Ledger

Introduction :

Aithough journal is a chronological record of all business transactions, ye

t cannot provide all information regarding a particular account at one place ne
journal cannot show the net effect of various transactions affecting a particular

person, asset, revenue and expense. For example, if a trader wants to know the
amountdue to a particular supplier or the amount due from a particular customer
he wil have to go
through the whole journal It would be a tedious and tme
consuming process. To overcome this dificuilty. another book of account, in
addition to Journal / special purpose books, is maintained This book is called
Ledger
Meaning
Ledger is a book of account which contains a condensed and classified
record of all transactions of the business posted from the journal. It is also called
the book of final entry, since all transactions are ultimately recorded in the
iedger. In this book, separate accounts are opened for each 'account head and
all transactions relating to a particular 'account head will be posted in that
concefned account. An account for each person, each type of revenue, expense
asset and liability is opened in the ledger. For example, all transactions relating
to a particular supplier; say Mukesh, will be posted to the account of
This helps in ascertaning the amount due to Mukesh.
Mukesh
Definition:
According to William Pickles, "A ledger is the most important book of
account and is the destinalion of the entries made in subsidiary
books.
According to Arther Fieldhouse, "Ledger is the permanent store house of all
the transactions"
Thus, ledger is a book of account where all accounts relating to different
transactions are maintained and into which all journal entries are posted In
fact
ledger is the principal book of account which provides complete intformation
about various transactions relating to all parties and all items of assets, revenue
and expenses. In other words, ledger is a book where the transactions are
Summarised on the basis of their 'account heads'
Ledger is generally maintained in the form of a bound register having special
ruling in each page. First few pages of the ledger has ordinary horizontal ruling
for indexing. Remaining pages are ruled like an account and is consecutively
numbered. The index pages are used for writing the names of accounts and the
Folio No. (Page No.) where a particular account has been opened for
easy
location. The ledger may also be maintained in loose-leaf form instead of one
bound book.
3.110 THEORY & PRACTICE OF ACCOUNTANCY

(3) J.F. (Journal Folio): In this column, the page number of the Journai where
the transaction was originally recorded, Is mentioned i t helps in locating the entry

in the Journal Again, in Journal the page number or the Ledger where the account

appears is written in the Ledger Folio column

(4) Amount: In this column, the amount of the transaction is written 'The account
which has been debited in the Journal will also be debited in the Ledger with the
same amount and the account which has been credited in the Journal will atso
be credited in the Ledger with the same amount.

Features of Ledger accounts

In T" shaped form of writing up a ledger account, balance is ascertained
periodically. In this book "T" shaped form of Ledger Account has been used
Such Ledger Account has the following features

hand side and

(a) Two sides : A Ledger Account has two sides, namely Left side
the right hand
Right hand side. Left hand side is called the Debit side while
S called the Credit side.
is made on the debit side of the ledger
(b) Recording oftwo aspect: Posting account which has been
account which has been debited in the journal and the
credited in the journal is credited in the ledger account
This is
c) Balancing Each account in the ledger is balanced independently
total of the Debit side and total
done by ascertaining the difference between the
of the Credit side.

Closing and Opening Balance:

end of a particular period are
The balances of accounts ascertained at the
known as closing balances. These
balances become opening balances in the

next period.

Meaning of Posting:
Posting process of transferring debit and credit aspects of the entries
is a
other books of original entry to the debit and crodit
appearing in the journal and
sides of the relevant accounts in the ledger. Postings are made using the word
To' and By as a prefix on the debit side and credit side respectively. The am
of posting is to make a classified and summarised record of all business
transactions under appropriate account heads

Basic rules to be followed while posting the transactions in the Ledger:

The following basic rules are to be observed while posting the transactions
in the ledger
(a) Separate accounts should be opened in the ledger for posting the different
transactions recorded in the Journal
(b) All the transactions pertaining to one 'account head' should be posted
to that account
 RECORDING OF TRANSACTIONS 3.111
(C) wo
aspects of the
aspect shoukd be postedbusiness transaction namely debit aspect and crede
on the debit side and
respectvely credit side of the account
Basic points regarding
posting
Basic points to be kept in
mind before posting
(1) Opening of separate accounts: are
diferent 'account heads' in the Separate accounts shouid be opened for
in the journal For ledger for posting the different
transactions recorded
example. Cash A/c. Salary Alc,
Purchases AAc. etc
2 One account for each kind
of
One account should be openedtransactions:
for each kind of
taking place during an accounting period transaction Transactions
be relating
posted to that account oniy. If more than one to that particular account shoukd
of transactions, the object of account is opened for one kind
not be
summarisation of transactions of similar nature
will
achieved. For example, it may be found that in the journal, Cash Nc has
been debited during a week, say on six
different dates and the same account has
been credited on four different dates. For
Alc will be opened for transactions recording in Cash AVc, only one Cash
taking place
all entry relating to Cash Alc will be made in
on all the
days and posting of
that account only
(3) Accounting period: recording in the journal and posting in the ledger is
All
done for a particular 'Accounting Period'. For
every accounting period seperate
set of books should be maintained.
Posting all transactions taking place in a
of
particular accounting period must be made in one set of
books
(4) Same account heads in both the books: Posting in the
made in the same account heads as
ledger should be
appearing in the journal. No change in the
name of the 'account
head should be made
(5) Postings made conveniently: Posting may be done at any time but it should
be completed before the end of the
accounting period. For keeping the accounts
upto date, posting should be made immediately after recording the transactions
in the journal

