LEDGER, + Meaning = Ledger ¢ Transactions are recorded in the Journal and thereafter, they are posted to the account a Ledger. + All accounts are put together fo make a) Ledgor. + Ledger 4 book + in which Vovious accounts ( Aset Alc, Liability Alc, Capital, Revenue and Expense Ales) ae opened and —trancactions are Posted rom the Journal Book. +f Ledger 8 also called the book of final entry, A Led nay be —defineh a8 “book which Conlains, in a Summevised ond — dlassifed (orm, a permanent record fall transactions . + Ledgor is called the Principal «Book account x Features > Moster record of all the accounts of + business . i} Ct & prepared from = Sowa it) Tae Alc shows the Cunerd balance in al occounts wb Wil Balance and Final Accounls are prepared from Ledger Alc. Y Tt summarise the opect {transactions upon assets, Liabilies, incomes, expenses and —copital . 1 Utility of Zedgor 4 Provides Complete _[nnjormation of a Powticutan Account : + Complete information relating to pouticulon acccurh us ovnilable al oneplace in the Ledger. 2 Lijormnation of Trvomes 2 Expenses : >A seperate account is maintained for eauh income and expense. >The amount of toto! inwme and total expenses. 8 known = fyorn the Ledger account . 3 Prepaxation of “Trial Balance : » Ledger helps in prepasing Winl Bolonce which —enswes ~—_ovithmnetical accuracy the ~— transactions recorded © tn oovks «CLONES. A Helpful in ‘Preparing Final» Awcounls + > After prepaxing “Wal Balance, Final Accounts ore prepared 10 know the profitability ond financial position business. x Tormat 4 Ledger NAME OF THE ACCOUNT, e.g., WAGES ACCOUNT or Ce Particulars LF] Amount (%) | Date Particulars JF] Anou Date ot | Name ofthe ‘Amount of | Date of | Name of the Amoun the ‘other account the the other account the transaction| transaction | transaction transac x Posting the — Entries + > Posting i necessany as Tt = Summariser all transoctions —velating 40 the account af one plae and aio shows how — transactions — have Changed the — account —_allances.x Mechanics of “Posting 4 Posting oh an /lccount debited in a uma Entry : > Following are +he steps to be followed : Fist - identity the account to be debited in the Ledger. Second - Enter tie date # the transaction in th ‘Date’ Column on the debit side the account . Third - Write the mame of the account which has bee Credited in the respective entry in the —‘Paxticulam’ Colum on the debit Side 4 the account as ‘To (name o account — Credited)’ Tourth - Record the page number a he Jounal where the entry exists in the ‘Journal Folio (J.F)' column. Fijth - «Enter the relevant mount im te ‘Amount’ column on dhe debi side 2 Posting of an Accout credited in a owmmal entiy > Following are +he steps to be followed : Fist - Toentity the account to be Credited in the Ledger Second - Enter the date of transadion in tte ‘Date’ column on the credit side the — account . Thad - Write the nome of the account which hos bee Credited in the respective entry in the —‘Porticulaw’ column on the debit Side § he account as ‘To (name account debited):Fourth - Record the page number th he Journal where the entry exists in the ‘Jounal Folio (J.F.)’ column. Fath - Enter the relevant amount in the Amount’ column on dhe credit side. * Posting of Simple Enntyy : > Consider the following entry to ilwtrate «the = above - JOURNAL (Page 57) Date Particulars aii ee LF. Dr.) Cr.) 218 See eer eeerera eter eerie ‘March 6) Salaries A/c wD. 30 15,000, To Bank Ac 3 15,000 (Being the salaries paid) Ledger (Page 30) Or SALARIES ACCOUNT Cr. Dato] Particulars iG e [date | Particulars Se ee 2018 aa Match 6] To Bank Alc 57 | __ 15,000 Or cr. BANK ACCOUNT dae TParcuas SRT [Oe [Pateurs : 2016 & March 6 | By Salaries A/c 15,000 x Posting Compound Entry : ~ When in a dowal entry, only one account is debited ‘and one oY more accounts are Credited or vice-versa, the entry ww known as Compound Journal Entiy.Example: On 1st April 2018, Ankit paid to Sohan by cheque ® 9,600 in full settlemeg, of % 10,000. Pass Journal entry and post it into Ledger Account in the