Journal ledger and trial balance
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Transcript of Journal ledger and trial balance
Journal and ledger posting
Some unusual transactions and their journal entries
June 1, 2004 – Anju contributed capital Rs. 50,000 Manju contributed capital Rs. 70,000
Anju Manju
50000
70000Capital
17. June 1, 2004 – Anju contributed capital Rs. 50,000 Manju contributed capital Rs. 70,000
Journal
Jualy 1, 2004 – Ajay contributed capital – Cash Rs. 90,000, Furniture Rs. 20,000
Vijay contributed capital – Cash Rs. 50,000 Stock Rs. 70,000
Ajay
cash Furniture
Vijay
Journal
July 1, 2004 – Ajay contributed capital – Cash Rs. 90,000, Furniture Rs. 20,000 Vijay contributed capital – Cash Rs. 50,000, Stock Rs. 70,000
July 13, 2003 – Received cash Rs.24,700 from
Shanthi in full settlement of her account of Rs.25,000.
July 13, 2003 – Received cash Rs.24,700 from Shanthi in full settlement of her account of Rs.25,000.
20. July 14, 2003 – Paid cash to Thenmozhi s.14,500, in full settlement of her account of Rs.15,000.
21. Jamuna who owed us Rs.10,000 is declared insolvent and 25% in a rupee is received from her on 15th July, 2003.
Insolvent: Unable to meet debts or discharge liabilities
What is bad debts?The term bad debts usually refers to accounts receivable (or trade accounts receivable) that will not be collected. However, bad debts can also refer to notes receivable that will not be collected.The bad debts associated with accounts receivable is reported on the income statement as Bad Debts Expense or Uncollectible Accounts Expense.
Journal
21. Jamuna who owed us Rs.10,000 is declared insolvent and 25% in a rupee is received from her on 15th July, 2003.
Received cash for a Bad debt written off last year Rs.7,500 on 18th January, 2004.
Insolvent Solvent
Journal
Received cash for a Bad debt written off last year Rs.7,500 on 18th January, 2004.
Ledger posting
• A Ledger is a book which contains all the accounts which are first entered in journal.
• According to L.C. Cropper, ‘the book which contains a classified and permanent record of all the transactions of a business is called the Ledger’.
• It’s a permanent record of transactions that can not changed.
Ledger
Name of The Account
Dr. Cr.
Format of Ledger
Date Particulars JF Amount
AED
Date Particulars JF Amount
AED
YearMonthDate
Accounts name YearMonthDate
Accounts name
• i. Each ledger 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. The words ‘Dr.’ and ‘Cr.’ are used to denote Debit and Credit.
• ii. The name of the account is mentioned in the top (middle) of the account.
• iii. The date of the transaction is recorded in the date column.
• iv. The word ‘To’ is used before the accounts which appear on the debit side of an account in the particulars column. Similarly, the word ‘By’ is used before the accounts which appear on the credit side of an account in the particulars column.
• v. The name of the other account which is affected by the transaction is written either in the debit side or credit side in the particulars column.
• vi. The page number of the Journal or Subsidiary Book from where that particular entry is transferred, is entered in the Journal Folio (J.F) column.
• vii. The amount pertaining to this account is entered in the amount column.
Explanation:
The process of transferring the entries recorded in the journal or subsidiary books to the respective accounts opened in the ledger is called Posting.
Posting
I. Procedure of posting for an Account which has been debited in the journal entry.
Step 1 →Locate in the ledger, the account to be debited and enter the date of the transaction in the date column on the debit side.
Step 2 →Record the name of the account credited in the Journal in the particulars column on the debit side as “To..... (name of the account credited)”.
Step 3 →Record the page number of the Journal in the J.F column on the debit side and in the Journal, write the page number of the ledger on which a particular account appears in the L.F. column.
Step 4 →Enter the relevant amount in the amount column on the debit side.
Procedure of posting
II. Procedure of posting for an Account which has been credited in the journal entry.
Step 1 →Locate in the ledger the account to be credited and enter the date of the transaction in the date column on the credit side.
Step 2 → Record the name of the account debited in the Journal in the particulars column on the credit side as “By...... (name of the account debited)”
Step 3 → Record the page number of the Journal in the J.F column on the credit side and in the Journal, write the page number of the ledger on which a particular account appears in the L.F. column.
Step 4 → Enter the relevant amount in the amount column on the credit side.
Procedure of posting
Example of Ledger and Posting
JournalMr. Ram started business with cash Rs.5,00,000 on 1st June
2003.
Write the journal of this transaction
JournalMr. Ram started business with cash Rs.5,00,000 on 1st June
2003.
