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Posting of Transactions In to Ledger

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What Is a Ledger & Why Ledger ?
In previous Lesson we have learned how the transactions are recorded in Journal.But there may be several transactions relating to one particular expenses, income. In a journal these transactions are appear in different pages . Suppose your Boss asking you ,what is the total travelling expenses for this month?. To find out these from a journal book is very difficult as the the transactions of this particular nature ( travelling expense) are scattered in to different pages of journal book.And you will have to check each and every pages, each and every transactions.In order to avoid this difficulty We are preparing Ledger account, transactions of similar nature moving in to Ledger book.

By creating a “Travelling expense” account , all transactions relating to travelling recorded there. In ledger transactions of similar nature are classified and summerised and similar transactions can be find out from single Ledger.Seperate Ledger is opened for each Kind of Account, and a ledger has two sides called, Debit side & Credit Side, Just find out  typical ledger formate below.

Let us post the journal book that we had created in earlier lesson in to ledger

Click here to get the journal book

Take the first Entry

01.01.2009 Cash …..DrTo Capital
(being capital brought by Mr john)		   200000.00 200000.00

In the above example ,You require to open two account

1. Cash Account

2.Capital Account

Cash account is the debit part, So it should be posted in debit side. So we can post this entry in cash Ledger as below.

Cash
Date Particulars JF Amount Date Particulars JF Amount
01/01/09 To, Capital   200000        

Simply this means that  cash balance increased 200000 by way of capital brought by john. Or  cash account has a balance of 200000.00

Capital is the credit part of this entry , So the posting should be on credit side

Capital
Date Particulars JF Amount Date Particulars JF Amount
        01/01/09 By, john capital   200000
               

This means that Rs 200000 is liable  to pay by the company to the owner of the company.

 Balancing of an account

The difference between the two sides of an account is known as account balance. The sum total of all debit entries are exceeds the total of credit entry, the account has a debit balance, and the credit entry exceeds the total of debit balance, account has credit balance.

Like wise let us post all the entries in to Ledger.

See the ledger book after posting all the entries

Land Account
Date Particulars JF Amount Date Particulars JF Amount
02/01/09 To, Cash   105000        
               
     
  By balance c/d   105000
      105000       105000
  To Balance B/d   105000        
               
Cash
Date Particulars JF Amount Date Particulars JF Amount
01/01/09 To, Capital   200000        
12/01/09 To sales   25000 02/01/09 By, Land   105000
15/01/09 To,SBI   10000 04/01/09 By, Stationery   1000
        06/01/09 By, rent   1500
        07/01/09 By,capital   5000
        08/01/09 By,staff welfare   100
        10/01/09 By, commision   500
        11/01/09 By,SBI   15000
     
  By balance c/d
106900
      235000       235000
  To Balance B/d   106900        
               
Purchase
Date Particulars JF Amount Date Particulars JF Amount
03/01/09 To, sk Creations   200000        
               
          By balance c/d   200000
      200000       200000
  To Balance B/d   200000        
               
S.K Creations
Date Particulars JF Amount Date Particulars JF Amount
16/01/09 To,Purchase return   5000 03/01/09 By, Purchase   200000
               
  To Balance C/d   195000        
      200000       200000
          By balance b/d   195000
               
               
Stationery
Date Particulars JF Amount Date Particulars JF Amount
04/01/09 To, Cash   1000        
               
          By balance c/d   1000
      1000       1000
  To Balance B/d   1000        
               
               
Indian Cotton
Date Particulars JF Amount Date Particulars JF Amount
05/01/09 To, Sales   45000 13/01/09 By, SBI   15000
        14/01/09 By,Sales return   2500
               
          By balance c/d
27500
      45000       45000

To Balance B/d
27500        
               
Sales
Date Particulars JF Amount Date Particulars JF Amount
        05/01/09 By, Indian Cotton   45000
        12/01/09 By, Cash   25000
  To Balance C/d
70000        
      70000       70000
          By balance b/d   70000
               
Rent
Date Particulars JF Amount Date Particulars JF Amount
06/01/09 To, cash   1500        
               
          By balance c/d   1500
      1500       1500
  To,balance b/d   1500        
               
Capital
Date Particulars JF Amount Date Particulars JF Amount
07/01/09 To, cash   5000 01/01/09 By, john capital   200000
               
               
  To Balance C/d   195000        
      200000       200000
          By,balance b/d   195000
               
Staff Welfare
Date Particulars JF Amount Date Particulars JF Amount
08/01/09 To, cash   100        
               
          By balance c/d   100
      100       100
  To,balance b/d   100        
               
Computer
Date Particulars JF Amount Date Particulars JF Amount
09/01/09 To, COmputer solution   30000        
               
          By balance c/d
30000
      30000


30000
  To Balance B/d
30000        
               
Computer solutions
Date Particulars JF Amount Date Particulars JF Amount
        10/01/09 By, Computer   30000
               
  To,balance c/d   30000        
      30000       30000
          Bybalance b/d   30000
Commision
Date Particulars JF Amount Date Particulars JF Amount
10/01/09 To, Cash   500        
               
          By balance c/d   500
      500       500
  To,balance b/d   500        
               
SBI ( Bank )
Date Particulars JF Amount Date Particulars JF Amount
11/01/09 To, Cash   15000 15/01/09 By, Cash   10000
13/01/09 To,Indian Cotton   15000        
               
          By balance c/d   20000
      30000       30000
  To,balance b/d   20000        
Sales Return
Date Particulars JF Amount Date Particulars JF Amount
14/01/09 To Indian Coton   2500        
               
               
          By,balance c/d   2500
      2500       2500
  To,balance b/d   2500        
               
               
Purchase Return
Date Particulars JF Amount Date Particulars JF Amount
        16/01/09 By SK Creations   5000
               
               
  To Balance C/d   5000        
      5000       5000
          Bybalance b/d   5000
               

If you have any doubts please use our comment section to ask.In the next lesson lets learn how to prepare trail balance.

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