CA.CS.CMA.MBA: Naveen.

Rohatgi NMIMS
Pharmacy- FM 1

LEDGER

INTRODUCTION :

Ledger
Ledger is a book containing various accounts. It is a book of Account in which
businessmen keeps individual records of business transactions. This account book is
maintained by businessmen for keeping individual records of persons, properties, expenses,
incomes, gains and losses.
1. Account :
An Account is a summarised record of all transactions pertaining to a particular person
or an asset or income or expense entered in one page. It gives the information regarding a
particular account without referring to all the transactions in the journal. An account is divided
into two parts. The left hand side is known as the debit side and the right hand side is known
as the credit side.
Dr. Account Cr.
Left Hand side Right Hand side
(Debit) (Credit)
Dr. Cr.
2. Head of an Account :
Head of an account means the name of the account. The name of an account is written at
the top, followed by the word “Account” e.g. An account relating to Yogesh Patel will bear the
head `Yogesh Patel Account'.
Dr. Yogesh Patel's A/c Cr.

3. To Debit an Account :
It means to record the transaction on the left hand side i.e. the debit side of an account.
Dr. Goods A/c Cr.

Left hand side

(Debit)
Dr
4. To Credit an Account :
It means to record the transaction on the right hand side i.e. Credit side of an account
Dr. Goods A/c Cr.

Right hand side

(Credit)
Cr
5. Ledger Folio :

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CA.CS.CMA.MBA: Naveen. Rohatgi NMIMS
Pharmacy- FM 1

The page number of the ledger is called a Ledger folio. By writing page number it becomes
easy to find out on which page the entry is made in the ledger so that checking becomes easier.
6. Posting :
The act of recording the transaction in the ledger on the basis of the entries made in
journal is known as posting

5.2 FORMAT OF A LEDGER :

In the Ledger of M/s.....

Dr. Goods A/c. Cr.
Date Particulars J.F. Amount Date Particulars J.F. Amount.
No. No.

5.3 UTILITY OF A LEDGER :

(1) Ledger helps the businessmen to know the exact position of debtors, creditors, properties
and many other items with which business deals.
(2) It shows relation between business and a particular account.
(3) This book is totalled and balanced at the end of the year which helps in preparation of
final accounts.

5.4 PROCEDURE FOR POSTING IN THE LEDGER :

Steps
(1) Pass the Journal Entry.
(2) Record the transaction in the debit side column of the Account which is debited with the
prefix “To” along with the name of Account which is credited.
(3) Record the transaction in the credit column of the Account which is credited with prefix
“By” along with the name of Account which is debited. e.g.
Step 1
Goods sold for cash ` 5,000/-
Date Particulars L.F. Debit Credit
` `
Jan 1. Cash A/c. ................................................ Dr. 5,000
To Sales A/c 5,000
(Being goods sold for cash)
Step 2
Dr. Cash Account Cr.
Date Particulars J/F ` Date Particulars J/F `

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CA.CS.CMA.MBA: Naveen. Rohatgi NMIMS
Pharmacy- FM 1

Jan 1 To Sales A/c 5,000

Step 3
Dr. Sales Account Cr.
Date Particulars J/F ` Date Particulars J/F `
Jan 1 By Cash A/c 5,000
In case, if a combined entry is passed.
e.g. goods sold to Ash for ` 5,000/- and 1/2 the amount received in cash.
Step 1
Dr. Journal Cr.
Date Particulars L.F. Debit Credit `
`
Jan.1 Ash A/c......................................................Dr. 2,500
Cash A/c ....................................................Dr. 2,500
To Sales A/c. 5,000
(Being goods sold to Ash and received 1/2 the
amount in cash)
Step 2
Dr. Ash Account Cr.
Date Particulars J/F ` Date Particulars J/F `
Jan 1 To Sales A/c. 2,500
Step 2
Dr. Cash Account Cr.
Date Particulars J/F ` Date Particulars J/F `
Jan1. To Sales A/c. 2,500
Step 3
Dr. Sales Account Cr.
Date Particulars J/F ` Date Particulars J/F `
Jan.1 By Ash A/c. 2,500
Jan.1 By Cash A/c. 2,500
Points to be noted :
(1) A separate account should be opened for every account entered in the journal.
(2) All the transactions relating to a particular account should be recorded in the account
already opened. No new account of the same name should be opened in the ledger.
(3) The name of the account should be recorded in bold letters at the centre of each account.
(4) The word “Dr” should be written at the left hand top corner of cash account, the word “Cr”
should be written at the right hand top corner of each account.
(5) Entries should be posted from Journal to ledger in chronological order.
(6) Every entry on the debit side of an account should begin with the word “To”.
(7) Every entry on the credit side of an account should begin with the word “By”

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CA.CS.CMA.MBA: Naveen. Rohatgi NMIMS
Pharmacy- FM 1

(8) The Personal and Real accounts should be balanced periodically as required by the
business concern and the Nominal accounts should be closed at the end of the year.

Illustration 1 :
Journalise the following transactions in the Books of Leena and post them into
Ledger Accounts :
Sept. `
2008
Sept. 1 Started business with cash 5,000
Sept. 8 Bought goods from Dhrur 1,500
Sept. 10 Sold goods to Karn 1,200
Sept. 12 Paid to Dhrur on Account 800
Sept. 15 Received on account from Karn 500
Sept. 20 Paid Salaries 200
Sept. 30 Cash Sales to Dhrur 2,500
Sept. 30 Cash Purchases from Karn 1,800

Illustration 2 :
Journalise the following transactions in the books of Miss Nidhi (narration
not necessary). Prepare the necessary Ledger Accounts and also balance them.
Following are the balances appearing on 1st March, 2008.
Ridhi A/c ` 28,000 [creditor], Purchase A/c ` 12,500, Cash A/c ` 25,000, Sales A/c 5,000
2008
Mar. 3 Goods purchased for ` 4,500
Mar. 10 Sold goods worth ` 7,500
Mar. 15 Cash paid to Ridhi on account ` 3,000
Mar. 18 Goods purchased from Ridhi ` 7,500
Mar. 19 Goods worth ` 300 returned to Ridhi since they were damaged in transit.
Mar. 25 Sold goods to Shankar ` 5,000 for cash.
Mar. 28 Cash sales ` 13,000.
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