Module 3

The Ledger

Page | 1 It has been explained in Module 1 that the Ledger is a book Consisting
of a number of accounts.

All transactions connected with a particular account are entered in

their respective accounts. An Account has a debit and a credit side.
Every account has be totaled at the end of the period and balanced.

The Account Format:

(Name of the Account)

-------------The Debit Side-------------→-----------The Credit Side-------- --→

Date Particulars Amt` Date Particulars Amt`

DDMMYY DDMMYY
Transacion entry XXX Transacion entry XXX
DDMMYY DDMMYY
Transacion entry XXX Transacion entry XXX
DDMMYY DDMMYY
Transacion entry XXX Transacion entry XXX
DDMMYY DDMMYY
Transacion entry XXX Transacion entry XXX
Balance -------→
TOTAL ---------→ TOTAL-----------→
After all the transactions for a period are posted, both the sides are
totaled. If the Debit side is in excess (Called the debit balance), the
difference is entered in the credit side and is brought forward to the
debit of next month or next period.

If the Credit is in excess( Called the credit Balance), the

difference is entered in the debit side and is brought forward to the
credit of the next period.

Thus, Both the sides final totals are always equal.

 Kindly go back to the Journal entries in Module 2. WE find that Cash
A/c is repeated many times. WE use this account to explain how the
posting is made from the Journal to Ledger.
Page | 2
Take the first transaction:

JOURNAL
Date PARTICULARS DEBIT ` CREDIT`
1st Cash A/c Dr 1000,000
Jan To Suresh Capital A/c 1000,000
(Business commenced by owner)
Cash a/c has been debited and Suresh Capital a/c has been Credited.
Cash being an asset, has increased. Hence, cash a/c been debited.

We have to debit this transaction to cash a/c in ledger. At the Same

time we have to credit the amount in Suresh Capital A/c. The debit and
credit are done simultaneously. Suresh Capital A/c being a liability has
also increased. Both asset and liability has increased by this transaction.
So we transfer to the respective accounts in the following manner:

Cash A/c

Date Particulars Amt` Date Particulars Amt`

1ST JAN To Suresh 1,000,000
Capitala/c

Suresh Capital A/c

Date Particulars Amt` Date Particulars Amt`

1st jan By Cash a/c 1000,000

WE now transfer all the transactions to the ledger by opening the

necessary accounts. Every account is finally totaled and balanced :-
 Cash A/c

Date Particulars Amt` Date Particulars Amt`

1st Jan To Suresh Capital 1,000,000 2nd jan
By Bank A/c 900,000
Page | 3 a/c
8th jan To sales a/c 12,000 11th Jan By Carr. Inwards 1500
a/c
12th Jan To sales a/c 15,000 12th Jan By Off. Expenses 2,500
a/c
19thJan 13th Jan
To Kidambi a/c 3,000 By Bank a/c 25,000
st th
21 Jan To Kidambi a/c 7,000 14 Jan By Purchases a/c 8,000
nd
22 Jan To Bank a/c 8,000 28th Jan By electricity a/c 3,000
30th Jan To Sales a/c 5,000 28th Jan By Salary a/c 15,000
29th Jan By Advertisement 2,000
29th Jan By Staff. Welfare 500
a/c
31st Jan By Balance C/d 92,500

TOTAL --------- 1,050,000 TOTAL----------- 1,050,000

→ →
1st feb To balance b/d 92,500

( we find that after posting all the transactions in Cash a/c, the debit
side is in excess by 92,500` which is carried forward to the next month)
Suresh Capital A/c is displaying a Credit excess as follows:-

Suresh Capital A/c

Date Particulars Amt` Date Particulars Amt`

st st
31 Jan To Balance c/d 1,000,000 1 jan By Cash a/c 1000,000

Total …………..> 1,000,000 Total ………..> 1,000,000

1st Feb By balance b/d 1,000,0 00

 Similarly, all the other accounts are posted to ledger as follows:-

Bank A/c

Page | 4 Date Particulars Amt` Date Particulars Amt`

2nd Jan To Cash a/c 900,000 3rd Jan
By Rent Dep. a/c 100,000
6th Jan By Furniture & 125,000
fixtures a/c
13Jan To Cash a/c 25,000 7th Jan By purchase a/c 250,000
18th Jan To Sales a/c 39,000 15th Jan
By Advertisement A/c 20,000
19th Jan To Kidambi a/c 7,000 20th By Office Equipment 75,000
Jan
a/c
25th Jan To Term Loan a/C 200,000 21st Jan By Kidambi a/c 7,000
30TH To sales a/c 20,000 22nd Jan By Rent a/c 15,000
JAN
22nd Jan By Cash a/c 8,000
rd
23 Jan By Drawings a/c 20,000
31st Jan By balance C/d 571,000

TOTAL -------→ 119,1000 TOTAL-----------→ 119,1000

st
1 Feb To balance B/d 571,000

Rent Deposit A/c

Date Particulars Amt` Date Particulars Amt`

nd st
3 Jan To Bank a/c 100,000 1 jan By balance c/d 100,000

Total …………..> 100,000 Total ………..> 1,00,000

1st Feb To balance b/d 100,000

 Furniture and Fixtures A/c

Date Particulars Amt` Date Particulars Amt`

6th Jan To Bank a/c 125,000 1st jan By balance c/d 125,000
Page | 5

Total …………..> 125,000 Total ………..> 125,000

1st
Feb To balance b/d 1,25,000

Purchase A/c

Date Particulars Amt` Date Particulars Amt`

th
7 Jan To Bank a/c 250,000 31st jan By Balance c/d 308,000
th
11 Jan To Rithvick Traders 50,000
a/c
14th Jan To Cash a/c 8,000

