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Chapter: 11th Accountancy : Ledger

Procedure for posting

The process of transferring the debit and credit items from the journal to the ledger accounts is called posting.

Procedure for posting

The process of transferring the debit and credit items from the journal to the ledger accounts is called posting. The procedure of posting from journal to ledger is as follows:

 

·        Locate the ledger account that is debited in the journal entry. Open the respective account in the ledger, if already not opened. Write the name of the account in the top middle. If already opened, locate the account from the ledger index. Now entries are to be made on the debit side of the account.

·        Record the date of the transaction in the date column on the debit side of that account.

·        Record the name of the account credited in the journal with the prefix ‘To’ in particulars column.

·        Record the amount of the debit in the ‘amount column’.

·        Locate the ledger account that is credited in the journal entry. Open the respective account in the ledger, if already not opened. Write the name of the account in the top middle. If already opened, locate the account from the ledger index. Now entries are to be made on the credit side of the account. Record the date of the transaction in the date column. Record the name of the account debited in the journal entry in the particulars column with the prefix ‘By’ and write the amount in the amount column.

Tutorial note

The name of the account in the top never appears in the particulars column. In the particulars column the account entered is the other account in the journal entry.



Illustration 1

Pass journal entries for the following transactions and post them in the ledger accounts.

2017

June  1        Basu started business with cash Rs. 50,000

June  4        Purchased furniture by paying cash for Rs. 6,000

June  7        Purchased machinery on credit from Harish Rs. 10,000                  

June  10      Bought goods for cash Rs. 4,000     

June  18      Paid insurance premium Rs. 100     

Solution



Ledger accounts





Posting of opening journal entry

In case of existing business enterprises, opening entry is made at the beginning of the accounting period to bring into account the balances of accounts which were not closed in the preceding accounting period. The accounts not closed are capital, liabilities and assets appearing in the balance sheet of the previous year. The entry passed is as follows:

Assets A/c (individually)                   Dr. xxx

To Liabilities A/c (individually)        xxx

To Capital A/c                         xxx

While posting the opening entry in the individual ledgers, the term balance brought down (balance b/d) is used. The steps involved in posting the opening entry are as follows:

Step 1: The items debited in the opening entry are entered on the debit side of respective accounts. The words ‘To Balance b/d’ are written in the particulars column with respective amounts in the amount column, date being the first day of the accounting period.

Step 2: The items credited in the opening entry are entered on the credit side of respective accounts. The words ‘By Balance b/d’ are written in the particulars column with respective amounts in the amount column, date being the first day of the accounting period.


Illustration 2

Prepare necessary ledger accounts in the books of Joy from the following opening entry:

In the books of Joy Journal entries


Solution 

Ledger accounts




 

Posting of compound journal entry

When a journal entry has more than one debit or more than one credit or both, it is called a compound entry. For items debited in the compound entry, entries are made on the debit side in the respective accounts with the respective amount debited. For items credited in the compound entry, entries are made on the credit side in the respective accounts with the respective amount credited. Posting of such entries to ledger accounts is explained in illustrations 3 and 4.


Illustration 3

Journalise the following transactions and post them to ledger. On May 20, 2018, Ram paid salaries Rs. 15,000; Electricity charges Rs. 8,000 and wages Rs. 2,000.

Solution




Ledger accounts



Illustration 4

On 15th March, 2017, Ramesh paid Rs. 13,800 in full settlement of his account Rs. 15,000 due to his creditor Dinesh. Pass journal entry and prepare ledger accounts.

Solution

In the books of Ramesh

 Journal entry



Ledger accounts





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