{"id":3005,"date":"2020-10-01T21:13:54","date_gmt":"2020-10-01T21:13:54","guid":{"rendered":"https:\/\/courses.lumenlearning.com\/wm-financialaccounting\/?post_type=chapter&#038;p=3005"},"modified":"2021-02-06T16:40:17","modified_gmt":"2021-02-06T16:40:17","slug":"calculate-account-balances","status":"publish","type":"chapter","link":"https:\/\/courses.lumenlearning.com\/suny-clinton-financialaccounting\/chapter\/calculate-account-balances\/","title":{"raw":"Calculate Account Balances","rendered":"Calculate Account Balances"},"content":{"raw":"<div class=\"textbox learning-objectives\">\r\n<h3>Learning Outcomes<\/h3>\r\n<ul>\r\n \t<li>Calculate the account balance<\/li>\r\n<\/ul>\r\n<\/div>\r\nAs we post, we continually update account balances. Here are the first two accounts in our general ledger. If this was an old-fashioned book ledger, each of these accounts would be a different page (or pages, when there are a lot of transactions posted):\r\n<table class=\"fin-table gridded\"><caption class=\"u-clearfix\">\r\n<div>General Ledger<\/div>\r\n<div><span style=\"float: left\">Account: Cash<\/span><span style=\"float: right\">Account No. 110<\/span><\/div>\r\n<\/caption>\r\n<thead>\r\n<tr>\r\n<td colspan=\"8\"><\/td>\r\n<\/tr>\r\n<tr>\r\n<th class=\"c\" colspan=\"2\" rowspan=\"2\" scope=\"col\">Date<\/th>\r\n<th class=\"c\" rowspan=\"2\" scope=\"col\">Item<\/th>\r\n<th class=\"c\" rowspan=\"2\" scope=\"col\">Post. Ref.<\/th>\r\n<th class=\"c\" rowspan=\"2\" scope=\"col\">Debit<\/th>\r\n<th class=\"c\" rowspan=\"2\" scope=\"col\">Credit<\/th>\r\n<th class=\"c\" colspan=\"2\" scope=\"col\">Balance<\/th>\r\n<\/tr>\r\n<tr>\r\n<th class=\"c\" scope=\"col\">Debit<\/th>\r\n<th class=\"c\" scope=\"col\">Credit<\/th>\r\n<\/tr>\r\n<\/thead>\r\n<tbody>\r\n<tr>\r\n<td>20--<\/td>\r\n<td><\/td>\r\n<td><\/td>\r\n<td><\/td>\r\n<td><\/td>\r\n<td><\/td>\r\n<td><\/td>\r\n<td><\/td>\r\n<\/tr>\r\n<tr>\r\n<th scope=\"row\">Oct<\/th>\r\n<th class=\"l\" scope=\"row\">1<\/th>\r\n<th scope=\"row\"><em>Balance<\/em><\/th>\r\n<td class=\"c\">a<\/td>\r\n<td><\/td>\r\n<td><\/td>\r\n<td class=\"r\">0.00<\/td>\r\n<td><\/td>\r\n<\/tr>\r\n<tr>\r\n<th><span class=\"u-sr-only\">Oct<\/span><\/th>\r\n<td class=\"l\">1<\/td>\r\n<td><\/td>\r\n<td class=\"c\">GJ1<\/td>\r\n<td class=\"r\">20,000.00<\/td>\r\n<td><\/td>\r\n<td class=\"r\">20,000.00<\/td>\r\n<td><\/td>\r\n<\/tr>\r\n<tr>\r\n<th><span class=\"u-sr-only\">Oct<\/span><\/th>\r\n<td class=\"l\">4<\/td>\r\n<td><\/td>\r\n<td class=\"c\">GJ1<\/td>\r\n<td><\/td>\r\n<td class=\"r\">12,000.00<\/td>\r\n<td class=\"r\">8,000.00<\/td>\r\n<td><\/td>\r\n<\/tr>\r\n<tr>\r\n<th><span class=\"u-sr-only\">Oct<\/span><\/th>\r\n<td class=\"l\">15<\/td>\r\n<td><\/td>\r\n<td class=\"c\">GJ1<\/td>\r\n<td class=\"r\">1,500.00<\/td>\r\n<td><\/td>\r\n<td class=\"r\">9,500.00<\/td>\r\n<td><\/td>\r\n<\/tr>\r\n<tr>\r\n<th><span class=\"u-sr-only\">Oct<\/span><\/th>\r\n<td class=\"l\">25<\/td>\r\n<td><\/td>\r\n<td class=\"c\">GJ1<\/td>\r\n<td><\/td>\r\n<td class=\"r\">2,600.00<\/td>\r\n<td class=\"r\">6,900.00<\/td>\r\n<td><\/td>\r\n<\/tr>\r\n<tr>\r\n<th><span class=\"u-sr-only\">Oct<\/span><\/th>\r\n<td class=\"l\">26<\/td>\r\n<td><\/td>\r\n<td class=\"c\">GJ1<\/td>\r\n<td><\/td>\r\n<td class=\"r\">1,000.00<\/td>\r\n<td class=\"r\">5,900.00<\/td>\r\n<td><\/td>\r\n<\/tr>\r\n<tr>\r\n<th><span class=\"u-sr-only\">Oct<\/span><\/th>\r\n<td class=\"l highlight\">30<\/td>\r\n<td><\/td>\r\n<td class=\"c highlight\">GJ2<\/td>\r\n<td class=\"r highlight\">1,600.00<\/td>\r\n<td><\/td>\r\n<td class=\"r\">7,500.00<\/td>\r\n<td><\/td>\r\n<\/tr>\r\n<tr>\r\n<th><span class=\"u-sr-only\">Oct<\/span><\/th>\r\n<td class=\"l\">31<\/td>\r\n<td><\/td>\r\n<td class=\"c\">GJ2<\/td>\r\n<td><\/td>\r\n<td class=\"r\">4,000.00<\/td>\r\n<td class=\"r\">3,500.00[footnote]We should be able to verify this amount with the bank.