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Income Ledger account balancing | Ledger

Income Ledger account balancing-Feature Image
Income Ledger account balancing-Feature Image

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Income Ledger account means those specific ledger accounts which are related to that amount which was earned or receivable against goods and services which are earned within the current Financial year. These amounts are known as Income and Gain.

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The Following are the name of Income and Gain account: –

  1. Sales a/c
  2. Commission Received a/c
  3. Rent Received a/c
  4. Interest Received
  5. Interest on Drawing
  6. Profit on sale of assets
  7. bad debt recovered
  8. Income tax refund
  9. Loading and Unloading charged from the customer

Steps of Closing of Income Ledger account

It is also known as Closing of Income 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 a balanced amount of larger side which we get after subtracting it from the shorter side on the shorter side of the ledger account.

Note: – 

  • Income account always has a “Credit balance” 
  • Income 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 Income account

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Illustration:

Prepare Sale A/c for the Month of Jan-18.

Date Transaction Amount 
05/01/18Sold goods to Pawan200,000
12/01/18Sold goods to Shallu and she paid with a cheque75,000
21/01/18Cash sale2,000
31/01/18Sold goods to Puneet123,000

Solution:

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

Sales A/c

DateParticulars J.F.AmountDateParticularsJ.F.Amount
05/01/18By Pawan a/c200,000
12/01/18By Bank a/c75,000
21/01/18By Cash a/c2,000
31/01/18By Puneet a/c123,000
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.

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we got Total of the Debit side is equal to 400,000/-
and
Total of the Credit side is equal to 0/-

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

Sales A/c

DateParticulars J.F.AmountDateParticularsJ.F.Amount
05/01/18By Pawan a/c200,000
12/01/18By Bank a/c75,000
21/01/18By Cash a/c2,000
31/01/18By Puneet a/c123,000
400,000400,000
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 400000 – 0 = 400,000/-

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.

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Sales A/c

DateParticulars J.F.AmountDateParticularsJ.F.Amount
05/01/18By Pawan a/c200,000
12/01/18By Bank a/c75,000
21/01/18By Cash a/c2,000
31/01/18By Puneet a/c123,000
31/01/18By Income statement a/c400,000
400,000400,000

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