LEDGER

Ledger is the main book of accounts. It is the most important book of

accounting system. It contains an account for each asset,liability,
Proprietorship,revenue and expances account to which the transa-
ctions recorded in the book of orginal entry are posted. Ledger is the
ultimate destination of all transctions.It is also called book of “final
-entry”. In ledger the information is classified by nature and relevan-
ce. The ledger includes all the basic accounts needed for the
preparation of the financial statements.

MAIN FEATURES OF LEDGER

Following are some of the main features of ledger.

• It is the principal or primary book of accounts.

• The transactions are classified under appropriate heads called accounts.
• The information contained in the ledger account can be used to draw the
conclusion regarding status of any account.
• The acconts contain the encoded and summaries of all the related
transactions.
• It is the basic of prepairing the finl account.
• It helps us in achieving the objectives of accounting.

It gives answers to the following pertinent questions

• What are the total sales to the individual customer ?
• What are the total purchases from an indivisual supplier ?
• How much amount is owed by others ?
• What is the amount of profit or loss made during a particular period ?
• What is the financial position of the firm on a particular date ?

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 The ruling of each account in ledger is as follows

Dr Cr
Date Particulars F. Amount Date Particulars F. Amount

To name Rs. By name

of credit of debit
A/c A/c

Balancing procedure:-

The following are some steps how to make the accounts

Step-1:-
Take of the total of debit and credit side on a rough sheet.
Step-2:-
Subtract the lower amount from the higher amount on the rough
sheet.The difference is called the balance.
Step-3:-
The balance is put on the smaller side of the ledger account as the
last iteam.Write the date at which the balancing done in ate
column.
Step-4:-
If the balance written in the debit side is more then it is written as
to balance c/d (c/d-carried down) in particular column. In case the
balance is written on credit side then it’s written as by balance
-b/d(b/d-brought down) in the particular column.

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 Step-5:-
Now total both the sides of the account. These total should be
written on equal level. A single line should be drawn above each
total and double line immediately beneath each total. The balance
thus written on the smaller side of the account and is called closing
baance.
Step-6:-
Finally the debit balance should be brought down to the debit side
by writing “To balance c/d” in a particular column. In the date
column the next date is written. In case of credit balance “By
balance b/d” is written in the particular column.
Step-7:-
The total in the amount column on both the sides must be shown
horizontally.

The following are some imaginary transactions to show it into the

ledger accounts.

Journalize the following transactions and post them into ledger

1999
Jan.1 Started business with cash Rs.10,000.
Jan.2 Deposited into bank Rs.9,000.
Jan.3 Purchased mechanary for Rs.5,000 from Jawahar and give
him a cheque for the amount.
Jan.15 Paid installation charges of machinery Rs.100.
Jan.20 Purchased timber from Naveen of the list price of Rs.2,000.
He allowed 10% trade Discount.
Jan.23 Furniture costing Rs.500 was used in furnishing the office.
Jan.25 Sold furniture to Naresh of list price of Rs.1,000 & allowed
Him 5% trade discount.
Jan.28 Received a cheque from Naresh for Rs.930 in full settleme-
nt and sent the cheque to bank.
Jan.29 Sent to Naveen in full settlement a cheque to bank.
Jan.31 Paid wages Rs.350 and Rent Rs.200.

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SOLUTION:-

JOURNAL ENTRIES

DATE PARTICULARS L. Dr. Cr.

F
1995 Cash Account Dr. Rs. Rs.
Jan. 1 To Capital Account 10,000 10,000
(Being amount brought in as capital)
Bank A/c Dr.
To cash A/c
Jan. 2 (Cash deposited into the bank)
9,000 9,000
Machinery A/c Dr.
To Bank A/c
Jan. 3 (Being machinery purchased & paid by cheque) 5,000 5,000
Machinery A/c Dr.
To Cash A/c 100 100
Jan. 15 (Being installation charges on machinery)

Purchase A/c Dr.

To Naveen’s A/c 1,800 1,800
Jan. 20 (Being timber purchased from Naveen)

Office furniture A/c Dr.

Jan. 23 To Purchase A/c 500 500
(Being furniture used in office)

Naresh’s A/c Dr.

To Sales 950 950
Jan. 25 (Being furniture sold to Naresh & trade dis.5%)

Bannk A/c Dr.

Discount Allowed A/c 930
Jan. 28 To Naresh’s A/c 20 950
(Being cheque full settlement from Naresh)
Naveen’s A/c Dr.
To Bank A/c
Jan. 29 To Discount Received A/c( Being cheque sent) 1,800 1,750

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 Wages A/c Dr. 50
Rent A/c 350
To Cash A/c (Being amount paid )
Jan. 31 200 550

Total for the month 30,650

LEDGER:-

CAPITAL ACCOUNT

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

1995
Jan. 1 By cash A/c
Rs.
10,000

DISCOUNT ALLOWED ACCOUNT

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

1995
Jan. To Naresh 20
20

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 NARESH

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

1995 1995
Jan. 25 To Sales A/c Rs Jan. By Bank A/c Rs.
500 28 By Discount 930
Jan. Allowed A/c
29 20

CASH ACCOUNT

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

1995
1995 To capital Rs. Jan. 2 By Bank A/c 9,000
Jan. 2 10,000 . 15 By machinery 100
. 31 A/C 350
. 31 By Wages A/C 200
By Rent A/c

BANK ACCOUNT

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

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1995
Jan. 2 To Cash A/c 9,000 1995 By machinery 5,000
To Naresh A/c 930 Jan. 3 By Naveen 1,750

MACHINERY ACCOUNT

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

1995
Jan. 3 To Bank A/c 5,000
Jan. 15 To Cash A/c 100

NAVEEN

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

1955 1955
Jan. 29 To Bank A/c 1,750 Jan. By Purchase 1,800
Jan. 29 To Discount 50 20 A/c
A/c

PURCHASE ACCOUNT

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

1995 Rs. 1,800 1995

Jan. 20 To Naveen Jan. By Office Rs. 500
23 furniture A/c

OFFICE FURNITURE ACCOUNT

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

1995
Jan. 23 To Purchase Rs.
A/c 500

SALES ACCOUNT

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

1995
Jan. By Naresh Rs. 950
25

DISCOUNT RECEIVED ACCOUNT

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

1995
Jan. By Naveen 50
25

RENT ACCOUNT

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

1995
Jan. 31 To Cash A/c 200

WAGES ACCOUNT

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

1995
Jan. 31 To Cash A/c 350

CONCLUSION:-

From the above description and transaction we reached on the

conclusion that:-
• What is Ledger ?
• How balancing of Accounts are made ?
• With imaginary transaction and its entries in Journal & Ledger.