UWEZO COLLEGE BEYOND TRAINING
CHAPTER THREE
THE LEDGER
The ledger is simply the accounts. The Ledger is classified into 3 main classes.
1. Sales Ledger, which has the accounts of all the debtors.
2. Purchases Ledger, which has the accounts of all the creditors.
3. The General Ledger. Have all the other accounts i.e. other assets, liability, incomes
and expenses and capital.
The ledger accounts can also be classified as follows:
In general, there are two categories of ledger accounts:-
Personal ledgers which are ledger relating to individuals that interacts with the business daily
transactions. The personal ledgers are further classified into sales ledgers which maintain
individual’s accounts relating to the debtors and purchases ledger which maintain individual
creditors accounts.
On the other hand, general ledger is the second category which records all other accounts that do
not qualify to be personal, they include impersonal accounts, double entry for personal accounts,
adjustments for the personal accounts.
Entries in the ledgers are captured on the duality concept basis where for every debit entry, there
must be a corresponding credit entry and the vice versa will apply for each credit entry recoded.
From illustration 2.3 below some light is shed on the preparation of the ledgers starting with the
general journal
FINANCIAL ACCOUNTING
UWEZO COLLEGE BEYOND TRAINING
Example 2.3
You are to enter the following items in the books, post to personal accounts, and
show transfers to the general ledger.
19x5
July 1 Credit purchases from: K Hill Sh.3800; M Norman
Sh.500; N Senior Sh.106.
“ 3 Credit sales to: E Rigby Sh.510; E Phillips Sh.246; F Thompson Sh.356.
5 Credit purchases from: R Morton Sh.200; J Cook Sh.180; D Edwards
Sh.410; C Davies Sh.66.
“ 8 Credit sales to: A Green Sh.307; H George Sh.250; J Ferguson Sh.185.
“ 12 Returns outwards to: M Norman Sh.30; N Senior Sh.16.
“ 14 Returns inwards from: E Phillips Sh.18; F Thompson Sh.22.
“ 20 Credit sales to: E Phillips Sh.188; F Powell Sh.310; E Lee Sh.420.
“ 24 Credit purchases from: Ferguson Sh.550; K Ennevor Sh.900.
“ 31 Returns inwards from: E Phillips Sh.27; E. Rigby Sh.30.
“ 31 Returns outwards to: J Cook Sh.13; C Davies Sh.11.
Study the solution provided
General journal
Date
June
2015 Details Dr sh. Cr Sh.
1-Jun Purchases 4406
K. Hill 3800
M. Norman 500
N. Senior 106
Being record of purchases done on
credit
3-Jun E Rigby 510
E Philips 246
F Thompson 356
Sales 1112
Being record of Sales done on credit
5-Jun Purchases 856
R Morton 200
J Cool 180
C Davies 66
D Edwards 410
Being record of purchases done on
credit
8-Jun A greens 307
FINANCIAL ACCOUNTING
UWEZO COLLEGE BEYOND TRAINING
H George 250
J Fergurson 185
Sales 742
Being record of Sales done on credit
12-Jun M. Norman 30
N. Senior 16
Returns outwards 46
To record purchases returns
14-Jun Returns inwards 40
E Philips 18
F Thompson 22
To record sales returns
20-Jun E Philips 188
F Powel 310
E Lee 420
Sales 918
Being record of Sales done on credit
24-Jun Purchases 1450
J Fergurson 550
K Ennevor 900
Being record of purchases done on
credit
30-Jun Returns inwards 57
E Philips 27
E Rigby 30
Being record of sales returns
30-Jun J Cool 13
C Davies 11
Returns outwards 24
To record purchases returns
Total 9651
Sales Ledger
E Rigby account
Date Details Amount Sh Date Details Amount Sh
3-Jun Sales 510 30-Jun Returns 30
30-Jun Bal C/F 480
510 510
FINANCIAL ACCOUNTING
UWEZO COLLEGE BEYOND TRAINING
E Philips account
Date Details Amount Sh Date Details Amount Sh
3-Jun Sales 246 30-Jun Returns 27
20-Jun Sales 188 14-Jun Returns 18
30-Jun Bal C/F 389
434 434
F Thompson account
Date Details Amount Sh Date Details Amount Sh
3-Jun Sales 356 14-Jun Returns 22
30-Jun Bal C/F 334
356 356
A greens
Date Details Amount Sh Date Details Amount Sh
8-Jun Sales 307
30-Jun Bal C/F 307
307 307
H George
Date Details Amount Sh Date Details Amount Sh
8-Jun Sales 250
30-Jun Bal C/F 250
250 250
J Fergurson
Date Details Amount Sh Date Details Amount Sh
8-Jun Sales 185
30-Jun Bal C/F 185
185 185
F Powel
FINANCIAL ACCOUNTING
UWEZO COLLEGE BEYOND TRAINING
Date Details Amount Sh Date Details Amount Sh
20-Jun Sales 310
30-Jun Bal C/F 310
310 310
E Lee
Date Details Amount Sh Date Details Amount Sh
20-Jun Sales 420
30-Jun Bal C/F 420
420 420
Purchases Ledger
K Hill account
Amount Amount
