{"id":3087,"date":"2020-10-08T22:08:04","date_gmt":"2020-10-08T22:08:04","guid":{"rendered":"https:\/\/courses.lumenlearning.com\/wm-financialaccounting\/?post_type=chapter&#038;p=3087"},"modified":"2020-11-18T04:50:20","modified_gmt":"2020-11-18T04:50:20","slug":"posting-adjusted-journal-entries-to-the-ledger","status":"publish","type":"chapter","link":"https:\/\/courses.lumenlearning.com\/suny-clinton-financialaccounting\/chapter\/posting-adjusted-journal-entries-to-the-ledger\/","title":{"raw":"Posting Adjusted Journal Entries to the Ledger","rendered":"Posting Adjusted Journal Entries to the Ledger"},"content":{"raw":"<div class=\"textbox learning-objectives\">\r\n<h3>Learning Outcomes<\/h3>\r\n<ul>\r\n \t<li>Posting adjusting entries to the ledgers and re-balancing the accounts<\/li>\r\n<\/ul>\r\n<\/div>\r\nAfter preparing the journal entries, we have to post them to the ledgers.\r\n\r\nLet\u2019s start by reviewing NeatNiks\u2019s trial balance for the month of October:\r\n<table class=\"fin-table gridded\"><caption>NeatNiks\r\nTrial Balance (unadjusted)\r\nFor the month ended October 31, 20XX<\/caption>\r\n  <thead>\r\n<tr>\r\n<th scope=\"col\"><span class=\"u-sr-only\">Reference No.<\/span><\/th>\r\n<th scope=\"col\"><span class=\"u-sr-only\">Accounts<\/span><\/th>\r\n<th scope=\"col\">Debits<\/th>\r\n<th scope=\"col\">Credits<\/th>\r\n<\/tr>\r\n  <\/thead>\r\n<tbody>\r\n<tr>\r\n<td>110<\/td>\r\n<td>Checking<\/td>\r\n<td class=\"r\">3,500.00<\/td>\r\n<td class=\"r\"><\/td>\r\n<\/tr>\r\n<tr>\r\n<td>120<\/td>\r\n<td>Accounts Receivable<\/td>\r\n<td class=\"r\">5,650.00<\/td>\r\n<td class=\"r\"><\/td>\r\n<\/tr>\r\n<tr>\r\n<td>125<\/td>\r\n<td>Supplies<\/td>\r\n<td class=\"r\">2,600.00<\/td>\r\n<td class=\"r\"><\/td>\r\n<\/tr>\r\n<tr>\r\n<td>130<\/td>\r\n<td>Prepaid Rent<\/td>\r\n<td class=\"r\">12,000.00<\/td>\r\n<td class=\"r\"><\/td>\r\n<\/tr>\r\n<tr>\r\n<td>210<\/td>\r\n<td>Account Payable<\/td>\r\n<td class=\"r\"><\/td>\r\n<td class=\"r\">1,600.00<\/td>\r\n<\/tr>\r\n<tr>\r\n<td>220<\/td>\r\n<td>Contractor Payable<\/td>\r\n<td class=\"r\"><\/td>\r\n<td class=\"r\">-<\/td>\r\n<\/tr>\r\n<tr>\r\n<td>310<\/td>\r\n<td class=\"r\">Nick Frank, Capital Contributions<\/td>\r\n<td class=\"r\"><\/td>\r\n<td>20,000.00<\/td>\r\n<\/tr>\r\n<tr>\r\n<td>330<\/td>\r\n<td>Nick Frank, Withdrawals<\/td>\r\n<td class=\"r\">4,000.00<\/td>\r\n<td class=\"r\"><\/td>\r\n<\/tr>\r\n<tr>\r\n<td>410<\/td>\r\n<td>Service Revenue<\/td>\r\n<td class=\"r\"><\/td>\r\n<td class=\"r\">8,750.00<\/td>\r\n<\/tr>\r\n<tr>\r\n<td>510<\/td>\r\n<td>Insurance Revenue<\/td>\r\n<td class=\"r\">1,500.00<\/td>\r\n<td class=\"r\"><\/td>\r\n<\/tr>\r\n<tr>\r\n<td>520<\/td>\r\n<td>Rent Expense<\/td>\r\n<td class=\"r\">-<\/td>\r\n<td class=\"r\"><\/td>\r\n<\/tr>\r\n<tr>\r\n<td>530<\/td>\r\n<td>Supplies Expense<\/td>\r\n<td class=\"r\">-<\/td>\r\n<td class=\"r\"><\/td>\r\n<\/tr>\r\n<tr>\r\n<td>540<\/td>\r\n<td>Contractor Expense<\/td>\r\n<td class=\"r\">1,100.00<\/td>\r\n<td class=\"r\"><\/td>\r\n<\/tr>\r\n<\/tbody>\r\n <tfoot>\r\n    <tr>\r\n      <td><\/td>\r\n      <td>Totals<\/td>\r\n      <td class=\"r line-single line-double\"><span class=\"u-sr-only\">Single line<\/span> 30,350.00\r\n        <span class=\"u-sr-only\">Double line<\/span><\/td>\r\n      <td class=\"r line-single line-double\"><span class=\"u-sr-only\">Single line<\/span> 30,350.00\r\n        <span class=\"u-sr-only\">Double line<\/span><\/td>\r\n    <\/tr>\r\n  <\/tfoot>\r\n<\/table>\r\nNext, we analyze each account, going down the list in order and starting with the checking account, which we verify with the bank. We\u2019ll go into this step in more detail in the next module on accounting for cash, so for now let\u2019s just assume this account is verified and we can check it off.\r\n\r\nNext is Accounts Receivable. We didn\u2019t keep a subsidiary ledger for this account and because this is just a hypothetical project, we didn\u2019t have the details for the subsidiary ledger, but let\u2019s just say this is what the subsidiary ledger looks like:\r\n<table class=\"fin-table gridded\"><caption class=\"u-clearfix\">NeatNiks\r\nAccounts Receivable Subsidiary Ledger\r\nFor the month ended October 31, 20XX<\/caption>\r\n<thead>\r\n<tr aria-hidden=\"true\">\r\n<td colspan=\"8\"><\/td>\r\n<\/tr>\r\n<tr style=\"text-transform: uppercase;\">\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<\/tr>\r\n<\/thead>\r\n<tbody>\r\n<tr aria-hidden=\"true\">\r\n<td colspan=\"6\"><\/td>\r\n<\/tr>\r\n<tr>\r\n<td><\/td>\r\n<td><\/td>\r\n<td>Max Von Snyder<\/td>\r\n<td><\/td>\r\n<td><\/td>\r\n<td><\/td>\r\n<\/tr>\r\n<tr>\r\n<td><\/td>\r\n<td><\/td>\r\n<td class=\"r\">\u00a0\u00a0\u00a0invoice dtd 10\/20\/20XX<\/td>\r\n<td><\/td>\r\n<td class=\"r\">5,000.00<\/td>\r\n<td><\/td>\r\n<\/tr>\r\n<tr>\r\n<td><\/td>\r\n<td><\/td>\r\n<td class=\"r\">\u00a0\u00a0\u00a0payment 10\/30<\/td>\r\n<td><\/td>\r\n<td class=\"r\">(1,000.00)<\/td>\r\n<td><\/td>\r\n<\/tr>\r\n<tr>\r\n<td><\/td>\r\n<td><\/td>\r\n<td class=\"r\">\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0balance owing<\/td>\r\n<td><\/td>\r\n<td><\/td>\r\n<td class=\"r\">4,000.00<\/td>\r\n<\/tr>\r\n<tr>\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<td><\/td>\r\n<td><\/td>\r\n<td>Donnie Almond<\/td>\r\n<td><\/td>\r\n<td><\/td>\r\n<td><\/td>\r\n<\/tr>\r\n<tr>\r\n<td><\/td>\r\n<td><\/td>\r\n<td class=\"r\">\u00a0\u00a0\u00a0invoice dtd 10\/20\/20XX<\/td>\r\n<td><\/td>\r\n<td class=\"r\">1,000.00<\/td>\r\n<td><\/td>\r\n<\/tr>\r\n<tr>\r\n<td><\/td>\r\n<td><\/td>\r\n<td class=\"r\">\u00a0\u00a0\u00a0payment 10\/30<\/td>\r\n<td><\/td>\r\n<td class=\"r\">(400.00)<\/td>\r\n<td><\/td>\r\n<\/tr>\r\n<tr>\r\n<td><\/td>\r\n<td><\/td>\r\n<td class=\"r\">\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0balance owing<\/td>\r\n<td><\/td>\r\n<td><\/td>\r\n<td class=\"r\">600.00<\/td>\r\n<\/tr>\r\n<tr>\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<td><\/td>\r\n<td><\/td>\r\n<td>Gracie Monocle<\/td>\r\n<td><\/td>\r\n<td><\/td>\r\n<td><\/td>\r\n<\/tr>\r\n<tr>\r\n<td><\/td>\r\n<td><\/td>\r\n<td class=\"r\">\u00a0\u00a0\u00a0invoice dtd 10\/20\/20XX<\/td>\r\n<td><\/td>\r\n<td class=\"r\">1,250.00<\/td>\r\n<td><\/td>\r\n<\/tr>\r\n<tr>\r\n<td><\/td>\r\n<td><\/td>\r\n<td class=\"r\">\u00a0\u00a0\u00a0payment 10\/30<\/td>\r\n<td><\/td>\r\n<td class=\"r\">(200.00)<\/td>\r\n<td><\/td>\r\n<\/tr>\r\n<tr>\r\n<td><\/td>\r\n<td><\/td>\r\n<td class=\"r\">\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0balance