Expenses Ledger account balancing | Ledger

Expenses Ledger account balancing - Feature Image

Expenses Ledger account: –

Expenses Ledger account means those specific ledger accounts which are related to that amount which is paid or due to paid for goods and services which are consumed within the current Financial year. These amounts are known as Expenses.

The Following are the name of Expenses and losses account: –

  1. Purchase a/c
  2. Freight and Transportation
  3. Octroi
  4. Carriage
  5. Commission paid
  6. Rent paid
  7. Wages
  8. Salary
  9. Staff welfare
  10. Bonus to Employees
  11. Printing and Stationery
  12. Postage and Stamps
  13. Electricity Charges
  14. Telephone and Mobile bills
  15. Repair and Maintenance
  16. Interest on Loan
  17. Interest on Capital
  18. Loss on sale of Asset
  19. Loss of goods by Theft
  20. Loss of Goods in Transit
  21. Insurance Charges
  22. Bad Debts

Expenses Ledger account balancing: –

It is also known as Closing of Expenses Ledger account for the specific account. The closing of ledger accounts is included in the following steps : –

  • 1st Step: Totaling both sides.
  • 2nd Step: Writes the total of the largest side on both sides.
  • 3rd Step: Subtract the shorter side total from the larger side total.
  • 4th Step: Now, Write balance amount of larger side which we get after subtracting it from the shorter side on the shorter side of the ledger account.

Note: – 

  • Expenses account always has a “Debit balance” 
  • Expense Ledger account balance always transferred to the Income statement at the end of each financial year.

Now we will explain it further with the help of the following illustration.

We will show only transactions related to the particular expense account

Illustration:

Prepare Freight and Transportation A/c for the Month of Jan-18.

Date  Transaction  Amount 
01/01/18 Transportation paid on the purchase of goods from Ram 10,000
09/01/18 Freight paid on the purchase of goods from Arun 5,000
17/01/18 Purchase goods from Raman and Transportation charge paid for 20,000
29/01/18 Purchase goods from Raman and Freight paid for 7,000
Solution:

After posting all the transaction in the journal and then posted it in the ledger we will get ledger account as shown below:

Freight and Transportation A/c

Date Particulars  J.F. Amount Date Particulars J.F. Amount
01/01/18 To Cash a/c 10,000
09/01/18 To Cash a/c 5,000
17/01/18 To Cash a/c 20,000
29/01/18 To Cash a/c 7,000
Note: – if you don’t know how to post the transactions in the ledger account please click on this link ledger.
Now, we will do it step by step
1st Step: Totaling both sides.
we got Total of the Debit side is equal to 42,000/-
and
Total of the Credit side is equal to 0/-

2nd Step: Writes the total of the largest side on both sides. So,

Freight and Transportation A/c

Date Particulars  J.F. Amount Date Particulars J.F. Amount
01/01/18 To Cash a/c 10,000
09/01/18 To Cash a/c 5,000
17/01/18 To Cash a/c 20,000
29/01/18 To Cash a/c 7,000
42,000 42,000

3rd Step: Subtract the shorter side total from the larger side total.

Total of the debit side(Largest side) subtracted from the credit side total(shortest)

we got 42000 – 0 = 42,000/-

4th Step: Now, Write balance amount of larger side which we get after subtracting it from the shorter side on the shorter side of the ledger account as shown below.

Freight and Transportation A/c

Date Particulars  J.F. Amount Date Particulars J.F. Amount
01/01/18 To Cash a/c 10,000
09/01/18 To Cash a/c 5,000
17/01/18 To Cash a/c 20,000
29/01/18 To Cash a/c 7,000
31/01/18 To Income Statement a/c (B. Fig.) 42,000
42,000 42,000

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