Where the accounts are maintained in the computers through the use of
accounting packages, the posting is made automatically on the pressing of Key
in the Key Board once the transaction is recorded in the books of
original entry
in the computer

Methods of Posting
There are three methods of posting from Journal to Ledger
fa) Entrywise posting: Posting of each journal entry in the affected 'account
heads' may be made before proceeding to the next entry
b)
(b) Account headwise posting: Posting may be made 'account head wise
1.e. posting of all Debits and Credits relating to one particular account
head may be made before taking up another account head
3.118
THEORY & PRACTICE OF ACCOUNTANCY

lustration 4.
From the following transactions, prepare the account of Armal and balance
the account on 31st Jan. 2009
2009
Jan. 1
Opening balance
(Dr.) Rs. 1,200
8 Purchased goods from him Rs. 2,000
10 Paid cash to him Rs. 3,500
15 Returned goods to him Rs. 500
2
22 Sold furniture to him Rs. 7,000
25 Sold goods to him Rs. 9,000
29 Received from him by cheque Rs. 5,000
Solution :
Amal
Dr. C.
Date Partculars J Amount Date Particulars Amount
F Rs. F Rs.
2009 2009
Jap.1 To Balance b/d 1,200 Jan.8 By Purchase Alc 2,000
3,500 Jan.29 By Bank Ac 5,000
Jan.15 To Purchase Retun AVc 500
Jan.22 To Furniture A/c 7,000 Jan.31 By Balance cld 14,200
Jan.22 To Sales A/c 9,000
21,200 21,200
2009
Feb.1 To Balance b/d 14,200
Mlustration 5.
2009
Jan. 30. Received cash on account of Sales Rs. 8,000;
Commission received Rs. 500, Interest received Rs.
Jan. 31. Paid cash on account of Purchases Rs.
4,000
5,000:
Commission paid Rs. 1,000, Interest paid Rs. 2,000.
Pass journal entries and post them in the
on January 31, 2009. ledger, also balance them
 RECORDING OF TRANSACTIONS -1 3119

Solution
Journal Entries
Date
Partculars L Dr
F. Amount (Rs) Amount (Rs)
2009
Jan. 30 Cash Ac
Dr. 12,500
To Sales Ac 8,000
To Commission Received A/c 500
To Interest Received AlNc 4,000
(Being the receipt of cash on account of
sales, commission and interest).
Jan. 31 Purchases Alc Dr. 5,000
Commission Allowed Alc Dr. 1,000
Interest Allowed Alc Dr. 2,000
To Cash Alc 8,000
(Being cash paid on account of purchases,
commission and interest)

Cash Account
Dr. C
Date Particulars J.Amount Date Pariculars J.Amount
FRs. F Rs
2009 2009
Jan.30 To Sales account 8,000 Jan. 31 By Purchases A/c 5,000
To Interest Received A/c 4,000 By Interest Paid Alc 2,000
To Commission By Commission
Received Alc 500 Paid Ac 1,000
Jan. 31 By Balance cld 4,500

12,500 12,500
Feb. 1 To Balance b/d 4,500
Sales Account
Cr.
Dr.
Date Particulars
Amount Date Particulars JAmount
EL Rs. F Rs.
2009
2009
Balance c/d 8,000| Jan.30 By Cash Alc 8,000
|Jan.31 To
8,000 8,000
Feb. 1 By Balance bl/d 8,000
 3.120 THEORY & PRACTICE OF
ACCOUNTANCY

Purchases Account

Dr
Particulars JAmount
Date Partcutars J.Amount Date
Rs
Rs
2009 2009
Jan.31 To Cash account 5,000 Jan.31 By Balance cld 5,000
5.000 5.000
Feb. 1 To Balance b/d 5,000

Commission Received Accou

C
Date Particulars Amount
Date Particulars Amount
Rs. Rs
2009 2009
Jan.31 To Balance c/d 500 Jan.30| By Cash account 500

500 500
Feb. 1 By Balance cld 500

Interest Received Account

Cr.
Dr.
Date Particulars . Amount Date Particulars Amount
F. Rs. Rs.

2009 2009

Jan.31 To Balance cld 4,000 Jan.30 By Cash account 4,000

4,000 4,000
Feb.1 By Balance bld 4,000

Interest Pajd Account

Particulars Amount
Date Particulars J.Amount Date
Rs
LE Rs
2009 2009
Balance cld 2,000
Jan.31 To Cash account 2,000 Jan.31 By
2.000
2.000
Feb. 1 By Balance b/d 2,000
3.124 THE ORY & PRACTICE OF ACCOUNIANGY

NOTE
It should bo kept in mind that in actual practico, at the ond of an
Accounts
accounting period, the balances of Rovenuo and Expense
are nol carried forward to the next perlod. At the end of an accounting
to the ()
period, these accounts are closod by transferring either the
Trading Account; or (li) fit and Loss Account dopending on
or indirect
nature of expense and revenue i.e. whether thøy are direct
account
For example; Wages account is closed by transfer to Trading
as it is a direct expenso whereas Salary
account is closed by
indirect expense.
transfer to the Profit and Loss account as it is an