owing<\/td>\r\n<td><\/td>\r\n<td><\/td>\r\n<td class=\"r\">1,050.00<\/td>\r\n<\/tr>\r\n<tr>\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<td><\/td>\r\n<td><\/td>\r\n<td class=\"r\">Total due from customers<\/td>\r\n<td><\/td>\r\n<td><\/td>\r\n<td class=\"line-double line-single\">5,650.00<span class=\"u-sr-only\">Double Line<\/span><\/td>\r\n<\/tr>\r\n<\/tbody>\r\n<\/table>\r\nThe subsidiary ledger agrees with the general ledger control account as reported on the trial balance. What we don\u2019t know is if this list is accurate. An auditor might send a letter to each of these accounts (or to a random sample of accounts) without mentioning the amount in our records, asking the customer to report what they owe (per their accounts payable records). What that report would not reveal, however, would be an account that is missing from the list. There are other tests and procedures for that audit, including tests of internal systems and statistical analysis, but those are covered in more advanced auditing courses. For now, since we\u2019re not doing a full audit for a publicly traded company, it\u2019s enough that we have matched the general ledger amount (control account) to the subsidiary ledger.\r\n\r\nCheck that one off.\r\n\r\nNow we come to supplies. The trial balance shows a debit balance of $2,600, but we have a physical count as of October 31 that shows an ending balance of $1,000 (from the original list of information way back in Module 1).\r\n\r\nThat balance means that during the month of October, Nick used up (expended) $1,600 of supplies. We\u2019ll need an adjusting journal entry.\r\n\r\nQuestion: Is this a deferral or an accrual? (answer after the AJE)\r\n\r\nIf you need to, scratch this example out on a piece of paper using T accounts.\r\n<table class=\"fin-table gridded\"><caption class=\"u-clearfix\"><span style=\"text-transform: uppercase;\">Journal<\/span><span style=\"float: right;\">Page 2<\/span><\/caption>\r\n<thead>\r\n<tr aria-hidden=\"true\">\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 31<\/th>\r\n<td>Supplies Expense<\/td>\r\n<td class=\"r\"><\/td>\r\n<td class=\"r\">1,600.00<\/td>\r\n<td><\/td>\r\n<\/tr>\r\n<tr>\r\n<th><span class=\"u-sr-only\">Oct 31<\/span><\/th>\r\n<td>\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0Supplies<\/td>\r\n<td><\/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><span class=\"u-sr-only\">Oct 31<\/span><\/th>\r\n<td>To record supplies used during the month<\/td>\r\n<td><\/td>\r\n<td><\/td>\r\n<td><\/td>\r\n<\/tr>\r\n<\/tbody>\r\n<\/table>\r\nThis is a <strong>deferred<\/strong> expense because we spent the money before we <em>expended<\/em> the resource.\r\n\r\nA debit to an expense account increases that account because expenses represent decreases to equity, and equity is on the right side of the accounting equation (A = L + E). A debit decreases equity because an increase is represented by an entry on the right side of the ledger\/T account (a.k.a. credit).\r\n\r\nAfter we post this expense to the ledger, our balance in the supplies account should be $1,000. We\u2019ll check that amount soon.\r\n\r\nNext on the list, as we walk our way down the trial balance, is Prepaid Rent. To analyze this account, we take a look at the ledger:\r\n<table class=\"fin-table gridded\"><caption class=\"u-clearfix\">\r\n<div style=\"text-transform: uppercase;\">General Ledger<\/div>\r\n<div><span style=\"float: left;\">Account: Prepaid Rent<\/span><span style=\"float: right;\">Account No. 130<\/span><\/div>\r\n<\/caption>\r\n<thead>\r\n<tr aria-hidden=\"true\">\r\n<td colspan=\"8\"><\/td>\r\n<\/tr>\r\n<tr style=\"text-transform: uppercase;\">\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 style=\"text-transform: uppercase;\">\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>a<\/td>\r\n<td><\/td>\r\n<td><\/td>\r\n<td>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\">4<\/td>\r\n<td><\/td>\r\n<td>GJ1<\/td>\r\n<td class=\"r\">12,000.00<\/td>\r\n<td><\/td>\r\n<td class=\"r\">12,000.00<\/td>\r\n<td><\/td>\r\n<\/tr>\r\n<\/tbody>\r\n<tbody>\r\n<tr aria-hidden=\"true\">\r\n<td colspan=\"8\"><\/td>\r\n<\/tr>\r\n<\/tbody>\r\n<\/table>\r\nWe trace the $12,000 entry back to the journal, and then from the journal to the supporting document in the file showing Nick rented a truck for $12,000 cash for October through March (6 months). It equates to $2,000 per month. One month is now used up, so we need to record the amount of the deferred expense that is now current. We\u2019ll decrease the asset \u201cPrepaid Rent\u201d with a credit entry and increase \u201cRent Expense\u201d with a debit entry.\r\n<table class=\"fin-table gridded\"><caption class=\"u-clearfix\"><span style=\"text-transform: uppercase;\">Journal<\/span><span style=\"float: right;\">Page 2<\/span><\/caption>\r\n<thead>\r\n<tr aria-hidden=\"true\">\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 31<\/th>\r\n<td>Rent Expense<\/td>\r\n<td class=\"r\"><\/td>\r\n<td class=\"r\">2,000.00<\/td>\r\n<td><\/td>\r\n<\/tr>\r\n<tr>\r\n<th><span class=\"u-sr-only\">Oct 31<\/span><\/th>\r\n<td>\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0Prepaid Rent<\/td>\r\n<td><\/td>\r\n<td class=\"r\"><\/td>\r\n<td class=\"r\">2,000.00<\/td>\r\n<\/tr>\r\n<tr>\r\n<th><span class=\"u-sr-only\">Oct 31<\/span><\/th>\r\n<td>To record rent expense for the month<\/td>\r\n<td><\/td>\r\n<td><\/td>\r\n<td><\/td>\r\n<\/tr>\r\n<\/tbody>\r\n<\/table>\r\nNext on the trial balance is Accounts Payable. We\u2019d have an Accounts Payable subsidiary ledger to compare the trial balance to, and we\u2019d do some research to determine if there were any payables that hadn\u2019t been recorded. For purposes of this simulation, let\u2019s just say that Accounts Payable checks out.\r\n\r\nNext is Contractor Payable (if Nick had employees this would be called Wages Payable), and since the month of October is actually over at this point and it\u2019s probably the first week of November as we are making these adjusting journal entries, we have the following information from Nick:\r\n\r\nNick owes his independent contractor workers $1,200 for work done in October\u2014he'll pay it in November.