BBA Ledger Account
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Transcript of BBA Ledger Account
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LEDGER
When transactions are transferredinto concerned account the system iscalled ledger.
- To identify the amount of debtors
- To know the amount pay to supplier
- To know Good purchased during the period
- To know Amount of Revenue andexpenditure
Procedure of recording up the accounts is
known as Posting.
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LEDGER
It is the book of final entry.
The information from the journal is transferred
to the ledger in the posting process. Debits and credits in the journal remain exactly
the same when posted to the accounts in theledger.
A ledger is a summary of statement of alltransactions relating to an account personal,real or nominal which have taken place during a
given period of time and shows their net effect”.
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Ledger Account------------??
All the transactions pertaining to an account arecollected at one place in the ledger. This helps
to get clear idea of an account at a glance. Thetotal sales, Total purchases, amount due fromcustomer, amount due to customers, cash
balance, bank balance can be ascertained atany time from the ledgers. Ledgers help toprepare the Trial Balance and the final accounts
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Ledger Format
1. T-Shaped Ledger Account
Traditional Approach
2. Horizontal Ledger Account With BalanceColumn
Mordern Approach
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……………. A/c Cr.Dr.
Date Particulars J.F Amt. Date Particulars J.F Amt
To............... xxxx By ………… xxxx
xxxx xxxx
Ledger Format T-Shaped
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Balancing the ledger Account:
Difference of total Dr & total Cr is Balancing Amount
If Total Dr > Total Cr, the balancing amount isappear in Cr side representing By balance c/d,called Debit balance.
If Total Cr > Total Dr, the balancing amount isappear in Dr side representing To balance c/d,called Credit balance.
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Examples:Amit invest Rs 20,000 in business
Date Particulars L.F Debit CreditCash A/c 20,000
Capital A/c 20,000
For Investing Cash inBusiness
Purchase Machinery of Rs 12,000.
Date Particulars L.F Debit Credit
Machinery A/c 12,000
Cash A/c 12,000
For Purchase of Machineryin Cash
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Balancing the ledger Account:
date Particulars J.
F
Amt date Particulars J.
F
Amt
To Capital 20,000 By Machinery 12,000
By balancec/d 8,000
20,000 20,000
Cash A/c Cr.Dr.
Difference of total Dr & total Cr is Balancing Amount:
Here, Total Dr – Total Cr = Balancing Amount20,000 – 12,000 = 8,000
Also, Total Dr > Total Cr, the balancing amount isappear in Cr side representing By balance c/d, called
Debit balance.
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Balancing the ledger Account:
date Particulars J.
F
Amt date Particulars J.
F
Amt
To balance
c/d
20,000 By Cash 20,000
20,000 20,000
Capital A/c Cr.Dr.
Difference of total Dr & total Cr is Balancing Amount:
Here, Total Cr – Total Dr = Balancing Amount20,000 – 0 = 20,000
Also, Total Cr > Total Dr, the balancing amount isappear in Dr side representing To balance c/d, called
Credit balance.
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Horizontal Ledger Account WithBalance Column
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Examples:Amit invest Rs 20,000 in business
Date Particulars L.F Debit CreditCash A/c 20,000
Capital A/c 20,000
For Investing Cash inBusiness
Purchase Machinery of Rs 12,000.
Date Particulars L.F Debit Credit
Machinery A/c 12,000
Cash A/c 12,000
For Purchase of Machineryin Cash
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Horizontal Ledger Account WithBalance Column
Date Transaction Debit Credit Balance
Opening Balance 0
Investing in Cash 20,000 20,000
Purchase of machinery 12,000 8,000
Cash A/c
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© Mary Low
ILLUSTRATIONS:
1: Amit A Lawyer opens the Legal Services firm by
investing Rs.20,000 cash into the business.2: Amit purchases equipment from Computer EquipmentLtd for Rs 9,0003: Purchase of 1,500 of stationery supplies for use in the
business.4: Rs1,000 in legal services were provided for cash.5: Legal services of Rs.1,500 were provided on credit toa client, Ravi.6: Amit makes a 3,000 partial payment to Computer
Equipment Ltd.7: Ravi pays Rs. 500 on account to Legal Services8: Amit decides to take Rs.2,000 cash from the businessfor his personal use.9: Amit a s Rs. 400 salaries to le al assistant.
