LEDGER POSTING, CLOSING (OR BALANCING OFF) ACCOUNTS AND EXTRACTION OF TRIAL

BALANCES
LEDGER POSTINGS
Entries as earlier noted are posted from the Journals to the Ledger
Account. This is diagrammatically demonstrated as here bellow
THE JOURNAL
Date Account Title/Explanation Ref/ Dr Cr
folio (Shs) (shs)
1/10/23 Cash a/c 01 20,000,000
Capital a/c 02 20,000,000

THE LEDGER

Dr CASH A/C Cr. Dr CAPITAL A/C Cr

Capital a/c 20,000,000 Cash a/c 20,000,000

The transfer of transactions from the journals to the ledgers is referred

to as posting. The transactions that appear in the debit column of the
general journal will be posted to the debit side of the respective ledger
as circled in the illustration above.

The transactions that appear in the credit column of the general journal
will be posted on the credit side of the respective ledger account

The title of the account from which the transaction is being made must be
indicated in the ledger with the amount being transacted in. Eg in the
above case:
 Cash account must indicate the title of Capital a/c from where fund
is received and the amount received from the account.
 Capital account must indicate the title of Cash a/c to which the
funds is given and the amount contributed
In the above illustration the arrows show the direction of the posting.
BALANCING OFF (CLOSING) THE LEDGER ACCOUNTS
Balancing off the accounts involves the following stages:
Using the example in class of Connie’s Bank A/c as below
Step 1
i) Draw Two lines below each side of the account. The upper being single
and the lower double
ii) Dr Connie’s Bank a/c Cr
Capital a/c 50,000 Cash a/c 10,000
Katwe PS 6,000 Purchases a/c 18,000
ABC Ltd (Creditor) 9,000
a/c
Expense (salaries) 5,000
a/c

Adding both sides of the account to determine the total for each side.
For example the debit side of the account above adds up to 56,000 while the
credit side to 42,000
Dr Connie’s Bank a/c Cr
Capital a/c 50,000 Cash a/c 10,000
Katwe PS 6,000 Purchases a/c 18,000
ABC Ltd (Creditor) 9,000
a/c
Expense (salaries) 5,000
a/c

56000 42000

Step 2
Leave space after all the transactions have been posted (as in the shaded
part above) for inserting the difference between the two totals as end of
period balance.
Step 3
After adding both sides of the Account, make the larger amount to become
the total used on both sides of the ledger. For our case it is 56,000 as
hereunder
Dr Connie’s Bank a/c Cr
Capital a/c 50,000 Cash a/c 10,000
Katwe PS 6,000 Purchases a/c 18,000
ABC Ltd (Creditor) 9,000
a/c
Expense (salaries) 5,000
a/c

56000 42000

iii) Subtract the smaller total from the larger total (e.g.56,000 - 42,000
=14,000).
iv) Enter the difference (14,000) on the side with the smaller amount and
it is represented as balance carried down (bal c/d as circled).
v) Dr Connie’s Bank a/c Cr
Capital a/c 50,000 Cash a/c 10,000
Katwe PS 6,000 Purchases a/c 18,000
ABC Ltd (Creditor) 9,000
a/c
Expense (salaries) 5,000
a/c
Bal C/d 14,000

56000 56000

Bal b/d 14,000

Now both the debit and credit side will have the same total when added.
NB
1. Remember that all the other postings in the ledger had their double
entries completed in the accounts whose titles have already been
indicated in the above bank account.
2. To complete the Double entry for the balances c/d which was just
introduced in the account for the difference on the a/c sides, the
amount is brought down (b/d)on the opposite side of the same a/c but
bellow the totals as indicated by the arrow above. i.e. to complete the
double entry within the same account, but for the next period or page.
3. The figures of the balances b/d are the figures that will appear in the
Trial balance as list of balances at the close of the period.
4. Balance c/d on nominal accounts are retired by posting them to Profit
and Loss account. They are not carried to the next period.
5. Balance c/d on assets and Liability accounts are brought down to the
balance sheet for the next accounting period