Balancing Ledger Accounts

Balancing Ledger Accounts :

Balancing of an account means the process of equalizing the two sides of an account by putting the difference on the side where amount is short. Where the debit side of an account exceeds the credit side, the difference is put on the credit side, and the account is said to have a debit balance. This balance is brought down on the debit side while reopening the account. Similarly, where the credit side of an account exceeds the debit side, the difference is put on the debit side, and the account is said to have a credit balance. This is brought down on credit side while reopening the account.

The following steps are followed for balancing the accounts:

(i) Total the amounts of debit and credit entries in the account.

(ii) If the debit and credit sides are equal then there is no balance. The account stands automatically
balanced or closed.

(iii) If the debit side total is more, put the difference on the credit side amount column, by writing the words in particulars column “By Balance c/d”. If the credit side total is more, put the difference on the debit side amount column by writing the words in the particulars column “To Balance c/d”.

(iv) After putting the difference in the appropriate side of the account, add both sides of the account and draw a thin line above and below the total.

(v) Bring down the debit balance on the debit side by writing the words in particulars column “To Balance b/d”. Similarly bring down the credit balance on the credit side by writing the words in the particulars column “By Balance b/d”.

Illustration 2:

Journalise the following transactions, post them in the ledger and balance the accounts in the books of Mr. Rajesh.

2013		Rs.
Jan. 1	Started business with cash	2,00,000
Jan. 3	Purchased goods for cash	60,000
Jan. 5	Sold goods to Shyam	60,000
Jan. 6	Sold goods for cash	20,000
Jan. 9	Received cash from Shyam	40,000
Jan. 13	Goods purchased from Ram	40,000
Jan. 20	Cash paid to Ram	20,000
Jan. 25	Paid office rent	4,000
Jan. 31	Paid salaries to staff	20,000
Jan. 31	Returned goods by Shyam	10,000

Solution:

In the Books of Mr. Rajesh
Journal Entries

Date	Particulars	L.F.	Debit (Rs.`)	Credit (Rs.)
2013 Jan. 1	Cash A/c Dr.		2,00,000
	To Capital A/c			2,00,000
	(Being capital introduced by the proprietor in cash)
Jan., 3	Purchases A/c Dr.		60,000
	To Cash A/c			60,000
	(Being goods purchased for cash)
” 5	Shyam Dr.		60,000
	To Sales A/c			60,000
	(Being goods sold on credit to Shyam)
” 6	Cash A/c Dr.		20,000
	To Sales A/c			20,000
	(Being goods sold for cash)
” 9	Cash A/c Dr.		40,000
	To Shyam			40,000
	(Being the cash received from Shyam)
” 13	Purchases A/c Dr.		40,000
	To Ram			40,000
	(Being goods purchased on credit from Ram)
” 20	Ram Dr.		20,000
	To Cash A/c			20,000
	(Being cash paid to Ram)
” 25	Rent A/c Dr.		4,000
	To Cash A/c			4,000
	(Being office rent paid in cash)
” 31	Salaries A/c Dr.		20,000
	To Cash A/c			20,000
	(Being salaries paid to staff)
” 31	Sales Returns A/c Dr.		10,000
	To Shyam			10,000
	(Being goods returned by Shyam)
			_______	_______
	Total		4,74,000	4,74,000

Ledger Accounts
Dr. Cash Account Cr.

Date	Particulars	J.F.	Rs.	Date	Particulars	J.F.	Rs.
2012				2011
Jan. 1	To Capital A/c			Jan. 3	By Purchases A/c		60,000
“6	To Sales		20,000	” 20	By Ram		20,000
“9	To Shyam		40,000	” 25	By Rent A/c		4,000
				” 31	By Salaries A/c		20,000
			____________	” 31	By Balance c/d		1,56,000
			2,60,000				2,60,000
Feb. 1	To Balance b/d		1,56,000

Dr. Capital Account Cr.

Date	Particulars	J.F.	Rs.	Date	Particulars	J.F.	Rs.
2013				2013
Jan. 31	To Balance c/d		2,00,000	Jan. 1	By Cash A/c		2,00,000
			2,00,000				2,00,000
				Feb. 1	By Balance b/d		2,00,000

Dr. Purchases Account Cr.

Date	Particulars	J.F.	Rs.	Date	Particulars	J.F.	Rs.
2013				2013
Jan. 3	To Cash A/c		60,000	Jan. 31	By Balance c/d		1,00,000
” 13	To Ram		40,000				_______
			1,00,000				1,00,000
Feb. 1	To Balance c/d		1,00,000

Dr. Sales Account Cr.

Date	Particulars	J.F.	Rs.	Date	Particulars	J.F.	Rs.
2013				2013
Jan. 31	To Balance c/d		80,000	Jan. 5	By Shyam		60,000
			______	” 6	By Cash A/c		20,000
			80,000				80,000
				Feb. 1	By Balance b/d		80,000

Dr. Shyam Cr.

Date	Particulars	J.F.	Rs.	Date	Particulars	J.F.	Rs.
2013				2013
Jan. 5	To Sales Account		60,000	Jan. 9	By Cash A/c		40,000
				” 31	By Sales Returns A/c		10,000
			_____	” 31	By Balance c/d		10,000
			60,000				60,000
Feb. 1	To Balance b/d		10,000

Dr. Ram Cr.

Date	Particulars	J.F.	Rs.	Date	Particulars	J.F.	Rs.
2013				2013
Jan. 20	To Cash A/c		20,000	Jan. 13	By Purchases A/c		40,000
”31	To Balance c/d		20,000				_________
			40,000				40,000
				Feb. 1	By Balance b/d		20,000

Dr. Rent Account Cr.

Date	Particulars	J.F.	Rs.	Date	Particulars	J.F.	Rs.
2013				2013
Jan. 25	To Cash Account		4,000	Jan. 31	By Balance c/d		4,000
			4,000				4,000
Feb. 1	To Balance b/d		4,000

Dr. Salaries Account Cr.

Date	Particulars	J.F.	Rs.	Date	Particulars	J.F.	Rs.
2013				2013
J an.31	To Cash Account		2000	Jan. 31	By Balance c/d		2000
			2,000				2,000
Feb.	To Balance b/d		2,000

Dr. Sales Returns Account Cr.

Date	Particulars	J.F.	Rs.	Date	Particulars	J.F.	Rs.
2013				2013
Jan. 31	To Shyam		10,000	Jan. 31	By Balance c/d		10,000
			10,000				10,000
Feb.	To Balance b/d		10,000

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