I have the postclosing trial balance of the company from the previous month. I also have the AR closing & the AP closing numbers. Do these numbers get transfered into the new month general journal and ledger accounts as balances forward?
Yes, the postclosing trial balance of the company from the previous month, along with the accounts receivable (AR) closing and accounts payable (AP) closing numbers, are typically transferred into the new month's general journal and ledger accounts as balances forward.
To transfer these numbers, you will follow these steps:
1. Open the general journal for the new month and prepare a new entry section.
2. Transfer the balances from the previous month's postclosing trial balance to the respective general ledger accounts in the new month.
- Identify each account in the trial balance and find the corresponding account in the general ledger.
- For revenue and expense accounts, transfer the balances to the Income Summary account.
- For asset, liability, and equity accounts, transfer the balances directly to the respective account.
- AR closing and AP closing numbers should be transferred to their corresponding accounts as well.
3. After transferring the balances, calculate the new balances for each account, considering any additional transactions or adjustments that occurred in the new month.
4. Record any new transactions in the general journal as necessary, making sure to follow appropriate debit and credit rules.
5. Post the entries from the general journal to the general ledger.
6. At the end of the new month, prepare a post-closing trial balance to ensure that all debits equal credits and verify the accuracy of the balances forward.
By following these steps, you will accurately transfer the balances from the previous month to the new month and maintain the continuity of financial records.