Ledger Account
Samir K Mahajan
MEANING OF LEDGER ACCOUNT
A Ledger is a book which contains all the accounts whether personal, real or nominal,which are first entered in journal or special purpose subsidiary books.
Ledger is a principal or main book which contains all the accounts in which thetransactions recorded in the books of original entry are transferred.
Ledger is also called the ‘Book of Final Entry’ or ‘Book of Secondary Entry’, becausethe transactions are finally incorporated in the Ledger.
MEANING OF LEDGER ACCOUNT contd.
Ledger accounts are classified into :
Asset AccountLiabilities AccountCapital AccountRevenue AccountExpenses Account
FORMAT OF LEDGER ACCOUNT
Name of the Account
Dr Cr
Date Particulars J.F. Amount (Rs)
Date Particulars J.F. Amount (Rs)
Year Month Date
To(Name of CreditAccount in Journal )
Year Month Date
By(Name of DebitAccount in Journal)
EXPLANATION: LEDGER ACCOUNT
i. Each ledger account is divided into two parts. The left hand side is known as the debit sideand the right hand side is known as the credit side. The words ‘Dr.’ and ‘Cr.’ are used todenote Debit and Credit.
ii. The name of the account is mentioned in the top (middle) of the account.
iii. The date of the transaction is recorded in the date column.
iv. The word ‘To’ is used before the accounts which appear on the debit side of an account inthe particulars column.
vi. Similarly, the word ‘By’ is used before the accounts which appear on the credit side of anaccount in the particulars column.
EXPLANATION: LEDGER ACCOUNT contd.
vi. The name of the other account which is affected by the transaction is writteneither in the debit side or credit side inthe particulars column.
vii. The page number of the Journal or Subsidiary Book from where that particularentry is transferred, is entered in theJournal Folio (J.F) column.
viii. The amount pertaining to this account is entered in the amount column.
POSTING
The process of transferring the entries recorded in the journal or subsidiary books to the respective accounts opened in the ledger is called Posting.
Procedure of posting for an Account which has been debited in the journal entry.
Step 1 Locate in the ledger, the account to be debited and enter the date of the transaction in thedate column on the credit side as ‘By ….. (the name of the account to be debited).
Step 2 Record the name of the account credited in the Journal in the particulars column on thedebit side as “To..... (name of the account credited)”.
Step 3 Record the page number of the Journal in the J.F column on the debit side and in theJournal, write the page number of the ledger on which a particular account appears in the L.F.column.
Step 4 Enter the relevant amount in the amount column on the debit side.
Procedure of posting
Balancing an Account
Balance is the difference between the total debits and the total credits of an account.
When posting is done, many accounts may have entries on their debit side as well as credit side.The net result of such debits and credits in an account is the balance.
Balancing means the writing of the difference between the amount columns of the two sides inthe lighter (smaller total) side, so that the grand totals of the two sides become equal.
Balancing an Account contd.
There are three possibilities while balancing an account during a given period.
It may be a debit balance or a credit balance or a nil balance depending upon the debit total and thecredit total.
i. Debit Balance :The excess of debit total over the credit total is called the debit balance
i. Credit Balance :The excess of credit total over the debit total is called the credit balance.
ii. Nil Balance :When the total of debits and credits are equal, it is closed by merely writing thetotal on both the sides
Balancing an Account contd.
Debit Balance: Following ledger accounts have debit balance:
1. All assets account such as; cash, building, and furniture2. All expenses and loss account i.e. wages, salaries, bad debts, discount
allowed3. Purchase account4. Sales return or return inward account5. Drawing account6. Debtors account7. Discount Allowed
Balancing an Account contd.
Credit Balance: Following ledger accounts have credit balance:
1. Capital account2. Liabilities account3. Reserve fund account4. Revenue and income account5. Sales account6. Purchase return or return outward account7. Creditors account8. Interest on drawing account9. Discount received
LEDGER POSTING FORM JOURNAL
Example 1: Pass the following journal entries and post them in ledger account
2005 Jan 1: Started business with cash Rs 20, 000Jan 3: Purchased goods from Navneet Rs 5000Jan 6: Paid to Navneet Rs 4900
Discount Allowed Rs 100Jan 9: Purchased Furniture Rs 2000
Jan 12: paid salaries Rs 1000Jan 15 : Rent received Rs 500Jan 18: Sold goods To Kartikeya Rs 4000
Date Particular L.F. Debit Amount (Rs)
Credit Amount (Rs)
2005Jan 1
Cash A/C Dr To Capital A/C (started business)
20000
5000
5000
2000
20000
5000
4900100
2000
Jan 3 Purchase A/C Dr To Navneet A/C (Purchased goods from Navneet for credit)
Jan 6 Navneet’s A/C Dr To Cash A/C To Discount Received A/C (Amount paid to Navneet who allowed Discount )
Jan 9 Furniture To A/C Dr To Cash A/C (Furniture Purchased for cash )
Balance c/d
JournalExample 1 contd.