Date Details Sh Date Details Sh
1-
Jun Purchases 3800
30-
Jun Bal C/F 3800
3800 3800
M Norman account
Amount Amount
Date Details Sh Date Details Sh
12- Returns 1-
Jun outwards 30 Jun Purchases 500
30-
Jun Bal C/F 470
500 500
N senior account
FINANCIAL ACCOUNTING
UWEZO COLLEGE BEYOND TRAINING
Amount Amount
Date Details Sh Date Details Sh
12- Returns 1-
Jun outwards 16 Jun Purchases 106
30-
Jun Bal C/F 90
106 106
R Morton account
Amount Amount
Date Details Sh Date Details Sh
5-
Jun Purchases 200
30-
Jun Bal C/F 200
200 200
J Cool account
Amount Amount
Date Details Sh Date Details Sh
30- 5-
Jun Returns 13 Jun Purchases 180
24-
Jun Purchases 900
30-
Jun Bal C/F 1067
1080 1080
C Davies account
Amount Amount
Date Details Sh Date Details Sh
30- 5-
Jun Returns 11 Jun Purchases 66
30-
Jun Bal C/F 55
66 66
D Edwards account
Date Details Amount Date Details Amount
FINANCIAL ACCOUNTING
UWEZO COLLEGE BEYOND TRAINING
Sh Sh
5-
Jun Purchases 410
30-
Jun Bal C/F 410
410 410
J Farguson account
Amount Amount
Date Details Sh Date Details Sh
24-
Jun Purchases 550
30-
Jun Bal C/F 550
550 550
J Cool account
Amount Amount
Date Details Sh Date Details Sh
24-
Jun Purchases 900
30-
Jun Bal C/F 900
900 900
General ledger
Purchases account
Date Details Amount Sh Date Details Amount Sh
1-Jun K Hill 3800
M. Norman 500
N. Senior 106
R Morton 200
J Cool 180
C Davies 66
D Edwards 410
J Fergurson 550
K Ennevor 900 30-Jun Bal C/F 5262
5262 5262
FINANCIAL ACCOUNTING
UWEZO COLLEGE BEYOND TRAINING
Sales account
Date Details Amount Sh Date Details Amount Sh
3-Jun E Rigby 510
3-Jun E Philips 246
3-Jun F Thompson 356
8-Jun A greens 307
8-Jun H George 250
8-Jun J Fergurson 185
20-Jun E Philips 188
20-Jun F Powel 310
20-Jun E Lee 420
30-Jun Bal C/F 2772
2772 2772
Returns outwards account
Date Details Amount Sh Date Details Amount Sh
12-
Jun M. Norman 30
12-
Jun N. Senior 16
30-
Jun J Cool 13
30-
Jun C Davies 11
30-Jun Bal C/F 70
70 70
Returns inwards account
Date Details Amount Sh Date Details Amount Sh
14-Jun E Philips 18
14-Jun F Thompson 22
30-Jun E Philips 27
30-Jun E Rigby 30
30-Jun Bal C/F 97
97 97
Note
The balances obtained in the accounts are the values to be taken to the final accounts. However,
FINANCIAL ACCOUNTING
UWEZO COLLEGE BEYOND TRAINING
the double entry should be passed through a test of accuracy
The Trial Balance
The trial balance is a simple report that shows the list of account balances classified as per the
debits and credits. The purpose of the trial balance is to show the accuracy of the double entries
made and to facilitate the preparation of final accounts i.e. the trading, profit & loss account and
a statement of financial position.
The trial balance is prepared of the same principles of double entry were:-
Assets balance is debited
Liability balances are credited
Capital balance is credited
Income balance is credited
Expenses balance is debited.
The structure of the trial balance is as follows
Trial balance
As at 31/Dec/20XX
Debit Credit
Details (Sh) (Sh)
Assets Xx
Expenses xx
Liabilities xx
Incomes xx
Capital xx
Total xxx xxx
In the example 2.3 above, the following trial balance can be extracted.
Trial balance extract
As at 31/Dec/20XX
Debit Credit
Details (Sh) (Sh)
Purchase acc 5262
Sales account 2772
Return inwards acc 97
Return outwards acc 70
K Hill account 3800
M Norman account 470
FINANCIAL ACCOUNTING
UWEZO COLLEGE BEYOND TRAINING
N senior account 90
R Morton account 200
J Cool account 1067
C Davies account 55
D Edwards account 410
J Farguson 550
E Lee 420
F Powel 310
J Farguson 185
H George 250
A Greens 307
F Thompson 334
E philips 389
E Rigby 480
Suspense 1450
Total 9484 9484
Review Questions
Question One
Mr J Ockey commenced trading as a wholesaler stationer on 1 May 2000 with a
capital of Sh.5, 000.00 with which he opened a bank account for his business.
During May the following transactions took place.
May 1 Bought shop fittings and fixtures from store fitments Ltd for
Sh.2,000.00 May 2 Purchased goods on credit from Abel Sh.650.00
May 4 Sold goods on credit to Bruce Sh.700.00
May 9 Purchased goods on credit from Green
Sh.300.00 May 11 Sold goods on credit
to Hill Sh.580.00
May 13 Cash sales paid into bank account Sh.200.00
May 16 Received cheque from Bruce in
settlement of his account May 17 Purchased goods on credit
from Kay Sh.800.0
FINANCIAL ACCOUNTING