Trial Balance or Statement of Ledger Account Balancos:

liketo
a business firm may
After the preparation of the ledger accounts,
done or not In order
know whether the posting in the ledger has been correctly
the business ascertains
to test the arithmetical accuracy of the ledger posting, in
a statement of balances
the balances of all the ledger accounts and prepares
balance is put in one column and the
the ledger. The accounts showing the debit
another column. If the total of debit
accounts showing the credit balance is put in
that the ledger is arithmetically
balances equals the total of credit balances, it proves
a Trial Balance. It is prepared
on
correct. Such statement of balances is called
in the books of account.
a separate sheet of paper. It is not prepared

Mustration 6.
Rs.
2009
Anil Commenced a business with cash 10,000
June 1
2 Deposited into bank 5,000
Purchased goods for Cash 1,500
3
2,000
4 Bought furniture for office use

Sold goods for Cash 1,000

6
Drew from bank for office use 1,000
"10
620
"13 Sold goods to Rajen
Purchased goods from Anjan 410
15
100
18 Paid office expenses
Received cash from Rajen 600
22
20
Allowed him discount
400
"25 Paid cash to Anjan in full settlement of his account
200
26 Paid Rent by cheque
500
28 Paid salary to staff
500
29 Purchased goods from Kapil
800
30 Sold goods to Mandira
 RECORDINGOF TRANSACTIONS 3.125

Solution: In the books of Anil

Journal Entries
Date Particulars L Dr. C
F. Amount (Rs.)|Arnount (Rs.)
2009
June 1 Cash Alc Dr. 10,000
To Capital Alc 10,000
(Being the amount brought in as capital)
June 2 Bank Ac Dr. 5,000
To Cash Alc 5,000
(Being cash deposited into bank)
June 3 Purchases Alc Dr. 1,500
To Cash Alc 1,500
(Being goods purchased on cash)
June 4 Furniture Alc Dr. 2,000
To Cash Ac 2,000
(Being furniture purchased for Cash)

June6 Cash A/c Dr. 1,000

To Sales Alc 1,000
(Being goods sold for cash)

Cash Alc Dr 1,000

June 10
To Bank Alc 1,000
(Being cash withdrawn from bank)

June 13 Rajen Dr. 620

To Sales Alc 620
(Being goods sold to Rajen)

Purchase Alc Dr. 410

|June 15
To Anjan 410
(Being goods purchased from Anjan)

June 18 Office Expenses A/Nc Dr. 100

To Cash Ac 100
(Being office expenses paid in cash)

June 22 Cash A/c Dr. 600

Discount Allowed ANc Dr. 20
To Rajen 620
(Being Cash received from Rajen and
discount allowed)
3.128 THEORY & PRACTICE OF ACCOUNTANCY

Date Particulars Dr C
FAmount(Rs.)|Amount (Rs.)
Dr. 410
June 25 Anjan 400
To Cash Alc
10
To Discount Received Alc
cash paid to Anjan and discount
(Being
receved)
Dr. 200
June 26 Rent Ac
200
To Bank Nc
(Being rent paid by cheque)
Dr. 500
June 28 Salary A/c
500
To Cash Ac

(Being salary paid in cash)

Dr. 500
Purchase A/c
June 29 500
To Kapil
(Being goods purchased
on credit)
Dr. 800
June 30 Mandira
800
To Sales Alc

(Being goods sold on credit)

Ledger
Cash Account
Cr.
Dr Particulars J Amount
Date
Date Particulars J.Amount Rs
F.Rs
2009
2009
Alc 10,000 June 2 By Bank Alc 5,000
June 1 To Capital Purchase A/c 1,500
1,000 June 3 By
June 6 To Sales Alc 2,000
To Bank A/c 1,000 June 4By Furniture Alc
June 10 100
June 22 To Rajen 600 June 18| By Office Expenses Alc 400
June 251 By Anjan
ANC 500
June 28| By Salary
3,100
Balance c/d
June 30) By
12,600
12,600

1 To Balance b/d 3,100

July
 RECORDING OF TRANSAC TIONSs
1127

Dr Capital Account
at Particulars
JAmount Date Partculars
2009 Rs
F
June 30 To Balance 2009
cid
10,000| June 1 By Cash Alc 10.000
10,000 10 000
July 1 By Balance b/d
10,000
Dr. Bank Account
Date Particulars Amount Date
C
Particulars JAmount
F. Rs.
2009 F Rs
June 2 To Cash Alc 2009
5,000 June 10 By Cash Alc 1,000
| June 26 By Rent A/c
200
June 30 By Balance cld 3800
5.000 5
July 1 To Balance b/d 3,800
Purchases Account
Dr
Date Particulars J. Amount Date C
Particulars JAmourt
2009
FRs F Rs
2009
June 3 To Cash A/c 1,500
June 15 To Anjan 410 June 30 By Balance cld 2,410
June 29 To Kapil 500
2,410 2,410
July 1 To Balance bld 2,410
Furniture Account
Dr.
Cr
Date Particulars . Amount Date Pariculars JAmount
FRs Rs
2009 2009
June 4 To Cash Alc 2,000| June 30 By Balance cid 2,000
2,000 2,000
July 1 To Balance b/d 2,000
 THEORY & PRACTICE OF
ACCOUNTANCY
3.128

