Credits Balance of Ledger: Journal Entries and Ledger Accounts

Arjun EP

Published on: October 2, 2020

When credit balance of ledger is given

In accounting, credit balance is the part of liabilities like creditor, bank overdraft, capital etc.

Generally, credit balance is creditor in ledger account.

It occurs when the total credit in an individual account are greater than the debit in that account.

When we (creditor) is familiar and loyal to a firm, we purchase goods on credit; we pay due amount frequently; again goods purchase on credit; again cash pay to firm.

This, activities goes on throughout the year.

At the end of an accounting period, once creditor’s account is closed.

At the time of account close, there may be discount received.

Here, Amount = Rs = $ = £ = € = ₹ = Af = ৳ = Nu = Rf = රු = Currency of your country

PROBLEM: 7

Following transactions were given to you KRK Traders:

July 1: Suman has credit balance Rs 20,000

July 10: Goods purchased from Suman Rs 70,000.

July 15: Cash paid to Suman Rs 50,000.

July 31: Goods returned to Suman Rs 3,300.

Required: (a) Journal entries; (b) Suman’s account

SOLUTION

Journal Entries

In the book of KRK Traders

Date	Particulars		LF	Amount Dr	Amount Cr
Jul, 10	Purchase account To Suman’s account (Being- goods purchased from Suman on credit)	Dr		70,000	70,000
Jul, 15	Suman’s account To Cash account (Being- cash paid to Suman)	Dr		50,000	50,000
Jul, 25	Suman’s account To Purchase return account (Being- goods returned to Suman)	Dr		3,300	3,300

Dr	Suman’s Account						Cr
Date	Particulars	JF	Amount	Date	Particulars	JF	Amount
Jul 15 Jul 25 Jul 31	To Cash account To Purchase return account To Balance c/d		50,000 3,300 36,700	Jul 1 Jul 10	By Balance b/d By Purchase account		20,000 70,000
Jul 15 Jul 25 Jul 31	To Cash account To Purchase return account To Balance c/d		90,000	Jul 1 Jul 10	By Balance b/d By Purchase account		90,000
				Aug 1	By Balance b/d		36,700

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Click on link for YouTube videos topic wise :
Accounting Equation	http://tiny.cc/c89jkz
Basic Journal Entries in Nepali	http://tiny.cc/uaakkz
Basic Journal Entries	http://tiny.cc/8aakkz
Journal Entry and Ledger	http://tiny.cc/caakkz
Ledger Account	http://tiny.cc/haakkz
Subsidiary Book	http://tiny.cc/399jkz
Cash Book	http://tiny.cc/889jkz
Trial Balance and Adjusted Trial Balance	http://tiny.cc/c59jkz
Bank Reconciliation Statement (BRS)	http://tiny.cc/q59jkz
Depreciation	http://tiny.cc/ugakkz
Click on link for YouTube videos chapter wise:
Financial Accounting and Analysis (All videos)	http://tiny.cc/jlersz
Accounting Process	http://tiny.cc/mlersz
Accounting for Long Lived Assets	http://tiny.cc/plersz
Analysis of Financial Statement	http://tiny.cc/slersz