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EXCEL BOOKS

Chapter 3
Postings in the Secondary Books

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Secondary Books

Secondary books record transactions in a classified manner to derive meaningful information. It is secondary because transactions are rerecorded in these books from the Primary Books. A secondary book is also called a Ledger.

When an entry from the Journal is re-recorded in Ledger, it is called posting.

Postings in the Secondary Books

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Types of Secondary Books

Secondary Books

General Ledger

Subsidiary Ledger

Debtors Ledger

Creditors Ledger

Postings in the Secondary Books

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Account Format

An account in the ledger has the following format:

Dr.
Date Particulars JF

Ledger Account
Amount Date Particulars JF

Cr.
Amount

Where, Dr. stands for Debit and Cr. Stands for Credit JF stands for Journal Folio
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Postings in the Ledger

A ledger is a book of accounts. In Primary Books the financial elements (i.e., account heads) of each transaction are identified and appropriately recorded. To post an entry from Journal to Ledger, follow these steps:

Identify the account heads; Observe which account (s) is debited and which is credited; Trace the concerned accounts in the Ledger; Post the entry to the debit side of the account (which is debited) and credit side of another account (which is credited)

Postings in the Secondary Books

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Examples

Let us consider Example 5 of chapter 2:

Example 5: Sold goods worth Rs. 10,00,000 on credit. Applying ground rules, the journal entry was: Debtors Sales Debit Credit Rs. 10,00,000 Rs. 10,00,000

Let us do the ledger posting of the above entry. Observe that there are two account heads in the above entry- Debtors and Sales.

Let us assume that the above transaction has taken place on 6 March 2006.

Postings in the Secondary Books

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Dr.
Date 6.3. 2006 Particulars To, Sales A/C JF ?

Debtors Account
Amount 10,00,000 Date Particulars JF

Cr.
Amount

Dr.
Date Particulars JF

Sales Account
Amount Date 6.3. Particulars By, Debtors A/C JF ?

Cr.
Amount 10,00,000

2006

A/C stands for Account. Notice that the entry is posted on the debit side of Debtors Account and simultaneously on the credit side of Sales Account. JF refers to the page number of the journal where the particular transaction is recorded.

Use of To (on the debit side) and By (on the credit side) is customary.
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Examples

Let us consider Example 6 of Chapter 2

Continuing with Example 5,the customer has paid Rs. 9,90,000 in full and final settlement of her dues.
Applying ground rules, the journal entry was: Cash Debit Rs. 9,90,000 Discount Allowed Debit Rs. 10,000 Debtors Credit Rs. 10,00,000 Let us assume that the above transaction has taken place on 3 April 2006.

Postings in the Secondary Books

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Dr.
Date 6.3. 2006 Particulars To, Sales A/C JF ?

Debtors Account
Amount 10,00,000 Date 3.4. 2006 Particulars By, Cash A/C By, Discount Allowed A/C JF ?

Cr.
Amount 9,90,000 10,000

Dr.
Date 3.4. 2006 Particulars To, Debtors A/C JF ?

Cash Account
Amount 9,90,000 9,9 Date Particulars JF

Cr.
Amount

Dr.
Date 3.4. 2006 Particulars To, Debtors A/C JF ?

Discount Allowed Account

Amount 10,000 Date Particulars JF

Cr.
Amount

The Debtors Account has records of both the entries (i.e., example 5 and 6). Note that the Debtors Account now has no balance left.
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Closing (or balancing) a Ledger Account

Dr.
Date
6.3. 2006

Debtors Account
Date
3.4. 2006

Particulars
To, Sales A/C TOTAL

JF
?

Amount
10,00,000

Particulars
By, Cash A/C By, Discount Allowed A/C TOTAL

JF
?

Amount
9,90,000 10,000

Cr.

10,00,000

10,00,000

Date
3.4. 2006

Dr.

Cash Account
Particulars
To, Debtors A/C TOTAL

JF
?

Amount
9,90,000 9,90,000

Date

Particulars
By, Balance c/d TOTAL

JF
?

Amount
9,90,000 9,90,000

Cr.

Dr.
Date
3.4. 2006

Discount Allowed Account

Particulars
To, Debtors A/C TOTAL

Cr.
JF
?

JF
?

Amount
1 0,000 1 0,000

Date

Particulars
By, Balance c/d TOTAL

Amount
10,000 10,000

A ledger account has to be closed (balanced) at the end of the accounting period. Balance c/d refers to balance carried down to the next period. In the next accounting period, the same account will start with the opening balance brought down (b/d) from the previous period.
Postings in the Secondary Books