\r\n\r\nWe looked at this exact journal entry in the prior section, so we\u2019ll just use that entry as a template and record the following:\r\n<table class=\"fin-table gridded\"><caption class=\"u-clearfix\"><span style=\"text-transform: uppercase;\">Journal<\/span><span style=\"float: right;\">Page 2<\/span><\/caption>\r\n<thead>\r\n<tr aria-hidden=\"true\">\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 31<\/th>\r\n<td>Contractor Expense<\/td>\r\n<td class=\"r\"><\/td>\r\n<td class=\"r\">1,200.00<\/td>\r\n<td><\/td>\r\n<\/tr>\r\n<tr>\r\n<th><span class=\"u-sr-only\">Oct 31<\/span><\/th>\r\n<td>\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0Contractor Payable<\/td>\r\n<td><\/td>\r\n<td class=\"r\"><\/td>\r\n<td class=\"r\">1,200.00<\/td>\r\n<\/tr>\r\n<tr>\r\n<th><span class=\"u-sr-only\">Oct 31<\/span><\/th>\r\n<td>To record October work paid in November<\/td>\r\n<td><\/td>\r\n<td><\/td>\r\n<td><\/td>\r\n<\/tr>\r\n<\/tbody>\r\n<\/table>\r\nAfter this account, we would verify the Capital account and the Withdrawal account, and scan the Revenue and Expense accounts, do some statistical analysis and some testing (if this were a full audit), and we\u2019d look for other things that need to be disclosed, such as any outstanding lawsuits, pension plan, etc. But this is just a small company, so we\u2019ll stop here for now. We\u2019ve done our due diligence and it doesn\u2019t look like we missed anything significant.\r\n\r\nWe have just three adjusting journal entries now, and we\u2019ve added them to the bottom of page 2 of our journal:\r\n<table class=\"fin-table gridded\"><caption class=\"u-clearfix\"><span style=\"text-transform: uppercase;\">Journal<\/span><span style=\"float: right;\">Page 2<\/span><\/caption>\r\n<thead>\r\n<tr aria-hidden=\"true\">\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>Checking<\/td>\r\n<td class=\"r\">110<\/td>\r\n<td class=\"r\">1,600.00<\/td>\r\n<td><\/td>\r\n<\/tr>\r\n<tr>\r\n<th><span class=\"u-sr-only\">Oct. 30<\/span><\/th>\r\n<td>\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0Accounts Receivable<\/td>\r\n<td>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><span class=\"u-sr-only\">Oct. 30<\/span><\/th>\r\n<td>To record receipt of payments from customers on account<\/td>\r\n<td><\/td>\r\n<td class=\"r\"><\/td>\r\n<td class=\"r\"><\/td>\r\n<\/tr>\r\n<tr aria-hidden=\"true\">\r\n<td colspan=\"5\"><\/td>\r\n<\/tr>\r\n<tr>\r\n<th scope=\"row\">Oct. 31<\/th>\r\n<td>Owner Withdrawal<\/td>\r\n<td class=\"r\">320<\/td>\r\n<td class=\"r\">4,000.00<\/td>\r\n<td><\/td>\r\n<\/tr>\r\n<tr>\r\n<th><span class=\"u-sr-only\">Oct. 31<\/span><\/th>\r\n<td>\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0Checking<\/td>\r\n<td>110<\/td>\r\n<td class=\"r\"><\/td>\r\n<td class=\"r\">4,000.00<\/td>\r\n<\/tr>\r\n<tr>\r\n<th><span class=\"u-sr-only\">Oct. 31<\/span><\/th>\r\n<td>To record payment to owner<\/td>\r\n<td><\/td>\r\n<td class=\"r\"><\/td>\r\n<td class=\"r\"><\/td>\r\n<\/tr>\r\n<tr aria-hidden=\"true\">\r\n<td colspan=\"5\"><\/td>\r\n<\/tr>\r\n<tr>\r\n<th scope=\"row\">AJE1 31<\/th>\r\n<td>Supplies Expense<\/td>\r\n<td class=\"r\"><\/td>\r\n<td class=\"r\">1,600.00<\/td>\r\n<td><\/td>\r\n<\/tr>\r\n<tr>\r\n<th><span class=\"u-sr-only\">AJE1 31<\/span><\/th>\r\n<td>\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0Supplies<\/td>\r\n<td><\/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><span class=\"u-sr-only\">AJE1 31<\/span><\/th>\r\n<td>To record supplies used during the month<\/td>\r\n<td><\/td>\r\n<td class=\"r\"><\/td>\r\n<td class=\"r\"><\/td>\r\n<\/tr>\r\n<tr aria-hidden=\"true\">\r\n<td colspan=\"5\"><\/td>\r\n<\/tr>\r\n<tr>\r\n<th scope=\"row\">AJE2 31<\/th>\r\n<td>Rent Expense<\/td>\r\n<td class=\"r\"><\/td>\r\n<td class=\"r\">2,000.00<\/td>\r\n<td><\/td>\r\n<\/tr>\r\n<tr>\r\n<th><span class=\"u-sr-only\">AJE2 31<\/span><\/th>\r\n<td>\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0Prepaid Rent<\/td>\r\n<td><\/td>\r\n<td class=\"r\"><\/td>\r\n<td class=\"r\">2,000.00<\/td>\r\n<\/tr>\r\n<tr>\r\n<th><span class=\"u-sr-only\">AJE2 31<\/span><\/th>\r\n<td>To record rent expense for the month<\/td>\r\n<td><\/td>\r\n<td class=\"r\"><\/td>\r\n<td class=\"r\"><\/td>\r\n<\/tr>\r\n<tr aria-hidden=\"true\">\r\n<td colspan=\"5\"><\/td>\r\n<\/tr>\r\n<tr>\r\n<th scope=\"row\">AJE3 31<\/th>\r\n<td>Contractor Expense<\/td>\r\n<td class=\"r\"><\/td>\r\n<td class=\"r\">1,200.00<\/td>\r\n<td><\/td>\r\n<\/tr>\r\n<tr>\r\n<th><span class=\"u-sr-only\">AJE3 31<\/span><\/th>\r\n<td>\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0Contractor Payable<\/td>\r\n<td><\/td>\r\n<td class=\"r\"><\/td>\r\n<td class=\"r\">1,200.00<\/td>\r\n<\/tr>\r\n<tr>\r\n<th><span class=\"u-sr-only\">AJE3 31<\/span><\/th>\r\n<td>To record October work paid in November<\/td>\r\n<td><\/td>\r\n<td class=\"r\"><\/td>\r\n<td class=\"r\"><\/td>\r\n<\/tr>\r\n<tr aria-hidden=\"true\">\r\n<td colspan=\"5\"><\/td>\r\n<\/tr>\r\n<\/tbody>\r\n<\/table>\r\nThen we post them to the appropriate ledgers, updating the references as we go. Let\u2019s just look at the last one to accrue wages for October. Assume you have already posted the other two.\r\n\r\nHere is the journal entry you wrote:\r\n<table class=\"fin-table gridded\"><caption class=\"u-clearfix\"><span style=\"text-transform: uppercase;\">Journal<\/span><span style=\"float: right;\">Page 2<\/span><\/caption>\r\n<thead>\r\n<tr aria-hidden=\"true\">\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\">AJE3 31<\/th>\r\n<td>Contractor Expense<\/td>\r\n<td class=\"r\"><\/td>\r\n<td class=\"r\">1,200.00<\/td>\r\n<td><\/td>\r\n<\/tr>\r\n<tr>\r\n<th><span class=\"u-sr-only\">AJE3 31<\/span><\/th>\r\n<td>\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0Contractor Payable<\/td>\r\n<td><\/td>\r\n<td class=\"r\"><\/td>\r\n<td class=\"r\">1,200.00<\/td>\r\n<\/tr>\r\n<tr>\r\n<th><span class=\"u-sr-only\">AJE3 31<\/span><\/th>\r\n<td>To record October work paid in November<\/td>\r\n<td><\/td>\r\n<td><\/td>\r\n<td><\/td>\r\n<\/tr>\r\n<\/tbody>\r\n<\/table>\r\nFirst, post the debit to Contractor Expense, making sure you update the balance in the ledger and the posting reference:\r\n<table class=\"fin-table gridded\"><caption class=\"u-clearfix\">\r\n<div style=\"text-transform: uppercase;\">General Ledger<\/div>\r\n<div><span style=\"float: left;\">Account: Contractor Expense<\/span><span style=\"float: right;\">Account No. 540<\/span><\/div>\r\n<\/caption>\r\n<thead>\r\n<tr aria-hidden=\"true\">\r\n<td colspan=\"8\"><\/td>\r\n<\/tr>\r\n<tr style=\"text-transform: uppercase;\">\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 style=\"text-transform: