Ledger

Module 5

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OBJECTIVE:
Ledger
OBJECTIVES
At the end of this module, you should be able to:
- Accomplish the ledger.
- Form the Trial Balances.

I. What is a Ledger?
After Journalizing, the next step is to accomplish the ledger. A journal entry is like a
set of instructions. The carrying out of these instructions is known as posting. As
stated earlier, posting is recording in the ledger accounts the information contained in
the journal. The good news is you have already done the hard part — you have
analyzed the transactions and created the journal entries. When you post, you will
not change your journal entries. If you debit an account in a journal entry, you will
debit the same account in posting. If you credit an account in a journal entry, you will
credit the same account in posting. After transactions are journalized, they can be
posted either to a T-account or a general ledger. Remember – a ledger is a listing of
all transactions in a single account, allowing you to know the balance of each account.
The ledger for an account is typically used in practice instead of a T-account but T-
accounts are often used for demonstration because they are quicker and sometimes
easier to understand. The general ledger is a compilation of the ledgers for each
account for a business. Below is an example of what the T-Accounts would look like for
a company.
the three-column ledger card format has columns for debit, credit, balance, and item
description. The three-column form ledger card has the advantage of showing the
balance of the account after each item has been posted. It is very important for you
to understand the debit and credit rules for each account type or you may not
calculate the balance correctly. Notice that they give an explanation for each item in
the ledger accounts. Often accountants omit these explanations because each item
can be traced back to the general journal for the explanation. The following are
examples of Ledger cards for the some of the accounts from the same company
shown in T-accounts above (see how you get the same balance under either
approach).

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To be honest, this step is pretty easy because the process is basically copying and
pasting. Here is an illustration.

ILLUSTRATION: Business #5

Date Particulars Ref. Debit Credit

Jun. 02,
2018
Cash 620,000
PPE 200,000
Reyes, Capital 820,000
Jun. 03 Inventories 333,000
Cash 333,000
Jun. 03 Travel Expenses 2,700
Cash 2,700
Jun. 05 Cash 420,000
Sales 420,000

Cost of Goods Sold 333,000

Inventories 333,000

In those four transactions, seven accounts were used. All of those accounts will have
their own ledger. Of course, the busiest will be the cash account and it will work like
this.
CASH
Date Description Debit#2 step Credit Balance
Jun. 02, 2018 Initial investment. 620,000 620,000
Jun. 03 Purchase of products. 333,000 287,000
Jun. 03 Travel spending. 2,700 284,300
Jun. 05 Sold products. 420,000 704,300
If it we come up with steps in doing this, it will be:
1. Find the ledger of the accounts that is involve in the transaction.
2. Check if that entry for that account is debit and credit.

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 3. Copy the amount that was used for that account in that transaction in the
journal into the ledger.
4. Compute for the Balance. The logical equation in getting it is to get the
difference of the sum of the debit and the credit. Take note, do not record it as a
negative amount if you come up with a negative value.
By the way, all the other six accounts should also have their own posting to the
ledger.
Now, let us add more entries to the illustration and I will post the entire ledger. It will
be good if you try to do it before you check the answer.
Jun. 07 PPE 130,000
Cash 130,000
Jun. 08 Inventories 416,000
Accounts Payable 416,000
Jun. 10 Cash 245,000
Sales 245,000

Cost of Goods Sold 208,000

Inventories 208,000
Jun. 15 Utilities Expenses 13,000
Cash 13,000
Jun. 16 Supplies Expenses 1,750
Cash 1,750
Jun. 18 Accounts Receivable 127,000
Sales 127,000

Cost of Goods Sold 100,000

Inventories 100,000
Jun. 20 Accounts Payable 416,000
Cash 416,000
Jun. 21 PPE 7,000
Cash 7,000
Jun. 22 Cash 141,000
Sales 141,000

