The Ledger 

Tuesday 29th June 2021

Introduction: In our lessons on books of original entry, we learnt that transactions are
recorded in these books as they occur. But, after the entries are made in the books of
original entry, they must be posted to the ledger. In this lesson, we will learn discuss the
ledger.

Books of original entry do not summarize transactions in separate customer accounts. The ledger
provides a record that summarizes all transactions. For the purpose of grouping transactions the
ledger is divided into three types; the general ledger, purchases ledger and sales ledger. Some
organizations also keep a private ledger.

Ledger

A ledger is a book where related accounts are grouped. It is the principal (main) book of
accounts. This book contains several pages called folios. Each page records transactions
relating to a given account and it is called a ledger account. A ledger account is used
to summarize all the transactions. 

A ledger account has two sides; the debit (Dr) and the credit (Cr) and each
side contains the following columns:

 The date column, in which he date of the transaction is recorded

 The particulars (details) column, in which a short description of the
transaction is entered.
 The folio column, in which the page or reference number is entered.  
 The amount column, in which the amount is entered.

Below are images showing the horizontal and vertical  format of a ledger account.

Horizontal Formart 
Vertical Format 

Types of Ledgers

For the purpose of maintaining control over the number of financial transaction, the
ledger is subdivided into the following.

General Ledger/Nominal Ledger

The general ledger is a ledger in which we record a summary of all transactions for
accounts such as assets, liabilities, revenues (incomes), expenses and owner's equity. 

Purchases Ledger

The purchases ledger is a ledger in which we keep accounts of all creditors or suppliers.

Sales Ledger

The sales ledger is a ledger where all transactions affecting debtors or customers are
recorded.

Cash book

While a cash book is book of original entry for cash and bank transactions, it is also part
of the ledger. 

Private Ledger 

This a ledger where some companies keep accounts that are confidential in nature like

the capital and drawings account. 

Now do the following activity to assess your learning.

What type of transactions are recorded or kept in the following ledgers ?

 The general ledger

 The purchases ledger
 The sales ledger

The ledger is the main book of accounts. For the purpose of maintaining control over th
transactions to be recorded, ledger accounts are subdivided into the general ledger, sale
purchases ledger and in some cases the private ledger.

In the next lesson, we will learn how to post transactions to the ledger. 

References:

Manjimela, F. et al (2015) Progress in Business Studies 9. Cape Town: Oxford University

Press.

Sichivula, N. and Longwe J. (2016) Junior Secondary School Business Studies: Learner's
Book Grade 9. Lusaka: MK Publishers
Business Studies

Original author: Jane BweendoCreated 27.05.19

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Hello, john simuntala
Aptus: Posting Transactions to Subsidiary Ledger

Jane BweendoCreated 27.05.19
close

Posting Transactions to Subsidiary Ledge

Introduction: In the previous lesson, we dealt with the principle of double entry and its
use in posting transactions from subsidiary books to the general ledger. In this lesson
we will continue using the principle of double entry in posting transactions from special
journals or subsidiary books to subsidiary ledgers, in particular the sales and purchases
ledger.
 Subsidiary ledgers are ledgers specifically designed to store specific types of business transactio
include; the sales ledger (accounts receivable or debtors ledger), purchases ledger (accounts pay
creditors ledger). 

Sales Ledger 

A sales ledger also is a sub ledger in which a business records its sales. It shows the amount owed by
customers as well as the amounts paid by customers. It contains separate accounts for individual
customers. Each account records sales, discounts allowed and returns, as well as payments. So the
sales ledger contains personal accounts of customers who have bought goods or services from our
business. The idea of the sales ledger is to help monitor or track the customers.

To help us understand, let us look at the following example.

Example.

The following goods were sold on credit by Peter Bwalya during the month of September 2016.
Sept. 4 Sold goods worth K10,500 to Peter
        6  Alice bought goods from Peter Bwalya on credit for K6,300
       15 Sold goods to John on credit for K5,700
       25 Sold goods on credit to Ann worth K4,800
       29 Mary bought goods worth K900 from Peter Bwalya. She did not pay for them immediately.

Remember, all transactions are first recorded in the appropriate books of original entry and the book
of original entry for credit sales is the sales day book. So the starting point will be the preparation of
the sales day book.

Peter Bwalya's  Sales Day Book will be as shown below. 

 The image shows
Bwalya's Sales d
instructions for p
ledger.

S.L stands for Sa

shows that the ite
posted to the sale
stands for Genera
which indicates t
will be posted to
ledger.

