# Posting Journal Entries to Ledger Accounts

The second step of accounting cycle is to post the journal entries to the ledger accounts.

The journal entries recorded during the first step provide information about which accounts are to be debited and which to be credited and also the magnitude of the debit or credit (see debit-credit-rules). The debit and credit values of journal entries are transferred to ledger accounts one by one in such a way that debit amount of a journal entry is transferred to the debit side of the relevant ledger account and the credit amount is transferred to the credit side of the relevant ledger account.

After posting all the journal entries, the balance of each account is calculated. The balance of an asset, expense, contra-liability and contra-equity account is calculated by subtracting the sum of its credit side from the sum of its debit side. The balance of a liability, equity and contra-asset account is calculated the opposite way i.e. by subtracting the sum of its debit side from the sum of its credit side.

## Example

The ledger accounts shown below are derived from the journal entries of Company A.

### Asset Accounts

 Cash Accounts Receivable $100,000$36,000 $21,200$15,300 28,500 60,000 32,900 17,600 15,300 19,100 4,000 19,100 5,000 3,470 $20,430$5,900
 Office Supplies Prepaid Rent $17,600$36,000 5,200 $22,800$36,000
 Equipment $80,000$80,000

 Accounts Payable Notes Payable $17,600$17,600 $20,000 5,200$5,200 $20,000  Utilities Payable Unearned Revenue$2,470 $4,000 1,494$3,964 $4,000 ### Equity Accounts  Common Stock$100,000 $100,000 ### Revenue, Dividend and Expense Accounts  Service Revenue Dividend$28,500 $5,000 54,100$82,600 $5,000  Wages Expense Miscellaneous Expense$19,100 $3,470 19,100$38,200 $3,470  Electricity Expense Telephone Expense$2,470 $1,494$2,470 \$1,494

The ledger accounts step of accounting cycle completes here. The next step is the preparation of unadjusted trial balance.

Written by Irfanullah Jan