uppercase;\">\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>a<\/td>\r\n<td><\/td>\r\n<td><\/td>\r\n<td>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\">25<\/td>\r\n<td><\/td>\r\n<td>GJ1<\/td>\r\n<td class=\"r\">1,100.00<\/td>\r\n<td><\/td>\r\n<td class=\"r\">1,100.00<\/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\">31<\/td>\r\n<td class=\"highlight\">AJE3<\/td>\r\n<td class=\"highlight\">GJ2<\/td>\r\n<td class=\"r highlight\">1,200.00<\/td>\r\n<td><\/td>\r\n<td class=\"r\">2,300.00<\/td>\r\n<td><\/td>\r\n<\/tr>\r\n<\/tbody>\r\n<tbody>\r\n<tr aria-hidden=\"true\">\r\n<td colspan=\"8\"><\/td>\r\n<\/tr>\r\n<\/tbody>\r\n<\/table>\r\nThen post the credit to Wages Payable:\r\n<table class=\"fin-table gridded\"><caption class=\"u-clearfix\">\r\n<div style=\"text-transform: uppercase;\">General Ledger<\/div>\r\n<div><span style=\"float: left;\">Account: Contractor Payable<\/span><span style=\"float: right;\">Account No. 220<\/span><\/div>\r\n<\/caption>\r\n<thead>\r\n<tr aria-hidden=\"true\">\r\n<td colspan=\"8\"><\/td>\r\n<\/tr>\r\n<tr style=\"text-transform: uppercase;\">\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 style=\"text-transform: uppercase;\">\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>a<\/td>\r\n<td><\/td>\r\n<td><\/td>\r\n<td><\/td>\r\n<td>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 highlight\">31<\/td>\r\n<td class=\"highlight\">AJE3<\/td>\r\n<td class=\"highlight\">GJ2<\/td>\r\n<td><\/td>\r\n<td class=\"r highlight\">1,200.00<\/td>\r\n<td><\/td>\r\n<td class=\"r\">1,200.00<\/td>\r\n<\/tr>\r\n<\/tbody>\r\n<tbody>\r\n<tr aria-hidden=\"true\">\r\n<td colspan=\"8\"><\/td>\r\n<\/tr>\r\n<\/tbody>\r\n<\/table>\r\nAs you update each ledger, you also update the journal by posting the ledger account number into the journal reference column:\r\n<table class=\"fin-table gridded\" style=\"height: 276px;\"><caption class=\"u-clearfix\"><span style=\"text-transform: uppercase;\">Journal<\/span><span style=\"float: right;\">Page 2<\/span><\/caption>\r\n<thead>\r\n<tr aria-hidden=\"true\">\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 style=\"height: 12px;\">\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>Checking<\/td>\r\n<td class=\"r\">110<\/td>\r\n<td class=\"r\">1,600.00<\/td>\r\n<td><\/td>\r\n<\/tr>\r\n<tr>\r\n<th><span class=\"u-sr-only\">Oct. 30<\/span><\/th>\r\n<td>\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0Accounts Receivable<\/td>\r\n<td>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><span class=\"u-sr-only\">Oct. 30<\/span><\/th>\r\n<td>To record receipt of payments from customers on account<\/td>\r\n<td><\/td>\r\n<td class=\"r\"><\/td>\r\n<td class=\"r\"><\/td>\r\n<\/tr>\r\n<tr aria-hidden=\"true\">\r\n<td colspan=\"5\"><\/td>\r\n<\/tr>\r\n<tr>\r\n<th scope=\"row\">Oct. 31<\/th>\r\n<td>Owner Withdrawal<\/td>\r\n<td class=\"r\">320<\/td>\r\n<td class=\"r\">4,000.00<\/td>\r\n<td><\/td>\r\n<\/tr>\r\n<tr>\r\n<th><span class=\"u-sr-only\">Oct. 31<\/span><\/th>\r\n<td>\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0Checking<\/td>\r\n<td>110<\/td>\r\n<td class=\"r\"><\/td>\r\n<td class=\"r\">4,000.00<\/td>\r\n<\/tr>\r\n<tr style=\"height: 12px;\">\r\n<th><span class=\"u-sr-only\">Oct. 31<\/span><\/th>\r\n<td>To record payment to owner<\/td>\r\n<td><\/td>\r\n<td class=\"r\"><\/td>\r\n<td class=\"r\"><\/td>\r\n<\/tr>\r\n<tr aria-hidden=\"true\">\r\n<td colspan=\"5\"><\/td>\r\n<\/tr>\r\n<tr style=\"height: 12px;\">\r\n<th scope=\"row\">AJE1 31<\/th>\r\n<td>Supplies Expense<\/td>\r\n<td class=\"r\">530<\/td>\r\n<td class=\"r\">1,600.00<\/td>\r\n<td><\/td>\r\n<\/tr>\r\n<tr>\r\n<th><span class=\"u-sr-only\">AJE1 31<\/span><\/th>\r\n<td>\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0Supplies<\/td>\r\n<td>125<\/td>\r\n<td><\/td>\r\n<td class=\"r\">1,600.00<\/td>\r\n<\/tr>\r\n<tr>\r\n<th><span class=\"u-sr-only\">AJE1 31<\/span><\/th>\r\n<td>To record supplies used during the month<\/td>\r\n<td><\/td>\r\n<td class=\"r\"><\/td>\r\n<td class=\"r\"><\/td>\r\n<\/tr>\r\n<tr aria-hidden=\"true\">\r\n<td colspan=\"5\"><\/td>\r\n<\/tr>\r\n<tr>\r\n<th scope=\"row\">AJE2 31<\/th>\r\n<td>Rent Expense<\/td>\r\n<td class=\"r\">520<\/td>\r\n<td class=\"r\">2,000.00<\/td>\r\n<td><\/td>\r\n<\/tr>\r\n<tr>\r\n<th><span class=\"u-sr-only\">AJE2 31<\/span><\/th>\r\n<td>\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0Prepaid Rent<\/td>\r\n<td>130<\/td>\r\n<td class=\"r\"><\/td>\r\n<td class=\"r\">2,000.00<\/td>\r\n<\/tr>\r\n<tr>\r\n<th><span class=\"u-sr-only\">AJE2 31<\/span><\/th>\r\n<td>To record rent expense for the month<\/td>\r\n<td><\/td>\r\n<td><\/td>\r\n<td><\/td>\r\n<\/tr>\r\n<tr aria-hidden=\"true\">\r\n<td colspan=\"5\"><\/td>\r\n<\/tr>\r\n<tr>\r\n<th scope=\"row\">AJE3 31<\/th>\r\n<td>Contractor Expense<\/td>\r\n<td class=\"r highlight\">540<\/td>\r\n<td class=\"r\">1,200.00<\/td>\r\n<td><\/td>\r\n<\/tr>\r\n<tr>\r\n<th><span class=\"u-sr-only\">AJE3 31<\/span><\/th>\r\n<td>\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0Contractor Payable<\/td>\r\n<td class=\"r highlight\">220<\/td>\r\n<td><\/td>\r\n<td>1,200.00<\/td>\r\n<\/tr>\r\n<tr>\r\n<th><span class=\"u-sr-only\">AJE3 31<\/span><\/th>\r\n<td>To record October work paid in November<\/td>\r\n<td><\/td>\r\n<td><\/td>\r\n<td><\/td>\r\n<\/tr>\r\n<tr aria-hidden=\"true\">\r\n<td colspan=\"5\"><\/td>\r\n<\/tr>\r\n<\/tbody>\r\n<\/table>\r\nWe numbered the AJEs, but that is optional.\r\n\r\nNext, we\u2019ll run an adjusted trial balance, but first let\u2019s check our understanding of this process so far.\r\n<div class=\"textbox tryit\">\r\n<h3>PRactice Question<\/h3>\r\nhttps:\/\/assessments.lumenlearning.com\/assessments\/23387\r\n\r\nhttps:\/\/assessments.lumenlearning.com\/assessments\/23388\r\n\r\n[ohm_question]203080-202382[\/ohm_question]\r\n\r\n<\/div>","rendered":"<div class=\"textbox learning-objectives\">\n<h3>Learning Outcomes<\/h3>\n<ul>\n<li>Posting adjusting entries to the ledgers and re-balancing the accounts<\/li>\n<\/ul>\n<\/div>\n<p>After preparing the journal entries, we have to post them to the ledgers.<\/p>\n<p>Let\u2019s start by reviewing NeatNiks\u2019s trial balance for the month of October:<\/p>\n<table class=\"fin-table gridded\">\n<caption>NeatNiks<br \/>\nTrial Balance (unadjusted)<br \/>\nFor the month ended October 31, 20XX<\/caption>\n<thead>\n<tr>\n<th scope=\"col\"><span class=\"u-sr-only\">Reference No.