Balance b/d
Jan 12 To Salaries A/C Dr To Cash A/C (payment of salaries )
1000
500
4000
1000
5000
4000
Jan 15 Cash A/C Dr To Rent A/C (Rent received )
Jan 18 Kartikeya’s A/C Dr To Sales A/C (sold goods to Kartikeya)
Journal
Example 1 contd.
Cash Account
Dr Cr
Date Particulars J.F. Amount (Rs)
Date Particulars J.F. Amount (Rs)
2005 Jan1 Jan 15
Feb 1
To Capital A/CTo Rent A/C
To Balance b/d
20000500
2005 Jan 6 Jan 9Jan 12Jan 31
By Navneet A/C By By Furniture A/C By Salaries A/C By Balance c/d
490020001000
12 600
20500 20500
12 600
Example 1 contd.
Ledger posting from Journal
Ledger
Capital Account
Dr Cr
Date Particulars J.F. Amount (Rs)
Date Particulars J.F. Amount (Rs)
2005 Jan 31 To Balanced c/d 20000
2005Jan1
Feb 1
By cash A/C
By Balance b/d
20000
20000 20000
20000
Example 1 contd.
Purchase Account
Dr Cr
Date Particulars J.F. Amount (Rs)
Date Particulars J.F. Amount (Rs)
2005 Jan 3
Feb 1
To Navneet’s A/C
To Balance b/d
50002005 Jan 31 By Balance c/d 5000
5000 5000
5000
Example 1 contd.
Navneet’s Account
Dr Cr
Date Particulars J.F.
Amount (Rs)
Date Particulars J.F. Amount (Rs)
2005 Jan6 To Cash A/C
To Discount Received A/C
4900100
2005 Jan 3 By Purchase A/C 5000
5000 5000
Example 1 contd.
Discount Received Account
Dr Cr
Date Particulars J.F. Amount (Rs)
Date Particulars J.F. Amount (Rs)
2005Jan 31 To Balance c/d 100
2005 Jan 6
Feb 1
By Navneet’s A/C
By Balance b/d
100
100 100
100
Example 1 contd.
Furniture Account
Dr Cr
Date Particulars J.F. Amount (Rs)
Date Particulars J.F. Amount (Rs)
2005 Jan 9
Feb 1
To Cash A/C
To Balance b/d
20002005 Jan 31 By balance c/d 2000
2000 2000
2000
Example 1 contd.
Salaries Account
Dr Cr
Date Particulars J.F. Amount (Rs)
Date Particulars J.F. Amount (Rs)
2005 Jan 12
Feb 31
To Cash A/C
To Balance b/d
10002005 Jan 31 By balance c/d 1000
1000 1000
1000
Example 1 contd.
Rent Account
Dr Cr
Date Particulars J.F. Amount (Rs)
Date Particulars J.F. Amount (Rs)
2005 Jan 31 To balance c/d 500
2005 Jan 15
Feb 1
By Cash A/C
By Balance b/d
500
500 500
500
Example 1 contd.
Kartikeya’s Account
Dr Cr
Date Particulars J.F. Amount (Rs)
Date Particulars J.F. Amount (Rs)
2005 Jan 18
Feb 1
To Sales A/c
To Balance b/d
40002005Jan 31 By Balance c/d 4000
4000 4000
4000
Example 1 contd.
Sales Account
Dr Cr
Date Particulars J.F. Amount (Rs)
Date Particulars J.F. Amount (Rs)
2005 Jan 31 To Balance c/d 4000
2005 Jan 18
Feb 1
By Kartikeya’s A/C
By Balance b/d
4000
4000 4000
4000
Example 1 contd.
LEDGER POSTING FROM CASH BOOK
Example 2
Enter the following transactions in a Cash Book and post them in ledger accounts with help of cash book.