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Journal 1
Date Description Debit Credit
Cash 20000.00
Capital 20000.00
GENERAL JOURNAL
Investing Cash in Business
Date Transaction Debit Credit Balance
Opening Balance 0
Investing Cash in Busuness 20,000 -20,000
Date Transaction Debit Credit BalanceOpening Balance 0
Investing Cash in Busuness 20,000 20,000
Cash A/c
Capital A/c
GENERAL JOURNAL
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Date Description Debit Credit
Computer Equipment A/c 9000.00
Com. Equ. Ltd 9000.00
GENERAL JOURNAL
Purchase of Equipment on Credit
Date Transaction Debit Credit Balance
Opening Balance 0
Purchase Of Equipment onCredit
9,000 9,000
Date Transaction Debit Credit Balance
Opening Balance 0
Purchase Of Equipment on Credit 9,000 -9,000
Com. Equ. Ltd A/c
Computer Equipment A/c
GENERAL JOURNAL
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Date Description Debit Credit
Supplies A/c 1500.00
Cash 1500.00
GENERAL JOURNAL
Purchase Of Suplies in Cash
Date Transaction Debit Credit Balance
Opening Balance 0
Purchase Of Supplies in Cash 1,500 1,500
Date Transaction Debit Credit Balance
Opening Balance 0
Investing Cash in Business 20,000 20,000
Purchase Of Supplies in Cash 1,500 18,500
Cash A/c
Supplies A/c
GENERAL JOURNAL
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Date Description Debit Credit
Cash A/c 1000.00
Service Revenue A/c 1000.00
GENERAL JOURNAL
Legal Service revenue earned in cash
Date Transaction Debit Credit Balance
Opening Balance 0
1 Investing in Cash 20,000 20,000
2 Purchase Of Supplies in Cash 1,500 18,500
3 Service Revenue earned in Cash 1,000 19,500
Date Transaction Debit Credit BalanceOpening Balance 0
Service Revenue earned in Cash 1,000 -1,000
Cash A/c
Service Revenue A/c
GENERAL JOURNAL
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Date Description Debit Credit
Ravi A/c 2500.00
Service Revenue 2500.00
GENERAL JOURNAL
Legal Service Revenue earned in Credit
Date Transaction Debit Credit Balance
Opening Balance 0
Service Revenue earned in credit 1,500 1,500
Date Transaction Debit Credit Balance
Opening Balance 0Service Revenue earned in Cash 1,000 -1,000
Service Revenue earned in credit 2,500 -3,500
Service Revenue A/c
Ravi A/c
GENERAL JOURNAL
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Date Description Debit Credit
Com.Equ. Ltd A/c 3000.00
Cash A/c 3000.00
GENERAL JOURNAL
Paid Cash to Computer Equipment Ltd.