Cost of Goods Sold 108,000

Inventories 108,000
CASH
Date Description Debit Credit Balance
Jun. 02, Initial investment. 620,000 620,000
2018
Jun. 03 Purchase of products. 333,000 287,000
Jun. 03 Travel spending. 2,700 284,300
Jun. 05 Sold products. 420,000 704,300
Jun. 07 Acquisition of PPE. 130,000 574,300
Jun. 10 Sold products. 245,000 819,300
Jun. 15 Utilities spending. 13,000 806,300
Jun. 16 Supplies 1,750 804,550
spending.
Jun. 20 Payment of 416,000 388,550
payable.
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Jun. 21 Acquisition of PPE. 7,000 381,550
Jun. 22 Sold products. 141,000 522,550
For all the other accounts, the description will not be written anymore as it is actually
the practice in real life.
Date PPE Debit Credit Balance
Jun. 02, 200,000 200,000
2018
Jun. 07 130,000 330,000
Jun. 21 7,000 337,000

Date Reyes, Capital Debit Credit Balance

Jun. 02, 820,000 820,000
2018

Date Inventories Debit Credit Balance

Jun. 03, 333,000 333,000
2018
Jun. 05 333,000 0
Jun. 08 416,000 416,000
Jun. 10 208,000 208,000
Jun. 18 100,000 108,000
Jun. 22 108,000 0

Date Travel Expenses Debit Credit Balance

Jun. 03, 2,700 2,700
2018

Date Sales Debit Credit Balance

Jun. 05, 420,000 420,000
2018
Jun. 10 245,000 665,000
Jun. 18 127,000 792,000
Jun. 22 141,000 933,000

Date Cost of Goods Debit Credit Balance

Sold
Jun. 05, 333,000 333,000
2018
Jun. 10 208,000 541,000
Jun. 18 100,000 641,000
Jun. 22 108,000 749,000

Date Accounts Debit Credit Balance

Payable
Jun. 08, 416,000 416,000
2018
Jun. 20 416,000 0

Date Utilities Debit Credit Balance

Expenses
Jun. 15, 13,000 13,000
2018

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Date Supplies Debit Credit Balance
Expenses
Jun. 16, 1,750 1,750
2018

Date Accounts Debit Credit Balance

Receivable
Jun. 18, 127,000 127,000
2018

The main purpose of posting to the ledger is getting the balance of each account.
Balance was already discussed in the previous lessons but let as look at it again.
Look at PPE, what is its final balance? P337,000. It means what?
It means that currently, the PPE that the business has is worth P337,000.
How about the P933,000 of Sales? It means that for the current period, the total
amount of “kita” of the business.
II. Trial Balance
After all transactions have been posted from the journal to the ledger and the balance
of each account is computed, the next step is to come up with the trial balance. A trial
balance is simply a listing of the ledger accounts along with their respective debit or
credit balances. The trial balance is not a formal financial statement, but rather a self-
check to determine that debits equal credits.
EXAM FELL CORPORATION
Trial Balance
December 31, 2020
Debit Credit
Cash 800,000
Accounts Receivable 100,000
Inventories 300,000
Property Plant and Equipment 2,000,000
Accounts Payable 400,000
Loans Payable 1,000,000
Capital Stock or Ordinary Shares 1,100,000
Retained Earnings 200,000
Sales 2,300,000
Cost of Goods Sold 900,000
Utilities Expenses 100,000
Other Expenses 800,000
TOTAL 5,000,000 5,000,000

The Trial Balance was the next step after you get the balances of the account from
the ledger. The key in trial balance is to get the same sum for the amounts that are
written on the debit side and those that are written on the credit side.
It indicates that you are on the right track. It does not mean though that you did not
commit a mistake in your earlier processes like Journalizing, Posting to the Ledger and
etc.
Do not forget about the proper order. The assets should be at the top. Next are the
liabilities. Then the equity accounts. Next is the income accounts and lastly, the
expense accounts.
After you come up with the Trial Balance, the next step is to compute for the adjusting
entries.
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Let us continue the Illustration #5, for you to see how to accomplish a trial balance.

