There are two types of ledger accounts format.
They are ‘T’ and continuous balance form.
‘T’ ACCOUNT
“T” Account is mostly used in business firms.
It is divided into two parts i.e. on left hand side debit and right hand side credit.
Theere are two formats of ledger ‘T’
T Account
Dr |
Cr |
To ………. To To |
By By By |
Or
Ledger Account
Dr |
|
|
|
|
|
|
Cr |
Date |
Particulars |
LF |
Amount |
Date |
Particulars |
LF |
Amount |
|
To To To |
|
|
|
By By By |
|
|
CONTINUOUS BALANCE LEDGER OR RUNNING ACCOUNT BALANCE LEDGER
Continue balance form is also known running balance form.
This is an alternative form of ‘T’ ledger account.
Generally, it is adopted by financial institutions and other business firms for cash and bank transactions.
According to this format, ledger is divided into seven columns.
They are date, particulars, folio, debit amount, credit amount, balance and debit or credit.
The specimen of running balance form is given below:
Continuous Balance Ledger (Cash or Bank Account)
Date |
Particulars |
LF |
Dr Amount |
Cr Amount |
Balance |
Dr/Cr |
|
|
|
|
|
|
|
Keep in mind
Cash and bank balance always has debit balance. Comes in cash or cheque is recorded in debit column. Goes out cash or cheque is recorded in credit column. All incomes are recorded in debit column. All expenses are recorded in credit column. No transaction of credit purchase, credit sales, outstanding expenses in cash and bank account. |
PROBLEM:
AM Trade Link has following extracted data (all transactions through bank)
1 Feb, Bank balance Rs 50,000 at City Bank.
3 Feb, Goods (inventory, merchandise) purchased Rs 24,000.
10 Feb, Sales revenue Rs 40,000.
15 Feb, Furniture purchased Rs 4,250.
20 Feb, Mobile and internet bill paid by mobile bank Rs 750.
25 Feb, Office rent paid Rs 6,500.
27 Feb, Cheque received from ABC Traders Rs 12,750.
28 Feb, Salary paid to office boy Rs 8,000.
Required: Continuous balance ledger of bank
[Answer: Balance c/d = 59,250]
SOLUTION
City Bank Account
In the book of AM Trade Link
Date |
Particulars |
LF |
Dr Amount |
Cr Amount |
Balance |
Dr/Cr |
1 Feb |
Balance b/d |
|
|
|
50,000 |
Dr |
3 Feb |
Goods purchased |
|
|
24,000 |
26,000 |
Dr |
10 Feb |
Sales |
|
40,000 |
|
66,000 |
Dr |
15 Feb |
Furniture purchase |
|
|
4,250 |
61,750 |
Dr |
20 Feb |
Mobile and internet bill |
|
|
750 |
61,000 |
Dr |
25 Feb |
Office rent paid |
|
|
6,500 |
54,500 |
Dr |
27 Feb |
ABC Traders |
|
12,750 |
|
67,250 |
Dr |
28 Feb |
Salary paid |
|
|
8,000 |
59,250 |
Dr |
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PROBLEMS AND ANSWERS |
Here, Amount = Rs = $ = £ = € = ₹ = Af = ৳ = Nu = Rf = රු =
PROBLEM:
Anthony Web Developer has following extracted data (all transactions through cash)
1 Feb, Cash balance Rs 15,250.
2 Feb, Office supplies purchased for Rs 750.
3 Feb, Services revenue Rs 18,000.
4 Feb, Hosting purchased Rs 6,500.
5 Feb, Mobile and internet bill paid Rs 1,350.
6 Feb, Service revenue Rs 3,500.
7 Feb, Office rent paid Rs 5,000.
Required: Continuous balance ledger of cash
[Answer: Balance c/d = 23,150]
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