Total …………..> 308,000 Total ………..>

1st Feb By balance b/d 308,000

RITHVICK TRADERS A/c

Date Particulars Amt` Date Particulars Amt`

st 1th
31 Jan To Balance c/d 50,000 1 jan By Purchase 50.000
a/c

Total …………..> 50,000 Total ………..> 50,000

1st
Feb To balance b/d 50,000
 Sales A/c

Date Particulars Amt` Date Particulars Amt`

31st Jan To Balance c/d 142,000 8th jan By Cash a/c 12,000
Page | 6 th
9 jan By Kidambi a/c 25,000
12th Jan By Cash a/c 15,000
18th Jan By Cash a/c 39,000
18th Jan
By Discount 1,000
Allowed a/c
th
30 Jan By Cash a/c 5,000
30th Jan By Bank a/c 20,000
30th Jan By Keshav a/c 25,000

Total …………..> 142,000 Total ………..> 142,000

1st Feb To balance b/d 142,000

Carriage Inwards A/c

Date Particulars Amt` Date Particulars Amt`

th 1th
11 Jan To Cash a/c 1,500 31 jan By Balance c/d 1,500

Total …………..> 1,500 Total ………..> 1,500

1st
Feb To balance b/d 1,500
 Office Expenses A/c

Date Particulars Amt` Date Particulars Amt`

12th Jan To Cash a/c 2,500 311thjan By Balance c/d 2,500
Page | 7

Total …………..> 2,500 Total ………..> 2,500

1st
Feb To balance b/d 2,500

Advertisement A/c

Date Particulars Amt` Date Particulars Amt`

th 1th
15 Jan To Bank a/c 20,000 31 jan By Balance c/d 22,000
th
29 Jan To Cash 2,000

Total …………..> 22,000 Total ………..> 22,000

1st
Feb To balance b/d 22,000

Discount Allowed A/c

Date Particulars Amt` Date Particulars Amt`

18th Jan To Sales a/c 1,000 311thJan By Balance c/d 1,000

Total …………..> 1,000 Total ………..> 1,000

1st
Feb To balance b/d 1,000
 Office Equipment A/c

Particulars Amt` Date Particulars Amt`

20th Jan To Bank a/c 75,000 311thjan By Balance c/d 75,000
Page | 8

Total …………..> 75,000 Total ………..> 75,000

1st
Feb To balance b/d 75,000

KIDAMBI A/c

Date Particulars Amt` Date Particulars Amt`

th th
9 Jan To Sales a/c 25,000 19 Jan By Cash a/c 3,000
st
21 Jan To Bank a/c 7,000 19th Jan By Bank a/c 7,000
21st Jan By Cash a/c 7,000
31st Jan Balance c/d 15,000
Total …………..> 32,000 Total ………..> 32,000

1st
Feb To balance b/d 15,000

Rent A/c

Date Particulars Amt` Date Particulars Amt`

th 1th
22 Jan To Bank a/c 15,000 31 jan By Balance c/d 15,000

Total …………..> 15,000 Total ………..> 15,000

1st
Feb To balance b/d 15,000
 DRAWINGS A/C

Date Particulars Amt` Date Particulars Amt`

22th Jan To Bank a/c 20,000 311thjan By Balance c/d 20,000
Page | 9

Total …………..> 20,000 Total ………..> 20,000

1st
Feb To balance b/d 20,000

TERM LOAN A/C

Date Particulars Amt` Date Particulars Amt`

th
31st Jan To Balance c/d 200,000 25 Jan By Bank a/c 200,000

Total …………..> 200,000 Total ………..> 200,000

ELECTRICITY A/C

Date Particulars Amt` Date Particulars Amt`

th 1th
28 Jan To cash a/c 3,000 31 jan By Balance c/d 3,000

Total …………..> 3,000 Total ………..> 3,000

1st
Feb To balance b/d 3,000
 SALARY A/C

Date Particulars Amt` Date Particulars Amt`

28th Jan To Bank a/c 15,000 311thjan By Balance c/d 15,000
Page | 10

Total …………..> 15,000 Total ………..> 15,000

1ST Feb To balance b/d 15,000

STAFF WELFARE A/C

Date Particulars Amt` Date Particulars Amt`

th 1th
28 Jan To cash a/c 500 31 jan By Balance c/d 500

Total …………..> 500 Total ………..> 500

1st
Feb To balance b/d 500

KESHAV A/C

Date Particulars Amt` Date Particulars Amt`

th 1th
30 Jan To Sales a/c 25,000 31 jan By Balance c/d 25,000

Total …………..> 25,000 Total ………..> 25,000

1st
Feb To balance b/d 25,000

------------END OF MODULE 3-----------

 Cash a/c 92500
Bank a/c 571000
Suresh capital a/c 10,00,000
Page | 11 Rent deposit aa/c 1,00,000
Furniture and fixtures 1,25,000
Purchases a/c 308,000
Rithwick traders 50,000
Sales 142,000
Carriage inwards 1500
Office expenses 2500
Advertisement 22000
Discount allowed 1000
Office equipment 75000
Kidambi 15000
Rent a.c 15000
Drawings 20000
Term loans 200,000
Electricity 3000
Salary 15000
Staff welfare 500
Keshav 25000

1392000 1392000