1. UNIT – I Journal and ledger posting
DEPARTMENT OF MANAGEMENT STUDIES
UNIT – I Journal and ledger posting
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2. Meaning of Journal
Journal is a record that keeps accounting transactions in chronological order, i.e. as they occur. Ledger is a record that keeps accounting transactions by accounts. Account is a unit to record and summarize accounting transactions.

3. Some unusual transactions and their journal entries
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4. June 1, 2004 – Anju contributed capital Rs. 50,000
June 1, 2004 – Anju contributed capital Rs. 50, Manju contributed capital Rs. 70,000
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5. 17. June 1, 2004 – Anju contributed capital Rs. 50,000
17. June 1, 2004 – Anju contributed capital Rs. 50, Manju contributed capital Rs. 70,000
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6. July 1, 2004 – Ajay contributed capital – Cash Rs. 90,000, Furniture Rs. 20, Vijay contributed capital – Cash Rs. 50, Stock Rs. 70,000
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7. July 1, 2004 – Ajay contributed capital – Cash Rs. 90,000, Furniture Rs. 20, Vijay contributed capital – Cash Rs. 50,000, Stock Rs. 70,000
Journal
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8. July 13, 2003 – Received cash Rs.24,700 from Shanthi in full settlement of her account of Rs.25,000.
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9. July 13, 2003 – Received cash Rs.24,700 from Shanthi in full settlement of her account of Rs.25,000.
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10. 20. July 14, 2003 – Paid cash to Thenmozhi s
20. July 14, 2003 – Paid cash to Thenmozhi s.14,500, in full settlement of her account of Rs.15,000.
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11. 21. Jamuna who owed us Rs.10,000 is declared insolvent and 25% in a rupee is received from her on 15th July, 2003.
Insolvent:  
Unable to meet debts or 
discharge liabilities
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12. What is bad debts?
The term bad debts usually refers to accounts receivable (or trade accounts receivable) that will not be collected.  However, bad debts can also refer to notes receivable that will not be collected. The bad debts associated with accounts receivable is reported on the income statement as Bad Debts Expense or Uncollectible Accounts Expense.
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13. 21. Jamuna who owed us Rs.10,000 is declared insolvent and 25% in a rupee is received from her on 15th July, 2003.
Journal
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14. Received cash for a Bad debt written off last year Rs
Received cash for a Bad debt written off last year Rs.7,500 on 18th January, 2004.
Insolvent
Solvent
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15. Received cash for a Bad debt written off last year Rs
Received cash for a Bad debt written off last year Rs.7,500 on 18th January, 2004.
Journal
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16. Ledger posting
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17. Ledger
A Ledger is a book which contains all the accounts which are first entered in journal.
According to L.C. Cropper, ‘the book which contains a classified and permanent record of all the transactions of a business is called the Ledger’.
It’s a permanent record of transactions that can not changed.
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18. Format of Ledger Name of The Account Dr. Cr. Date Particulars JF
Amount
AED
Year
Month
Accounts name
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19. Explanation:
i. Each ledger account is divided into two parts. The left hand side is known as the debit side and the right hand side is known as the credit side. The words ‘Dr.’ and ‘Cr.’ are used to denote Debit and Credit.
ii. The name of the account is mentioned in the top (middle) of the account.
iii. The date of the transaction is recorded in the date column.
iv. The word ‘To’ is used before the accounts which appear on the debit side of an account in the particulars column. Similarly, the word ‘By’ is used before the accounts which appear on the credit side of an account in the particulars column.
v. The name of the other account which is affected by the transaction is written either in the debit side or credit side in the particulars column.
vi. The page number of the Journal or Subsidiary Book from where that particular entry is transferred, is entered in the Journal Folio (J.F) column.
vii. The amount pertaining to this account is entered in the amount column.
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20. Posting
The process of transferring the entries recorded in the journal or subsidiary books to the respective accounts opened in the ledger is called Posting.
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21. Procedure of posting
I. Procedure of posting for an Account which has been debited in the journal entry.
Step 1 →Locate in the ledger, the account to be debited and enter the date of the transaction in the date column on the debit side.
Step 2 →Record the name of the account credited in the Journal in the particulars column on the debit side as “To..... (name of the account credited)”.
Step 3 →Record the page number of the Journal in the J.F column on the debit side and in the Journal, write the page number of the ledger on which a particular account appears in the L.F. column.
Step 4 →Enter the relevant amount in the amount column on the debit side.
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22. Procedure of posting
II. Procedure of posting for an Account which has been credited in the journal entry. Step 1 →Locate in the ledger the account to be credited and enter the date of the transaction in the date column on the credit side. Step 2 → Record the name of the account debited in the Journal in the particulars column on the credit side as “By (name of the account debited)” Step 3 → Record the page number of the Journal in the J.F column on the credit side and in the Journal, write the page number of the ledger on which a particular account appears in the L.F. column. Step 4 → Enter the relevant amount in the amount column on the credit side.
