Can you show 15 transactions with their journal entries, ledger, and trial balance?

Let the business in our example be X Trading. The 15 transactions are as follows:

1. 1^st April – X Trading started its business with Rs. 10,000 cash and furniture of Rs. 5,000.
2. 5^th April – Purchased 1,000 units of goods for Rs. 1,000 in cash from Ram.
3. 10^th April – Bought stationery for Rs. 100 in cash.
4. 25^Th April – Sold 500 goods for Rs. 750 in cash.
5. 1^st May – Paid a rent of Rs. 1200 ( 1^st April to 31^st March)
6. 1^st June – Took a loan of Rs. 15,000 from the bank at [email protected]%.
7. 15^Th June – Sold 400 goods for Rs. 600 to Shyam in credit.
8. 1st August – Bought a computer for Rs. 10,000 in from ABC Computers in credit.
9. 15^th October – Received Rs. 300 from Shyam in cash.
10. 1^st November – Purchased 2,000 units of goods for 2,000 from Ram in credit.
11. 15^th November – Paid Rs. 5,000 to ABC Computers through cheque.
12. 1^st December – Sold 1,000 units of goods for Rs. 1,500. Received cheque as payment.
13. 1^st January – Obtained Trade license (valid for 5 years) by paying fees of Rs. 1000 through online bank transfer.
14. 15^Th February – Paid Rs. 1,500 to Ram. Through cheque.
15. 15^Th March – Drawings made of Rs. 2000 in cash.

We will prepare the journal, ledgers and the trial balance from the above transactions.

Journal

Journal is known as the book of primary entry or book of original entry. It is because every transaction is recorded in form of journal entries in the journal. Every journal entry affects at least two accounts (dual effect). A transaction has to be a monetary transaction otherwise it cannot be recorded as a journal entry.

The procedure of recording transactions as journal entries is simple if we follow the modern rules of accounting.

So first we have to identify which and what type of account does a transaction affect. The types of accounts are:

1. Asset – Debit in case of increase Credit in case of decrease.
2. Liabilities – Debit in case of decrease Credit in case of increase.
3. Capital – Debit in case of decrease Credit in case of increase.
4. Expense – Debit in case of increase Credit in case of decrease.
5. Income – Debit in case of decrease Credit in case of increase.

Ledger

Ledgers are known as the books of principal entry or book of final entry. All the journal entries recorded in the journal are posted to the ledgers. A Ledger is where the entries related to a particular account are recorded. For example, all the transactions related to salary will be recorded in the salary account ledger.

It is very important to prepare the ledger to arrive at the balance of each account in the books of concern so that it can prepare its trial balance.

The procedure of posting journal entries in the ledger account is done is as follows:

The ledgers are as follows:

Trial Balance

The trial balance is not a part of the books of accounts. It is just a statement prepared to check the arithmetical accuracy of the books of the accounts. It also helps to know about the omission and posting mistakes. It is prepared after the ledger accounts have been drawn and their balances have been ascertained.

The balance of all the ledger accounts is posted on either side of the trial balance. Debit balance of the account on the debit side and credit balance of the account on the credit side.

Also, the closing stock from the financial statements of the previous year is posted on the debit side of the trial balance as opening stock to account for the stock with the business at the beginning of the financial year.

Following is the trial balance of X trading: