ledger

LEDGERAmitabha Maheshwari

Faculty Finance

PIMG

LEDGER AND POSTING

• The place where record of all business transactions relating to a particular person, firm or an item is- kept is termed as 'Account'. The book is which such accounts are kept is termed as 'Ledger'

• Thus, an account is a record of all the transactions in summarized form that have taken place in relation to a particular person or thing specified. Account is prepared and presented in 'T' shape, divided into two equal sides. Traditionally, the left side is called Debit (Dr.) side and right side is called credit (Cr.) side.

LEDGER AND POSTING• The specimen of an account is given below:

LEDGER ACCOUNT

• Description of Ledger Account: The Account is divided into two equal parts i.e., Debit Side and Credit Side. Each side has four columns: Date, particulars, J.E and Amount. The description of each column is given below:

• 1. Date: The date of transaction which is recorded in Journal/Subsidiary Book is written in this column.

• 2. Particulars: 'To' and 'By' words are written is Debit and Credit side respectively and name of opposite account of the particulars journal entry is also written.

Date Particulars J.F. Amount Date Particulars J.F. Amount

DR. CR.

LEDGER AND POSTING

• 3. Journal Folio: The page number of Journal or Subsidiary book having the entry is written in this column. 'J.E' means 'Journal Folio' or page number of 'Journal'. Here, Subsidiary Books are also termed as special Journals.

• 4. Amount: The amount of related transaction is written in this column.

LEDGER AND POSTING

• The process of transferring the information contained in a Journal to a Ledger is called posting.

• The following rules should be kept in mind while posting transactions in the ledger from the Journal:

• 1. Separate accounts should be opened in the ledger for posting transactions relating to different accounts recorded in the Journal.

• 2. The concerned account which has been debited in the journal should also be debited. However, a reference should be made of the other account which has been credited in the journal.

• 3. The credit of the journal entry is posted to the credit side of the account but a reference should be given of the other account which has been debited in the journal.

LEDGER AND POSTING• 5. In the folio column, the page number of journal from where the entry is

transferred to ledger account is written. • 6. The date of the transaction is written on the date column. • The following procedure is followed for posting the debit' and credit aspect

of the transaction recorded in a Journal• (i) Posting of Account debited in a Journal entry: The steps to be followed

are: • First: Identify in the Ledger the account to be debited. • Second: Enter the date of the transaction in the 'Date' column on the debit

side of the account. • Third: Write the name of the account which has been credited in the

respective entry in the 'Particulars Column' on the debit side of the account as 'To (name of account credited)'.

• Fourth: Record the page number of the Journal where the entry exists in the folio column.

• Fifth: Enter the relevant amount in the 'Amount' column on the debit side.

LEDGER AND POSTING• (ii) Posting an Account credited in a Journal entry: The steps to be

followed are: • First: Identify in the Ledger the account to be credited. • Second: Enter the date of the transaction in the 'Date' column on the

credit side.• Third: Write the name of the account which has been debited in the

respective entry in the 'Particulars Column' on the credit side of the account as 'By (name of account debited)'.

• Fourth: Record the page number of the Journal where the entry exists in the folio column.

• Fifth: Enter the relevant amount in the 'Amount' column on the credit side.

Journalize the following transactions, post them in Ledger Accounts and balance them:• 2007 Rs. • April 1 Kamal started business with cash 1,00,000 • April 2 Bought goods for cash

30,500 • April 3 Opened Bank Account with cash 50,000 • April 4 Sold goods for cash

40,000 • April 7 Bought goods from Surya on credit

30,000 • April 10 Sold goods to Rakesh on credit

25,000

• April 15 Purchased Plant and Machinery

and payment is made by cheque 16,600 • April 19 Paid to Surya in cash 10,000 • April 21 Received loan from Anil and deposited

the same into bank 8,000 • April 23 Goods returned to Surya 1,000 • April 26 Withdrew from bank for personal use 5,000 • April 27 Paid to Surya by cheque 8,000 • April 29 Received cash from Rakesh

10,000 • April 30 Purchased stationery for cash 200 • April 30 Paid wages and salaries

10,000

Date Particular L.F. Dr.(Rs.) Cr.(Rs.)

2007 April 1

Cash A/c Dr. To Capital A/c

1,00,000 1,00,000

April 2

Purchases A/c Dr. To Cash A/c

30,500 30,500

April 3

Bank A/c Dr. To Cash A/c(Being a bank account opened by depositing)

50,000 50,000

April 4

Cash A/c Dr. To Sales A/c(Being goods sold for cash)

40,000 40,000


April 7

Purchases A/c Dr. To Surya(Being goods purchased on credit from Surya)

30,000 30,000

April 10

Rakesh Dr. To Sales A/c(Being goods sold to Rakesh on credit)

25,000 25,000

April 15

Plant and Machinery A/c Dr. To Bank A/c(Being plant and machinery purchased by cheque)

16,600 16,600

April 19

Surya Dr. To Cash A/c(Being amount paid to Surya in cash)

10,000 10,000


April 21

Bank A/c Dr. To Anil’s Loan A/c(Being loan from Anil received and deposited into bank)

8,000 8,000

April 23

Surya Dr. To Returns Outwards A/c(Being goods returned to Surya)

1,000 1,000

April 26

Drawings A/c Dr. To Bank A/c(Being amount withdrawn from bank for personal use)

5,000 5,000

April 27

Surya Dr. To Bank A/c(Being amount paid to Surya by cheque)

8,000 8,000


April 29

Cash A/c Dr. To Rakesh(Being cash received from Rakesh)

10,000 10,000

April 30

Stationery A/c Dr. To Cash A/c(Being stationery purchased for cash)

200 200

April 30

Wages and Salary A/c Dr. To Cash A/c(Being wages and salaries paid in cash)

10,000 10,000