journal is a book of records where daily monetary transactions of a business is posted. though it...
TRANSCRIPT
LEDGER
JOURNAL-LEDGERJournal is a book of records where daily monetary
transactions of a business is posted. Though it brings all the transactions together, it creates
confusion between small and important expenses.
Thus, a ledger was introduced, where all the transactions are recorded under the individual
accounts.
WHAT IS A LEDGER:A ledger account can be defined as a summary statement of
all the transactions relating to a person, asset, expense or income which have taken place during a given period of time
and shows their net effect.
Thus, a group of accounts is known as ledger.
LEDGER: IN A NUTSHELL
Ledger contains same information as journal.It summarizes the transactions relating to person, asset, expense or income.It is a book of accounts as it helps in achieving the objective of accounts.It’s easier to understand and maintain than journal.
A ledger should answer:1. What are the total sales to an individual
customer?2. What are the total purchases from an
individual supplier?3. How much amount is owed by debtors?4. How much amount is owed to debtors?5. What is the amount of profit or loss made
during a particular period?6. What is the financial position of the firm on a
particular date?
TYPES OF LEDGER:GENERAL LEDGER• A collection of group of accounts
that supports the value items shown in the major financial statements
SUBSIDIARY LEDGER• Subset of general ledger
FORMAT OF LEDGER:
DATE
PARTICU-LARS
F. AMOUNT
DATE
PARTICU-LARS
F.
AMOUNT
To Name Of Credit Account
Rs. By Name Of Debit Account
Rs.
Dr. Cr.
ITEMS IN LEDGER:Each account in the ledger is divided into two equal parts by a vertical line.The left hand side is known as debit (Dr.) side.The right hand side is known as credit (Cr.) side.The two sides are further divided into four columns, date, particulars, folio and amount.‘F’ is the folio page number of the journal or subsidiary book.
LEDGER POSTING OF JOURNAL:
Every transaction is initially recorded in journal as journal entry. From the journal, it’s transferred to the respective accounts in the ledger.
This process of transferring from the journal to ledger is known as posting.
Lets see how do we post an entry from journal to ledger:
Journal entry:2010, April 1. Goods sold for cash Rs. 2,500
Dr. Cr.
2010 April 1
Cash Account Dr.To Sales Account
Rs.2,500
Rs.
2,500
Now, lets see how the posting on ledger takes place:
DATE
PARTICU-LARS
F. AMOUNT
DATE
PARTICU-LARS
F.
AMOUNT
2010APRIL 1
To Sales Account
Rs.2,500
Rs.
DATE
PARTICU-LARS
F. AMOUNT
DATE
PARTICU-LARS
F.
AMOUNT
Rs. 2010April 1
By Cash Account
Rs.2,500
SALES ACCOUNT
CASH ACCOUNT
Now lets see how the compound journal entry works:Ledger posting of compound journal entry is:2010, April 30 paid for: Charity- Rs. 101 Salaries- Rs. 2,000 Stationery- Rs. 199
2010April 30
Charity Account Dr.Salaries Account Dr.Stationery Account Dr. To Cash Account(Being amount paid for charity, salaries and stationery)
Rs. 101
2,000199
Rs.
2,300
Dr. Cr.
Now lets see how the posting in ledger takes place:
DATE
PARTICU-LARS
F. AMOUNT
DATE
PARTICU-LARS
F.
AMOUNT
2010APRIL 30
To Cash Account
Rs.101
Rs.
DATE
PARTICU-LARS
F. AMOUNT
DATE
PARTICU-LARS
F.
AMOUNT
2010APRIL 30
To Cash Account
Rs.2,000
Rs.
CHARITY ACCOUNT
SALARIES ACCOUNT
DATE
PARTICU-LARS
F. AMOUNT
DATE
PARTICU-LARS
F.
AMOUNT
2010APRIL 1
To Sales Account
Rs.2,500
Rs.
STATIONERY ACCOUNT
DATE
PARTICU-LARS
F. AMOUNT
DATE
PARTICU-LARS
F.
AMOUNT
2010APRIL 1
To Sales Account
Rs.2,500
Rs.
CASH ACCOUNT
EXAMPLE:Question: Post the following transactions in the ledger of Imran:
2010 Rs.Jan. 1 Started business with cash 45,000Jan. 2 Paid into bank 25,000Jan. 2 Goods purchased for cash 15, 000Jan. 3 Purchase of Furniture and payment by cheque 5,000Jan. 5 Sold goods for cash 8,500Jan. 8 Sold goods to Arvind Walia 4,000Jan. 10 Good purchased from Amrit Lal 7,000Jan. 12 Goods returned to Amrit Lal 1,000Jan. 15 Goods returned to Arvind Walia 200
Jan. 18 Cash received from Arvind Walia Rs. 3,760 and discount allowed to him 40Jan. 21 Withdrew from bank for private use 1,000 Withdrew from bank for use in the business 5,000Jan. 25 Paid telephone rent for one year 400Jan. 28 Cash paid to Amrit Lal in full settlement of his account 5,940Jan. 30 Paid for: Stationery 200 Rent 1,000 Salaries to staff 2,500
DATE
PARTICU-LARS
F. AMOUNT
DATE
PARTICU-LARS
F.
AMOUNT
2010JAN. 1
518
21
31
To Capital A/cTo Sales A/cTo Arvind WaliaTo Bank A/c
To Balance b/d
Rs.
45,000
8,5003,760
5,000
62,260
12,220
2010JAN.12
25
2830
3030
30
By Bank A/cBy Purchase A/cBy Telephone rent A/cBy Amrit LalBy Stationery A/cBy Rent A/cBy Salaries A/cBy Balances c/d
Rs.
25,000
15,000
4005,940
2001,000
2,500
12,22062,260
CASH ACCOUNT
DATE
PARTICU-LARS
F. AMOUNT
DATE
PARTICU-LARS
F.
AMOUNT
2010JAN 30
To Balance c/d
Rs.45,000
45,000
2010JAN1
DEC.1
By Cash A/c
By Balance b/d
Rs.45,000
45,000
45,000
CAPITAL ACCOUNT
DATE
PARTICU-LARS
F. AMOUNT
DATE
PARTICU-LARS
F.
AMOUNT
2010JAN 1
31
To Cash A/c
To Balance b/d
Rs.25,000
25,000
14,000
2010JAN3
21
2130
By Furniture A/cBy Drawings A/cBy Cash A/cBy Balance c/d
Rs.
5,000
45,000
5,000
14,000
25,000
BANK ACCOUNT
DATE
PARTICU-LARS
F. AMOUNT
DATE
PARTICU-LARS
F.
AMOUNT
2010JAN 210
31
To Cash A/cTo Amrit Lal
To Balance b/d
Rs.
15,0007,000
22,000
14,000
2010JAN30 By Balance
c/d
Rs.
22,000
22,000
PURCHASES ACCOUNT
DATE
PARTICU-LARS
F. AMOUNT
DATE
PARTICU-LARS
F.
AMOUNT
2010JAN 3
31
To Bank A/c
To Balance b/d
Rs.
5,000
5,000
5,000
2010JAN30 By Balance
c/d
Rs.
5,000
5,000
FURNITURE ACCOUNT
DATE
PARTICU-LARS
F. AMOUNT
DATE
PARTICU-LARS
F.
AMOUNT
2010JAN 30
31
To Balance c/d
To Balance b/d
Rs.
12,500
12,500
14,000
2010JAN58
By Cash A/cBy Arvind Walia
Rs.
8,500
4,000
12,500
SALES ACCOUNT
DATE
PARTICU-LARS
F. AMOUNT
DATE
PARTICU-LARS
F.
AMOUNT
2010JAN 8 To Sales
A/c
Rs.
4,000
22,000
4,000
2010JAN15
1818
By Returns InwardsBy Cash A/cBy Discount A/c
Rs.
2003,760
40
4,000
ARVIND WALIA
DATE
PARTICU-LARS
F. AMOUNT
DATE
PARTICU-LARS
F.
AMOUNT
2010JAN 12
2828
To Returns OutwardsTo Cash A/cTo Discount A/c
Rs.
1,000
5,940
60
7,000
2010JAN10 By
Purchase A/c
Rs.
7,000
7,000
AMRIT LAL
DATE
PARTICU-LARS
F. AMOUNT
DATE
PARTICU-LARS
F.
AMOUNT
2010JAN 15
31
To Arvind Walia
To Balance b/d
Rs.
200
200
200
2010JAN30 By Balance
c/d
Rs.
200
200
RETURNS INWARDS ACCOUNT
DATE
PARTICU-LARS
F. AMOUNT
DATE
PARTICU-LARS
F.
AMOUNT
2010JAN 30 To Balance
c/d
Rs.
1,000
1,000
2010JAN12
31
By Amrit Lal
To Balance b/d
Rs.
1,000
1,000
1,000
RETURNS OUTWARDS ACCOUNT
DATE
PARTICU-LARS
F. AMOUNT
DATE
PARTICU-LARS
F.
AMOUNT
2010JAN 18
10
To Arvind WaliaTo Amrit Lal
Rs.
4020
60
2010JAN28
31
By Amrit Lal
By Balance b/d
Rs.
60
60
20
DISCOUNT ACCOUNT
DATE
PARTICU-LARS
F. AMOUNT
DATE
PARTICU-LARS
F.
AMOUNT
2010JAN 21
31
To Bank A/c
To Balance b/d
Rs.
1,000
1,000
1,000
2010JAN30 By Balance
c/d
Rs.
1,000
1,000
DRAWINGS ACCOUNT
DATE
PARTICU-LARS
F. AMOUNT
DATE
PARTICU-LARS
F.
AMOUNT
2010JAN 2510
31
To Cash A/cTo Amrit Lal
To Balance b/d
Rs.
15,0007,000
22,000
14,000
2010JAN30 By Balance
c/d
Rs.
22,000
22,000
TELEPHONE RENT ACCOUNT
DATE
PARTICU-LARS
F. AMOUNT
DATE
PARTICU-LARS
F.
AMOUNT
2010JAN 30
31
To Cash A/c
To Balance b/d
Rs.
200
200
200
2010JAN30 By Balance
c/d
Rs.
200
200
SALARY ACCOUNT
DATE
PARTICU-LARS
F. AMOUNT
DATE
PARTICU-LARS
F.
AMOUNT
2010JAN 30
31
To Cash A/c
To Balance b/d
Rs.
1,000
1,000
1,000
2010JAN30 By Balance
c/d
Rs.
1,000
1,000
RENT ACCOUNT
DATE
PARTICU-LARS
F. AMOUNT
DATE
PARTICU-LARS
F.
AMOUNT
2010JAN 30
31
To Cash A/c
To Balance b/d
Rs.
2,500
2,500
2,500
2010JAN30 By Balance
c/d
Rs.
2,500
2,500
SALARIES ACCOUNT
THANK YOU