JOHN REYES BUSINESS

Trial Balance
December 31, 2018 (Usually, Dec. 31 siya ginagawa, so let us assume na
12/31/2018)
Debit Credit
Cash 522,550
Accounts Receivable 127,000
Inventories 0
Property Plant and Equipment 337,000
Accounts Payable 0
Reyes, Capital 820,000
Sales 933,000
Cost of Goods Sold 749,000
Utilities Expenses 13,000
Supplies Expenses 1,750
Travel Expenses 2,700
TOTAL 1,753,000 1,753,000

The main purpose of a trial balance is to see if the sum of debit and credit are the
same. If that happens, you can now go to the next step. If it is not, then checked what
you did in the previous process to find an error.
Now, I think your question is, how to determine which side to put the balance of each
account.
Pwede mong gawin in two ways.
1. Alalahanin mo kung anong side nag-iincrease yung account. Saan siya
nadadagdagan, debit ba o credit. Kung saan siya nadadagdagan, dun mo ilagay.
In short:
Debit para sa Assets at Expenses
Credit para sa Liabilities, Income, Equity, Contra-Assets
2. Kung hindi mo maalala yung #1, ang gawin mo is balikan mo yung ledger nung
account at yung side na may masmataas na value, dun mo ilagay.

Self
Test 6
Ledger and Trial Balance: Accomplish the ledger and
the trial balance for the entries of the new business
of Bibi Roro.
Date ACCOUNTS Debit Amount Credit Account
01/10/201
9 Inventories 25,000.00
Roro, Capital 25,000.00
04/10/201
9 Cash 250,000.00

Roro, Capital 250,000.00

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31/10/201
9 Cash 1,000,000.00
Loans Payable 1,000,000.00
31/10/201
9 Wages Expenses 15,000.00
Cash 15,000.00
31/10/201
9 Inventories 413,000.00

Cash 413,000.00
31/10/201
9 PPE 400,000.00

Cash 400,000.00
03/11/201
9 Cash 304,000.00

Sales 304,000.00

03/11/201
9 COGS 201,000.00

Inventories 201,000.00
09/11/201
9 Utilities Expenses 14,000.00
Cash 14,000.00
12/11/201
9 Accounts Receivable 82,000.00
Sales 82,000.00

12/11/201
9 COGS 58,000.00
Inventories 58,000.00
18/11/201
9 Wages Expenses 15,000.00
Cash 15,000.00
21/11/201
9 Inventories 290,000.00

Accounts Payable 290,000.00

24/11/201
9 Cash 41,000.00
Accounts Receivable 41,000.00
27/11/201
9 PPE 77,000.00
Cash 77,000.00
30/11/201
9 Accounts Payable 71,000.00
Cash 71,000.00
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 30/11/201
9 Cash 145,000.00

Sales 145,000.00

30/11/201
9 COGS 96,000.00
Inventories 96,000.00

QUIZ
Trial Balance: Accomplish the trial balance for the
entries of the new business of Jack Macapagal.
ACCOUNTS Debit Amount Credit Account
15/10/2019 PPE 550,000.00
Macapagal, Capital 550,000.00
18/10/2019 Cash 250,000.00
Loans Payable 250,000.00

31/10/2019 Utilities Expenses 3,000.00

Cash 3,000.00
05/11/2019 Wages Expenses 20,000.00
Cash 20,000.00
07/11/2019 Inventories 87,000.00
Cash 87,000.00
09/11/2019 PPE 50,000.00
Cash 50,000.00
12/11/2019 Cash 91,000.00
Sales 91,000.00

12/11/2019 COGS 66,000.00

Inventories 66,000.00
18/11/2019 Utilities Expenses 14,000.00
Cash 14,000.00
21/11/2019 Inventories 301,000.00
Accounts Payable 301,000.00
24/11/2019 Accounts Receivable 128,000.00
Sales 128,000.00