Sales Account
C
Dr Particutars Amaus
Parcuiars Amount Date
F Rs
Rs
2009 2009
By Cash Ac
6 1,000
une 30 To Balance cid 2420 June
une 13 8y Rajen 620
800
June 30) By Mandira
2420 2420
July 1 By Baiance bid 2420

Rajen
D Cr.
Date Paricuiars Amount Dae Paricuias Amaunt
Rs Rs
2009 2009
620 June 22 By Cash Alc
June 13 To Sales Ac 600
June 22 ByDiscount Alowed Aic
20
620 620
Anjan
Dr C.
Daie Particulars Amount Date Parnculars J Amount
Rs Rs
2009 2009
|June 25 To Cash Alc 400 June 15 By Purchase A/c 410
25 To Discount
Received Ac 10
410 410

Office Expenses Account

Dr. C
Date Pariculars JAmount Date Pariculars Amaunt
Rs Rs
2009
2009
June 18 To Cash Alc 100 June 30 By Balance cid 100
00 100
July 1 To Balance b/d
100
 RECORDING OF TRANSACTIONS 3.129

Discount Allowed Account

Dr.
Cr.
Date Pariculars J. Amount Datle Particulars Amount
Rs. Rs
2009 2009
June 22 To Rajen 20 June 30 By Balance cld 20
0 20
July 1 To Balance b/d 20

Discount Received Account

Dr. Cr.
Dale Pariculars Amount Date Partculars JAmount
Rs. Rs
2009 2009
June 30 To Balance c/d 10 June 25 By Anjan 10

10 10
July 1 By Balance b/d
10
Rent Account
Dr. Cr.
Dale Pariculars . Amount Date Particulars JAmount
FRs. Rs.
2009 2009
|June 26 To Bank A/c 200 June 30 By Balance c/d 200
200 200

July 1 To Balance bld 200

Salary Account
Cr.
Dr. Particulars Amount
Dale Particulars Amount Date
Rs. Rs.

2009 2009
Cash Alc 500 June 30 By Balance c/d 500
June 28 To
500 500

| July 1 To Balance bld 500

3.130 THEORY & PRACTICE OF ACCOUNTANCY

Kapil
Dr. Cr
Particulars AmuntDate Particulars JAmount
F Rs Rs
2009 2009
June 30 To Balance c'd 500 June 29 By Purchase Ac 500
500 500
July 1 By Balance b/d 500

Mandira
Dr. Cr.
Dale Pariculars J.Amount Date Particulars Amount
F.Rs Rs.
2009 2009
June 30 To Sales Alc 800 June 30 By Balance c/d 800
800 800
July 1 To Balance b/d 800

Trial Balance as on 30th June, 2009

Dr. Cr.

Account heads Amount (Rs.) Account heads Amount (Rs.)

Cash Alc 3,100 Capital A/c 10,000

Bank Alc 3,800 Sales A/c 2,420
Purchases Alc 2,410 Discount Received Alc 10
Fumiture Ac 2,000 Kapil 500
Office Expenses Alc 100
Discount Allowed Alc 20
Rent Ac 200
Salary A/c 500
Mandira 800

12,930 12,930
 RECOROING OF TRANSACTIONS

malse e tikwing post them into ledger, balarice the accounts, and prapae

Mareh Ms Rajid Duta of Guwahati commenced business as book sellers

vwitacapital of Rs. 40,000
Miarodt Obened an account with SB!, Dispur and deposited Rs. 15,00o
Marc 3 ugt new humiture tor the shop Rs 2,000. and paid by cheque
ard 4 Sught books Rs. 4,000 and paper Rs. 3,500 in cash.
March 5 Scid dooks and paper for cash Rs. 700.
Marh Purchased books from Book Land, Guwahati Rs. 1,800.
March 13 Soid dooks to the Book Emporium for cash Rs. 5,000.
Marc 15 Paid for wages Rs. 600 and stationery Rs. 100.
Marc 17 Pac cash o Book Land. Rs. 1,750 and received discount Rs. 50
arc 20 Received rent for a portion of the shop sublet Rs. 300.
March 22 Soid books and stabonery to Ashok Book Stall Rs. 3,000
March 31 Paid rent Rs 450 and salaries for the month Rs. 1,500
March 31 Recaived cash from Ashok Book Stall Rs. 2,950 in full settlement of
teir account for Rs. 3,000.

