Amity Business School

Journal - Opening entry

Pass the opening entry on January 01, 2009 on the basis of

information taken from the books of Mr X
Cash
in
hand
Rs
10,000
Stock of goods
Rs 5,000
Land
and
Building
Rs
35,000
Debtors
Rs 7,000
Plant
Rs
18,000
Creditors
Rs
10,000
1

Amity Business School

Single Journal Entry

Purchased goods of Rs 5,000 from Shyam for cash

Compound Journal Entry

Paid cash of Rs 5000 for goods purchased from Shyam.
Discount received Rs 500

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Ledger
Business transactions are first entered in Journal or
subsidiary books. The next step is to transfer the entries
to respective accounts in Ledger.
In other words, all entries recorded in Journal are
classified and in order to ascertain the position of a
particular account, all transactions relating to that
particular account are collected at one place in the
Ledger.
In short, a ledger is the principal books of accounts
which contains all accounts of the business enterprise
whether Personal, Real, Nominal.
The book which contains a classified and permanent
record of all the transactions of a business is called the
Ledger

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Proforma of Ledger
Dr.

Cr.

Dat Particular
e
s
J.F.

Amount
(Rs)
Date

Particular
s
J.F.

Amoun
t (Rs)

To

By

Amity Business School

POSTING OF TRANSACTIONS
Transactions are first entered in the books of original
entry and then transferred to the ledger. This process is
called posting.
The term Posting means transferring the debit and
credit items from the Journal their respective accounts in
the Ledger.
The aim of posting is to make classified and summarized
record of an account in respect of various transactions
that affect the account.
5

Amity Business School

ILLUSTRATION
2009
Jan
2
Suresh opens a business and gets Rs 20,000 as capital in
the
business.
Jan
5
Purchased goods of Rs 7000 for cash.
Jan
10
Purchased goods of Rs 5000 from Udit.
Jan 11
Sold
goods for cash Rs 5000.
Jan 15
Sold
goods to Shyam for Rs 3000.

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Rules of Posting:
All transactions relating to one account should be
entered at one place.
The word To is used before the account which appears
on the debit side and By is used before the account
which appears on the credit side.
If an account has been debited in the Journal Entry, it
should be recorded on the debit side of Ledger.
If an account has been credited in the Journal Entry, it
should be recorded on the credit side of Ledger.
Similar amount which has been posted on the debit side
of an account should also be posted on the credit side of
another account.
7

Amity Business School

BALANCING OF ACCOUNTS
Balancing is the process of equalizing the two
sides of the accounts.
Debit Balance
Credit balance

If the sum of debits is equal to the sum of

credits, it is a closed account

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Debit Balance
Cash a/c
Dr.

Date Particulars J.F.

Amount
(Rs)
Date Particulars

To Capital
a/c

To sales
A/c

20,000
5,000
25,000

Cr.

J.F.

Amount
(Rs)

By
Purchases a/c
By Balance
c/d

7,000
18,000
25,000

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Credit balance
Capital A/c

Dat Particular
e
s
J.F.

To
balance

c/d

Amount
(Rs)
Date

Particular
s
J.F.

Amoun
t (Rs)

20,00
0

By Cash
a/c

20,000

20,00
0

20,00
0

Dr.

Cr.

10

Amity Business School

Posting of Compound entries

Pass journal entries and post them in Ledger

Jan 15 Received cash for cash sales Rs 14000, from Niti Rs
5000, for commission Rs 4000, Rent Rs 700
Jan 18 Paid for stationary Rs 300, salaries Rs 3000, charity
Rs 2000.
Jan 20 Received Rs 3960 in full settlement from Arvind for
Rs 4000.
11

Amity Business School

Opening entry -Ledger

Pass the opening entry on January 01, 2009 on the basis of

information taken from the books of Mr X
Cash
in
hand
Rs
10,000
Stock of goods
Rs 5,000
Land
and
Building
Rs
35,000
Debtors
Rs 7,000
Plant
Rs
18,000
Creditors
Rs
10,000
12