1980Jan 1 : Cash in hand ------------- Rs 11200Jan.5 : Received from Akash ---- Rs 300Jan 7 : paid rent --------------------- Rs 30Jan 8 : sold goods ------------------ Rs 300Jan10 : Paid Sunny ----------------- Rs 700Jan 27: Purchased furniture ------- Rs 200Jan 31 : paid salaries ---------------------- Rs 100
Cash Book
Dr Receipts payments Cr
Date Particular R.N. L.F. Amount (Rs)
Date Particular V.N. L.F. Amount (Rs)
1980Jan 1
Jan.5
Jan. 8
Feb 1
To Balance b/d
To Akash
To Sales
To Balance b /d
11 200
300
300
1980 Jan. 7
Jan. 10
Jan. 27
Jan. 31
Jan 31
By rents
By Sunny
By Furniture
By Salaries
By Balance c/d
30
700
200
100
10770
11800 11800
10,700
Example 2: solution: Ledger
Example 2 contd.
Ledger posting from debit side of cash book
Akash’ Account
Dr Cr
Date Particulars J.F. Amount (Rs)
Date Particulars J.F. Amount (Rs)
1980Jan 31 To balance c/d 300
1980Jan 5
Feb 1
By Cash A/C
By Balance b/d
300
300 300
300
Example 2 contd.
Ledger posting from credit side of cash book
Rent Account
Dr Cr
Date Particulars J.F. Amount (Rs)
Date Particulars J.F. Amount (Rs)
1980Jan 7
Feb 1
To Cash
To Balance b/d
301980Jan 31 By Balance c/d 30
30 30
30
Example 2 contd.
Sales‘s Account
Dr Cr
Date Particulars J.F. Amount (Rs)
Date Particulars J.F. Amount (Rs)
1980Jan 31 To balance c/d 300
1980Jan 8
Feb 1
By Cash A/C
By Balance b/d
300
300 300
300
Example 2 contd.
Sunny’s Account
Dr Cr
Date Particulars J.F. Amount (Rs)
Date Particulars J.F. Amount (Rs)
1980Jan 10
Feb 1
To Cash
To Balance b/d
7001980Jan 31 By Balance c/d 700
700 700
700
Example 2 contd.
Furniture Account
Dr Cr
Date Particulars J.F. Amount (Rs)
Date Particulars J.F. Amount (Rs)
1980Jan 27
Feb 1
To Cash
To Balance b/d
2001980Jan 31 By Balance c/d 200
200 200
200
Example 2 contd.
Salaries Account
Dr Cr
Date Particulars J.F. Amount (Rs)
Date Particulars J.F. Amount (Rs)
1980Jan 31
Feb 1
To Cash
To Balance b/d
1001980Jan 31 By Balance c/d 100
100 1200
100
LEDGER POSTING FROM PURCHASE BOOK
Example 3
Enter the following transactions in a Purchase Book and post them in ledger accounts with help of Purchase book.
Record the following transactions on purchase book2006:March1 Purchases from Purohit Furnishers, Gandhi Nagar (Invoice no. 516)
20 Chairs @ Rs 1500 each2 Tables @ Rs 4000 eachLess trade discount @ 10%
March7 Bought M/S Roy and Co. , Ahmedabad (Invoice number 700)20 Stools @Rs. 1250each10 collapsible chairs @Rs. 2000 eachDelivery and cartage Rs. 150
March 26 Purchase 10 Mini Chairs @ 500 on cash
PURCHASE BOOK/PURCHASE JOURNAL
Date Inward Invoice Number
Particulars Name of Suppliers
(Account to be credited)
L.F. Amount
Details (Rs) Total (Rs)
2006March1
March 7
516
700
Purohit Furnishers, Gandhinagar20 Chairs @ Rs 1500 each2 Tables @ Rs 4000 each
Less: trade discount @ 10%
M/S Roy and Co. , Ahmedabad20 Stools @Rs. 1250each
10 collapsible [email protected] each
Add: Delivery and cartage Rs. 150
Purchase A/C Dr
300008000
34200
45150
380003800
2500020000
45000150
79350
Example 3: Solution
Example 3 contd.
Ledger Posting from Purchase book
Purchase Account
Dr Cr
Date Particulars J.F. Amount (Rs)
Date Particulars J.F. Amount (Rs)
2006March 30
April1
To Total amount as per purchase book
To Balance b/d
79350
2006March 30 By Balance c/d 79350
79350 79350
79350
Ledger
Example 3 contd.
Purohit Furnishers Account
Dr Cr
Date Particulars J.F. Amount (Rs)
Date Particulars J.F. Amount (Rs)
2006March 30 To Balance c/d
34200
2006March 1
April 1
By Purchase A/C
By Balance b/d
34200
34200 34200
34200
Example 3 contd.
