How to Prepare Ledger Accounts with Solved Problems

If the Journal is a diary where you write everything as it happens, the Ledger is a set of folders. Each folder (Account) contains only transactions related to one specific person, asset, or expense.

Definition:

A Ledger is the “Principal Book of Accounts” where transactions are classified and summarized into individual accounts.

Format of ledger

Think of a Ledger as a “Money Diary” for one specific person or thing.

• Left Side (Debit – Dr): Think of this as the “Incoming” or “Receiver” side.
• Right Side (Credit – Cr): Think of this as the “Outgoing” or “Giver” side.

The Visual Template (Use this for every account)

15 Practice Sums (Step-by-Step Solutions)

To make this “Pro” level, I will show you the Journal Entry first (The logic), then the Ledger (The recording).

Sum 1: Starting Business

Transaction: Started business with Cash ₹5,00,000.

• Logic: Cash is coming in (Debit), Capital is the source (Credit).
• Journal: Cash A/c (Dr) to Capital A/c (Cr).

Cash Account

Capital Account

Sum 2: Bank Deposit

Transaction: Deposited ₹2,00,000 into Bank.

• Logic: Bank receives (Debit), Cash goes out (Credit).

Bank Account

Cash Account (Continued)

Sum 3: Cash Purchase

Transaction: Bought goods for Cash ₹50,000.

• Logic: Purchases (Expense) is Debit, Cash (Going out) is Credit.

Purchases Account

Sum 4: Cash Sale

Transaction: Sold goods for Cash ₹80,000.

• Logic: Cash (Coming in) is Debit, Sales (Income) is Credit.

Sales Account

Sum 5: Paying Rent (Expense)

Transaction: Paid Rent ₹10,000 by Cash.

Rent Account

Sum 6: Credit Purchase (Buying on “Udhaar”)

Transaction: Bought goods from Anita on credit ₹40,000.

• Logic: Purchases (Debit), Anita is the Giver (Credit).

Anita’s Account

Sum 7: Credit Sale

Transaction: Sold goods to Rahul on credit ₹60,000.

Rahul’s Account

Sum 8 & 9: Returns (The Reverse Logic)

Transaction 8: Returned goods to Anita worth ₹2,000.
Transaction 9: Rahul returned goods to us worth ₹3,000.

Purchase Returns A/c (Sum 8)

Sales Returns A/c (Sum 9)

Sum 10 & 12: Settlements & Discounts (The “MBA” Level)

Sum 12 Transaction: Rahul owed us ₹57,000. He paid ₹55,000 and we gave him a ₹2,000 discount.

Rahul’s Account (Settlement)

Sum 11, 13, 14, 15: Special Adjustments

• Sum 11 (Compound): Started business with Cash and Furniture. You open two ledger accounts and post “To Capital” in both.
• Sum 13 (Drawings): Owner took money for personal use. Drawings A/c (Dr) To Bank (Cr).
• Sum 14 (Depreciation): Value of Furniture went down. Depreciation A/c (Dr) To Furniture A/c (Cr).
• Sum 15 (Outstanding): Salary is due but not paid. Salary A/c (Dr) To Outstanding Salary A/c (Cr).

Practice Section: 5 Sums for You

Answer Key (The Step-by-Step Solution)

For each sum, I will show you which two accounts are affected and where the money goes.

Sum 1: Capital Entry

• Accounts affected: Cash A/c and Capital A/c.
• The Logic: Cash comes in (Debit), Capital is the source (Credit).

Cash Account

Sum 2: Asset Purchase

• Accounts affected: Furniture A/c and Cash A/c.
• The Logic: Furniture comes in (Debit), Cash goes out (Credit).

Furniture Account

Sum 3: Credit Purchase (The “Liability”)

• Accounts affected: Purchases A/c and Modern Traders A/c.
• The Logic: Goods come in (Debit), Modern Traders is the Giver/Creditor (Credit).

Modern Traders Account

Sum 4: Credit Sale (The “Asset/Debtor”)

• Accounts affected: Kiran’s A/c and Sales A/c.
• The Logic: Kiran is the Receiver (Debit), Sales is the Income (Credit).

Kiran’s Account

Sum 5: Paying a Creditor

• Accounts affected: Modern Traders A/c and Cash A/c.
• The Logic: Modern Traders receives money (Debit), Cash goes out (Credit).

Modern Traders Account (Updated)

(Note: The “Balance c/d” shows we still owe them ₹5,000).

Tips and tricks

5 simple “Golden Tricks” to master ledger posting without any confusion:

1. The “Opposite Name” Trick
   Inside any account, never write its own name. If you are in the Cash Account, look at the journal and grab the other name (like Sales or Rent) and write that instead. It’s like a “No Selfies” rule!
2. The “To” & “By” Shortcut
   Remember: “To” is Left, “By” is Right.
   If the journal entry has a “To” (the credit part), it ironically moves to the Left side of the other account. If it’s the top name (the debit part), it moves to the Right side of the other account using “By.”
3. The Cash “Plus/Minus” Hack
   For Cash or Bank accounts:
   • Left side is your (+) Plus side (Money coming in).
   • Right side is your (-) Minus side (Money going out).
     If you paid someone, it’s always on the Right. If you received money, it’s always on the Left.
4. The “Best Friends” Rule (Discounts)
   Cash and Discount are best friends; they always stay on the same side. If you post Cash on the Left side, the Discount Allowed goes on the Left side too. They never leave each other.
5. The “Slide” Balancing Trick
   When finishing an account, the “Balance c/d” is just a gap-filler on the smaller side. To start the next month, just “Slide” that amount to the opposite side below the total line and call it “Balance b/d.” That is your real final answer.

Swathika B

Swathika B is an MBA graduate in Finance & Business Analytics , the founder of The Commerce Lab. With a strong academic foundation in B.Com BFSI and hands-on experience in financial analysis, data analytics, and business studies, she created this platform to make Commerce and Accountancy simple, practical, and exam-ready for students across India.