The next step will be to post the sales day book to the ledgers; the sales ledger and the general
ledger. The double entry for posting the sales day book to the ledgers is as follows.

 Debit the individual accounts of customers in the sales ledger with individual amounts. 
 Credit the sales account in the general ledger with the total of the sales day book.

We will first post individual amounts to the debit side of each customer's account in the sales
ledger as follows: 

                                                                       Sales Ledger

Peter

Date       Details                      Folio   Debit (K)   Date    Details                        Folio

Sept. 4  Sales    10,500      

  Alice

Date       Details                      Folio   Debit (K)   Date    Details                        Folio

Sept. 6  Sales   6,300      

John

Date       Details                      Folio   Debit (K)   Date    Details                        Folio

Sept. 15 Sales   5,700      
 Annie

Date       Details                      Folio   Debit (K)   Date    Details                        Folio

 Sept.25  Sales   4,800      

                                                                               Mary

Date       Details                      Folio   Debit (K)   Date    Details                        Folio

Sept. 29 Sales   900      

Note that the sales ledger only contains individual accounts of customers.  The posting of individual
amounts to the sales ledger is done on a daily basis.

At the end of the month, we will post the total of the sales day book to the credit side of the sales
account as follows:

General Ledger

Sales Account

Date       Details                      Folio   Debit (K)   Date    Details                        Folio

        Sept. 30 Sundry Debtors  

We stated earlier that the sales ledger also records sales returns. Assuming that some
goods were returned by Peter Bwalya's customers as follows:

Sept 8  Alice returned some goods worth K1,100

       20  John returned goods worth K700  

Again, first prepare the book of original entry, which is the sales returns journal as follows:
To post the sales returns day book or journal to the ledger we carry out the double entry as follows:
here are also two steps involved in posting transactions from the sales returns day book to the
ledger.

 Debit the sales returns account in the general ledger with the total of the sales returns day
book or journal.

 Credit individual accounts of customers in the sales ledger with individual amounts daily.

General Ledger

Sales Returns Account

Date       Details                      Folio   Debit (K)   Date    Details                        Folio

Sept. 30 Sundry Debtors   1,700      

Sales Ledger

  Alice

Date       Details                      Folio   Debit (K)   Date    Details                        Folio

        Sept.8 Returns  
 John

Date       Details                      Folio   Debit (K)   Date    Details                        Folio

        Sept.20 Returns  

Purchases Ledger

A purchases ledger is a sub-ledger in which a business records and monitors its creditors. It contains
separate accounts for individual suppliers. Each account records purchases, discounts received and
returns, as well as payments. The purchases ledger contains personal accounts of individual suppliers
from whom our business has bought goods or services. As we might have seen so far, all the
postings to the general ledger and sub ledgers are done from the journals. Postings to the purchases
ledger are made from the purchases day book and purchases returns day book

Below is an image showing how to post transactions from the purchases day book or
journal to the ledger.
http://www.dineshbakshi.com/images/stories/accounting-formats/

Note that:

 The purchases account in the general ledger has been debited with the total of the
purchases day book.
 Individual accounts of suppliers in the sales ledger have been credited with individual
amounts. 

Posting from the Purchases Returns Day Book 

The double entry for posting the purchases returns day book is as follows:

We probably, still remember that when goods that were bought on credit are returned for any
reason, entries are first made in the purchases returns day book or journal and later posted to the
ledger.

 Debit individual accounts of suppliers in the purchases ledger with individual amounts. 

 Credit the purchases returns account in the general ledger with the total of the purchases
returns day book.

Let us post the purchases returns day book below. 

We will start by posting the individual amounts to the debit side of each individual account of
suppliers in the purchases ledger as shown below. 

                                                      Purchases Ledger

Emma Traders

Date       Details                      Folio   Debit (K)   Date    Details                        Folio

Aug. 7 Returns   2,000      

Blessings Cleaners

Date       Details                      Folio   Debit (K)   Date    Details                        Folio

Aug. 10 Returns   1,040      

                                                           General Ledger
 Purchases Returns Account

Date       Details                      Folio   Debit (K)   Date    Details                        Folio

Sept. 15 Sundry creditors   3,040      

Now do the following activity to assess your learning.

1. Post the following purchases journal or day book to the ledger. Ensure that the double ent

2. What type of accounts are kept in the following ledgers.

 Purchases ledger
  Sales Ledger

The sales ledger contains individual accounts of customers, while the purchases ledger
individual or personal accounts of suppliers.

In the next lesson, we will learn about the trial balance. 

