Financial and

Management
Accounting By:
BITS Pilani Hema N C
hema.nc@wilp.bits-pilani.ac.in
Work Integrated Learning
Programmes Division
 BITS Pilani
Work Integrated Learning
Programmes Division

Ledger Posting
 Ledger Posting

• An account is an individual record of increases and decreases in an item,

which is likely to be of interest or importance.
• Ledger posting is the process of transferring information from the journal to
the ledger.
• Transactions are recorded in analytical order i.e all transactions pertaining
to a particular account are recorded at one place in the ledger
• The frequency of posting could be daily, weekly, or monthly, depending on
the number of transactions. Ex: If subsidiary books like Purchase register
and Sales register are maintained separately, the summary for the month is
posted as one entry at the end of the month
• It is a book of final entry because the transactions that are first entered in
the journal or special purpose Books are finally posted in the ledger. It is
also called the Principal Book of Accounts
• Accuracy of ledger accounts is tested by preparing the Trial balance to
which all the ledger balances are transferred

01/29/2023 BITS Pilani, WILPD

 Double-entry System

The simplest form of account is called a T account with following three parts
1. The title that describes the name of the asset, liability or equity account
(real, personal or nominal a/c)
2. A left side, or debit side; and
3. A right side, or credit side
4. The difference in amounts between the total debits and total credits in an
account is the balance.
5. If the total debits exceed the total credits, the account has a debit balance.
6. If the total credits exceed the total debits, the account has a credit
balance.

Title of the Account

Left = Debit Right = Credit

01/29/2023 BITS Pilani, WILPD

 Steps in Ledger Posting

1. Locate in the ledger the account(s) debited in the journal entry.

2. Enter the date of the transaction in the account.
3. Enter the relevant journal page number in the Post. Ref. column of the
account.
4. Enter the debit amount appearing in the journal in the Debit column of the
account.
5. Enter the account code or the ledger page number in the Post. Ref, column
of the journal.
6. Repeat steps 1 to 5 for the account(s) credited in the journal entry.

01/29/2023 BITS Pilani, WILPD

 Steps in Ledger Posting

1. The word “To” is used before the accounts which appear on the debit side of an account .
2. The word “By” is used before the accounts which appear on the credit side of an account .
3. If an account has been debited in the Journal, it should be posted on the debit side of
the Ledger account.
4. If an account has been credited in the Journal, it should be posted on the
credit side of the Ledger account.

Title of the Account

Dr. Cr.

Date Particulars JF Amount Date Particulars JF Amount

(Journal (Journal
Folio) Folio)

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 Ledger Posting Format
Ex. Cash sales – Rs.15000/-
JE to be passed is Cash a/c Dr. Rs. 15000/-
To Sales Rs.15000/-

Cash Account
Dr. Cr.
Date Particulars JF Amount Date Particulars JF Amount

To Sales a/c 15000

By Balance c/d 15000
To Balance b/d 15000

Sales Account
Dr. Cr.
Date Particulars JF Amount Date Particulars JF Amount

By Cash a/c 15000

To Balance c/d 15000
By Balance b/d 15000

01/29/2023 BITS Pilani, WILPD

 Journal Entries

Balance of an account is the result of recording more increase than decrease

1. Asset Accounts – Have a debit balance

Land & Buildings, Plant & machinery, Furniture, Patents, Inventory, Bank/
Cash etc

2. Liability Accounts – Have a credit balance

Lenders’ accounts, Creditors, Debentures, Bank overdraft etc

3. Capital Accounts- Have a credit balance

Capital accounts, Reserves, etc

4. Revenue Accounts- Have a credit balance

Sales, Discount received, Interest received, commissions received, etc

5. Expenses Accounts – Have a debit balance

Purchases, Wages & Salaries, Depreciation, Discount allowed, Rent etc

The usual balance for an account is its normal balance.

01/29/2023 BITS Pilani, WILPD

 Balance of an Account
Types of Account Increase Decrease Normal Balance
Recorded by recorded by (balance b/d)
Asset Debit Credit Debit
Liability Credit Debit Credit
Equity
Share Capital Credit Debit Credit
Retained earnings Credit Debit Credit
Drawings/Dividend Debit Credit Debit
Income & Expenditure
Revenue Credit Debit Credit
Expenses Debit Credit Debit