24/11/2019 COGS 99,000.00

Inventories 99,000.00
30/11/2019 Accounts Payable 200,000.00
Cash 200,000.00
03/12/2019 Cash 78,000.00
Accounts Receivable 78,000.00
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06/12/2019 Wages Expenses 25,000.00
Cash 25,000.00
09/12/2019 Accounts Payable 71,000.00
Cash 71,000.00
18/12/2019 Cash 150,000.00
Sales 150,000.00

18/12/2019 COGS 96,000.00

Inventories 96,000.00

SELF TEST –
Date CASH DEBIT
Answers (6)
CREDIT Balance
04/10/2019 250,000.00 250,000.00
31/10/2019 1,000,000.00 1,250,000.00

15,000.00 1,235,000.00
413,000.00 822,000.00
400,000.00 422,000.00
03/11/2019 304,000.00 726,000.00
09/11/2019 14,000.00 712,000.00

18/11/2019 15,000.00 697,000.00

24/11/2019 41,000.00 738,000.00

27/11/2019 77,000.00 661,000.00

30/11/2019 71,000.00 590,000.00

30/11/2019 145,000.00 735,000.00

Inventorie
Date s DEBIT CREDIT Balance

01/10/2019 25,000.00 25,000.00

31/10/2019 413,000.00 438,000.00
03/11/2019 201,000.00 237,000.00

12/11/2019 58,000.00 179,000.00

21/11/2019 290,000.00 469,000.00

30/11/2019 96,000.00 373,000.00

DEBI
Date Roro, Capital T CREDIT Balance
01/10/2019 25,000.00
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 25,000.00

04/10/2019 250,000.00 275,000.00

Date Loans Payable DEBIT CREDIT Balance

31/10/2019 1,000,000.00 1,000,000.00

Date Wages Expenses DEBIT CREDIT Balance

31/10/201
9 15,000.00 15,000.00
18/11/201
9 15,000.00 30,000.00

PP CREDI
Date E DEBIT T Balance
31/10/2019 400,000.00 400,000.00

27/11/2019 77,000.00 477,000.00

Date Sales DEBIT CREDIT Balance

03/11/201
9 304,000.00 304,000.00
12/11/201
9 82,000.00 386,000.00
30/11/201
9 145,000.00 531,000.00

Date COGS DEBIT CREDIT Balance

03/11/201
9 201,000.00 201,000.00
12/11/201
9 58,000.00 259,000.00
30/11/201
9 96,000.00 355,000.00

Date Utilities Expenses DEBIT CREDIT Balance

09/11/2019 14,000.00 14,000.00

Date Accounts Receivable DEBIT CREDIT Balance

12/11/201
9 82,000.00 82,000.00
24/11/201
9 41,000.00 41,000.00

Accounts
Date Payable DEBIT CREDIT Balance
21/11/2019 290,000.00 290,000.00
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30/11/2019 71,000.00 219,000.00

TRIAL BALANCE DEBIT CREDIT

Cash 735,000.00 -

Accounts Receivable 41,000.00 -

Inventories 373,000.00 -
PPE 477,000.00 -
Accounts Payable - 219,000.00

Loans Payable - 1,000,000.00

Roro, Capital - 275,000.00
Sales - 531,000.00
COGS 355,000.00 -

Utilities Expenses 14,000.00 -

Wages Expenses 30,000.00 -

BALANCE 2,025,000.00 2,025,000.00

References
Henio, Edrian. 1992. “Accounting Numbers as ‘inscription’:
Action at a Distance and the Development of Accounting.”
Accounting, Organizations and Society, 17 (7): 685–708.
Hermanson, Edwards et. Al. 2011. Accounting Principles:
A Business Perspective.
Walther, Larry M. 2010. Basics of Accounting and
Information Processing. Bookboon
Bautista, Melinnda et. al. 2016. Fundamentals of
Accounting – OBE-Compliant with multiple choice questions
and problem solving. Wiseman’s Book Trading, Inc.
Ballada, Win et. a. 2018. Basic Financial Accounting and
Reporting. DomDane Publisher

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