[\/footnote]<\/td>\r\n<td><\/td>\r\n<\/tr>\r\n<\/tbody>\r\n<tbody>\r\n<tr>\r\n<td colspan=\"8\"><\/td>\r\n<\/tr>\r\n<\/tbody>\r\n<\/table>\r\n<table class=\"fin-table gridded\"><caption class=\"u-clearfix\">\r\n<div>General Ledger<\/div>\r\n<div><span style=\"float: left\">Account: ACCOUNTS RECEIVABLE<\/span><span style=\"float: right\">Account No. 120<\/span><\/div>\r\n<\/caption>\r\n<thead>\r\n<tr>\r\n<td colspan=\"8\"><\/td>\r\n<\/tr>\r\n<tr>\r\n<th class=\"c\" colspan=\"2\" rowspan=\"2\" scope=\"col\">Date<\/th>\r\n<th class=\"c\" rowspan=\"2\" scope=\"col\">Item<\/th>\r\n<th class=\"c\" rowspan=\"2\" scope=\"col\">Post. Ref.<\/th>\r\n<th class=\"c\" rowspan=\"2\" scope=\"col\">Debit<\/th>\r\n<th class=\"c\" rowspan=\"2\" scope=\"col\">Credit<\/th>\r\n<th class=\"c\" colspan=\"2\" scope=\"col\">Balance<\/th>\r\n<\/tr>\r\n<tr>\r\n<th class=\"c\" scope=\"col\">Debit<\/th>\r\n<th class=\"c\" scope=\"col\">Credit<\/th>\r\n<\/tr>\r\n<\/thead>\r\n<tbody>\r\n<tr>\r\n<td>20--<\/td>\r\n<td><\/td>\r\n<td><\/td>\r\n<td><\/td>\r\n<td><\/td>\r\n<td><\/td>\r\n<td><\/td>\r\n<td><\/td>\r\n<\/tr>\r\n<tr>\r\n<th scope=\"row\">Oct<\/th>\r\n<th class=\"l\" scope=\"row\">1<\/th>\r\n<th scope=\"row\"><em>Balance<\/em><\/th>\r\n<td class=\"c\">a<\/td>\r\n<td><\/td>\r\n<td><\/td>\r\n<td class=\"r\">0.00<\/td>\r\n<td><\/td>\r\n<\/tr>\r\n<tr>\r\n<th><span class=\"u-sr-only\">Oct<\/span><\/th>\r\n<td class=\"l\">20<\/td>\r\n<td><\/td>\r\n<td class=\"c\">GJ1<\/td>\r\n<td class=\"r\">7,250.00<\/td>\r\n<td><\/td>\r\n<td class=\"r\">7,250.00<\/td>\r\n<td><\/td>\r\n<\/tr>\r\n<tr>\r\n<th><span class=\"u-sr-only\">Oct<\/span><\/th>\r\n<td class=\"l highlight\">30<\/td>\r\n<td><\/td>\r\n<td class=\"c highlight\">GJ2<\/td>\r\n<td><\/td>\r\n<td class=\"r highlight\">1,600.00<\/td>\r\n<td class=\"r\">5,650.00<\/td>\r\n<td><\/td>\r\n<\/tr>\r\n<\/tbody>\r\n<tbody>\r\n<tr>\r\n<td colspan=\"8\"><\/td>\r\n<\/tr>\r\n<\/tbody>\r\n<\/table>\r\nOne particular journal entry has been highlighted so you can see how it is posted and how the ledger entry can be traced back to the journal:\r\n<table class=\"fin-table gridded\"><caption class=\"u-clearfix\"><span>Journal<\/span><span style=\"float: right\">Page 2<\/span><\/caption>\r\n<thead>\r\n<tr>\r\n<td colspan=\"5\"><\/td>\r\n<\/tr>\r\n<tr>\r\n<th scope=\"col\">Date<\/th>\r\n<th scope=\"col\">Description<\/th>\r\n<th scope=\"col\">Post. Ref.<\/th>\r\n<th scope=\"col\">Debit<\/th>\r\n<th scope=\"col\">Credit<\/th>\r\n<\/tr>\r\n<\/thead>\r\n<tbody>\r\n<tr>\r\n<td>20--<\/td>\r\n<td><\/td>\r\n<td><\/td>\r\n<td><\/td>\r\n<td><\/td>\r\n<\/tr>\r\n<tr>\r\n<th scope=\"row\">Oct. 30<\/th>\r\n<td>Cash<\/td>\r\n<td class=\"c\">110<\/td>\r\n<td class=\"r\">1,600.00<\/td>\r\n<td><\/td>\r\n<\/tr>\r\n<tr>\r\n<th><\/th>\r\n<td>\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0Accounts Receivable<\/td>\r\n<td class=\"c\">120<\/td>\r\n<td class=\"r\"><\/td>\r\n<td class=\"r\">1,600.00<\/td>\r\n<\/tr>\r\n<tr>\r\n<th><\/th>\r\n<td>To record receipt of payments from customers on account<\/td>\r\n<td class=\"r\"><\/td>\r\n<td class=\"r\"><\/td>\r\n<td><\/td>\r\n<\/tr>\r\n<\/tbody>\r\n<\/table>\r\nIn the journal, we have noted the account number we posted to.