Ledger Is The Main Book Of Accounts. It Is The

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 transactions 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 relevance. 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 Date

Cr Particulars F. Amount Date Particulars F. Amount

To name of credit A/c

Rs.

By name of debit 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 settlement 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. 3

SOLUTION:JOURNAL ENTRIES DATE

PARTICULARS

1995 Jan. 1

Jan. 15

Cash Account Dr. To Capital Account (Being amount brought in as capital) Bank A/c Dr. To cash A/c (Cash deposited into the bank) Machinery A/c Dr. To Bank A/c (Being machinery purchased & paid by cheque) Machinery A/c Dr. To Cash A/c (Being installation charges on machinery)

Jan. 20

Purchase A/c Dr. To Naveen’s A/c (Being timber purchased from Naveen)

Jan. 2 Jan. 3

Jan. 23

Jan. 25

Jan. 28 Jan. 29

Office furniture A/c To Purchase A/c (Being furniture used in office)

L. F

Dr.

Cr.

Rs. 10,000

Rs. 10,000

9,000

9,000

5,000

5,000

100

100

1,800

1,800

500

500

950

950

930 20

950

Dr.

Naresh’s A/c Dr. To Sales (Being furniture sold to Naresh & trade dis.5%) Bannk A/c Dr. Discount Allowed A/c To Naresh’s A/c (Being cheque full settlement from Naresh) Naveen’s A/c Dr. To Bank A/c To Discount Received A/c( Being cheque sent)

1,800

1,750

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Jan. 31

Wages A/c Dr. Rent A/c To Cash A/c (Being amount paid )

50 350 200

550

30,650

Total for the month

LEDGER:CAPITAL ACCOUNT Date

Particulars

J.F. Amount Date Particulars 1995 Jan. 1

By cash A/c

J.F. Amount Rs. 10,000

DISCOUNT ALLOWED ACCOUNT Date

Particulars

1995 Jan. 20

To Naresh

J.F. Amount Date Particulars

J.F. Amount

20

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NARESH Date

Particulars

1995 Jan. 25

To Sales A/c

J.F. Amount Date Particulars Rs 500

1995 Jan. 28 Jan. 29

By Bank A/c By Discount Allowed A/c

J.F. Amount Rs. 930 20

CASH ACCOUNT Date 1995 Jan. 2

Particulars To capital

J.F. Amount Date Particulars Rs. 10,000

1995 Jan. 2 . 15 . 31 . 31

By Bank A/c By machinery A/C By Wages A/C By Rent A/c

J.F. Amount 9,000 100 350 200

BANK ACCOUNT Date

Particulars

J.F. Amount Date Particulars

J.F. Amount

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1995 Jan. 2

To Cash A/c To Naresh A/c

9,000 930

1995 Jan. 3

By machinery By Naveen

5,000 1,750

MACHINERY ACCOUNT Date

Particulars

1995 Jan. 3 Jan. 15

To Bank A/c To Cash A/c

J.F. Amount Date Particulars

J.F. Amount

5,000 100

NAVEEN Date 1955 Jan. 29 Jan. 29

Particulars

To Bank A/c To Discount A/c

J.F. Amount Date Particulars

1,750 50

1955 Jan. 20

By Purchase A/c

J.F. Amount

1,800

PURCHASE ACCOUNT 7

Date 1995 Jan. 20

Particulars

J.F. Amount Date Particulars Rs. 1,800

To Naveen

1995 Jan. 23

By Office furniture A/c

J.F. Amount Rs. 500

OFFICE FURNITURE ACCOUNT Date 1995 Jan. 23

Particulars To Purchase A/c

J.F. Amount Date Particulars

J.F. Amount

Rs. 500

SALES ACCOUNT Date

Particulars

J.F. Amount Date Particulars 1995 Jan. 25

By Naresh

J.F. Amount Rs. 950

DISCOUNT RECEIVED ACCOUNT Date

Particulars

J.F. Amount Date Particulars 1995 Jan. 25

By Naveen

J.F. Amount 50

RENT ACCOUNT

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Date

Particulars

1995 Jan. 31

To Cash A/c

J.F. Amount Date Particulars

J.F. Amount

200

WAGES ACCOUNT Date

Particulars

1995 Jan. 31

To Cash A/c

J.F. Amount Date Particulars

J.F. Amount

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.

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