Try to find how many accounts involved in the journal
Cash Account Ram,s Capital Account
For ledger posting draw 2 Ledgers
Cash Account
Ram,s Capital Account
Name of AccountDr.
Cr. Date Particulars JF Amount
AED
Date Particulars JF Amount
AED
YearMonthDate
Accounts name YearMonthDate
Accounts name
Name of AccountDr.
Cr. Date Particulars JF Amount
AED
Date Particulars JF Amount
AEDYearMonthDate
Accounts name YearMonthDate
Accounts name
Write the name of Accounts at the top of each ledger.
Cash Account
Ram,s Capital Account
Cash AccountDr.
Cr. Date Particulars JF Amount
AED
Date Particulars JF Amount
AED
YearMonthDate
Accounts name YearMonthDate
Accounts name
Ram’s Capital AccountDr.
Cr. Date Particulars JF Amount
AED
Date Particulars JF Amount
AEDYearMonthDate
Accounts name YearMonthDate
Accounts name
Input the dates
Cash AccountDr.
Cr. Date Particulars JF Amount
AED
Date Particulars JF Amount
AED
2003June 1
Accounts name YearMonthDate
Accounts name
Start Debit side with “To”
Start “Credit side with “By”
Cash AccountDr.
Cr. Date Particulars JF Amount
AED
Date Particulars JF Amount
AED
2003June 1
To Rams Account
YearMonthDate
Accounts name
Insert the amount
Cash AccountDr.
Cr. Date Particulars JF Amount
AED
Date Particulars JF Amount
AED
2003June 1
To Rams Account
500,000 YearMonthDate
Accounts name
Sum up debit and credit side
Cash AccountDr.
Cr. Date Particulars JF Amount
AED
Date Particulars JF Amount
AED
2003June 1
To Rams Account
500,000
500,000
YearMonthDate
Accounts name
Adjust debit credit with
Balance Carried Down orBalance C/d
Cash AccountDr.
Cr. Date Particulars JF Amount
AED
Date Particulars JF Amount
AED
2003June 1
To Rams Account
500,000
500,000
2003June 30 Balance c/d 500,000
500,000
Carry forward the adjusted balance
Balance Brought Down orBalance b/d
Cash AccountDr.
Cr. Date Particulars JF Amount
AED
Date Particulars JF Amount
AED
2003June 1
July 1
To Rams Account
Balance b/d
500,000
500,000
500,000
2003June 30 Balance c/d 500,000
500,000
Rams Capital AccountDr.
Cr. Date Particulars JF Amount
AED
Date Particulars JF Amount
AED
2003
June 30 Balance c/d 500,000
500,000
2003June 1
July 1
By Cash A/c
Balance b/d
500,000
500,000
500,000
Journalise the following transactions in the books of Amar and post them in the Ledger:-
2004March1 Bought goods for cash Rs. 25,0002 Sold goods for cash Rs. 50,0003 Bought goods for credit from Gopi Rs.19,0005 Sold goods on credit to Robert Rs.8,0007 Received from Robert Rs. 6,0009 Paid to Gopi Rs.5,00020 Bought furniture for cash Rs. 7,000
Illustration 3.
Journal of Amar
There are six accounts involved: • Cash, • Purchases, • Sales, • Furniture, • Gopi & • Robert,
so six accounts are to be opened in the ledger.
Cash Account
In the Books of Amar
Purchases Account
Sales Account
Furniture Account
Gopi Account
Robert Account
The following are the advantages of ledger:i. Complete information at a glance:
All the transactions pertaining to an account are collected at one place in the ledger. By looking at the balance of that account, one can understand the collective effect of all such transactions at a glance.
ii. Arithmetical AccuracyWith the help of ledger balances, Trial balance can be prepared to
know the arithmetical accuracy of accounts.iii. Result of Business Operations
It facilitates the preparation of final accounts for ascertaining the operating result and the financial position of the business concern.
iv. Accounting informationThe data supplied by various ledger accounts are summarized,
analyzed and interpreted for obtaining various accounting information.
ADVANTAGES OF LEDGER
Compound or Combined Journal Entry is one where more than one transactions are recorded by passing only one journal entry instead of passing several journal entries.
Since every debit must have the corresponding equal amount of credit, special care must be taken in posting the compound journal entry, where there may be only one debit aspect but many corresponding credit aspects of equal value or vise versa.
The posting of such transactions is done in the same way as already explained.
Posting of Compound Journal Entries
Journal
Illustration 3 : Jan. 12, 2003, Cash sales Rs.10,000, Cash received from
Kannan Rs.5,000 and commission earned Rs.2,500.