<\/span><\/th>\n<th scope=\"col\"><span class=\"u-sr-only\">Accounts<\/span><\/th>\n<th scope=\"col\">Debits<\/th>\n<th scope=\"col\">Credits<\/th>\n<\/tr>\n<\/thead>\n<tbody>\n<tr>\n<td>110<\/td>\n<td>Checking<\/td>\n<td class=\"r\">3,500.00<\/td>\n<td class=\"r\"><\/td>\n<\/tr>\n<tr>\n<td>120<\/td>\n<td>Accounts Receivable<\/td>\n<td class=\"r\">5,650.00<\/td>\n<td class=\"r\"><\/td>\n<\/tr>\n<tr>\n<td>125<\/td>\n<td>Supplies<\/td>\n<td class=\"r\">2,600.00<\/td>\n<td class=\"r\"><\/td>\n<\/tr>\n<tr>\n<td>130<\/td>\n<td>Prepaid Rent<\/td>\n<td class=\"r\">12,000.00<\/td>\n<td class=\"r\"><\/td>\n<\/tr>\n<tr>\n<td>210<\/td>\n<td>Account Payable<\/td>\n<td class=\"r\"><\/td>\n<td class=\"r\">1,600.00<\/td>\n<\/tr>\n<tr>\n<td>220<\/td>\n<td>Contractor Payable<\/td>\n<td class=\"r\"><\/td>\n<td class=\"r\">&#8211;<\/td>\n<\/tr>\n<tr>\n<td>310<\/td>\n<td class=\"r\">Nick Frank, Capital Contributions<\/td>\n<td class=\"r\"><\/td>\n<td>20,000.00<\/td>\n<\/tr>\n<tr>\n<td>330<\/td>\n<td>Nick Frank, Withdrawals<\/td>\n<td class=\"r\">4,000.00<\/td>\n<td class=\"r\"><\/td>\n<\/tr>\n<tr>\n<td>410<\/td>\n<td>Service Revenue<\/td>\n<td class=\"r\"><\/td>\n<td class=\"r\">8,750.00<\/td>\n<\/tr>\n<tr>\n<td>510<\/td>\n<td>Insurance Revenue<\/td>\n<td class=\"r\">1,500.00<\/td>\n<td class=\"r\"><\/td>\n<\/tr>\n<tr>\n<td>520<\/td>\n<td>Rent Expense<\/td>\n<td class=\"r\">&#8211;<\/td>\n<td class=\"r\"><\/td>\n<\/tr>\n<tr>\n<td>530<\/td>\n<td>Supplies Expense<\/td>\n<td class=\"r\">&#8211;<\/td>\n<td class=\"r\"><\/td>\n<\/tr>\n<tr>\n<td>540<\/td>\n<td>Contractor Expense<\/td>\n<td class=\"r\">1,100.00<\/td>\n<td class=\"r\"><\/td>\n<\/tr>\n<\/tbody>\n<tfoot>\n<tr>\n<td><\/td>\n<td>Totals<\/td>\n<td class=\"r line-single line-double\"><span class=\"u-sr-only\">Single line<\/span> 30,350.00<br \/>\n        <span class=\"u-sr-only\">Double line<\/span><\/td>\n<td class=\"r line-single line-double\"><span class=\"u-sr-only\">Single line<\/span> 30,350.00<br \/>\n        <span class=\"u-sr-only\">Double line<\/span><\/td>\n<\/tr>\n<\/tfoot>\n<\/table>\n<p>Next, we analyze each account, going down the list in order and starting with the checking account, which we verify with the bank. We\u2019ll go into this step in more detail in the next module on accounting for cash, so for now let\u2019s just assume this account is verified and we can check it off.<\/p>\n<p>Next is Accounts Receivable. We didn\u2019t keep a subsidiary ledger for this account and because this is just a hypothetical project, we didn\u2019t have the details for the subsidiary ledger, but let\u2019s just say this is what the subsidiary ledger looks like:<\/p>\n<table class=\"fin-table gridded\">\n<caption class=\"u-clearfix\">NeatNiks<br \/>\nAccounts Receivable Subsidiary Ledger<br \/>\nFor the month ended October 31, 20XX<\/caption>\n<thead>\n<tr aria-hidden=\"true\">\n<td colspan=\"8\"><\/td>\n<\/tr>\n<tr style=\"text-transform: uppercase;\">\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<\/tr>\n<\/thead>\n<tbody>\n<tr aria-hidden=\"true\">\n<td colspan=\"6\"><\/td>\n<\/tr>\n<tr>\n<td><\/td>\n<td><\/td>\n<td>Max Von Snyder<\/td>\n<td><\/td>\n<td><\/td>\n<td><\/td>\n<\/tr>\n<tr>\n<td><\/td>\n<td><\/td>\n<td class=\"r\">\u00a0\u00a0\u00a0invoice dtd 10\/20\/20XX<\/td>\n<td><\/td>\n<td class=\"r\">5,000.00<\/td>\n<td><\/td>\n<\/tr>\n<tr>\n<td><\/td>\n<td><\/td>\n<td class=\"r\">\u00a0\u00a0\u00a0payment 10\/30<\/td>\n<td><\/td>\n<td class=\"r\">(1,000.00)<\/td>\n<td><\/td>\n<\/tr>\n<tr>\n<td><\/td>\n<td><\/td>\n<td class=\"r\">\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0balance owing<\/td>\n<td><\/td>\n<td><\/td>\n<td class=\"r\">4,000.00<\/td>\n<\/tr>\n<tr>\n<td><\/td>\n<td><\/td>\n<td><\/td>\n<td><\/td>\n<td><\/td>\n<td><\/td>\n<\/tr>\n<tr>\n<td><\/td>\n<td><\/td>\n<td>Donnie Almond<\/td>\n<td><\/td>\n<td><\/td>\n<td><\/td>\n<\/tr>\n<tr>\n<td><\/td>\n<td><\/td>\n<td class=\"r\">\u00a0\u00a0\u00a0invoice dtd 10\/20\/20XX<\/td>\n<td><\/td>\n<td class=\"r\">1,000.00<\/td>\n<td><\/td>\n<\/tr>\n<tr>\n<td><\/td>\n<td><\/td>\n<td class=\"r\">\u00a0\u00a0\u00a0payment 10\/30<\/td>\n<td><\/td>\n<td class=\"r\">(400.00)<\/td>\n<td><\/td>\n<\/tr>\n<tr>\n<td><\/td>\n<td><\/td>\n<td class=\"r\">\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0balance owing<\/td>\n<td><\/td>\n<td><\/td>\n<td class=\"r\">600.00<\/td>\n<\/tr>\n<tr>\n<td><\/td>\n<td><\/td>\n<td><\/td>\n<td><\/td>\n<td><\/td>\n<td><\/td>\n<\/tr>\n<tr>\n<td><\/td>\n<td><\/td>\n<td>Gracie Monocle<\/td>\n<td><\/td>\n<td><\/td>\n<td><\/td>\n<\/tr>\n<tr>\n<td><\/td>\n<td><\/td>\n<td class=\"r\">\u00a0\u00a0\u00a0invoice dtd 10\/20\/20XX<\/td>\n<td><\/td>\n<td class=\"r\">1,250.00<\/td>\n<td><\/td>\n<\/tr>\n<tr>\n<td><\/td>\n<td><\/td>\n<td class=\"r\">\u00a0\u00a0\u00a0payment 10\/30<\/td>\n<td><\/td>\n<td class=\"r\">(200.00)<\/td>\n<td><\/td>\n<\/tr>\n<tr>\n<td><\/td>\n<td><\/td>\n<td class=\"r\">\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0balance owing<\/td>\n<td><\/td>\n<td><\/td>\n<td class=\"r\">1,050.00<\/td>\n<\/tr>\n<tr>\n<td><\/td>\n<td><\/td>\n<td><\/td>\n<td><\/td>\n<td><\/td>\n<td><\/td>\n<\/tr>\n<tr>\n<td><\/td>\n<td><\/td>\n<td class=\"r\">Total due from customers<\/td>\n<td><\/td>\n<td><\/td>\n<td class=\"line-double line-single\">5,650.00<span class=\"u-sr-only\">Double Line<\/span><\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<p>The subsidiary ledger agrees with the general ledger control account as reported on the trial balance. What we don\u2019t know is if this list is accurate. An auditor might send a letter to each of these accounts (or to a random sample of accounts) without mentioning the amount in our records, asking the customer to report what they owe (per their accounts payable records). What that report would not reveal, however, would be an account that is missing from the list. There are other tests and procedures for that audit, including tests of internal systems and statistical analysis, but those are covered in more advanced auditing courses. For now, since we\u2019re not doing a full audit for a publicly traded company, it\u2019s enough that we have matched the general ledger amount (control account) to the subsidiary ledger.<\/p>\n<p>Check that one off.<\/p>\n<p>Now we come to supplies. The trial balance shows a debit balance of $2,600, but we have a physical count as of October 31 that shows an ending balance of $1,000 (from the original list of information way back in Module 1).<\/p>\n<p>That balance means that during the month of October, Nick used up (expended) $1,600 of supplies. We\u2019ll need an adjusting journal entry.