Posting to the ledger¶
The journal answers "what happened, in what order." It won't answer "how much cash do we have right now." For that you need every Cash entry pulled together in one place, in the order it happened to Cash specifically, not buried among entries for Rent Expense and Accounts Payable. That pulling-together is called posting, and the place it lands is called the ledger.
The ledger is the journal, reorganized by account¶
The general ledger is the full set of a company's accounts, one T-account per account, updated as entries happen. Posting is the mechanical step of copying each journal line into the T-account for that account, on the same side it was recorded. A line debited in the journal gets posted to the debit side of that account's T-account, and a credited line goes to the credit side.
Here's the part worth pausing on: posting adds no new information. The journal already has everything, in the order transactions occurred. The ledger has the exact same numbers, sorted by account instead of by date. You post for the same reason you'd re-sort a spreadsheet of expenses by category instead of by date: the total for one category is invisible until everything for that category sits together.
Building a Cash T-account¶
Harbor Music Lessons opened for business in January. Seven journal entries touched seven accounts; six of the seven touched Cash. Pulling just the Cash lines out of the journal, in order, gives:
| Date | Side | Amount |
|---|---|---|
| Jan 7 | Debit | $5,400 |
| Jan 9 | Credit | $850 |
| Jan 10 | Credit | $180 |
| Jan 11 | Credit | $1,100 |
| Jan 15 | Debit | $700 |
| Jan 18 | Credit | $230 |
Posting means copying each of those, in order, onto the correct side of a two-column Cash T-account:
Cash
| Debit | Credit |
|---|---|
| Jan 7 $5,400 | Jan 9 $850 |
| Jan 15 $700 | Jan 10 $180 |
| Jan 11 $1,100 | |
| Jan 18 $230 | |
| Total $6,100 | Total $2,360 |
| Balance $3,740 |
Finding the ending balance¶
To close out a T-account, add up each side separately, then subtract the smaller total from the larger. The difference goes on the side with the bigger total, and that's the ending balance.
For Cash: debits total $6,100, credits total $2,360. $6,100 minus $2,360 is $3,740, and since debits were bigger, $3,740 sits on the debit side. Cash is an asset, and assets have a debit normal balance, so a debit-side ending balance is exactly what you'd expect. If an asset account ever ends up with more credits than debits, that's a signal to go back and check the entries.
The same rule applies no matter which account you're posting. Harbor Music Lessons also bought $650 of supplies on account on January 20, which is the only entry touching Accounts Payable:
Accounts Payable
| Debit | Credit |
|---|---|
| Jan 20 $650 | |
| Total $650 | |
| Balance $650 |
One entry, one side, nothing to subtract: the balance is just $650, sitting on the credit side. Accounts Payable is a liability, so a credit balance is its normal balance too.
Posting doesn't create new numbers
After posting, the sum of all debit balances across every account equals the sum of all credit balances, because they're the same journal entries, just resorted. Posting can't make an error appear or disappear; it can only make an existing error easier to spot, because now it's sitting in one account instead of scattered across the journal.
A second month doesn't start at zero¶
Harbor Music Lessons' T-accounts above start empty because January is its first month. From February on, that stops being true for most accounts. Asset, liability, and equity accounts carry their ending balance forward as next month's beginning balance, posted onto the account's normal side before any of the new month's entries go in. Revenue, expense, and dividend accounts are the exception: they're closed out to Retained Earnings at the end of the accounting year, so they restart at zero, a Chapter 3 topic. For now, post new entries on top of any beginning balance you're given, the same way you'd post to an account that started at zero.
Common mistake: assuming a debit always increases the account
A debit is a posting to the left side, nothing more. Whether that grows or shrinks the balance depends on the account's normal side. Debiting Cash (normal debit) increases it. Debiting Accounts Payable (normal credit) when a company pays down what it owes moves the balance the opposite way, toward zero. You have to check which side is normal for that specific account before you can say "increase" or "decrease."
Pause and work¶
Post Harbor Music Lessons' full January journal to every account it touches, not just Cash and Accounts Payable, and check your ending balances against the widget.
Now try Brightline Cleaning's first month. Every other ending balance is filled in for you; post Cash and Accounts Payable yourself and fill in just those two.
Last one, with fresh numbers each time you try it.
Once every account has an ending balance, the next question is whether the whole set of them is even internally consistent, which is exactly what a trial balance checks.