• Closing Balance in Asset / Liabilities / Equity accounts will be carried forward to

the next accounting period through Balance Sheet.
• Closing Balance in Income and expenses accounts will be transferred to Profit and
Loss account /Income statement
01/29/2023 BITS Pilani, WILPD
Exercise : Journal Entries
Following are some of the financial transactions for the month of August 2021of
XYZ, a designer company
Date Transactions
August 1 Pavan invested Rs.5,00,000 cash in XYZ Company shares and received 5000
shares of Rs.100/- each in the share capital of the company
August 2 Bought Stationery for cash , Rs.2,000/-
August 3 Paid office rent for July, Rs.15,000/-
August 4 Bought equipment from S Company for Rs.90,000/- with a down payment of
Rs.30,000/- and agreed to pay the balance in six equal instalments on the
last day of the month beginning August.
August 5 Signed an agreement with Design wear for developing a special design. The
agreement provided for payment of a fee of Rs.35,000/- upon completion of
the work.
August 6 Paid for repairs to Equipment Rs.9,500/-
August 7 Received payment for designs supplied, Rs.20,000/-

01/29/2023 BITS Pilani, WILPD

Exercise:
XYZ, a business that supplies new designs for dresses. Following are some of the financial transactions for
the month of August 2021.
Date Transactions
August 8 Advance received from Kids world, a customer, for designs to be provided
later Rs.15000/-
August 9 Bought Computers on credit from Y Company, Rs.35000/-
August 10 Cash paid for office expenses Rs.15000/-
August 14 Paid Y Company on account , Rs.10,000/-
August 18 Received cash from Dinesh & Company, Rs. 4,000/- for designs supplied
August 21 Appointed an office manager on monthly salary of Rs.25,000/-
August 27 Paid telephone bill, Rs.1,200/-
August 28 Paid office assistant’s July salary, Rs.4,500/-
August 29 Electricity bill paid Rs.1,200/-
August 30 Paid S Company, Rs.10,000/- towards instalment due for August
Prepare the Ledger accounts for the above transactions

01/29/2023 BITS Pilani, WILPD

 Exercise: Ledger Accounts of
XYZ Co.
Cash Account
Dr. Cr.
Date Particulars JF Amount Date Particulars JF Amount

Aug 1 To Share Capital A/C 500000 Aug 2 By Stationery A/C 2000

Aug 7 To Sales 20000 Aug 3 By Rent A/C 15000
Aug 8 To Adv. From Customers 15000 Aug 4 By Equipment A/C 30000
Aug 18 To Sales 4000 Aug 6 By Repairs 9500

Aug 10 By Office exps 15000

Aug 14 By Non-Trade Payables- Y Company 10000

Aug 27 By Telephone exps A/C 1200

Aug 28 By Salaries A/C 4500

Aug 30 By Electricity exps 1200

Aug 30 By Non Trade Payables – S Company 10000

Aug 30 By Balance 440600

Total 539000 Total 539000

Sept 1 Balance b/d 440600

01/29/2023 BITS Pilani, WILPD

Exercise: XYZ
Share Capital Account
Dr. Cr.
Date Particulars JF Amount Date Particulars JF Amount
August 1 By Cash A/C 500000
Aug. 31 To balance c/d 500000
Total 500000 Total 500000

Sept.1 By Balance b/d 500000

Stationery Account
Dr. Cr.

Date Particulars JF Amount Date Particulars JF Amount

Aug 2 To Cash A/C 2000
Aug 31 By balance c/d 2000
Total 2000 Total 2000
Sept. 1 To Balance b/d 2000

01/29/2023 BITS Pilani, WILPD

Exercise: XYZ
Rent Expenses Account
Dr. Cr.
Date Particulars JF Amount Date Particulars JF Amount

Aug 3 To Cash A/C 15000

Aug 31 By balance c/d 15000
Total 15000 Total 15000
Sept 1 To Balance b/d 15000

Equipment Account
Dr. Cr.
Date Particulars JF Amount Date Particulars JF Amount
Aug 4 To Cash A/C 30000
To Non-trade 60000
Payable - S
Company A/C
Aug 31 By balance c/d 90000
Total 90000 Total 90000
Sept 1 To Balance b/d 90000

01/29/2023 BITS Pilani, WILPD

Exercise: XYZ

Non-trade Payables – S Company Account

Dr. Cr.