<\/p>\n<p>Question: Is this a deferral or an accrual? (answer after the AJE)<\/p>\n<p>If you need to, scratch this example out on a piece of paper using T accounts.<\/p>\n<table class=\"fin-table gridded\">\n<caption class=\"u-clearfix\"><span style=\"text-transform: uppercase;\">Journal<\/span><span style=\"float: right;\">Page 2<\/span><\/caption>\n<thead>\n<tr aria-hidden=\"true\">\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 31<\/th>\n<td>Supplies Expense<\/td>\n<td class=\"r\"><\/td>\n<td class=\"r\">1,600.00<\/td>\n<td><\/td>\n<\/tr>\n<tr>\n<th><span class=\"u-sr-only\">Oct 31<\/span><\/th>\n<td>\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0Supplies<\/td>\n<td><\/td>\n<td class=\"r\"><\/td>\n<td class=\"r\">1,600.00<\/td>\n<\/tr>\n<tr>\n<th><span class=\"u-sr-only\">Oct 31<\/span><\/th>\n<td>To record supplies used during the month<\/td>\n<td><\/td>\n<td><\/td>\n<td><\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<p>This is a <strong>deferred<\/strong> expense because we spent the money before we <em>expended<\/em> the resource.<\/p>\n<p>A debit to an expense account increases that account because expenses represent decreases to equity, and equity is on the right side of the accounting equation (A = L + E). A debit decreases equity because an increase is represented by an entry on the right side of the ledger\/T account (a.k.a. credit).<\/p>\n<p>After we post this expense to the ledger, our balance in the supplies account should be $1,000. We\u2019ll check that amount soon.<\/p>\n<p>Next on the list, as we walk our way down the trial balance, is Prepaid Rent. To analyze this account, we take a look at the ledger:<\/p>\n<table class=\"fin-table gridded\">\n<caption class=\"u-clearfix\">\n<\/caption>\n<thead>\n<tr aria-hidden=\"true\">\n<td colspan=\"8\"><\/td>\n<\/tr>\n<tr style=\"text-transform: uppercase;\">\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 style=\"text-transform: uppercase;\">\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>a<\/td>\n<td><\/td>\n<td><\/td>\n<td>0.00<\/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>GJ1<\/td>\n<td class=\"r\">12,000.00<\/td>\n<td><\/td>\n<td class=\"r\">12,000.00<\/td>\n<td><\/td>\n<\/tr>\n<\/tbody>\n<tbody>\n<tr aria-hidden=\"true\">\n<td colspan=\"8\"><\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<p>We trace the $12,000 entry back to the journal, and then from the journal to the supporting document in the file showing Nick rented a truck for $12,000 cash for October through March (6 months). It equates to $2,000 per month. One month is now used up, so we need to record the amount of the deferred expense that is now current. We\u2019ll decrease the asset \u201cPrepaid Rent\u201d with a credit entry and increase \u201cRent Expense\u201d with a debit entry.<\/p>\n<table class=\"fin-table gridded\">\n<caption class=\"u-clearfix\"><span style=\"text-transform: uppercase;\">Journal<\/span><span style=\"float: right;\">Page 2<\/span><\/caption>\n<thead>\n<tr aria-hidden=\"true\">\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 31<\/th>\n<td>Rent Expense<\/td>\n<td class=\"r\"><\/td>\n<td class=\"r\">2,000.00<\/td>\n<td><\/td>\n<\/tr>\n<tr>\n<th><span class=\"u-sr-only\">Oct 31<\/span><\/th>\n<td>\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0Prepaid Rent<\/td>\n<td><\/td>\n<td class=\"r\"><\/td>\n<td class=\"r\">2,000.00<\/td>\n<\/tr>\n<tr>\n<th><span class=\"u-sr-only\">Oct 31<\/span><\/th>\n<td>To record rent expense for the month<\/td>\n<td><\/td>\n<td><\/td>\n<td><\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<p>Next on the trial balance is Accounts Payable. We\u2019d have an Accounts Payable subsidiary ledger to compare the trial balance to, and we\u2019d do some research to determine if there were any payables that hadn\u2019t been recorded. For purposes of this simulation, let\u2019s just say that Accounts Payable checks out.<\/p>\n<p>Next is Contractor Payable (if Nick had employees this would be called Wages Payable), and since the month of October is actually over at this point and it\u2019s probably the first week of November as we are making these adjusting journal entries, we have the following information from Nick:<\/p>\n<p>Nick owes his independent contractor workers $1,200 for work done in October\u2014he&#8217;ll pay it in November.<\/p>\n<p>We looked at this exact journal entry in the prior section, so we\u2019ll just use that entry as a template and record the following:<\/p>\n<table class=\"fin-table gridded\">\n<caption class=\"u-clearfix\"><span style=\"text-transform: uppercase;\">Journal<\/span><span style=\"float: right;\">Page 2<\/span><\/caption>\n<thead>\n<tr aria-hidden=\"true\">\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 31<\/th>\n<td>Contractor Expense<\/td>\n<td class=\"r\"><\/td>\n<td class=\"r\">1,200.00<\/td>\n<td><\/td>\n<\/tr>\n<tr>\n<th><span class=\"u-sr-only\">Oct 31<\/span><\/th>\n<td>\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0Contractor Payable<\/td>\n<td><\/td>\n<td class=\"r\"><\/td>\n<td class=\"r\">1,200.00<\/td>\n<\/tr>\n<tr>\n<th><span class=\"u-sr-only\">Oct 31<\/span><\/th>\n<td>To record October work paid in November<\/td>\n<td><\/td>\n<td><\/td>\n<td><\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<p>After this account, we would verify the Capital account and the Withdrawal account, and scan the Revenue and Expense accounts, do some statistical analysis and some testing (if this were a full audit), and we\u2019d look for other things that need to be disclosed, such as any outstanding lawsuits, pension plan, etc. But this is just a small company, so we\u2019ll stop here for now. We\u2019ve done our due diligence and it doesn\u2019t look like we missed anything significant.