M/S M S Roy and Co. Account
Dr Cr
Date Particulars J.F. Amount (Rs)
Date Particulars J.F. Amount (Rs)
2006March 30 To Balance c/d
45150
2006March 1
April 1
By Purchase A/C
By Balance b/d
45150
45150 45150
45150
LEDGER POSTING FROM Sales BOOK
Example 4
Enter the following transactions in a Sales Book and post them in ledger accounts with help of sales book.
Enter the following transactions in the sales book of Ojha Enterprise , Ahmedabad2006May 4 sold M/S Dewan Brothers , Ahmedabad (Invoice no. 175)
10 dozens pencils @Rs 20 per dozen14 dozens rubbers @ Rs 60 per dozen
May 14 Sold to Sun Enterprise, Gandhi Nagar (invoice no. 200)5 dozens of gum bottles @ Rs 5 per bottle70 dozens rulers @ Rs 15 per dozenLess: 10% trade discount
May 30 sold old furniture to M/S Patel and Sons, on credit for Rs 17000 (invoice no.300)
SALES BOOK/SALES JOURNAL
Date OutwardInvoice Number
Particulars Name of Suppliers
(Account to be debited )
L.F. Amount
Details (Rs) Total (Rs)
2006May 4
May 14
175
200
M/S Dewan Brothers , Ahmedabad10 dozens pencils @Rs 20 per dozen14 dozens rubbers @ Rs 60 per dozen
Sun Enterprise, Gandhi Nagar5 dozens of gum bottles @ Rs 5 per bottle
70 dozens rulers @ Rs 15 per dozen
Less: 10% trade discount
Sales A/C Cr
200840 1040
1215
3001050
1350135
2255
Example 4: Solution
Example 4 contd.
Ledger Posting from Sales book
Sales Account
Dr Cr
Date Particulars J.F. Amount (Rs)
Date Particulars J.F. Amount (Rs)
2006May 30 To Balance c/d
2255
2006May 30
June 1
By Total amount as per sales book
By Balance b/d
2255
2255 2255
2255
Ledger
Example 4 contd.
M/S Dewan Brothers Account
Dr Cr
Date Particulars J.F. Amount (Rs)
Date Particulars J.F. Amount (Rs)
2006May 4
June1
To Sales A/C
To Balance b/d
10402006May 30 By balance c/d 1040
1040 1040
1040
Example 4 contd.
Sun Enterprise Account
Dr Cr
Date Particulars J.F. Amount (Rs)
Date Particulars J.F. Amount (Rs)
2006May 14
June 1
To Sales A/C
To Balance b/d
12152006May 30 By balance c/d 1215
1215 1215
1215
Example 5: Ledger posting 0f compound journal entries.
Jan. 12, 2003, Cash sales Rs.10,000, Cash received from Kannan Rs.5,000 and commission earned Rs.2,500
Date Particular L.F. Debit Amount (Rs)
Credit Amount (Rs)
2014Jan 1
Cash A/C Dr To Sales A/CTo Kannan A/C To Commission A/C
(Received cash for sale, fromKannan and as commission))
1750010000
50002500
Journal
Solution:
Example 5 contd.
Cash Account
Dr Cr
Date Particulars J.F. Amount (Rs)
Date Particulars J.F. Amount (Rs)
2003Jan 12
Feb 1
To Sales A/C To Kannan A/CTo Commission A/C
To Balance b/d
1000050002500
2003Jan31 By balance c/d
17500
17500 1040
17500
Ledger
Example 5 contd.
Sales Account
Dr Cr
Date Particulars J.F. Amount (Rs)
Date Particulars J.F. Amount (Rs)
2003Jan 12
Feb 1
To Sales c/d
To Balance b/d
100002003Jan31 By Cash A/C
10000
10000 10000
10000
Example 5 contd.
Kannan Account
Dr Cr
Date Particulars J.F. Amount (Rs)
Date Particulars J.F. Amount (Rs)
2003Jan 12 To Balance c/d 5000
2003Jan31
Feb 1
By Cash A/C
By Balance b/d
5000
5000 5000
17500
Example 5 contd.
Commission Account
Dr Cr
Date Particulars J.F. Amount (Rs)
Date Particulars J.F. Amount (Rs)
2003Jan 12 To Balance c/d 2500
2003Jan31 By Cash A/C
By Balance b/dFeb 1
17500
2500 2500
2500
Ledger
Example 6.
Posting from the Petty Cash Book
Example 6: Mr Mohit, the pettycahier of M/s Samaira Tradersreceived Rupees 2,000 on May01, 2010 from the Head Cashier.For the month, details of pettyexpenses are listed here under:
Petty Cash Book contd.
Samir K Mahajan
Date2010 May
Details AmountRs.
