Procedures of Preparing Ledger Account

Very Short Questions

Explain the procedure of preparing ledger account.

Posting the account from journal to the ledger, the rules of journalising should be followed. Account debited in a journal should be also debited and account credit also credit in the ledger account. The process of preparing the ledger account can be summarized as follows:

1. Mention the name of account at the top center.

2. Post the account on its debit side if it has been debited in the journal. The first four columns on debit side record the information as follows:

Date: it record the date of the transaction.
Particular: it record the name of reference account after writing the word 'To'. The reference account is one, which has been credited in the journal.
Journal folio(JF): It record the page number of the journal from which the account is being posted.
Amount: It records the amount of the account being debited.

3. Post the account on its credit side if it has been credited in the journal. The last four column on credit side record the information as follows:

Date: It record the date of the transaction.
Particulars: it records the name of reference account after writing the word 'By'. The referenced account is one, which has been debited in the journal.
Journal folio (JF): It record the page number of the journal from which the account is being posted.
Amount: it record the amount of the account being credited.

The following transactions are extracted from the books of a trader:

Started business with cash Rs.60,000.

Cash deposited in the bank Rs.50,000.

Goods purchased from Ramesh for Rs.10,000 and paid by cheque Rs.3,000 in part.

Cash sales made Rs.800.

Paid for salary Rs.4,000 and for rent Rs.2,000 by cheque.

Received commission of Rs.2,500.

Required: Cash a/c and Bank a/c

Journal entries

Date	Particulars	LF	Debit Rs.	Credit Rs.
a).	Cash a/c ……………………………Dr.		60,000
	To capital a/c			60,000
	(Being business started with cash.)
b).	Bank a/c …………………Dr.		50,000
	To cash a/c			50,000
	(Being cash deposited into bank.)
c).	Purchase a/c ……………….Dr.		10,000
	To Bank a/c			3,000
	To Ramesh’s a/c			7,000
	(Being goods purchased from Ramesh and paid through cheque.)
d).	Cash a/c………………………..Dr.		800
	To sales a/c			800
	(Being cash sales made.)
e).	Salary a/c ………………………Dr.		4,000
	Rent a/c…………………………Dr.		2,000
	To cash a/c			6,000
	Being paid for salary and rent by cheque.)
f).	Cash a/c…………………………..Dr.		2,500
	To commission received a/c			2,500
	(Being commission received.)

Cash a/c

Date	Particulars	JF	Amount	Date	Particulars	JF	Amount
	To capital a/c		60,000		By bank a/c		50,000
	To sales a/c		800		By salary a/c		4,000
	To commission received a/c		2,500		By rent a/c		2,000
					By balance c/d		7,300
			63,300				63,300
	To balance b/d		7,300

Bank a/c

Date	Particulars	JF	Amount	Date	Particulars	JF	Amount
	To cash a/c		50,000		By purchase a/c		3,000
					By balance c/d		47,000
			50,000				50,000
	To balance b/d		47,000

The following transactions are extracted from the books of Mr. Prithivi Poudel:

Purchased office furniture for Rs.7,000 from Fine Furniture Centre and paid by cheque Rs.2,000 in part.

Cash received from Mr. Jatan Joshi Rs.2,300 and allowed discount to him Rs.200.

Cash purchases made Rs.700.

Received rent through cheque Rs.2,500.

Paid for interest Rs.600.

Required: Cash a/c and Purchase a/c

Journal entries

Date	Particulars	LF	Debit Rs.	Credit Rs.
a).	Furniture a/c ……………………….Dr.		7,000
	To Bank a/c			2,000
	To Fine Furniture a/c			5,000
	(Being office furniture purchased through cheque and paid in part.)
b).	Cash a/c ……………………..Dr.		2,300
	Discount a/c…………………..Dr.		200
	To Mr. Jatan Joshi’s a/c			2,500
	(Being cash received from Mr. Jatan Joshi and allowed discount.)
c).	Purchase a/c……………..Dr.		700
	To cash a/c			700
	(Being cash purchases made.)
d).	Bank a/c …………………….Dr.		2,500
	To rent received a/c			2,500
	(Being rent received through cheque.)
e).	Interest a/c………………………Dr.		600
	To cash a/c			600
	(Being paid for interest.)

Cash a/c

Date	Particulars	JF	Amount	Date	Particulars	JF	Amount
	To Mr. Jatan Joshi’s a/c		60,000		By purchase a/c		700
					By interest a/c		600
					By balance c/d		58,700
			60,000				60,000
	To balance b/d		58,700

Purchase a/c

Date	Particulars	JF	Amount	Date	Particulars	JF	Amount
	To cash a/c		700		By balance c/d		700
			700				700
	To balance b/d		700

Date	Particular	L.F	Debit Rs.	Credit Rs.
Marga 1	Purchase a/c.............................Dr.		10,000
	To Siddhi's a/c			10,000
	(Being goods purchased from Siddhi)
Marga 3	Cash a/c....................................Dr.		7000
	To Bank a/c			7000
	(Being cash withdrew from bank for office use)
Marga 5	Siddhi's a/c................................Dr.		5000
	To Cash a/c			5000
	(Being cash paid to siddhi)
Marga 7	Cash a/c...................................Dr.		500
	To Sales a/c			500
	(Being cash sales)
	Total		22,500	22,500

Dr.			Siddhi's Account				Cr.
Date	Particular	JF	Amount	Date	Particular	JF	Amount
Marga 5	To Cash a/c		5000	Marga 1	By Purchase a/c		5000
			5000				5000

Dr.			Cash Account				Cr.
Date	Particular	JF	Amount	Date	Particular	JF	Amount
Marga 3 Marga 7	To Bank a/c To Sales a/c		7000 500	Marga 5 Marga 30	By Siddhi's a/c By Balance c/d		5000 2500
			7500				7500

Poush 1	To Balance b/d		2500

Dr.			Bank Account				Cr.
Date	Particular	JF	Amount	Date	Particular	JF	Amount
Marga 30	To Balance c/d		7000	Marga 3	By Cash a/c		7000
			7000				7000

				Poush 1	By Balance b/d		7000