Week 4 – Answer Key: Journals, Ledgers & Posting

Concept 1

Purpose of Journals & Ledgers — Answer Key

General Journal

The general journal is the book of original entry. It records all transactions in chronological order, including the date, accounts debited and credited, amounts, a brief description, and a reference number.

The journal answers: “What happened, and when?”

General Ledger

The general ledger is the collection of all accounts used by the business (Cash, AR, AP, Revenue, Expenses, etc.). Each account shows its beginning balance, increases, decreases, and ending balance.

The ledger answers: “What is the current balance of each account?”

Both are needed: the journal provides chronological detail; the ledger organizes information by account to support trial balances and financial statements.

Concept 2

Journal Entry Construction — Sample Solutions

Example 1 — Paid rent in cash, $1,200

Rent Expense.................. 1,200
    Cash................................ 1,200
(To record payment of rent)

Example 2 — Purchased supplies on credit, $350

Supplies.............................. 350
    Accounts Payable........... 350
(To record supplies purchased on account)

Example 3 — Billed customers for services, $2,000

Accounts Receivable.......... 2,000
    Service Revenue................ 2,000
(To record services billed to customers)

Example 4 — Received $1,000 from customer on account

Cash.................................. 1,000
    Accounts Receivable........ 1,000
(To record customer payment on account)

Concept 3

Posting Entries to Ledger Accounts — Answer Key

Sample Ledger — Rent Expense

Rent Expense	Debit	Credit	Balance
Jan 3 – J1	1,200		1,200 Dr

Sample Ledger — Cash

Cash	Debit	Credit	Balance
Jan 1 – Beg Bal	5,000		5,000 Dr
Jan 3 – J1		1,200	3,800 Dr
Jan 6 – J3	1,000		4,800 Dr

Sample Ledger — Accounts Payable

Accounts Payable	Debit	Credit	Balance
Jan 4 – J2		350	350 Cr

Concept 4

Subsidiary Ledgers & Control Accounts — Answer Key

Subsidiary ledgers provide detailed information for specific control accounts, such as Accounts Receivable and Accounts Payable. The sum of all subsidiary ledger balances must equal the control account balance in the general ledger.

Sample AR Subsidiary Ledger

Customer: Blue Sky Corp

Date	Description	Debit	Credit	Balance
Jan 5	Invoice #122	1,300		1,300
Jan 10	Payment		800	500

Customer: Redwood Inc

Date	Description	Debit	Credit	Balance
Jan 6	Invoice #120	700		700

Total AR from Subsidiary Ledger = 500 + 700 = 1,200

AR Control Account in G/L must equal 1,200 for records to be correct.

Concept 5

Posting References — Answer Key

Posting references link journal entries and ledger postings (e.g., writing “G101” in the journal and “J3” in the ledger).

They:

Provide a clear audit trail.
Help verify that every journal entry has been posted.
Reduce the risk of duplication and omissions.

Concept 6

Common Posting Errors & Corrections — Answer Key

Wrong account: Reverse the incorrect posting, then post to the correct account.
Debit posted as credit: Reverse and re-post on the correct side.
Wrong amount: Post an adjusting entry for the difference.
Only one side posted: Post the missing debit or credit with proper references.
Transaction omitted: Record the full journal entry and post it to the ledger.

Concept 7

Intro to Trial Balance — Answer Key

A trial balance is a list of all ledger account balances at a specific date. It checks whether total debits equal total credits.

Sample Trial Balance (Partial)

Account	Debit	Credit
Cash	4,800
Accounts Receivable	1,200
Supplies	350
Accounts Payable		350
Service Revenue		2,000
Rent Expense	1,200

Students should verify that total debits equal total credits. If not, they must re-check postings, amounts, and account classifications.

Homework

Homework Solutions — Summary

Assignment 1 (Journal Entries): Students’ answers should match the sample journal entries provided earlier.

Assignment 2 (Posting to Ledger): All journal entries must be correctly posted to the appropriate ledger accounts, with correct running balances and cross-references.

Assignment 3 (Subsidiary Ledger & Control Account): The sum of all customer balances in the AR subsidiary ledger must equal the AR control account in the general ledger. Any difference indicates a posting or calculation error.

Discussion

Discussion Prompt — Instructor Model Answer

Why do we need both a journal and a ledger?

The journal captures transactions in date order, but does not show how each account is affected over time. The ledger organizes information by account, allowing bookkeepers and managers to see current balances, prepare trial balances, and generate financial statements. Both tools are required for a complete and auditable system.

Risks if posting is not done:

Cash, AP, and AR balances become unreliable.
Control accounts will not match subsidiary ledgers.
Trial balances will be inaccurate or impossible to prepare.
Financial statements will misstate assets, liabilities, equity, and profit.
Audits may fail due to incomplete or disorganized records.

Summary

Week 4 Summary — Answer Key

By the end of Week 4, students should be able to take transactions from source documents, record them as proper journal entries, post them to the correct ledger accounts, maintain subsidiary ledgers, detect posting errors, and prepare a basic trial balance. These are foundational skills for accurate, audit-ready bookkeeping.

Week 5 will apply these skills to cash management and bank reconciliations, further strengthening control over account balances.