\r\n\r\nIn the ledger, we noted the journal (General Journal) and the page. We\u2019re not using special journals, but they would be noted appropriately. Examples of special journals could include a Sales Journal (SJ), Purchasing Journal (PJ), Cash Receipts Journal (CRJ), Cash Disbursements Journal (CDJ), Payroll Journal (PRJ), and so on.\r\n\r\nAlso, note that the beginning balance, even though it is a zero, is in the debit column, because both of these accounts are asset accounts, which have a normal balance on the debit side. A credit balance in Accounts Receivable would mean that we owed all our customers\u2019 money, which is a highly unlikely scenario, and a credit balance in the checking account would mean that withdrawals had exceeded deposits, meaning the account is overdrawn. Those scenarios would turn these accounts from assets to liabilities.\r\n\r\nNow, look at the entries in Accounts Receivable:\r\n<table class=\"fin-table gridded\"><caption class=\"u-clearfix\">\r\n<div>General Ledger<\/div>\r\n<div><span style=\"float: left\">Account: ACCOUNTS RECEIVABLE<\/span><span style=\"float: right\">Account No. 120<\/span><\/div>\r\n<\/caption>\r\n<thead>\r\n<tr>\r\n<td colspan=\"8\"><\/td>\r\n<\/tr>\r\n<tr>\r\n<th class=\"c\" colspan=\"2\" rowspan=\"2\" scope=\"col\">Date<\/th>\r\n<th class=\"c\" rowspan=\"2\" scope=\"col\">Item<\/th>\r\n<th class=\"c\" rowspan=\"2\" scope=\"col\">Post. Ref.<\/th>\r\n<th class=\"c\" rowspan=\"2\" scope=\"col\">Debit<\/th>\r\n<th class=\"c\" rowspan=\"2\" scope=\"col\">Credit<\/th>\r\n<th class=\"c\" colspan=\"2\" scope=\"col\">Balance<\/th>\r\n<\/tr>\r\n<tr>\r\n<th class=\"c\" scope=\"col\">Debit<\/th>\r\n<th class=\"c\" scope=\"col\">Credit<\/th>\r\n<\/tr>\r\n<\/thead>\r\n<tbody>\r\n<tr>\r\n<td>20--<\/td>\r\n<td><\/td>\r\n<td><\/td>\r\n<td><\/td>\r\n<td><\/td>\r\n<td><\/td>\r\n<td><\/td>\r\n<td><\/td>\r\n<\/tr>\r\n<tr>\r\n<th scope=\"row\">Oct<\/th>\r\n<th class=\"l\" scope=\"row\">1<\/th>\r\n<th scope=\"row\"><em>Balance<\/em><\/th>\r\n<td class=\"c\">a<\/td>\r\n<td><\/td>\r\n<td><\/td>\r\n<td class=\"r\">0.00<\/td>\r\n<td><\/td>\r\n<\/tr>\r\n<tr>\r\n<th><span class=\"u-sr-only\">Oct<\/span><\/th>\r\n<td class=\"l\">20<\/td>\r\n<td><\/td>\r\n<td class=\"c\">GJ1<\/td>\r\n<td class=\"r\">7,250.00<\/td>\r\n<td><\/td>\r\n<td class=\"r\">7,250.00<\/td>\r\n<td><\/td>\r\n<\/tr>\r\n<tr>\r\n<th><span class=\"u-sr-only\">Oct<\/span><\/th>\r\n<td class=\"l\">30<\/td>\r\n<td><\/td>\r\n<td class=\"c\">GJ2<\/td>\r\n<td><\/td>\r\n<td class=\"r\">1,600.00<\/td>\r\n<td class=\"r\">5,650.00<\/td>\r\n<td><\/td>\r\n<\/tr>\r\n<\/tbody>\r\n<tbody>\r\n<tr>\r\n<td colspan=\"8\"><\/td>\r\n<\/tr>\r\n<\/tbody>\r\n<\/table>\r\nThe balance on October 31 is a debit of $5,650.00, calculated as follows:\r\n<table class=\"fin-table acctstatement\">\r\n<tbody>\r\n<tr>\r\n<th colspan=\"2\" scope=\"col\">Beginning balance<\/th>\r\n<th class=\"r\">$-<\/th>\r\n<\/tr>\r\n<tr>\r\n<td colspan=\"2\">debit entry<\/td>\r\n<td class=\"r\">7,250.00<\/td>\r\n<\/tr>\r\n<tr>\r\n<td colspan=\"2\">credit entry<\/td>\r\n<td class=\"r\">(1,600.00)<\/td>\r\n<\/tr>\r\n<tr>\r\n<th colspan=\"2\" scope=\"row\">Ending balance<\/th>\r\n<td class=\"r line-single line-double\"><span class=\"u-sr-only\">Single Line<\/span>$5,650.00<span class=\"u-sr-only\">Double Line<\/span><\/td>\r\n<\/tr>\r\n<\/tbody>\r\n<\/table>\r\nWe subtracted the credit, not because credits are negative or reductions, but because this is an asset account that is increased by debits and decreased by credits. Also note that in accounting, we often use parentheses to show a negative, and we use a single underline to show we are summing up a column of numbers, and a double underline to show that we are done (the \u201cbottom line\u201d).