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Posting and Balancing of Ledgers: Journal Entries and Ledger Accounts

Arjun EP

Published on: October 2, 2020

How to posting and balancing of ledgers

The difference between the total of debit and credit of an account is known as balance.

Generally, ledgers are closed at the end of accounting period.

But, they can be closed when they are required.

The procedure for balancing a ledger is given below:

Step 1: Find out the total amount of debit and credit separately on a rough,

Step 2: Put the difference amount to make equal by writing ‘balance c/d’; this balance may be either debit or credit,

Step 3: Now, both debit and credit amount is equal in total,

Step 4: Transfer ‘balance c/d’ for ‘balance b/d’ in opposite side and write next date.

Normal debit and credit balances

There are two types of balances.

First is debit balance and second is credit balance.

All asset accounts, expense accounts and distribution accounts have debit balances.

All the liability accounts, revenue accounts, and owner’s equity accounts have credit balances.

Cash account is the part of assets; cash has debit balance.

capital account is part of liabilities; capital has credit balance.

Some major balances are:

Debit balances include	Credit balances include
Cash account	Bank overdraft account
Purchase account	Sales account
Return inwards account	Return outwards account
Fixed assets account	–
Expenses account	Income account
Drawings account	Capital account
Investment account	Loan account
Accounts receivable	Accounts payable account
Debtors account	Creditors account

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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

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

PROBLEM: 3A

June 1: Business started with cash Rs 200,000.

Journal Entry

In the book of KK Enterprises

Date	Particulars		LF	Amount Dr	Amount Cr
June, 1	Cash account	Dr		200,000
	To Capital account				200,000
	(Being- business stared with cash)

Here, Cash is debited Rs 200,000; Capital is credited Rs 200,000.

Cash Account

Dr							Cr
Date	Particulars	LF	Amount	Date	Particulars	LF	Amount
Jun, 1	To Capital account		200,000	Jun, 1	By Balance c/d		200,000
			200,000				200,000
Jun, 2	To Balance b/d		200,000

Capital Account

Dr							Cr
Date	Particulars	LF	Amount	Date	Particulars	LF	Amount
Jun, 1	To Balance c/d		200,000	Jun, 1	By Cash account		200,000
			200,000				200,000
				Jun, 2	By Balance b/d		200,000

Keep in Mind (KIM)

Balance amount is put to make ledger equal.

This balance may be in either debit side or credit side.

This putting amount is known balance c/d

Balance c/d means balance carried down. It is also known closing balance and ending balance.

Balance b/d means balance brought down. It is also known opening balance or beginning balance.

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

PROBLEM: 3B

Following extracted transactions were given to you BC Traders:

5 March 2020: Started business with cash Rs 150,000; stock Rs 60,000 and furniture worth Rs 30,000.

Required: Journal entry and ledgers

Journal Entry

In the book of BC Traders

Date	Particulars		LF	Amount Dr	Amount Cr
June, 1	Cash account	Dr		150,000
	Stock account	Dr		60,000
	Furniture account	Dr		30,000
	To Capital account				240,000
	(Being- business stared with cash, stock & furniture)

Here, Cash is debited Rs 200,000; Capital is credited Rs 200,000.

Cash Account

Dr							Cr
Date	Particulars	LF	Amount	Date	Particulars	LF	Amount
Jun, 1	To Capital account		150,000	Jun, 1	By Balance c/d		150,000
			150,000				150,000
Jun, 2	To Balance b/d		150,000

Stock Account

Dr							Cr
Date	Particulars	LF	Amount	Date	Particulars	LF	Amount
Jun, 1	To Capital account		60,000	Jun, 1	By Balance c/d		60,000
			60,000				60,000
Jun, 2	To Balance b/d		60,000

Furniture Account

Dr							Cr
Date	Particulars	LF	Amount	Date	Particulars	LF	Amount
Jun, 1	To Capital account		30,000	Jun, 1	By Balance c/d		30,000
			30,000				30,000
Jun, 2	To Balance b/d		30,000

Capital Account

Dr							Cr
Date	Particulars	LF	Amount	Date	Particulars	LF	Amount
Jun, 1	To Balance c/d		240,000	Jun, 1	By Cash account		150,000
				Jun, 1	By Stock account		60,000
				Jun, 1	By Furniture account		30,000
			240,000				240,000
				Jun, 2	By Balance b/d		240,000