Date Particulars JF Amount Date Particulars JF Amount

Aug 30 To Cash A/C 10000 Aug 4 By Equipment A/C 60000

Aug 31 To Balance c/d 50000

Total 60000 Total 60000

Sept 1 By balance b/d 50000

Repairs Account
Dr. Cr.
Date Particulars JF Amount Date Particulars JF Amount
Aug 6 To Cash A/C 9500
Aug 31 By balance c/d 9500
Total 9500 Total 9500
Sept 1 To Balance b/d 9500

01/29/2023 BITS Pilani, WILPD

Exercise: XYZ
Sales Account
Dr. Cr.
Date Particulars JF Amount Date Particulars JF Amount
Aug 7 By Cash A/C 20000
June 10 By cash a/c 4000
Aug 31 To balance c/d 24000
Total 24000 Total 24000
Sept 1 By Balance b/d 24000

Advance from Customers – Kids World Account

Dr. Cr.
Date Particulars JF Amount Date Particulars JF Amount
Aug 8 By Cash A/C 15000
Aug 31 To balance c/d 15000
Total 15000 Total 15000
Sept 1 By Balance b/d 15000

01/29/2023 BITS Pilani, WILPD

Exercise: XYZ
Computers Account
Dr. Cr.
Date Particulars JF Amount Date Particulars JF Amount
June To Non-Trade payable 35000
– Y Company a/c
Aug 31 By Balance c/d 35000
Total 35000 Total 35000
Sept 1 To balance b/d 35000

Non Trade payable – Y Company Account

Dr. Cr.
Date Particulars JF Amount Date Particulars JF Amount
Aug 9 By Computers a/c 35000
Aug 14 To Cash a/c 10000
Aug 31 To balance c/d 25000
Total 35000 Total 35000
Sept 1 By balance b/d 25000

01/29/2023 BITS Pilani, WILPD

Exercise: XYZ
Telephone Expenses Account
Dr. Cr.
Date Particulars JF Amount Date Particulars JF Amount
Aug 27 To Cash A/C 1200
Aug 31 By balance c/d 1200
Total 1200 Total 1200
Sept 1 Balance b/d 1200

Salaries Expenses Account

Dr. Cr.
Date Particulars JF Amount Date Particulars JF Amount
Aug 28 To Cash A/C 4500
Aug 31 By balance c/d 4500
Total 4500 Total 4500
Sept 1 To Balance b/d 4500

01/29/2023 BITS Pilani, WILPD

Exercise: XYZ
Electricity Expenses Account
Dr. Cr.
Date Particulars JF Amount Date Particulars JF Amount
Aug 29 To Cash a/c 1200
Aug 31 By balance c/d 1200
Total 1200 Total 1200
July 1 To Balance b/d 1200

Office expenses Account

Dr. Cr.
Date Particulars JF Amount Date Particulars JF Amount
Aug 10 To Cash a/c 15000
Aug 31 By balance c/d 15000
Total 15000
Sept 1 To balance b/d 15000

01/29/2023 BITS Pilani, WILPD

Verification of the Accounting
Equation Assets = Liabilities + Capital + Revenues -
Expenses – Drawings (or Dividends)

Assets Amount
Equipment 90000
Computers 35000
Cash 440600
Total Assets 565600

Labilities Amount
Non-trade payables – S Company 50000
Non-Trade payables – Y Company 25000
Advance from Customers 15000
Total Liabilities 90000

01/29/2023 BITS Pilani, WILPD

Verification of the Accounting
Equation
Capital Amount
Share capital 500000
Total Capital 500000
Revenues Amount
Sales 24000
Total Revenues 24000
Expenses Amount
Salaries 4500
Electricity exps 1200
Telephone exps 1200
Stationery 2000
Repairs 9500
Office expenses 15000
Rent 15000
Total Expense 48400

01/29/2023 BITS Pilani, WILPD

Verification of the Accounting
Equation
Assets = Liabilities + Capital + Revenue – Expenses -
Dividend

565600 = 90000+500,000+24000-48400
565600 = 614000-48400
565600 = 565600

01/29/2023 BITS Pilani, WILPD

 Ledger account – Practice
Problems
Prepare the Journal Entries for the following transactions of W Company for the
month of July 2021

July 1 - Cash sales for the Rs.55,000/-

July 3 - Credit sales during the Rs.36000/-
July 5 - Stationery purchased in cash Rs.2500/-
July 7- General expenses paid in cash Rs.1250/-
July 10- Credit purchases during the month Rs.29000/-
July 11 - Rent paid for the month of June Rs.8000/-
July 14 - Received advance from Customers for next month sales Rs.18000/-
July 16 - Salaries paid for June Rs.16000/-
July 20 - Loan raised from Y in cash Rs.100000/-
July 25 – Material purchased in cash Rs.16000/-
July 30 - Cash drawn for personal use Rs.5000/-