ass eassary joumail entries and post them in the appropriate Ledger Accounts
ofSanuah for the month of January, 2009 and balance them on 31st January.
2009 and prepare trial balance:
1Started usiness wth Rs. 40,000 in the bank and Rs. 10,000 cash;
ught Fumiture Rs. 5.000 and payment made by cheque by cheque;
Bought goods for resale on credit from Sama & Co. Rs. 20,000;
SPaic ages of assistant in cash Rs. 1,000
11 Goods retumed to Sama & Co. Rs. 2.000;
12 Paicd Sama & Co. Rs. 4,000 by cheque;
17 Cash sailes Rs 16,000;
20 Boug goods for resale on credit from Boro & Co. Rs. 2 ,800
23 Paic wages of assistant in cash Rs.900:
24 Cash saies Rs. 11000:
24 Paid wages in cash Rs. 1,000:
25 Paid insurance premium by cheque Rs. 800:
26 Cash sales Rs 8,000:
27 Bought statonery paid in cash Rs. 500:
29 Paid Boro & Co. Rs 1,400 by cheque;
30 Paid rent by cheque Rs. 2,000
31 Paid Rs 2.000 into the bank.
Enter the folowing ransactions in the subsidiary books and post them into
edger and prepare a Trial Balance for the month of December, 2008 and bring
doen he balances on 1st January, 2009 (all igures in rupees)
2008 Dec.
Mr. Hari started a business with 70,000
Modem Fumiture 6,000
4Bought fumiture trom
 ACCOUNTANCY
3.144 THEORY & PRACTICE OF

10,000
5 Purchased goods for cash
list price of Rs. 15,000
8 Purchased goods having a
trom B. Bora & Trade discount 20%
Co. 14,000
9 Opened a bank account by depositing 22,000
10 Sold goods for cash 10,000
Co.
from Dhanuka & 1,000
12 Goods purchased on credit
15 Goods retumed to Dhanuka
& Co. worth 100
18 Paid electricity bill 9,000
19 Cash sales 1,000
from bank. 500
20 Withdew for private use Mart.
from Bharat Stationery 10,000
24 Purchased stationery
25 Sold goods to Utpal Das 2,000
Das 5,000
28 Goods retumed by Utpal
& Co. by cheque
30 Payment to B. Bora prepare ledger
books of Arun and
transactions in the trial balance.
8. Joumalise the following 2009 and prepare
the accounts on 31st January,
accounts. Balance
Fumiture Rs. 4,000,
2009 with cash Rs. 18,000,
Jan. 1 Suman started business
and Stock Rs. 5,000. Rs. 14,000.
of India with
Bank Account with Union Bank
Jan. 2 Opened a Rs. 9,000
credit from Harsh
Purchased goods on 6,000
Jan. 4
received the
amount in cash Rs.
for Rs. 8,000 and day)
Jan. 8 Sold goods with Bank
deposited
same

2,000. (cheque was

and by cheque Rs. for Rs. 9,000 by
Rs. 8,800 in full
settlement of his account
Jan. 10 Paid Harsh
cheque.
Madhu for Rs. 800.
Jan. 15 Sold goods to settlement of his account.
cash in full
Rs. 780 from Madhu in
the
Jan. 16 Received Rs. 600 in cash and
Jadu for Rs. 2,000/- received
to
Jan. 27 Sold goods credit.
one month's
balance was for Rs. 1,000
Haren and paid him
valued Rs. 7,000 from
Jan. 28 Bought goods on UBI.
cheque
in cash, Rs. 2,000 by Stationery Rs.
Salaries Rs. 600/- and Printing and
rent Rs. 500/,
Jan. 31 Paid
200 in cash.
them in the
transactions in the
books of Jugal and post
Joumalise the following 2009
as on April, 30,
and also balance them
Ledger Account
Fumiture Rs. 9,000,
2009 Cash at Bank Rs. 24,500,
April 1 Cash in hand Rs. 12,600, Tushar (Dr.) Rs.
6,750; Bibek
Akshat (Dr.) Rs. 3,400;
Machinery Rs 18,000,
4,700; Stock Rs. 8,000. Rs.
(Cr) Rs. 5,800; Rahul (Cr.) 4,500

Purchased goods for cash 19,000

4
Introduced further capital 10,000
66
4,000
9 Purchased goods by cheque
Tushar
14 Received cash from
 RECORDING OF TRANSACTIONS- 3.145

17 Paid travelling expenses by cheque 1 ,500

19 Taken loan from Gauri 9.000
21 Sold goods to Akshat 6,000
24 Paid salaries by cheque 2.000
25 Purchased fumiture for cash 11,000
27 Withdrawn from bank for personal use 4.000
29 Paid rent 1,500
30 Received commission from Joy 3,400
10. Record the following transaction in the jourmal of New Fumiture House and
prepare necessary accounts. Balance them on 31st January, 2009 and bring
down the balance on 1st February, 2009
2009 Amount
January. (Rs.)
1 Started business with cash 30,000
2 Open a bank Account 25,000
10 Purchased machinery 15,000
(lssued cheque for the same)
15 Paid installation charges for machinery 2,000
20 Purchased timber from Das & Co. at
the list price of Rs. 20,000 at 10% trade discount.
25 Timber costing Rs. 4,000 was used for furnishing the office.
31 Sold fumiture to Ramesh on the list price of Rs. 10,000 and allowed him
10% trade discount.