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23. Example of Ledger and Posting
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24. Write the journal of this transaction
Journal Mr. Ram started business with cash Rs.5,00,000 on 1st June 2003.
Write the journal of this transaction
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25. Journal Mr. Ram started business with cash Rs
Journal Mr. Ram started business with cash Rs.5,00,000 on 1st June 2003.
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26. Try to find how many accounts involved in the journal
Cash Account
Ram,s Capital Account
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27. For ledger posting draw 2 Ledgers
Cash Account
Ram,s Capital Account
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28. Name of Account Name of Account
Dr Cr.
Date
Particulars JF
Amount
AED
Year
Month
Accounts name
Name of Account
Dr Cr.
Date
Particulars JF
Amount
AED
Year
Month
Accounts name
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29. Write the name of Accounts at the top of each ledger.
Cash Account
Ram,s Capital Account
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30. Cash Account Ram’s Capital Account
Dr Cr.
Date
Particulars JF
Amount
AED
Year
Month
Accounts name
Ram’s Capital Account
Dr Cr.
Date
Particulars JF
Amount
AED
Year
Month
Accounts name
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31. Input the dates
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32. Cash Account Dr. Cr. Date Particulars JF Amount AED 2003 June 1
Accounts name
Year
Month
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33. Start Debit side with “To”
Start “Credit side with “By”
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34. Cash Account Dr. Cr. Date Particulars JF Amount AED 2003 June 1
To Rams Account
Year
Month
Accounts name
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35. Insert the amount
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36. Cash Account Dr. Cr. Date Particulars JF Amount AED 2003 June 1
To Rams Account
500,000
Year
Month
Accounts name
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37. Sum up debit and credit side
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38. Cash Account Dr. Cr. Date Particulars JF Amount AED 2003 June 1
To Rams Account
500,000
Year
Month
Accounts name
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39. Adjust debit credit with
Balance Carried Down or
Balance C/d
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40. Cash Account Dr. Cr. Date Particulars JF Amount AED 2003 June 1
To Rams Account
500,000
June 30
Balance c/d
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41. Carry forward the adjusted balance
Balance Brought Down or
Balance b/d
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42. Cash Account Dr. Cr. Date Particulars JF Amount AED 2003 June 1 July 1
To Rams Account
Balance b/d
500,000
June 30
Balance c/d
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43. Rams Capital Account Dr. Cr. Date Particulars JF Amount AED 2003
June 30
Balance c/d
500,000
June 1
July 1
By Cash A/c
Balance b/d
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44. Illustration 3.
Journalise the following transactions in the books of Amar and post them in the Ledger:-
2004
March1 Bought goods for cash Rs. 25,000
Sold goods for cash Rs. 50,000
Bought goods for credit from Gopi Rs.19,000
Sold goods on credit to Robert Rs.8,000
Received from Robert Rs. 6,000
Paid to Gopi Rs.5,000
Bought furniture for cash Rs. 7,000
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45. Journal of Amar
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47. so six accounts are to be opened in the ledger.
There are six accounts involved:
Cash,
Purchases,
Sales,
Furniture,
Gopi &
Robert,
so six accounts are to be opened in the ledger.
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48. In the Books of Amar
Cash Account
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49. Purchases Account
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50. Sales Account
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51. Furniture Account
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52. Gopi Account
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53. Robert Account
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54. ADVANTAGES OF LEDGER The following are the advantages of ledger:
i. Complete information at a glance:
All the transactions pertaining to an account are collected at one place in the ledger. By looking at the balance of that account, one can understand the collective effect of all such transactions at a glance.
ii. Arithmetical Accuracy
With the help of ledger balances, Trial balance can be prepared to know the arithmetical accuracy of accounts.
iii. Result of Business Operations
It facilitates the preparation of final accounts for ascertaining the operating result and the financial position of the business concern.
iv. Accounting information
The data supplied by various ledger accounts are summarized, analyzed and interpreted for obtaining various accounting information.
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55. Posting of Compound Journal Entries
Compound or Combined Journal Entry is one where more than one transactions are recorded by passing only one journal entry instead of passing several journal entries. Since every debit must have the corresponding equal amount of credit, special care must be taken in posting the compound journal entry, where there may be only one debit aspect but many corresponding credit aspects of equal value or vise versa. The posting of such transactions is done in the same way as already explained.
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56. Illustration 3 :. Jan. 12, 2003, Cash sales Rs
Illustration 3 : Jan. 12, 2003, Cash sales Rs.10,000, Cash received from Kannan Rs.5,000 and commission earned Rs.2,500.
Journal
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