The totals and balances are not written in pencil but in

- ILLUSTRAION 1
To illustrate, let us compute the account balance of CASH ACCOUNT of You Home NetSolutions.
CASH ACT. NO. 101

Date Explanation F Debit Date Explanation F Credit

1 2022 2022 1
2 Jul. 1 Initial cash investment GJ 1 2 0 0 0 0 0 0 - Jul. 2 Acquisition of land GJ 1 1 5 0 0 0 0 0 - 2
3 4 Cash received for house painting GJ 1 7 5 0 0 0 - 6 Payment of various expenses GJ 1 4 3 0 0 0 - 3
4 8 Collection from charge customers GJ 1 2 0 0 0 0 - 7 Payment to creditors. GJ 1 9 0 0 0 - 4
5 9 Cash withdrawal for personal use GJ 2 1 0 0 0 0 - 5
6 31 Total 2 0 9 5 0 0 0 - 31 Total 1 5 6 2 0 0 0 - 6
7 7
8 31 Account balance 5 3 3 0 0 0 - 8
9 9

Notes:
1) The total debit entries and the total credit entries are dated July 31 because it is assumed here that the financial
statements will be prepared at the end of July which is the end of the fiscal year.
2) The account balance of cash is debit of P 576,000 and written under the column "debit" because this column has a
higher total entries than the credit side.

- ILLUSTRATION 2
To illustrate, let us compute the account balance of ACCOUNTS PAYABLE of You Home NetSolutions.

ACCOUNTS PAYABLE ACT. NO. 201

Date Explanation F Debit Date Explanation F Credit

1 2022 2022 1
2 Jul. 7 Payment to creditors. GJ 1 9 0 0 0 - Jul. 3 Acquisition of supplies for cash GJ 1 1 3 5 0 0 - 2
3 3
4 31 Account balance 4 5 0 0 - 4
5 5
6 6

Notes:
1) The account balance of accounts payable is debit of P 4,500 and written under the column "credit" because this
column has a higher total entries than the debit side.

- ILLUSTRATION 3
To illustrate, let us compute the account balance of HARRY JASPER, DRAWING of You Home NetSolutions.

HARRY JASPER, DRAWING ACT. NO. 302

Date Explanation F Debit Date Explanation F Credit

1 2022 2022 1
2 Jul. 9 Cash withdrawal for personal use GJ 2 1 0 0 0 0 - 2
3 3

Notes:
1) Since there is only one debit entry and no entries under the credit column, the account Harry Jasper, Drawing has a
debit balance of P 10,000 that must be double-ruled.

- ILLUSTRATION 4
To illustrate, let us compute the account balance of SERVICE REVENUE of You Home NetSolutions.
SERVICE REVENUE ACT. NO. 401

Date Explanation F Debit Date Explanation F Credit

1 2022 2022 1
2 Jul. 4 Cash received for house painting GJ 1 7 5 0 0 0 - 2
3 5 Billed customer services rendered. GJ 1 5 0 0 0 0 - 3
4 31 Account Balance 1 2 5 0 0 0 - 4
5 5

Notes:
1) Since all entries are under the credit column, the account Service Revenue has a credit balance of P 125,000 which
is the total credit entries.
- ILLUSTRATION 5
Other accounts have the following balances:

ACCOUNTS RECEIVABLE ACT. NO. 102

Date Explanation F Debit Date Explanation F Credit

1 2022 2022 1
2 Jul. 5 Billed customer services rendered. GJ 1 5 0 0 0 0 - Jul. 8 Collection from charge customers GJ 1 2 0 0 0 0 - 2
3 3
4 31 Account balance 3 0 0 0 0 - 4
5 5

SUPPLIES ACT. NO. 103

Date Explanation F Debit Date Explanation F Credit

1 2022 2022 1
2 Jul. 3 Acquisition of supplies for cash GJ 1 1 3 5 0 0 - Jul. 10 Used portion of supplies GJ 2 1 1 5 0 0 - 2
3 3
4 31 Account balance 2 0 0 0 - 4
5 5

LAND ACT. NO. 131

Date Explanation F Debit Date Explanation F Credit

1 2022 2022 1
2 Jul. 2 Acquisition of land GJ 1 1 5 0 0 0 0 0 - 2
3 3

UTILITIES PAYABLE ACT. NO. 202

Date Explanation F Debit Date Explanation F Credit

1 2022 2022 1
2 Jul. 11 Unpaid utilities for the month GJ 2 5 0 0 0 - 2
3 3

HARRY JASPER, CAPITAL ACT. NO. 301

Date Explanation F Debit Date Explanation F Credit

1 2022 2022 1
2 Jul. 1 Initial cash investment GJ 1 2 0 0 0 0 0 0 - 2
3 3

SALARIES EXPENSE ACT. NO. 501

Date Explanation F Debit Date Explanation F Credit

1 2022 2022 1
2 Jul. 6 Payment of salaries GJ 1 2 1 5 0 0 - 2
3 3

RENT EXPENSE ACT. NO. 502

Date Explanation F Debit Date Explanation F Credit

1 2022 2022 1
2 Jul. 6 Payment of rent GJ 1 1 0 0 0 0 - 2
3 3

UTILITIES EXPENSE ACT. NO. 503

Date Explanation F Debit Date Explanation F Credit

1 2022 2022 1
2 Jul. 6 Payment of utilities GJ 1 9 0 0 0 - 2
3 11 Unpaid utilities for the month GJ 2 5 0 0 0 - 3
4 31 Account balance 1 4 0 0 0 - 4
5 5

SUPPLIES EXPENSE ACT. NO. 504

Date Explanation F Debit Date Explanation F Credit

1 2022 2022 1
2 Jul. 10 Used portion of supplies GJ 2 1 1 5 0 0 - 2
3 3
 MISCELLANEOUS EXPENSE ACT. NO. 505

Date Explanation F Debit Date Explanation F Credit

1 2022 2022 1
2 Jul. 6 Payment of various expenses, GJ 1 2 5 0 0 - 2
3 3

- Other way of presenting account balance

The account balance can be written on the other side of the account. Instead of writing the debit balance under the
debit column, the amount is written under the credit column to make the difference of the total debit entries and total
credit entries equal to zero. Although, the balance is written under the credit column but it represents debit balance of
the account.

MISCELLANEOUS EXPENSE ACT. NO. 505

Date Explanation F Debit Date Explanation F Credit

1 2022 2022 1
2 Jul. 6 Payment of various expenses, GJ 1 2 5 0 0 - Jul 31 Account balance 2 5 0 0 - 2
3 3

On the other hand, instead of writing the credit balance under the credit column, the amount is written under the debit
column to make the difference of the total debit entries and total credit entries equal to zero. Although, the balance is
written under the debit column but it represents credit balance of the account.

ACCOUNTS PAYABLE ACT. NO. 201

Date Explanation F Debit Date Explanation F Credit

1 2022 2022 1
2 Jul. 7 Payment to creditors. GJ 1 9 0 0 0 - Jul. 3 Acquisition of supplies for cash GJ 1 1 3 5 0 0 - 2
3 31 Account balance 4 5 0 0 - 3
4 31 Total 1 3 5 0 0 - 31 Total 1 3 5 0 0 - 4
5 5