11. Joumalise the following into the books of M/s Capital Business Enterprise,
Guwahati., post into ledger, balance the accounts on 30th Aprl, 2009 and prepare
the trial balance as on 30th April, 2009.
2009
April 1 Cash in hand Rs. 2,600; Cash at bank Rs. 12,000; Avinash (Dr.) Rs.
1,800: Stock Rs. 7,000; Sanjoy (Cr.) Rs. 7,000; Ajoy (Dr.) Rs. 3,000
April 2 Bought goods from Sanjoy 2,800

April 4 Bought goods from Krishan 2,400

April 5 Sold goods to Ajoy 3,000

April 14 Sold goods for cash 4,000

April 16 Paid for stationery 250
800
April 18 Withdrew cash for private purpose
April 20 Paid salaries by cheque 2,750
7,000
April 26 Sold goods to Avinash
April 28 Received from Avinash by cheque 2,500
4,000
April 29 Received from Ajoy by cheque
3,500
April 30 Bought goods from Madhu for cash
April 30 Salary outstanding 800
 THEORY& PRACTICE OF ACCOUNTANCY

Api 30 Received commission 600

Apri 30 Bank charges debited by the bank 100
ei 30 Bank interest credited by the bank 200
Ener he folowing transactions in the joumal of M/s. Baruat traders, post them
12
May 2009
e Ledger and prepare he triai balance on 31st

May 2009 Rs
Commenced business with cash 90,000
Opened bank account with ICIC 40.000
Opened bank account with S8B 20,000
Purchased furmiture 10,000
Sought goods for cash from M/s.
Modem Traders 5,000
Purchased good from Ms. Das Traders 39,000
on lCICI bank
Paic to Mis Moderm Traders by cheque
as acvance for purchase of goods 15,000
10 Cash Sales 29,000
15 Saic goocs to Mis. Bora Stores 16,000
Recaived from Mis. Bora Stores by cheque 7,000
Endorsed the cheque received

from Mis. Bora Stores to M/s. Das Traders

Paid trade expenses 1,000

21 Paid tips to office peon 30

23 Goods retum to Mis. Das Traders 3,000

25 Paid to Mis Das Traders by cheque on SBI 8,000
28 Bought postage stamps 100
Paid salary to Muku, the accountant 4,000
Said waste matenais 100
Eter the foilowing transactions in the joumal of M/s. Sunil traders. post them
n e Ledger prepare the trial balance 30th April, 2009
009 Rs
Suni Commenced a business with cash 40,000
Deposited into bank 25,000
Purchased goods for Casn 2.500
Bought fumiture for office use 2.000
Soid goods for Cash 2,000
10 Drew from bank for office use 1,400
3 Soic goocs to Raen 620
5 Purcnased goods from Anjan 410
 RECORDINGOF TRANSACTIONS- 3 147

100
Paid ofce epense
600
22 Received Cash from Rajen 20
Alowed him discount
400
Paid cash to Anjan in full settlement of his account
200
26 Paid Rent by cheque
500
27 Paid salary to staf
500
Purchased goods from Kapil
800
29 Sold goods to Mandira
400
30 Recotved rent from ofmce sub-let
18,000
30 Purchased machinery on cred
Paid for camiage of machine
800
2.000
Paid for inctallation charge of machine
fee of proprietor's son 2.500
30 ssued cheque for payment of school
cheque for purchase of furniture
30 Issued a
4,000
for proprietor's residence

transactions in the Journal of Susma, post them to the Ledger

14. Enter the folowing
2009
and prepare the trial balance
on 30th April,
Rs
2009 70.000
Started business with cash
April 1
50,000
Bank balance
40,000
April 1 Deposited into bank
Discount.
Mr. Roy Rs. 30,000 at 10% Trade
April 2 Purchased goods from
current account 2,000
April 3 Transferred to Fixed Deposit AVc from bank
account 26,700
to Mr. Roy in full settlement of the
April 4 Issued a Cheque
12,000
April 7 Sold goods to Mahim
9,950
Mahim
April 10 Received a Cheque from
50
and discount allowed
in the bank
April 11 Deposited Mahim's cheque
2.800
Purchased Furniture from Jadab by Cheque
April 14
by the bank dishonoured
April 16 Mahim's cheque retuned
30
April 20 Bank Charges
8,400
April 21 Sold goods
2,000
Bank
April 22 Deposited into
400
by Mahim
April 23 Goods returned
3,000
Drew cheque for ofice
use
April 28
1,00
April 29 Paid Rent by Cheque
2,000
April 30 Paid wages
10,000
Advanceda loan at 12% p.a. to Sanjoy by cheque
April 30
 Cash Book
Cash Book is a special purpose book which is used to record all transactions
the
to cash receipts and cash payments in chronological order. When
relating
are sub-divided, cash transactions are not recorded in the
OS onginalareentry
jourmal.OTThese recorded in a separate book called Cash book) In this bOok
receipts and payments of coins, notes, cheques, drafts, postal orders ec. aio

recorded
Importance of Cash Book
Cash Book is the most important subsidiary book, because it keeps the record
of cash transactions of the business. The following are the importance of cash book:
a) Helpfulin cash management: Cash Book is maintained by every business,
whether big or small in size. It is simply because every business must be very
cautious about its cash management ie., cash receipts and cash payments. The
business must know the amount of cash that has been collected/payments that
have been made daily, weekly and monthly and also the periodic balance of cash in
hand, so that effective steps for utilisation of cash balance can be taken.