References:

Manjimela, F. et al (2015) Progress in Business Studies 9. Cape Town: Oxford University

Press.

Sichivula, N. and Longwe J. (2016) Junior Secondary School Business Studies: Learner's
Book Grade 9. Lusaka: MK Publishers.

Business Studies
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Hello, john simuntala
Aptus: Posting Transactions to the Ledger

Jane BweendoCreated 27.05.19
close

Posting Transactions to the Ledger

Introduction: In the previous lesson, we looked at different types of ledgers. We learnt

that ledgers are classified into three types namely the general ledger, the purchases
ledger and sales ledger. In this lesson, we will learn how to post transactions from the
books of original entry to the ledger.
 

Posting in accounting means transferring an entry from the journal to the Ledger. In posting tran
ledger, we need to understand the principle of double entry.

Principle of Double Entry

 
The bookkeeping principle of double entry requires every transaction to be treated twice; once on
the debit side of one account and once on the credit side of a different account. An account is said
to be debited when an entry is made on the debit side, and it is said to be debited when an entry is
made on the credit side. For example, the recording of a cash sale of K1000.00 would require making
two entries:

 a debit entry of K1000.00 in the cash account.

 a credit entry of K1000.00 in the sales account.

Cash Account

Date       Details                      Folio   Debit (K)   Date    Details                        Folio

   Sales    1,000      

Sales Account

Date       Details                      Folio   Debit (K)   Date    Details                        Folio

          Cash  

Watch the video clip below to learn more about the principle of double entry.

This video explains the double entry system with examples. 

The principle of double entry also known as the double entry system satisfies the equation:  Assets =
Liabilities + Equity

Watch the following video clip to learn more on the accounting equation.

We will now learn how to post transactions from books of original entry to the ledger
using the principle of double entry. 

Posting transactions From the General Journal to the General Ledger

A general ledger is the major set of accounts that summarizes all transactions taking

place within an entity. This means that the majority of the transactions are posted to the
general ledger. Posting involves transferring the debits and credits recorded in the
journals to appropriate ledger accounts so that the details and balance for each account
can be found easily. 

The following steps are followed in posting transactions from the general journal to the
general ledger:

 The date is recorded in the appropriate general ledger account.

 The general journal page number is recorded in the Folio column of each ledger account as a
cross reference.
 The debit and credit amounts from the general journal are posted to the debit or credit
columns in the appropriate general ledger account.
 After posting the entry, a balance is calculated in the Balance column of each general ledger
account.
 http://www.opentextbooks.org.hk/ditatopic/22975

In the image above, you can see that nothing is written in the descriptions column. Remember, what
should be written in descriptions column is the name of the other account. So in the cash account,
we will write share capital in the description column and in the share account, we will write cash. 

You can also watch the video clip below for a detailed discussion on posting the general
journal to the ledger.

This video clip shows how to post transactions from the general journal to the general ledger. Note that this vi
give all the ledger account columns. Emphasis is on you knowing on which side of the ledger to post each item

For clarity, we will include all the ledger account columns for the first posting in the
video above.
 General Ledger
  Accounts Receivables (Debtors)

Date       Details                      Folio   Debit   Date    Details                        Fo

Jan. 5  Service revenue    2,000      
             

Service Revenue

Date       Details                      Folio   Debit   Date    Details                        Fo

        Jan. 5  Accounts receivable  
             

Now do the following activity to assess your learning.

1. In each of the following transactions, state the account to be debited and credited. 

 Started business with capital in cash K600.

 Bought furniture by cheque K1200.
 Sold goods for cash K800.

2. Post the following is Heel's General Journal.

                                    General Journal

Date    Details                    Folio  Debit (K)  Cr

September 1       Cash                                          20,000  
  Capital    
Being capital introduced into
       
business

Post this general journal to the general ledger

Remember, the rule of double entry requires every transaction to be treated twice.
 Posting involves transferring the debits and credits recorded in the journals to appropria
accounts.  This requires an understanding of the principle of double entry book keeping
of double entry requires every transaction to be treated twice; once on the debit side of
and once on the credit side of a different account. An account is said to be debited when
made on the debit side, and it is said to be debited when an entry is made on the credit s

In the next lesson, we will learn how to post special journals to appropriate ledgers.

References:

http://www.opentextbooks.org.hk/ditatopic/22975

Manjimela, F. et al (2015) Progress in Business Studies 9. Cape Town: Oxford University

Press.

Sichivula, N. and Longwe J. (2016) Junior Secondary School Business Studies: Learner's
Book Grade 9. Lusaka: MK Publishers.

Business Studies
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