\r\n\r\nHere is the fully posted Accounts Payable ledger page:\r\n<table class=\"fin-table gridded\"><caption class=\"u-clearfix\">\r\n<div>General Ledger<\/div>\r\n<div><span style=\"float: left\">Account: ACCOUNTS RECEIVABLE<\/span><span style=\"float: right\">Account No. 210<\/span><\/div>\r\n<\/caption>\r\n<thead>\r\n<tr>\r\n<td colspan=\"8\"><\/td>\r\n<\/tr>\r\n<tr>\r\n<th class=\"c\" colspan=\"2\" rowspan=\"2\" scope=\"col\">Date<\/th>\r\n<th class=\"c\" rowspan=\"2\" scope=\"col\">Item<\/th>\r\n<th class=\"c\" rowspan=\"2\" scope=\"col\">Post. Ref.<\/th>\r\n<th class=\"c\" rowspan=\"2\" scope=\"col\">Debit<\/th>\r\n<th class=\"c\" rowspan=\"2\" scope=\"col\">Credit<\/th>\r\n<th class=\"c\" colspan=\"2\" scope=\"col\">Balance<\/th>\r\n<\/tr>\r\n<tr>\r\n<th class=\"c\" scope=\"col\">Debit<\/th>\r\n<th class=\"c\" scope=\"col\">Credit<\/th>\r\n<\/tr>\r\n<\/thead>\r\n<tbody>\r\n<tr>\r\n<td>20--<\/td>\r\n<td><\/td>\r\n<td><\/td>\r\n<td><\/td>\r\n<td><\/td>\r\n<td><\/td>\r\n<td><\/td>\r\n<td><\/td>\r\n<\/tr>\r\n<tr>\r\n<th scope=\"row\">Oct<\/th>\r\n<th class=\"l\" scope=\"row\">1<\/th>\r\n<th scope=\"row\"><em>Balance<\/em><\/th>\r\n<td class=\"c\">a<\/td>\r\n<td><\/td>\r\n<td><\/td>\r\n<td><\/td>\r\n<td class=\"r\">0.00<\/td>\r\n<\/tr>\r\n<tr>\r\n<th><span class=\"u-sr-only\">Oct<\/span><\/th>\r\n<td class=\"l\">7<\/td>\r\n<td><\/td>\r\n<td class=\"c\">GJ1<\/td>\r\n<td><\/td>\r\n<td class=\"r\">2,600.00<\/td>\r\n<td><\/td>\r\n<td class=\"r\">2,600.00<\/td>\r\n<\/tr>\r\n<tr>\r\n<th><span class=\"u-sr-only\">Oct<\/span><\/th>\r\n<td class=\"l\">26<\/td>\r\n<td><\/td>\r\n<td class=\"c\">GJ1<\/td>\r\n<td class=\"r\">1,000.00<\/td>\r\n<td><\/td>\r\n<td><\/td>\r\n<td class=\"r\">1,600.00<\/td>\r\n<\/tr>\r\n<\/tbody>\r\n<tbody>\r\n<tr>\r\n<td colspan=\"8\"><\/td>\r\n<\/tr>\r\n<\/tbody>\r\n<\/table>\r\nAnd how the balance is calculated:\r\n<table class=\"fin-table acctstatement\">\r\n<tbody>\r\n<tr>\r\n<th colspan=\"2\" scope=\"col\">Beginning balance<\/th>\r\n<th class=\"r\">$-<\/th>\r\n<\/tr>\r\n<tr>\r\n<td colspan=\"2\">debit entry<\/td>\r\n<td class=\"r\">2,600.00<\/td>\r\n<\/tr>\r\n<tr>\r\n<td colspan=\"2\">credit entry<\/td>\r\n<td class=\"r\">(1,000.00)<\/td>\r\n<\/tr>\r\n<tr>\r\n<th colspan=\"2\" scope=\"row\">Ending balance<\/th>\r\n<td class=\"r line-single line-double\"><span class=\"u-sr-only\">Single Line<\/span>$1,600.00<span class=\"u-sr-only\">Double Line<\/span><\/td>\r\n<\/tr>\r\n<\/tbody>\r\n<\/table>\r\nThis is a liability account (something we owe) with a normal credit balance, so we subtract debits from credits to get the balance.