(b) Helpfulin ascertaining the true cash position: The Cash Book gives the
true postion of cash transactions. At any time the balance of cash as shown by the
cash book must agree with the physical balance of cash in hand in the cash box.
(c) Helpful in preventing embezzlement : The maintenance of cash book
helps in preventing embezzlement and manipulation. Unless cash book is maintained,
the business will be in the dark about the daily cash position and this may increase
the chance of committing frauds by the concerned staff.

(0) Serves as e documentary evidence for cash balance: Cash Book serves
as a documentary evidence for the available cash balances because the actual
cash balance is compared by the cash balance as shown by Cash Book daily
Discrepancies, if any, are identified and rectfied.
Features/characteristics of Cash Book
The following are the features/characteristics of a Cash Book
(a) Primary and Subsidiary book: Cash book is a subsidiary book of account
and a day book. It is also a first book of entry of all cash transactions.
(6) Recordling of cesh trensactions only: All the cash transactions involving
receipt and payments of cash during the period are recorded in this book. No
non-cash transaction finds place in cash book.
(c) Substitute of Cash Account: As a matter of fact it is a substitute for cash
account in the ledger because where cash book is maintained, no cash account
is opened in the ledger.
 3.218 THEORY & PRACTICE OF ACCOUNTANCY

(d) Dualpurpose: It serves the function of both a journal and a ledger at the same
time

(e Recording in chronological order: All cash receipts and payments are

of occurrence
recorded in chronological order i.e. according to the date
records only cash
No credit Balance: The Cash Book (Cash column)
balance.
transactions and, therefore, it cannot show any credit

Advantages of Cash book:

the advantages of a cash book:
The following are
all cash transactions are
(a) Ascertainment daily cash transactions: Since
of the cash receipt and cash payment
recorded in cash book, it is easy to ascertain
on daily basis.
balance can be known at any time by
(b) Ascertainment ofcash balance: Cash
book at that point of time.
There is no
cash
ascertaining the balance of the
box.
need of calculating actual cash in the
shown by the cash book
defalcation: The balance of cash as
(C)
(c) Guadagainst
balance of cash in the cash
box. This process of
can be verified with physical
defalcation of cash.
verification acts as a guard against
error can be detected at the time of
(d) Rectification oferrors: Any mistake or
in
difference between the actual cash the
verification of cash book. If there
is a
Cash Book, it means there is some error.
cash box and the balance as per

Cash Account:
Distinction between Cash Book and

Points of Cash Account

Cash Book
distinction

Cash account is an account

Cash book is a subsidiary book|
1. Nature in the ledger.
meant for recording receipts appearing
and payments of cash.

the
Cash account serves
2. Purpose Cash book serves the purpose
of ledger account
of both journal and ledger at purpose

the same time. only.

recorded in
is recorded in the Journal folio is
3. Folio Ledger folio cash account.
cash book.
for final
It is an account
4. Nature of entry It is a book of both primary!
and final entry. entry only.
 CASH BOOK 3.219

l Cash Book a Journal or a

Ledger
Sometimes a question arises whether Cash Book is a journal or a ledger? it
IB 4 Journal since the
transactions are recorded in it for the first tme irom te
BOurce documents. Later on these are posted to the respective accounts in the
eogor The Cash Book is also a ledger in the sense that it serves the purp0se
of a cash account also.
When a Cash Book is prepared, no separate cash
account ls opened In the ledger. As such, the Cash Book is a journal as we 35
a ledger and hence it
may be called journalised ledger.
Similarities of Cesh Book wlth Journal:
(a) Just Iike a journal, transactions in the Cash Book are recorded for the first
time from source documents.
(b) Just like a journal, transactions in the Cash Book are recorded date wise, i.e.
in a chronological
order, and when they take place.
as

(c) Just like a journal, transactions from Cash Book are also posted t e
relevant account (except Cash account) in the edger.
(d) Just like a journal, a Cash Book also contains a Ledger Folio Column.

Similerties of Cash Book wlth Ledger:

(a) Form of Cash book closely resembles to a ledger account. it has two sides
having identical columns. The eft side (receipts side) is the debit side and
the right side (payment side) is the credit side.
account also and as such when a Cash
cash
(b) Cash Book itself serves as a

Book is maintained, cash account is not opened in the Ledger. The Cash
book is, therefore, is a part of ledger also.
words To' and By are used in a Cash Book also.
(c) Just like a ledger account, the
ledger account.
(d) It is balanced just like a

DHferent types of cash book:

its size, nature and requirements
business differs from others as regards
Every bok maintained by each of them
varies accordingly.
Therefore, the type of cash
different kinds of cash book:
However, the following are the
Column Cash Book
(a) Simple or Single

(b) Double Column Cash

Book : Cash book having
Discount, or
columns o n e for Cash and another for
(i) two Cash and another for
Bank; or
one for
(i) two columns Discount. (This type of
one for Bank and another for
(ii) two columns used in practice)
cash book is not
 ACCOUNTANCY
3220 THE ORY & PRACTICE OF

(c) Triple Column Cash Book.

