Chapter 4

Journalizing and Posting Transactions

 Learning Objectives

  1. LO1    Describe the flow of data from source documents through the trial balance.
  2. LO2    Describe and explain the purpose of source documents.
  3. LO3    Describe the chart of accounts as a means of classifying financial information.
  4. LO4    Journalize transactions.
  5. LO5    Post to the general ledger and prepare a trial balance.
  6. LO6    Explain how to find and correct errors.


  1. Finding and Correcting Errors in the Trial Balance
  2. Tips for Finding Errors in the Trial Balance (See Figure 4-14)
    1. Double check your addition.
    2. Find the difference between the debits and credits.
      1. Check for missing debits and credits if the error is the same as the transaction.
      2. Divide the difference by 2. It could mean two debits and no credits or vice versa.
      3. Divide the difference by 9.
        1. It could mean a slide error.
        2. It could mean a transposition error.
    3. Retrace your steps through the accounting process.
  3. Correcting Errors
    1. Ruling Method (See Figure 4-15)
      1. Used to correct two types of errors:
        1. When an incorrect journal entry has been made, but not yet posted.
        2. When a proper entry has been made but posted to the wrong account or for the wrong amount.
      2. Using the ruling method
        1. Draw a single line through the incorrect account title or amount.
        2. Write the correct information directly above the line.
        3. Initial the correction.
    2. Correcting Entry Method (See Figure 4-16)
      1. Used when an incorrect entry has been journalized and posted to the wrong account
      2. Using the correcting entry method:
        1. Make an entry in the general journal to reverse the original entry.
        2. Include an explanation.
        3. Post to the related general ledger accounts. (See Figure 4-17)
        4.  “Correcting” is written in the Item column of the general ledger.

In-Class Exercise: Complete Exercises E4-8A, E4-8B (10 minutes each)

In-Class Exercise: Complete Problems P4-11A, P4-11B (10 minutes each