01/29/2023 BITS Pilani, WILPD

 Exercise: Ledger Accounts of
W Company
Cash Account
Dr. Cr.
Date Particulars JF Amount Date Particulars JF Amount

July 1 To Sales 55000 July 5 By Stationery A/C 2500

July 18 To Advance from Customers 18000 July 7 By General expenses a/c 1250
July 20 To Loan from Y 100000 July 13 By Rent a/c 8000
July 16 By Salaries a/c 16000

July 25 By Purchases a/c 16000

30 July By Drawings a/c 5000

Aug 30 By Balance 124250

173000 173000
Sept 1 Balance b/d 124250

01/29/2023 BITS Pilani, WILPD

Exercise: XYZ Sales Account

Dr. Cr.
Date Particulars JF Amount Date Particulars JF Amount

July 1 By Cash A/C 55000

July 3 By Trade 36000
receivables
31 July To balance c/d 91000
91000 91000
Sept.1 By Balance b/d 91000

Loan from Y Account

Dr. Cr.
Date Particulars JF Amount Date Particulars JF Amount
July 20 By Cash a/c 100000
31 July To balance c/d 100000
100000 100000
Aug 1 By balance b/d 100000

01/29/2023 BITS Pilani, WILPD

Exercise: XYZ
Advance from Customers Account

Dr. Cr.
Date Particulars JF Amount Date Particulars JF Amount

July 18 By Cash A/C 18000

July. 31 To balance c/d 18000

Aug.1 By Balance b/d 18000

Drawings Account
Dr. Cr.

Date Particulars JF Amount Date Particulars JF Amount

July 30 To Cash A/C 5000
July 31 By balance c/d 5000
5000 5000
Aug. 1 To Balance b/d 5000

01/29/2023 BITS Pilani, WILPD

Exercise: XYZ
Trade Receivable Account

Dr. Cr.
Date Particulars JF Amount Date Particulars JF Amount

July 3 To Sales a/c 36000

July 31 By balance c/d 36000

36000 36000
Aug 1 To balance b/d 36000

Trade Payable Account

Dr. Cr.

Date Particulars JF Amount Date Particulars JF Amount

July 10 By Purchases 29000
31 July To balance c/d 29000
29000 29000
Aug 1 By Balance b/d 29000

01/29/2023 BITS Pilani, WILPD

Exercise: XYZ
General expenses Account

Dr. Cr.
7 July To Cash a/c 1250
31 July By Balance c/d 1250
1250 1250
Aug 1 To balance b/d 1250

Stationery Account
Dr. Cr.

Date Particulars JF Amount Date Particulars JF Amount

July 5 To Cash a/c 2500
July 31 By balance c/d 2500
2500 2500
Aug 1 To balance b/d 2500

01/29/2023 BITS Pilani, WILPD

Exercise: XYZ
Purchases Account

Dr. Cr.
Date Particulars JF Amount Date Particulars JF Amount
July 10 To Trade payables 29000

July 25 To Cash a/c 16000

July 31 By balance c/d 45000
45000
Aug 1 To balance b/d 45000

Rent Account
Dr. Cr.
Date Particulars JF Amount Date Particulars JF Amount
13 July To Cash a/c 8000
July 31 By balance c/d 8000
8000 8000
Aug 1 To balance b/d 8000

01/29/2023 BITS Pilani, WILPD

Exercise: XYZ
Salaries Account

Dr. Cr.
Date Particulars JF Amount Date Particulars JF Amount
July 16 To Cash a/c 16000
31 July By balance c/d 16000
16000 16000
Aug 1 To balance b/d 16000

01/29/2023 BITS Pilani, WILPD

Verification of the Accounting
Equation Assets = Liabilities + Capital + Revenues -
Expenses – Drawings (or Dividends)

Assets Amount
Trade Receivable 36000
Cash 124250
Total Assets 160250

Labilities Amount
Trade payable 29000
Loan from Y 100000
Advance from Customers 18000
Total Liabilities 147000

01/29/2023 BITS Pilani, WILPD

 Verification of the Accounting
Equation
Revenue Amount
Sales 91000
Total Capital 91000
Expenses Amount
Salaries 16000
Stationery 2500
General Expenses 1250
Purchases 45000
Rent 8000
Total Expense 72750

01/29/2023 BITS Pilani, WILPD

Verification of the Accounting
Equation
Assets = Liabilities – Drawings + Revenue – Expenses

160250 = 147000-5000+91000-72750
160250 = 233000-72750
160250 = 160250

01/29/2023 BITS Pilani, WILPD