\r\n<div class=\"textbox tryit\">\r\n<h3>Practice Question<\/h3>\r\nhttps:\/\/assessments.lumenlearning.com\/assessments\/23375\r\n\r\nhttps:\/\/assessments.lumenlearning.com\/assessments\/23376\r\n\r\n[ohm_question]201757[\/ohm_question]\r\n\r\n<\/div>","rendered":"<div class=\"textbox learning-objectives\">\n<h3>Learning Outcomes<\/h3>\n<ul>\n<li>Calculate the account balance<\/li>\n<\/ul>\n<\/div>\n<p>As we post, we continually update account balances. Here are the first two accounts in our general ledger. If this was an old-fashioned book ledger, each of these accounts would be a different page (or pages, when there are a lot of transactions posted):<\/p>\n<table class=\"fin-table gridded\">\n<caption class=\"u-clearfix\">\n<\/caption>\n<thead>\n<tr>\n<td colspan=\"8\"><\/td>\n<\/tr>\n<tr>\n<th class=\"c\" colspan=\"2\" rowspan=\"2\" scope=\"col\">Date<\/th>\n<th class=\"c\" rowspan=\"2\" scope=\"col\">Item<\/th>\n<th class=\"c\" rowspan=\"2\" scope=\"col\">Post. Ref.<\/th>\n<th class=\"c\" rowspan=\"2\" scope=\"col\">Debit<\/th>\n<th class=\"c\" rowspan=\"2\" scope=\"col\">Credit<\/th>\n<th class=\"c\" colspan=\"2\" scope=\"col\">Balance<\/th>\n<\/tr>\n<tr>\n<th class=\"c\" scope=\"col\">Debit<\/th>\n<th class=\"c\" scope=\"col\">Credit<\/th>\n<\/tr>\n<\/thead>\n<tbody>\n<tr>\n<td>20&#8211;<\/td>\n<td><\/td>\n<td><\/td>\n<td><\/td>\n<td><\/td>\n<td><\/td>\n<td><\/td>\n<td><\/td>\n<\/tr>\n<tr>\n<th scope=\"row\">Oct<\/th>\n<th class=\"l\" scope=\"row\">1<\/th>\n<th scope=\"row\"><em>Balance<\/em><\/th>\n<td class=\"c\">a<\/td>\n<td><\/td>\n<td><\/td>\n<td class=\"r\">0.00<\/td>\n<td><\/td>\n<\/tr>\n<tr>\n<th><span class=\"u-sr-only\">Oct<\/span><\/th>\n<td class=\"l\">1<\/td>\n<td><\/td>\n<td class=\"c\">GJ1<\/td>\n<td class=\"r\">20,000.00<\/td>\n<td><\/td>\n<td class=\"r\">20,000.00<\/td>\n<td><\/td>\n<\/tr>\n<tr>\n<th><span class=\"u-sr-only\">Oct<\/span><\/th>\n<td class=\"l\">4<\/td>\n<td><\/td>\n<td class=\"c\">GJ1<\/td>\n<td><\/td>\n<td class=\"r\">12,000.00<\/td>\n<td class=\"r\">8,000.00<\/td>\n<td><\/td>\n<\/tr>\n<tr>\n<th><span class=\"u-sr-only\">Oct<\/span><\/th>\n<td class=\"l\">15<\/td>\n<td><\/td>\n<td class=\"c\">GJ1<\/td>\n<td class=\"r\">1,500.00<\/td>\n<td><\/td>\n<td class=\"r\">9,500.00<\/td>\n<td><\/td>\n<\/tr>\n<tr>\n<th><span class=\"u-sr-only\">Oct<\/span><\/th>\n<td class=\"l\">25<\/td>\n<td><\/td>\n<td class=\"c\">GJ1<\/td>\n<td><\/td>\n<td class=\"r\">2,600.00<\/td>\n<td class=\"r\">6,900.00<\/td>\n<td><\/td>\n<\/tr>\n<tr>\n<th><span class=\"u-sr-only\">Oct<\/span><\/th>\n<td class=\"l\">26<\/td>\n<td><\/td>\n<td class=\"c\">GJ1<\/td>\n<td><\/td>\n<td class=\"r\">1,000.00<\/td>\n<td class=\"r\">5,900.00<\/td>\n<td><\/td>\n<\/tr>\n<tr>\n<th><span class=\"u-sr-only\">Oct<\/span><\/th>\n<td class=\"l highlight\">30<\/td>\n<td><\/td>\n<td class=\"c highlight\">GJ2<\/td>\n<td class=\"r highlight\">1,600.00<\/td>\n<td><\/td>\n<td class=\"r\">7,500.00<\/td>\n<td><\/td>\n<\/tr>\n<tr>\n<th><span class=\"u-sr-only\">Oct<\/span><\/th>\n<td class=\"l\">31<\/td>\n<td><\/td>\n<td class=\"c\">GJ2<\/td>\n<td><\/td>\n<td class=\"r\">4,000.00<\/td>\n<td class=\"r\">3,500.00<a class=\"footnote\" title=\"We should be able to verify this amount with the bank.\" id=\"return-footnote-3005-1\" href=\"#footnote-3005-1\" aria-label=\"Footnote 1\"><sup class=\"footnote\">[1]<\/sup><\/a><\/td>\n<td><\/td>\n<\/tr>\n<\/tbody>\n<tbody>\n<tr>\n<td colspan=\"8\"><\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<table class=\"fin-table gridded\">\n<caption class=\"u-clearfix\">\n<\/caption>\n<thead>\n<tr>\n<td colspan=\"8\"><\/td>\n<\/tr>\n<tr>\n<th class=\"c\" colspan=\"2\" rowspan=\"2\" scope=\"col\">Date<\/th>\n<th class=\"c\" rowspan=\"2\" scope=\"col\">Item<\/th>\n<th class=\"c\" rowspan=\"2\" scope=\"col\">Post. Ref.