Page 81 - DMGT104_FINANCIAL_ACCOUNTING

Unit 5: Preparation of Journal, Ledger and Balancing

Balancing of Different types of Accounts Notes

Assets: All asset accounts are balanced. These accounts always have a debit balance.
Liabilities: All Liability accounts are balanced. All these accounts have a credit balance.
Capital: This account is always balanced and usually has a credit balance.
Expense and Revenues: These Accounts are not balanced but are simply totaled up. The debit
total of Expense/Loss will show the expense/Loss. In the same manner, credit total of Revenue/
Income will show increase in income. At the time of preparing the Trial Balance, the totals of
these are taken to the Trial Balance.

Example: Record the following transactions in the Journal and post them into Ledger of
Mr. Aditya Raj:
2008 ( )
March 1 Purchase of Goods from Ramautar 3,20,000

March 10 Paid Rent for the month 2,000
March 11 Purchase of Plant 1,00,000
March 12 Paid Salaries 12,000
March 15 Paid Ramautar 1,00,000

March 20 Sold Goods to Shyam 20,000
March 25 Received from Shyam 30,000
March 31 Reserved Cash from Cash Sales 2,50,000
March 31 Wages Paid 5,000

Solution:
Journal of Mr. Aditya Raj
Date Particulars L.F. Amount (Dr.) Amount (Cr.)
( ) ( )
2008
March 1 Purchase Account Dr. 3,20,000
To Ramautar 3,20,000
(Being purchase of goods on credit)
March 10 Rent Account Dr. 2,000
To Cash Account 2,000
(Being payment of rent)
March 11 Plant Account Dr. 1,00,000
To Cash Account 1,00,000
(Being purchase of plant)
March 12 Salaries Account Dr. 12,000
To Cash Account 12,000
(Being payment of salaries)
Contd...

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