0203040506080810121314161919202223282930
Auto fareCourier servicesPostal stampsErasers/Sharpeners/Pencils/PadsSpeed post chargesTaxi fare (Rs.105 + Rs.90)RefreshmentsAuto fare Registered postal chargesTelegramCartageComputer stationeryBus fareSTD call chargesOffice sanitation including disinfectant (Rs. 36 + Rs. 24)RefreshmentPhoto stating chargesCourier servicesUnloading chargesBus fare
5540
10522598
1958560423425
1652487604547404015
Books of Samira Traders Petty Cash Book
Amount Received
C.B.F.N
Date Particular VN
Amount Paid
Analysis of Payment
Rs. 2010May
Rs. Postage Telephone and Telegram
Conveyance
Stationary
Miscellaneous
2000 01 Cash Received
0203040506080810121314161919
Auto fareCourier servicesPostal stampsErasers/Sharpeners/Pencils/PadsSpeed post chargesTaxi fare (Rs.105 + Rs.90)RefreshmentsAuto fare Registered postal chargesTelegramCartageComputer stationeryBus fareSTD call charges
5540
10522598
1958560423425
1652487
40105
98
4234
87
55
195
60
24
225
165
85
25
Petty Cash Book contd.
Samir K Mahajan
Analysis Petty Cash Book contd.
Amount Received
C.B.F.N
Date Particular VN
Amount Paid
Analysis of Payment
Rs. 2010May
Rs. Postage Telephone and Telegram
Conveyance
Stationary
Miscellaneous
20
2223282930
Office sanitation including disinfectant (Rs. 36 + Rs. 24)RefreshmentPhoto stating chargesCourier servicesUnloading chargesBus fare
604547404015
40
15
604547
40
31 Balance c/d1487513
325 121 364 390 302
2000 2000
5131487
June
0101
Balance b/dCash Received
Petty Cash Book contd.
Samir K Mahajan
Books of Samira Traders Journal
Date Particular L.F. Debit Amount (Rs)
Credit Amount (Rs)
2010May 01
Petty cash A/c Dr.To Cash A/c(Cash paid to petty cashier)
2,0002,000
May 31 Postage A/c Dr.Telephone & Telegram A/c Dr.Conveyance A/c Dr.Stationary A/c Dr.Miscellaneous expenses A/c Dr.To Petty cash A/c(Petty expenses posted to petty cash account)
325121349390302
1,487
Samir K Mahajan
Example: 6 contd.
Petty Cash Book contd.
Samir K Mahajan
Books of Samaria TradersPetty Cash Account
Dr Cr
Date Particulars J.F. Amount (Rs)
Date Particulars J.F. Amount (Rs)
2010May 01
June 01
To Cash A/c
To Balance b/dTo Cash
2000 2010May 31
May 31
By Sundries as petty cash book
By Balance c/d
1,487
513
2000 2000
5131487
Petty Cash Book contd.
Samir K Mahajan
Books of Samaria TradersPostage Account
Dr Cr
Date Particulars J.F. Amount (Rs)
Date Particulars J.F. Amount (Rs)
2010May 01
June 01
To Petty Cash
To Balance b/d
325 May 31 By Balance c/d 325
325 325
325
Petty Cash Book contd.
Samir K Mahajan
Books of Samaria TradersTelephone and Telephone Account
Dr Cr
Date Particulars J.F. Amount (Rs)
Date Particulars J.F. Amount (Rs)
2010May 01
June 01
To Petty Cash
To Balance b/d
121 May 31 By Balance c/d 121
121 121
121
Petty Cash Book contd.
Samir K Mahajan
Books of Samaria TradersConveyance Account
Dr Cr
Date Particulars J.F. Amount (Rs)
Date Particulars J.F. Amount (Rs)
2010May 01
June 01
To Petty Cash
To Balance b/d
349 May 31 By Balance c/d 349
349 349
349
Petty Cash Book contd.
Samir K Mahajan
Books of Samaria TradersStationary Account
Dr Cr
Date Particulars J.F. Amount (Rs)
Date Particulars J.F. Amount (Rs)
2010May 01
June 01
To Petty Cash
To Balance b/d
390 May 31 By Balance c/d 390
390 390
390
Petty Cash Book contd.
Samir K Mahajan
Books of Samaria TradersMiscellaneous Expenses Account
Dr Cr
Date Particulars J.F. Amount (Rs)
Date Particulars J.F. Amount (Rs)
2010May 01
June 01
To Petty Cash
To Balance b/d
302 May 31 By Balance c/d 302
302 302
302
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