<\/th>\n<th class=\"c\" rowspan=\"2\" scope=\"col\">Debit<\/th>\n<th class=\"c\" rowspan=\"2\" scope=\"col\">Credit<\/th>\n<th class=\"c\" colspan=\"2\" scope=\"col\">Balance<\/th>\n<\/tr>\n<tr>\n<th class=\"c\" scope=\"col\">Debit<\/th>\n<th class=\"c\" scope=\"col\">Credit<\/th>\n<\/tr>\n<\/thead>\n<tbody>\n<tr>\n<td>20&#8211;<\/td>\n<td><\/td>\n<td><\/td>\n<td><\/td>\n<td><\/td>\n<td><\/td>\n<td><\/td>\n<td><\/td>\n<\/tr>\n<tr>\n<th scope=\"row\">Oct<\/th>\n<th class=\"l\" scope=\"row\">1<\/th>\n<th scope=\"row\"><em>Balance<\/em><\/th>\n<td class=\"c\">a<\/td>\n<td><\/td>\n<td><\/td>\n<td class=\"r\">0.00<\/td>\n<td><\/td>\n<\/tr>\n<tr>\n<th><span class=\"u-sr-only\">Oct<\/span><\/th>\n<td class=\"l\">20<\/td>\n<td><\/td>\n<td class=\"c\">GJ1<\/td>\n<td class=\"r\">7,250.00<\/td>\n<td><\/td>\n<td class=\"r\">7,250.00<\/td>\n<td><\/td>\n<\/tr>\n<tr>\n<th><span class=\"u-sr-only\">Oct<\/span><\/th>\n<td class=\"l highlight\">30<\/td>\n<td><\/td>\n<td class=\"c highlight\">GJ2<\/td>\n<td><\/td>\n<td class=\"r highlight\">1,600.00<\/td>\n<td class=\"r\">5,650.00<\/td>\n<td><\/td>\n<\/tr>\n<\/tbody>\n<tbody>\n<tr>\n<td colspan=\"8\"><\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<p>One particular journal entry has been highlighted so you can see how it is posted and how the ledger entry can be traced back to the journal:<\/p>\n<table class=\"fin-table gridded\">\n<caption class=\"u-clearfix\"><span>Journal<\/span><span style=\"float: right\">Page 2<\/span><\/caption>\n<thead>\n<tr>\n<td colspan=\"5\"><\/td>\n<\/tr>\n<tr>\n<th scope=\"col\">Date<\/th>\n<th scope=\"col\">Description<\/th>\n<th scope=\"col\">Post. Ref.<\/th>\n<th scope=\"col\">Debit<\/th>\n<th scope=\"col\">Credit<\/th>\n<\/tr>\n<\/thead>\n<tbody>\n<tr>\n<td>20&#8211;<\/td>\n<td><\/td>\n<td><\/td>\n<td><\/td>\n<td><\/td>\n<\/tr>\n<tr>\n<th scope=\"row\">Oct. 30<\/th>\n<td>Cash<\/td>\n<td class=\"c\">110<\/td>\n<td class=\"r\">1,600.00<\/td>\n<td><\/td>\n<\/tr>\n<tr>\n<th><\/th>\n<td>\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0Accounts Receivable<\/td>\n<td class=\"c\">120<\/td>\n<td class=\"r\"><\/td>\n<td class=\"r\">1,600.00<\/td>\n<\/tr>\n<tr>\n<th><\/th>\n<td>To record receipt of payments from customers on account<\/td>\n<td class=\"r\"><\/td>\n<td class=\"r\"><\/td>\n<td><\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<p>In the journal, we have noted the account number we posted to.<\/p>\n<p>In the ledger, we noted the journal (General Journal) and the page. We\u2019re not using special journals, but they would be noted appropriately. Examples of special journals could include a Sales Journal (SJ), Purchasing Journal (PJ), Cash Receipts Journal (CRJ), Cash Disbursements Journal (CDJ), Payroll Journal (PRJ), and so on.<\/p>\n<p>Also, note that the beginning balance, even though it is a zero, is in the debit column, because both of these accounts are asset accounts, which have a normal balance on the debit side. A credit balance in Accounts Receivable would mean that we owed all our customers\u2019 money, which is a highly unlikely scenario, and a credit balance in the checking account would mean that withdrawals had exceeded deposits, meaning the account is overdrawn. Those scenarios would turn these accounts from assets to liabilities.<\/p>\n<p>Now, look at the entries in Accounts Receivable:<\/p>\n<table class=\"fin-table gridded\">\n<caption class=\"u-clearfix\">\n<\/caption>\n<thead>\n<tr>\n<td colspan=\"8\"><\/td>\n<\/tr>\n<tr>\n<th class=\"c\" colspan=\"2\" rowspan=\"2\" scope=\"col\">Date<\/th>\n<th class=\"c\" rowspan=\"2\" scope=\"col\">Item<\/th>\n<th class=\"c\" rowspan=\"2\" scope=\"col\">Post. Ref.