Cash A/c
Com. Equ. Ltd A/c
Date Transaction Debit Credit Balance
Opening Balance 0
1 Investing in Cash 20,000 20,000
2 Purchase Of Supplies in Cash 1,500 18,500
3 Service Revenue earned in Cash 1,000 19,500
4 Paid cash to computer equipment ltd. 3,000 16,500
Date Transaction Debit Credit Balance
Opening Balance 0
Purchase Of Equipment on Credit 9,000 -9,000
Paid cash to computer equipment ltd. 3,000 -6,000
GENERAL JOURNAL
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Date Description Debit Credit
Cash A/c 500.00
Ravi A/c 500.00
GENERAL JOURNAL
Cash Received from Ravi
Date Transaction Debit Credit Balance
Opening Balance 0
1 Investing in Cash 20,000 20,000
2 Purchase Of Supplies in Cash 1,500 18,5003 Service Revenue earned in Cash 1,000 19,500
4 Paid cash to computer equipment ltd. 3,000 16,500
5 Cash received from ravi 500 17,000
Date Transaction Debit Credit Balance
Opening Balance 0
Service Revenue earned in credit 1,500 1,500
Cash Received from ravi 500 1,000
Cash A/c
Ravi A/c
Date Description Debit Credit
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© Mary Low
Date Description Debit Credit
Drawing A/c 2000.00
Cash A/c 2000.00
Cash Drawing for personal use
Date Transaction Debit Credit Balance
Opening Balance 0
1 Investing in Cash 20,000 20,0002 Purchase Of Supplies in Cash 1,500 18,500
3 Service Revenue earned in Cash 1,000 19,500
4 Paid cash to computer equipment ltd. 3,000 16,500
5 Cash received from ravi 500 17,000
6 Cash Drawing for personal use 2,000 15,000
Drawing A/c
Cash A/c
Date Transaction Debit Credit Balance
Opening Balance 0
1 Cash Drawing for personal use 2,000 2,000
GENERAL JOURNAL
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© Mary Low
Date Description Debit Credit
Salary A/c 400.00
Cash A/c 400.00
GENERAL JOURNAL
Salary Paid to Legal assistant
Date Transaction Debit Credit Balance
Opening Balance 0
Salary Paid to legal assistant 400 400
Date Transaction Debit Credit Balance
Opening Balance 0
1 Investing in Cash 20,000 20,000
2 Purchase Of Supplies in Cash 1,500 18,5003 Service Revenue earned in Cash 1,000 19,500
4 Paid cash to computer equipment ltd. 3,000 16,500
5 Cash received from ravi 500 17,000
6 Cash Drawing for personal use 2,000 15,0007 Salar Paid to le al assistant 400 14 600
Cash A/c
Salary A/c
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T-Ledger Account
Date Particulars J.F Amount Date Particulars J.F Amount
To Capital A/c 20,000 By Supplies A/c 1,500
To Service revenue 1,000 By A/P (Com. Equ.ltd) 3,000
To A/R (Ravi) 5,00 By Drawing 2,000
By Salary 400
By Balance c/d 14600
21,500 21,500
Cash A/c Cr.Dr.
Balancing the ledger Account:Difference of total Dr & total Cr is Balancing Amount
If Total Dr > Total Cr, the balancing amount is appear in Cr siderepresenting By balance c/d, called Debit balance.If Total Cr > Total Dr, the balancing amount is appear in Dr siderepresenting To balance c/d, called Credit balance.
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T-Ledger Account
Date Particulars J.F Amount Date Particulars J.F Amount
To Balance c/d 20,000 By Cash A/c 20,000
20,000 20,000
Capital A/c Cr.Dr.
Balancing the ledger Account:Difference of total Dr & total Cr is Balancing Amount
If Total Dr > Total Cr, the balancing amount is appear in Cr siderepresenting By balance c/d, called Debit balance.If Total Cr > Total Dr, the balancing amount is appear in Dr siderepresenting To balance c/d, called Credit balance.
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T-Ledger Account
Date Particulars J.F Amount Date Particulars J.F Amount
To A/P (Comp.
Equip. ltd)
9,000 By balance c/d 9,000
9,000 9,000
Computer Equipment A/c Cr.Dr.
Balancing the ledger Account:Difference of total Dr & total Cr is Balancing Amount
If Total Dr > Total Cr, the balancing amount is appear in Cr siderepresenting By balance c/d, called Debit balance.If Total Cr > Total Dr, the balancing amount is appear in Dr siderepresenting To balance c/d, called Credit balance.
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T-Ledger Account
Date Particulars J.F Amount Date Particulars J.F Amount
To Cash 3,000 By Computer
Equipment A/c
9,000
To Balance c/d 6,000
9,000 9,000
A/P(Computer Equipment ltd) A/c Cr.Dr.
Balancing the ledger Account:Difference of total Dr & total Cr is Balancing Amount
If Total Dr > Total Cr, the balancing amount is appear in Cr siderepresenting By balance c/d, called Debit balance.If Total Cr > Total Dr, the balancing amount is appear in Dr siderepresenting To balance c/d, called Credit balance.
