Liabilities Ledger account balancing | Ledger

Liabilities Ledger account means those specific ledger accounts which are related to that amount which is payable or pending to pay. These amounts are known as Liabilities and Capital.

The Following are the name of the Liabilities and Capital account: –

Capital
Bank Loan
Bank Overdraft
Loan from ____________. ( Name of any person or institution)
Debenture
Trade payables
Bills payables
Outstanding Expenses
Advance received income
Advance from customers
All reserves and surplus accounts
Security Deposited from Employees

Closing of Liability Ledger account:-

It is also known as Closing of Liability 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: –

Liabilities account always has a “Credit balance”
Liabilities Ledger account balance will always carry forward to the next financial year.

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

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We will show only transactions related to the particular Liabilities account.

Illustration:

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

Date	Transaction	Amount
01/01/18	Credit balance in the Bank a/c	300,000
08/01/18	Purchase goods from Ramu and paid with a cheque	150,000
22/01/18	Salary paid to Employees	175,000
31/01/18	Goods sold to Priyanka and payment received by cheque	250,000

Solution:

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

Bank A/c

Table of Contents

Closing of Liability Ledger account:-

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

Date	Particulars	J.F.	Amount	Date	Particulars	J.F.	Amount
31/01/18	To Sale a/c		250,000	05/01/18	By Balance b/d		300,000
				12/01/18	By Purchase a/c		150,000
				21/01/18	By Salary a/c		175,000

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 250,000/-

and

Total of the Credit side is equal to 625,000/-

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

Bank A/c

Date	Particulars	J.F.	Amount	Date	Particulars	J.F.	Amount
31/01/18	To Sale a/c		250,000	05/01/18	By Balance b/d		300,000
				12/01/18	By Purchase a/c		150,000
				21/01/18	By Salary a/c		175,000

			625,000				625,000

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/-

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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.

Bank A/c

Date	Particulars	J.F.	Amount	Date	Particulars	J.F.	Amount
31/01/18	To Sale a/c		250,000	05/01/18	By Balance b/d		300,000
				12/01/18	By Purchase a/c		150,000
				21/01/18	By Salary a/c		175,000
31/03/18	By balance c/d (B. Fig)		375,000
			625,000				625,000

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Closing of Liability Ledger account:-

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

Illustration:

Solution:

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