<\/th>\n<th class=\"c\" rowspan=\"2\" scope=\"col\">Debit<\/th>\n<th class=\"c\" rowspan=\"2\" scope=\"col\">Credit<\/th>\n<th class=\"c\" colspan=\"2\" scope=\"col\">Balance<\/th>\n<\/tr>\n<tr>\n<th class=\"c\" scope=\"col\">Debit<\/th>\n<th class=\"c\" scope=\"col\">Credit<\/th>\n<\/tr>\n<\/thead>\n<tbody>\n<tr>\n<td>20&#8211;<\/td>\n<td><\/td>\n<td><\/td>\n<td><\/td>\n<td><\/td>\n<td><\/td>\n<td><\/td>\n<td><\/td>\n<\/tr>\n<tr>\n<th scope=\"row\">Oct<\/th>\n<th class=\"l\" scope=\"row\">1<\/th>\n<th scope=\"row\"><em>Balance<\/em><\/th>\n<td class=\"c\">a<\/td>\n<td><\/td>\n<td><\/td>\n<td class=\"r\">0.00<\/td>\n<td><\/td>\n<\/tr>\n<tr>\n<th><span class=\"u-sr-only\">Oct<\/span><\/th>\n<td class=\"l\">20<\/td>\n<td><\/td>\n<td class=\"c\">GJ1<\/td>\n<td class=\"r\">7,250.00<\/td>\n<td><\/td>\n<td class=\"r\">7,250.00<\/td>\n<td><\/td>\n<\/tr>\n<tr>\n<th><span class=\"u-sr-only\">Oct<\/span><\/th>\n<td class=\"l\">30<\/td>\n<td><\/td>\n<td class=\"c\">GJ2<\/td>\n<td><\/td>\n<td class=\"r\">1,600.00<\/td>\n<td class=\"r\">5,650.00<\/td>\n<td><\/td>\n<\/tr>\n<\/tbody>\n<tbody>\n<tr>\n<td colspan=\"8\"><\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<p>The balance on October 31 is a debit of $5,650.00, calculated as follows:<\/p>\n<table class=\"fin-table acctstatement\">\n<tbody>\n<tr>\n<th colspan=\"2\" scope=\"col\">Beginning balance<\/th>\n<th class=\"r\">$-<\/th>\n<\/tr>\n<tr>\n<td colspan=\"2\">debit entry<\/td>\n<td class=\"r\">7,250.00<\/td>\n<\/tr>\n<tr>\n<td colspan=\"2\">credit entry<\/td>\n<td class=\"r\">(1,600.00)<\/td>\n<\/tr>\n<tr>\n<th colspan=\"2\" scope=\"row\">Ending balance<\/th>\n<td class=\"r line-single line-double\"><span class=\"u-sr-only\">Single Line<\/span>$5,650.00<span class=\"u-sr-only\">Double Line<\/span><\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<p>We subtracted the credit, not because credits are negative or reductions, but because this is an asset account that is increased by debits and decreased by credits. Also note that in accounting, we often use parentheses to show a negative, and we use a single underline to show we are summing up a column of numbers, and a double underline to show that we are done (the \u201cbottom line\u201d).<\/p>\n<p>Here is the fully posted Accounts Payable ledger page:<\/p>\n<table class=\"fin-table gridded\">\n<caption class=\"u-clearfix\">\n<\/caption>\n<thead>\n<tr>\n<td colspan=\"8\"><\/td>\n<\/tr>\n<tr>\n<th class=\"c\" colspan=\"2\" rowspan=\"2\" scope=\"col\">Date<\/th>\n<th class=\"c\" rowspan=\"2\" scope=\"col\">Item<\/th>\n<th class=\"c\" rowspan=\"2\" scope=\"col\">Post. Ref.<\/th>\n<th class=\"c\" rowspan=\"2\" scope=\"col\">Debit<\/th>\n<th class=\"c\" rowspan=\"2\" scope=\"col\">Credit<\/th>\n<th class=\"c\" colspan=\"2\" scope=\"col\">Balance<\/th>\n<\/tr>\n<tr>\n<th class=\"c\" scope=\"col\">Debit<\/th>\n<th class=\"c\" scope=\"col\">Credit<\/th>\n<\/tr>\n<\/thead>\n<tbody>\n<tr>\n<td>20&#8211;<\/td>\n<td><\/td>\n<td><\/td>\n<td><\/td>\n<td><\/td>\n<td><\/td>\n<td><\/td>\n<td><\/td>\n<\/tr>\n<tr>\n<th scope=\"row\">Oct<\/th>\n<th class=\"l\" scope=\"row\">1<\/th>\n<th scope=\"row\"><em>Balance<\/em><\/th>\n<td class=\"c\">a<\/td>\n<td><\/td>\n<td><\/td>\n<td><\/td>\n<td class=\"r\">0.00<\/td>\n<\/tr>\n<tr>\n<th><span class=\"u-sr-only\">Oct<\/span><\/th>\n<td class=\"l\">7<\/td>\n<td><\/td>\n<td