<\/p>\n<p>We have just three adjusting journal entries now, and we\u2019ve added them to the bottom of page 2 of our journal:<\/p>\n<table class=\"fin-table gridded\">\n<caption class=\"u-clearfix\"><span style=\"text-transform: uppercase;\">Journal<\/span><span style=\"float: right;\">Page 2<\/span><\/caption>\n<thead>\n<tr aria-hidden=\"true\">\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>Checking<\/td>\n<td class=\"r\">110<\/td>\n<td class=\"r\">1,600.00<\/td>\n<td><\/td>\n<\/tr>\n<tr>\n<th><span class=\"u-sr-only\">Oct. 30<\/span><\/th>\n<td>\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0Accounts Receivable<\/td>\n<td>120<\/td>\n<td class=\"r\"><\/td>\n<td class=\"r\">1,600.00<\/td>\n<\/tr>\n<tr>\n<th><span class=\"u-sr-only\">Oct. 30<\/span><\/th>\n<td>To record receipt of payments from customers on account<\/td>\n<td><\/td>\n<td class=\"r\"><\/td>\n<td class=\"r\"><\/td>\n<\/tr>\n<tr aria-hidden=\"true\">\n<td colspan=\"5\"><\/td>\n<\/tr>\n<tr>\n<th scope=\"row\">Oct. 31<\/th>\n<td>Owner Withdrawal<\/td>\n<td class=\"r\">320<\/td>\n<td class=\"r\">4,000.00<\/td>\n<td><\/td>\n<\/tr>\n<tr>\n<th><span class=\"u-sr-only\">Oct. 31<\/span><\/th>\n<td>\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0Checking<\/td>\n<td>110<\/td>\n<td class=\"r\"><\/td>\n<td class=\"r\">4,000.00<\/td>\n<\/tr>\n<tr>\n<th><span class=\"u-sr-only\">Oct. 31<\/span><\/th>\n<td>To record payment to owner<\/td>\n<td><\/td>\n<td class=\"r\"><\/td>\n<td class=\"r\"><\/td>\n<\/tr>\n<tr aria-hidden=\"true\">\n<td colspan=\"5\"><\/td>\n<\/tr>\n<tr>\n<th scope=\"row\">AJE1 31<\/th>\n<td>Supplies Expense<\/td>\n<td class=\"r\"><\/td>\n<td class=\"r\">1,600.00<\/td>\n<td><\/td>\n<\/tr>\n<tr>\n<th><span class=\"u-sr-only\">AJE1 31<\/span><\/th>\n<td>\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0Supplies<\/td>\n<td><\/td>\n<td class=\"r\"><\/td>\n<td class=\"r\">1,600.00<\/td>\n<\/tr>\n<tr>\n<th><span class=\"u-sr-only\">AJE1 31<\/span><\/th>\n<td>To record supplies used during the month<\/td>\n<td><\/td>\n<td class=\"r\"><\/td>\n<td class=\"r\"><\/td>\n<\/tr>\n<tr aria-hidden=\"true\">\n<td colspan=\"5\"><\/td>\n<\/tr>\n<tr>\n<th scope=\"row\">AJE2 31<\/th>\n<td>Rent Expense<\/td>\n<td class=\"r\"><\/td>\n<td class=\"r\">2,000.00<\/td>\n<td><\/td>\n<\/tr>\n<tr>\n<th><span class=\"u-sr-only\">AJE2 31<\/span><\/th>\n<td>\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0Prepaid Rent<\/td>\n<td><\/td>\n<td class=\"r\"><\/td>\n<td class=\"r\">2,000.00<\/td>\n<\/tr>\n<tr>\n<th><span class=\"u-sr-only\">AJE2 31<\/span><\/th>\n<td>To record rent expense for the month<\/td>\n<td><\/td>\n<td class=\"r\"><\/td>\n<td class=\"r\"><\/td>\n<\/tr>\n<tr aria-hidden=\"true\">\n<td colspan=\"5\"><\/td>\n<\/tr>\n<tr>\n<th scope=\"row\">AJE3 31<\/th>\n<td>Contractor Expense<\/td>\n<td class=\"r\"><\/td>\n<td class=\"r\">1,200.00<\/td>\n<td><\/td>\n<\/tr>\n<tr>\n<th><span class=\"u-sr-only\">AJE3 31<\/span><\/th>\n<td>\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0Contractor Payable<\/td>\n<td><\/td>\n<td class=\"r\"><\/td>\n<td class=\"r\">1,200.00<\/td>\n<\/tr>\n<tr>\n<th><span class=\"u-sr-only\">AJE3 31<\/span><\/th>\n<td>To record October work paid in November<\/td>\n<td><\/td>\n<td class=\"r\"><\/td>\n<td class=\"r\"><\/td>\n<\/tr>\n<tr aria-hidden=\"true\">\n<td colspan=\"5\"><\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<p>Then we post them to the appropriate ledgers, updating the references as we go. Let\u2019s just look at the last one to accrue wages for October. Assume you have already posted the other two.<\/p>\n<p>Here is the journal entry you wrote:<\/p>\n<table class=\"fin-table gridded\">\n<caption class=\"u-clearfix\"><span style=\"text-transform: uppercase;\">Journal<\/span><span style=\"float: right;\">Page 2<\/span><\/caption>\n<thead>\n<tr aria-hidden=\"true\">\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\">AJE3 31<\/th>\n<td>Contractor Expense<\/td>\n<td class=\"r\"><\/td>\n<td class=\"r\">1,200.00<\/td>\n<td><\/td>\n<\/tr>\n<tr>\n<th><span class=\"u-sr-only\">AJE3 31<\/span><\/th>\n<td>\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0Contractor Payable<\/td>\n<td><\/td>\n<td class=\"r\"><\/td>\n<td class=\"r\">1,200.00<\/td>\n<\/tr>\n<tr>\n<th><span class=\"u-sr-only\">AJE3 31<\/span><\/th>\n<td>To record October work paid in November<\/td>\n<td><\/td>\n<td><\/td>\n<td><\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<p>First, post the debit to Contractor Expense, making sure you update the balance in the ledger and the posting reference:<\/p>\n<table class=\"fin-table gridded\">\n<caption class=\"u-clearfix\">\n<\/caption>\n<thead>\n<tr aria-hidden=\"true\">\n<td colspan=\"8\"><\/td>\n<\/tr>\n<tr style=\"text-transform: uppercase;\">\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 style=\"text-transform: uppercase;\">\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>a<\/td>\n<td><\/td>\n<td><\/td>\n<td>0.00<\/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>GJ1<\/td>\n<td class=\"r\">1,100.00<\/td>\n<td><\/td>\n<td class=\"r\">1,100.00<\/td>\n<td><\/td>\n<\/tr>\n<tr>\n<th><span class=\"u-sr-only\">Oct<\/span><\/th>\n<td class=\"l highlight\">31<\/td>\n<td class=\"highlight\">AJE3<\/td>\n<td class=\"highlight\">GJ2<\/td>\n<td class=\"r highlight\">1,200.00<\/td>\n<td><\/td>\n<td class=\"r\">2,300.00<\/td>\n<td><\/td>\n<\/tr>\n<\/tbody>\n<tbody>\n<tr aria-hidden=\"true\">\n<td colspan=\"8\"><\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<p>Then post the credit to Wages Payable:<\/p>\n<table class=\"fin-table gridded\">\n<caption class=\"u-clearfix\">\n<\/caption>\n<thead>\n<tr aria-hidden=\"true\">\n<td colspan=\"8\"><\/td>\n<\/tr>\n<tr style=\"text-transform: uppercase;\">\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 style=\"text-transform: uppercase;\">\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>a<\/td>\n<td><\/td>\n<td><\/td>\n<td><\/td>\n<td>0.00<\/td>\n<\/tr>\n<tr>\n<th><span class=\"u-sr-only\">Oct<\/span><\/th>\n<td class=\"l highlight\">31<\/td>\n<td class=\"highlight\">AJE3<\/td>\n<td class=\"highlight\">GJ2<\/td>\n<td><\/td>\n<td class=\"r highlight\">1,200.00<\/td>\n<td><\/td>\n<td class=\"r\">1,200.00<\/td>\n<\/tr>\n<\/tbody>\n<tbody>\n<tr aria-hidden=\"true\">\n<td colspan=\"8\"><\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<p>As you update each ledger, you also update the journal by posting the ledger account number into the journal reference column:<\/p>\n<table class=\"fin-table gridded\" style=\"height: 276px;\">\n<caption class=\"u-clearfix\"><span style=\"text-transform: uppercase;\">Journal<\/span><span style=\"float: right;\">Page 2<\/span><\/caption>\n<thead>\n<tr aria-hidden=\"true\">\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 style=\"height: 12px;\">\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>Checking<\/td>\n<td class=\"r\">110<\/td>\n<td class=\"r\">1,600.00<\/td>\n<td><\/td>\n<\/tr>\n<tr>\n<th><span class=\"u-sr-only\">Oct. 30<\/span><\/th>\n<td>\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0Accounts Receivable<\/td>\n<td>120<\/td>\n<td class=\"r\"><\/td>\n<td class=\"r\">1,600.00<\/td>\n<\/tr>\n<tr>\n<th><span