JOURNAL, LEDGER AND 3 TYPES OF T BALANCE

Master Problem: The Full Accounting Cycle

💡 The Scenario

To truly master Bookkeeping, we are going to look at a realistic business scenario with 6 transactions that affect 9 different accounts. In Part 1, we will analyze the transactions and post them into the Journal. In Part 2, we will open all 9 Ledgers and balance them.

Part 1: The Transactions & Journal (May 2026)

Mr. Y runs a trading business. Here are his transactions for the month of May:

• May 01: Started business with Cash ₹1,00,000 and Bank Balance ₹50,000.
• May 03: Purchased Furniture by cheque ₹20,000.
• May 08: Purchased goods on credit from M/s Alpha for ₹40,000.
• May 12: Sold goods for Cash ₹15,000 and on credit to Beta Bros for ₹25,000.
• May 18: Paid M/s Alpha by cheque ₹30,000.
• May 31: Paid Rent in cash ₹5,000.

Date	Particulars	L.F.	Debit (₹)	Credit (₹)
2026 May 01	Cash A/c ... Dr. Bank A/c ... Dr.     To Capital A/c (Being business started with cash and bank)		1,00,000 50,000	1,50,000
May 03	Furniture A/c ... Dr.     To Bank A/c (Being furniture purchased by cheque)		20,000	20,000
May 08	Purchases A/c ... Dr.     To M/s Alpha A/c (Being goods purchased on credit)		40,000	40,000
May 12	Cash A/c ... Dr. Beta Bros A/c ... Dr.     To Sales A/c (Being goods sold for cash and credit)		15,000 25,000	40,000
May 18	M/s Alpha A/c ... Dr.     To Bank A/c (Being payment made to creditor by cheque)		30,000	30,000
May 31	Rent A/c ... Dr.     To Cash A/c (Being rent paid in cash)		5,000	5,000
	GRAND TOTAL		2,85,000	2,85,000

Part 2: Posting & Balancing the 9 Ledgers

Now, we will open a separate 'T' Account for every unique account we used in the Journal above.

🔍 Spotlight: How did we balance the CASH Account?

Before you scroll down and look at the final ledgers, let's walk through the exact mathematical steps we used to balance the very first one, the Cash Account:

1. Total Both Sides (Roughly): Look at the cash entries. We received cash twice (1,00,000 + 15,000 = ₹1,15,000 on the Debit side) and we paid cash once (₹5,000 on the Credit side).
2. Find the Heavier Side: The Debit side is heavier by ₹1,10,000 (1,15,000 - 5,000).
3. Equalize (c/d): A ledger must balance! We must make both sides equal the heavier amount (1,15,000). So, we plug in the missing ₹1,10,000 onto the lighter side (the Credit side) on the last day of the month (May 31) and write "By Balance c/d" (carried down).
4. Draw Totals: Now, we draw our double lines and write 1,15,000 on both sides to show they match.
5. Bring it Down (b/d): On the very next day (June 01), we pull that ₹1,10,000 balance down to its true home—the heavier Debit side—and write "To Balance b/d" (brought down). This tells the business owner exactly how much cash they have in their hands to start June!

Notice how this exact same 5-step process is applied to every single account below:

1. CASH ACCOUNT

Date	Particulars	J.F.	Amount	Date	Particulars	J.F.	Amount
May 01	To Capital A/c		1,00,000	May 31	By Rent A/c		5,000
May 12	To Sales A/c		15,000	May 31	By Balance c/d		1,10,000
	TOTAL		1,15,000		TOTAL		1,15,000
Jun 01	To Balance b/d		1,10,000

2. BANK ACCOUNT

Date	Particulars	J.F.	Amount	Date	Particulars	J.F.	Amount
May 01	To Capital A/c		50,000	May 03	By Furniture A/c		20,000
				May 18	By M/s Alpha A/c		30,000
	TOTAL		50,000		TOTAL		50,000

*Note: The Bank Account balanced perfectly (50,000 on both sides) without needing a c/d balance. The account is settled to zero.*

3. CAPITAL ACCOUNT

Date	Particulars	J.F.	Amount	Date	Particulars	J.F.	Amount
May 31	To Balance c/d		1,50,000	May 01	By Cash A/c		1,00,000
				May 01	By Bank A/c		50,000
	TOTAL		1,50,000		TOTAL		1,50,000
				Jun 01	By Balance b/d		1,50,000

4. FURNITURE ACCOUNT

Date	Particulars	J.F.	Amount	Date	Particulars	J.F.	Amount
May 03	To Bank A/c		20,000	May 31	By Balance c/d		20,000
	TOTAL		20,000		TOTAL		20,000
Jun 01	To Balance b/d		20,000

5. PURCHASES ACCOUNT

Date	Particulars	J.F.	Amount	Date	Particulars	J.F.	Amount
May 08	To M/s Alpha A/c		40,000	May 31	By Balance c/d		40,000
	TOTAL		40,000		TOTAL		40,000
Jun 01	To Balance b/d		40,000

6. M/S ALPHA A/C (CREDITOR)

Date	Particulars	J.F.	Amount	Date	Particulars	J.F.	Amount
May 18	To Bank A/c		30,000	May 08	By Purchases A/c		40,000
May 31	To Balance c/d		10,000
	TOTAL		40,000		TOTAL		40,000
				Jun 01	By Balance b/d		10,000

7. BETA BROS A/C (DEBTOR)

Date	Particulars	J.F.	Amount	Date	Particulars	J.F.	Amount
May 12	To Sales A/c		25,000	May 31	By Balance c/d		25,000
	TOTAL		25,000		TOTAL		25,000
Jun 01	To Balance b/d		25,000

8. SALES ACCOUNT

Date	Particulars	J.F.	Amount	Date	Particulars	J.F.	Amount
May 31	To Balance c/d		40,000	May 12	By Cash A/c		15,000
				May 12	By Beta Bros A/c		25,000
	TOTAL		40,000		TOTAL		40,000
				Jun 01	By Balance b/d		40,000

9. RENT ACCOUNT

Date	Particulars	J.F.	Amount	Date	Particulars	J.F.	Amount
May 31	To Cash A/c		5,000	May 31	By Balance c/d		5,000
	TOTAL		5,000		TOTAL		5,000
Jun 01	To Balance b/d		5,000

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The Journal Book

Date	Particulars	L.F.	Debit (₹)	Credit (₹)

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