class=\"c\">GJ1<\/td>\n<td><\/td>\n<td class=\"r\">2,600.00<\/td>\n<td><\/td>\n<td class=\"r\">2,600.00<\/td>\n<\/tr>\n<tr>\n<th><span class=\"u-sr-only\">Oct<\/span><\/th>\n<td class=\"l\">26<\/td>\n<td><\/td>\n<td class=\"c\">GJ1<\/td>\n<td class=\"r\">1,000.00<\/td>\n<td><\/td>\n<td><\/td>\n<td class=\"r\">1,600.00<\/td>\n<\/tr>\n<\/tbody>\n<tbody>\n<tr>\n<td colspan=\"8\"><\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<p>And how the balance is calculated:<\/p>\n<table class=\"fin-table acctstatement\">\n<tbody>\n<tr>\n<th colspan=\"2\" scope=\"col\">Beginning balance<\/th>\n<th class=\"r\">$-<\/th>\n<\/tr>\n<tr>\n<td colspan=\"2\">debit entry<\/td>\n<td class=\"r\">2,600.00<\/td>\n<\/tr>\n<tr>\n<td colspan=\"2\">credit entry<\/td>\n<td class=\"r\">(1,000.00)<\/td>\n<\/tr>\n<tr>\n<th colspan=\"2\" scope=\"row\">Ending balance<\/th>\n<td class=\"r line-single line-double\"><span class=\"u-sr-only\">Single Line<\/span>$1,600.00<span class=\"u-sr-only\">Double Line<\/span><\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<p>This is a liability account (something we owe) with a normal credit balance, so we subtract debits from credits to get the balance.<\/p>\n<div class=\"textbox tryit\">\n<h3>Practice Question<\/h3>\n<p>\t<iframe id=\"lumen_assessment_23375\" class=\"resizable\" src=\"https:\/\/assessments.lumenlearning.com\/assessments\/load?assessment_id=23375&#38;embed=1&#38;external_user_id=&#38;external_context_id=&#38;iframe_resize_id=lumen_assessment_23375\" frameborder=\"0\" style=\"border:none;width:100%;height:100%;min-height:400px;\"><br \/>\n\t<\/iframe><\/p>\n<p>\t<iframe id=\"lumen_assessment_23376\" class=\"resizable\" src=\"https:\/\/assessments.lumenlearning.com\/assessments\/load?assessment_id=23376&#38;embed=1&#38;external_user_id=&#38;external_context_id=&#38;iframe_resize_id=lumen_assessment_23376\" frameborder=\"0\" style=\"border:none;width:100%;height:100%;min-height:400px;\"><br \/>\n\t<\/iframe><\/p>\n<p><iframe loading=\"lazy\" id=\"ohm201757\" class=\"resizable\" src=\"https:\/\/ohm.lumenlearning.com\/multiembedq.php?id=201757&theme=oea&iframe_resize_id=ohm201757&show_question_numbers\" width=\"100%\" height=\"150\"><\/iframe><\/p>\n<\/div>\n\n\t\t\t <section class=\"citations-section\" role=\"contentinfo\">\n\t\t\t <h3>Candela Citations<\/h3>\n\t\t\t\t\t <div>\n\t\t\t\t\t\t <div id=\"citation-list-3005\">\n\t\t\t\t\t\t\t <div class=\"licensing\"><div class=\"license-attribution-dropdown-subheading\">CC licensed content, Original<\/div><ul class=\"citation-list\"><li>Calculate Account Balances. <strong>Authored by<\/strong>: Joseph Cooke. <strong>Provided by<\/strong>: Lumen Learning. <strong>License<\/strong>: <em><a target=\"_blank\" rel=\"license\" href=\"https:\/\/creativecommons.org\/licenses\/by\/4.0\/\">CC BY: Attribution<\/a><\/em><\/li><\/ul><\/div>\n\t\t\t\t\t\t <\/div>\n\t\t\t\t\t <\/div>\n\t\t\t <\/section><hr class=\"before-footnotes clear\" \/><div class=\"footnotes\"><ol><li id=\"footnote-3005-1\">We should be able to verify this amount with the bank. <a href=\"#return-footnote-3005-1\" class=\"return-footnote\" aria-label=\"Return to footnote 1\">&crarr;<\/a><\/li><\/ol><\/div>","protected":false},"author":17,"menu_order":11,"template":"","meta":{"_candela_citation":"[{\"type\":\"original\",\"description\":\"Calculate Account Balances\",\"author\":\"Joseph Cooke\",\"organization\":\"Lumen 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