class=\"u-sr-only\">Oct. 30<\/span><\/th>\n<td>To record receipt of payments from customers on account<\/td>\n<td><\/td>\n<td class=\"r\"><\/td>\n<td class=\"r\"><\/td>\n<\/tr>\n<tr aria-hidden=\"true\">\n<td colspan=\"5\"><\/td>\n<\/tr>\n<tr>\n<th scope=\"row\">Oct. 31<\/th>\n<td>Owner Withdrawal<\/td>\n<td class=\"r\">320<\/td>\n<td class=\"r\">4,000.00<\/td>\n<td><\/td>\n<\/tr>\n<tr>\n<th><span class=\"u-sr-only\">Oct. 31<\/span><\/th>\n<td>\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0Checking<\/td>\n<td>110<\/td>\n<td class=\"r\"><\/td>\n<td class=\"r\">4,000.00<\/td>\n<\/tr>\n<tr style=\"height: 12px;\">\n<th><span class=\"u-sr-only\">Oct. 31<\/span><\/th>\n<td>To record payment to owner<\/td>\n<td><\/td>\n<td class=\"r\"><\/td>\n<td class=\"r\"><\/td>\n<\/tr>\n<tr aria-hidden=\"true\">\n<td colspan=\"5\"><\/td>\n<\/tr>\n<tr style=\"height: 12px;\">\n<th scope=\"row\">AJE1 31<\/th>\n<td>Supplies Expense<\/td>\n<td class=\"r\">530<\/td>\n<td class=\"r\">1,600.00<\/td>\n<td><\/td>\n<\/tr>\n<tr>\n<th><span class=\"u-sr-only\">AJE1 31<\/span><\/th>\n<td>\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0Supplies<\/td>\n<td>125<\/td>\n<td><\/td>\n<td class=\"r\">1,600.00<\/td>\n<\/tr>\n<tr>\n<th><span class=\"u-sr-only\">AJE1 31<\/span><\/th>\n<td>To record supplies used during the month<\/td>\n<td><\/td>\n<td class=\"r\"><\/td>\n<td class=\"r\"><\/td>\n<\/tr>\n<tr aria-hidden=\"true\">\n<td colspan=\"5\"><\/td>\n<\/tr>\n<tr>\n<th scope=\"row\">AJE2 31<\/th>\n<td>Rent Expense<\/td>\n<td class=\"r\">520<\/td>\n<td class=\"r\">2,000.00<\/td>\n<td><\/td>\n<\/tr>\n<tr>\n<th><span class=\"u-sr-only\">AJE2 31<\/span><\/th>\n<td>\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0Prepaid Rent<\/td>\n<td>130<\/td>\n<td class=\"r\"><\/td>\n<td class=\"r\">2,000.00<\/td>\n<\/tr>\n<tr>\n<th><span class=\"u-sr-only\">AJE2 31<\/span><\/th>\n<td>To record rent expense for the month<\/td>\n<td><\/td>\n<td><\/td>\n<td><\/td>\n<\/tr>\n<tr aria-hidden=\"true\">\n<td colspan=\"5\"><\/td>\n<\/tr>\n<tr>\n<th scope=\"row\">AJE3 31<\/th>\n<td>Contractor Expense<\/td>\n<td class=\"r highlight\">540<\/td>\n<td class=\"r\">1,200.00<\/td>\n<td><\/td>\n<\/tr>\n<tr>\n<th><span class=\"u-sr-only\">AJE3 31<\/span><\/th>\n<td>\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0Contractor Payable<\/td>\n<td class=\"r highlight\">220<\/td>\n<td><\/td>\n<td>1,200.00<\/td>\n<\/tr>\n<tr>\n<th><span class=\"u-sr-only\">AJE3 31<\/span><\/th>\n<td>To record October work paid in November<\/td>\n<td><\/td>\n<td><\/td>\n<td><\/td>\n<\/tr>\n<tr aria-hidden=\"true\">\n<td colspan=\"5\"><\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<p>We numbered the AJEs, but that is optional.<\/p>\n<p>Next, we\u2019ll run an adjusted trial balance, but first let\u2019s check our understanding of this process so far.<\/p>\n<div class=\"textbox tryit\">\n<h3>PRactice Question<\/h3>\n<p>\t<iframe id=\"lumen_assessment_23387\" class=\"resizable\" src=\"https:\/\/assessments.lumenlearning.com\/assessments\/load?assessment_id=23387&#38;embed=1&#38;external_user_id=&#38;external_context_id=&#38;iframe_resize_id=lumen_assessment_23387\" frameborder=\"0\" style=\"border:none;width:100%;height:100%;min-height:400px;\"><br \/>\n\t<\/iframe><\/p>\n<p>\t<iframe id=\"lumen_assessment_23388\" class=\"resizable\" src=\"https:\/\/assessments.lumenlearning.com\/assessments\/load?assessment_id=23388&#38;embed=1&#38;external_user_id=&#38;external_context_id=&#38;iframe_resize_id=lumen_assessment_23388\" frameborder=\"0\" style=\"border:none;width:100%;height:100%;min-height:400px;\"><br \/>\n\t<\/iframe><\/p>\n<p><iframe loading=\"lazy\" id=\"ohm203080\" class=\"resizable\" src=\"https:\/\/ohm.lumenlearning.com\/multiembedq.php?id=203080-202382&theme=oea&iframe_resize_id=ohm203080&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-3087\">\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>Posting Adjusted Journal Entries to the Ledger. <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>","protected":false},"author":17,"menu_order":10,"template":"","meta":{"_candela_citation":"[{\"type\":\"original\",\"description\":\"Posting Adjusted Journal Entries to the Ledger\",\"author\":\"Joseph Cooke\",\"organization\":\"Lumen Learning\",\"url\":\"\",\"project\":\"\",\"license\":\"cc-by\",\"license_terms\":\"\"}]","CANDELA_OUTCOMES_GUID":"","pb_show_title":"on","pb_short_title":"","pb_subtitle":"","pb_authors":[],"pb_section_license":""},"chapter-type":[],"contributor":[],"license":[],"class_list":["post-3087","chapter","type-chapter","status-publish","hentry"],"part":67,"_links":{"self":[{"href":"https:\/\/courses.lumenlearning.com\/suny-clinton-financialaccounting\/wp-json\/pressbooks\/v2\/chapters\/3087","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/courses.lumenlearning.com\/suny-clinton-financialaccounting\/wp-json\/pressbooks\/v2\/chapters"}],"about":[{"href":"https:\/\/courses.lumenlearning.com\/suny-clinton-financialaccounting\/wp-json\/wp\/v2\/types\/chapter"}],"author":[{"embeddable":true,"href":"https:\/\/courses.lumenlearning.com\/suny-clinton-financialaccounting\/wp-json\/wp\/v2\/users\/17"}],"version-history":[{"count":20,"href":"https:\/\/courses.lumenlearning.com\/suny-clinton-financialaccounting\/wp-json\/pressbooks\/v2\/chapters\/3087\/revisions"}],"predecessor-version":[{"id":6224,"href":"https:\/\/courses.lumenlearning.com\/suny-clinton-financialaccounting\/wp-json\/pressbooks\/v2\/chapters\/3087\/revisions\/6224"}],"part":[{"href":"https:\/\/courses.lumenlearning.com\/suny-clinton-financialaccounting\/wp-json\/pressbooks\/v2\/parts\/67"}],"metadata":[{"href":"https:\/\/courses.lumenlearning.com\/suny-clinton-financialaccounting\/wp-json\/pressbooks\/v2\/chapters\/3087\/metadata\/"}],"wp:attachment":[{"href":"https:\/\/courses.lumenlearning.com\/suny-clinton-financialaccounting\/wp-json\/wp\/v2\/media?parent=3087"}],"wp:term":[{"taxonomy":"chapter-type","embeddable":true,"href":"https:\/\/courses.lumenlearning.com\/suny-clinton-financialaccounting\/wp-json\/pressbooks\/v2\/chapter-type?post=3087"},{"taxonomy":"contributor","embeddable":true,"href":"https:\/\/courses.lumenlearning.com\/suny-clinton-financialaccounting\/wp-json\/wp\/v2\/contributor?post=3087"},{"taxonomy":"license","embeddable":true,"href":"https:\/\/courses.lumenlearning.com\/suny-clinton-financialaccounting\/wp-json\/wp\/v2\/license?post=3087"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}