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© Mary Low
Some more Examples
Start a business with Rs. 5000 cash and a buildingworth Rs. 10000Purchase goods worth Rs. 2000, out of which 1200 oncredit from RamPurchase Machinery of Rs. 2500, Rs 500 paid in Cash
& remaining Through Bank LoanSold goods for Rs. 600, including Rs. 400 to ShyamReceived Rs. 380 from shyam in full settlement of hisaccount
Paid Rs. 100 for wages & salary Rs. 50Paid Rs 1150 for Ram for his full claimWithdraw Rs. 400 from his business, out of which 50%is for personal purpose & remaining for businesspromotion
Mr Ashok commenced business on 1st January 1992 with a
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Mr Ashok commenced business on 1st January, 1992 with acapital of Rs.1,00,000 in cash. On the same date he opened thebank account and deposited Rs.20,000. During the month ofJanuary 1992 the following transactions
tookplace: Rs. Jan 1 Bought goods for cash 70,000
2 Sold good to Rahul & Co 38,000
15 Sold goods for cash 9,000
21 Rahul & co. paid by cheque 35,000 31 Paid rent by cash 2,000
Paid wages by cash 3,000
Withdrew cash personal use 5,000
Make journal entries for the transactions.Prepare necessary ledger accounts
1)Mr A deposited into bank Rs 50 000 to start a business
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1)Mr.A deposited into bank Rs.50,000 to start a business
2) Paid rent for three months at Rs.2500 per month
3) Bought office equipment from B&Co. for Rs. 10000, paid tothem Rs.3000 and promised to pay the balance after two
months. 4) Rendered services to clients and received cash Rs. 5000
5) Purchase supplies for cash Rs. 400
6) Paid salaries to staff Rs. 5400
7) Bought furniture for Rs. 3200,paid to K&Co. Rs.1200 andpromised to pay balance after one month
8) Withdrew cash for personal use Rs. 3000
9) Billed to Nasir for services rendered Rs. 12500
10) Received from Nasir Rs.5000INSTRUCTION
A: Prepare journal entries
B: Post to ledger accounts
(Considering All payments through Bank)
Prepare Jornal entries and make necessary ledger
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Prepare Jornal entries and make necessary ledgeraccounts from the following transactions
1. Mr. Ahmed invested cash Rs. 125,000
2. Bought merchandise for cash Rs.200003. Paid rent for the month Rs.50004. Purchase office supplies for Rs.15005. Sold goods for cash Rs.5000
6. Purchase goods on credit from Nasir Ali Rs.100007. Paid salaries to office staff Rs. 125008. Paid to Nasir Ali Rs.35009. Sold goods on credit to Abid Rs.1500010. Merchandise return to Nasir Ali Rs.25011. Goods were returned by Abid Rs.75012. Withdrew cash for personal use Rs.1000
13. Sold old machine at Rs 500
In July 2005 Nasir Jamal started business and
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In July 2005, Nasir Jamal started business andcompleted following transactions.
July 1 He deposited $ 165,000 cash in a business
July 2 Purchased equipment for $ 55,000 from ABC Co.paid $20,000 and balance will be paid after threemonth.
July 7 Paid rent for three months $ 1500
July 12 Purchase goods on credit from Khan & Co. $1200
July 17 Paid salaries to staff $ 2500
July 20 Paid to Khan & Co.$ 700
July 23 Paid insurance $ 400
July 27 Nasir withdrew $ 1500 cash from the businessfor personal use
Prepare journal entries and Ledger accounts.
Khalid invested in business cash Rs 40000 office
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. Khalid invested in business cash Rs.40000, officeequipment Rs.60,0002. Purchase merchandise for cash Rs. 60003. Purchase goods on credit from Zahid Rs.10000
4. Sold merchandise on credit to Amir Rs.100005. Paid rent expense Rs.6006. Sold merchandise for cash Rs. 35007. Earned commission Rs. 10000
8. Purchase supplies on credit from Aleem Rs. 8009. Paid traveling expense Rs. 65010. Sold merchandise to Mr. Kareem Rs. 4000 oncredit.
11. Khalid withdrew cash for personal use Rs. 300012. Rendered services to client and receivedcommission Rs. 200013. Paid insurance for the month Rs. 500
Prepare journal entries and Ledger accounts