d) Multi-Columnar Cash Book.
e) Petty Cash Book.
These are explained below
or Single Column Cash Book
(Simpleor Single Column Cash Book: Simple recording onty Cash
Sa cash book which has only one column on both sides for
all receipts and
when
receipts and cash payments. This cash book is used
in the ledger when
are in cash only. Cash account is not prepared
payments atu
book is prepared by the firm. It does not keep any record
S e cash througn cheques,
Danking transactions and cash discount. Receipts and payments
or discounts, etc. are dealt with separately. It is very simple
to operate and is

SUitable for concerns having larger number of cash

transactions and a few bank
transactions.
a cash book
(6) Double Column Cash Book: Double column Cash Book is
column
which has two columns for recording the amount on both sides. Double
cash book may take any of the following three forms: such as Cash book having

() Cash and Discount Columns;

for recording Cash and Discount transactions; or

(i) Cash and Bank Columns;

for recording Cash and Bank transactions;or
(i) Bank and Discount Columns;
for recording Bank and Discount transactions.
(c) Triple Column Cash Book: Triple Column Cash Book is a cash book which
has three columns on each side for recording Discount, Cash and Bank
transactions. This book facilitates the recording of bank transactions
with cash and discount transactions. The discount column on the debit
along
side
is called Discount Allowed' column and the column on the credit side is
called 'Discount Received column'.

(d) Multiple Column Cash Book: The cash book, both side of which a
on
number of column are provided for
need of the organisation is called a
recording the amount according to the
Multi-Columnar Cash Book.
() Petty Cash Book: A cash book maintained for
to petty expenditure. recording the payments relating
Format of Single Column Cash Book:
Dr
Cr.
Date Particulars ReceiptL.F.| Amount Date Particulars Vr. L.F. Amount
(Receipts) No
() ii) (w)
Rs.(Payments) N Rs
( (vi) (vi) (vii))(ix)| (x)
 CAGH B

ustredon 1 Erter the twirg varsarrs n a Smge Cash B

Rs
March 1 Cash in hrd 11 20
Marc5 Reved fron Ran
March 7 Pad rert
March & Sold gods
March 10 Paid to Maro 700
March 27 Purchased Furniture 200
March 31 Paid salanes 100

Solution:
CASH BOOK wITH CASH COLUMN ONLY
D
C
PartcsiarsRLATo Date Particsiars
VL Aout
o.FRs
2009 2009
Ma 1 To Balance bd 11,200 Mar 7 By Rent Ac 30
Mar. 5 To Rahim 300 Mar 10 By Mano
700
Mar. 27 By Furniture Ac
200
Mar 31 By Salaries ANc
Mar. 8 To Sales Ac 300 100
Mar 31 By Balance cld
10.770

11.800 11.800
2009
Apri. 1
To Balance bld 10,770

Cash Book:
Ledger Posting from Simple
book: Transactions
(a) Transactions appearing on the Debit side of the Cash
book are posted to the Credit side of the
appearing on the Detbit side of the Cash
acounts by writing the words By Cash' For example:
To Sales Ac appears on
will be made on the credit side
the debit side of the cash book. Here. posting
the words By Cash'.
t h e Sailes Account in the ledger by writing
 ACCOUNTANCY
3.224 THEORY & PRACTICE OF

cash book: Transactions

() Trensactions appearing on the credit side of the
are posted to the Debit side of
pearing on the credit side of the cash book Purchases
coounts by writing the words To Cash'. For example; By
nosean
NC appears on the credit side of the cash book. Here, posting ill be made on
writing the words To
the debit side of the Purchases Account in the ledger by
Cash'
Cash and Bank are not posted in
Noe Al ccounts invoving contra entries i.e.
the ledger

lustration 2.
Arup started business on 1st April, 2009. The following were his transactions
for the month of April, 2009. Write up single column Cash Book and balance the
same on the last day of the month.
2009 Rs.
April 1 Arup started business with cash 9,000
2 Purchased goods for cash 4,000
4 Cash sales 3,000
7 Received from Karan on account 2,500
10 Paid to Madhu on account
1,200
11 Bought stationery
180
14 Sold goods to Ramesh for cash
900
18 Purchased furniture for cash
1,000
22 Paid to Mihir on account
700
27 Withdrew from business for personal use
600
28 Tooka loan from Suresh
2,000
30 Paid into Bank
5,000
30 Paid Rent
1,200
30 Received commission
150
Solution: In the books of Arup
Cash Book with Cash Column only C
Receipt L|Amount Date Particulars
Voucher L.Amount
Date Particularss No F Rs
No. FRs.
2009 2009
To Capital Alc 9,000 April 2 By Purchases Alc 4,000
April 1

Apri 4 To Sales Ac 3,000 April 10 By Madhu 1,200

180
April 7 To Karan 2,500 April 11 By Stationery Ac

April 14 To Sales Alc 900 April 18 By Furniture A/c 1,000

April 28 To Suresh loan Alc 2,000 April 22 By Mihir 700

To Commission Ac 150 |April 27 By Drawings Ac 600

April 30

April 30 By Bank Nc 5.000

April 30 By Rent ANc 1,200

April 30 By Balance cld 3,670

17,550 17,550
2009
May 1 To Balance b/d 3,670