books of Angi: JOURNAL Date Particulars LF. [or @ 2018 April 1] Sohan Or. | 28} — 10,000 To Bank A/c 20 9.600 To Discount Received A/c 21 a (Being the cheque issued to Sohan in full settlement) @ In the above entry, Sohan has been debited with Bank Account and Discount Received Account. So, in ledger, Sohan's Account will be debited with & 9,600 as ‘To Bank A/c’ and with % 400 as “To Discount Received A/c” (i) Bank Account has been credited with Sohan. So, in the ledger, Bank Account will be credited with 2 9,600 as “By Sohan”. Gi) Discount Received Account has been credited with Sohan. So, in the ledger. Discount Received Account will be credited % 400 as “By Sohan”. (Page 28 Dr. SOHAN a Date Particulars oe JF. z Date Particulars JF. z 2018 April 1] To Bank A/c 8 9,600 To Discount Received Alc | 81 400 | (Page 20 Or. BANK ACCOUNT cr Date _| Particulars JF. z Date Particulars LF. z 2018 April__1| By Sohan ait 9,600 (Page 21) pr DISCOUNT RECEIVED ACCOUNT cr Date Particulars SF. r Date Particulars JF. 2018 April__1 | By Sohan 81 [ae 400 x Posting Open Entey Tor an existing entity or —enterpsite, the abilities 08 shown by the = Balance Sheet the the balance of assels and at the end 4 accounting —yeax axe brought — forward © tw the beginning — of mexl Yeon.+The entry posed fo record sun losing balances of the previous year Called Opening Entry. Illustration 1. Pass the Opening Entry on Ist April, 2018 on the basis of the followiay information taken from the books of Mr. Ashok. Also, post the opening entry z Cash in Hand 20,009 Sundry Debtors 60.00) Stock of Goods 10,00) Input IGST Account 15.000 Input SGST Acgount 5,000 Plant 50,000 Land and Building 1,00,000 Sundry Creditors 1,00,000 | Solution: In the Books of Mr, Ashok JOURNAL ce or al om) 20.000 Sundry Debtors A/c 60.000 Stock Ac Or, 40.000 | Input 1GST Nc or. 15,000 Or. 5.000 | input SGST Ac Plant A/c “Or Pd Land and Building A/c “Or "To. Sundry Creditors Alc To Capital A/c (Note 1) (Being the last year's balances brought forward) lotes: 1. The excess of assets over liabilities is the proprietors capital and is credited tohi ital A Notes: input IGST Account and Input SGST Account have debit balance, — Ledger (CASH ACCOUNT 1,00,000 190,000Cr. STOCK ACCOUNT JF. = [Date | Particulars Je] 40,000 : 1 INPUT IGST ACCOUNT —— JF. z Date —_| Particulars JF. 15,000 cr. INPUT SGST ACCOUNT JF. = |date | Particulars {oF | + | wrt 4] To Balance bid 5,000 i rs PLANT ACCOUNT = pate | Particulars JF. = [Date | Particulars JF | 218 jori_1] To Balance bia 50,000 2 LAND AND BUILDING ACCOUNT cr Dae | Particulars IF. % [Date | Particulars ure] a8 iort_1] To Balance bid 1,00,000 LL 0. SUNDRY CREDITORS ACCOUNT cr. Date | Particulars JF] & [date — | Particulars Ure 2018 April _1| By Balance b/d 1,00,000 0. CAPITAL ACCOUNT cr. Dae | Particulars IF. = [Date | Particulars EA ae 2018 Apt 1 | By Balance b/d 1,90,000 » Balancing of Ledger > Aer posting the transactions, accounts are balanced every yea Or after a Certain period. » Balancing an account means that the two ides an account oxe totalled and the difference in total of the two sida wsitten on the side whose ola is © smaller.>The depit balame ts then wwitin on the debit side aso Balance brought down’ or ‘To Balance bla’ Tris i the — opening balance may be emual, those accounts will not show any balance . >The concept balancing — is itlulted © im the following —diagrasm + PROCESS OF BALANCING LEDGER ACCOUNTS Total both the sides of a Ledger Account Find out the difference ¥ If the Debit Side Tota! is more than If the Credit Side Total is more than the Credit Side Total, the Debit Side Total, write the Difference on the Credit Side as write the Difference on the Debit Side as ‘By Balance c/a’ ‘To Balance c/d’ ¥ ea a reece Make the total of the Debit Side equal to the total of the Credit Side Y Draw a double line after both the totals y Bring forward the balance on the next date anna - ¥ + . If Debit Balance, It Credit Balance write on the Debit Side as write on the Credit Side as ‘To Balance b/d’ ‘By Balance b/d’