Ledger Accounts and Posting Step by Step

A Journal records transactions in date order. A Ledger reorganises those same entries account by account. It helps us answer questions such as: How much cash is available? How much is receivable from a customer? How much is payable to a supplier? What is the balance of Purchases, Sales, Rent or Capital?

Simple idea: Journal tells the story transaction by transaction; Ledger collects the complete story of each account at one place.

Learning outcomes

After this lesson, you should be able to prepare separate ledger accounts, post debit and credit effects correctly, write To and By, post compound entries, balance an account and transfer balances towards the Trial Balance.

Meaning of posting

Posting means transferring each debit and credit from the Journal to its respective Ledger account. Every Journal entry has at least two effects, so every entry must be posted to at least two ledger accounts. Posting does not create a new transaction; it classifies the recorded transaction account-wise.

Standard ledger format

J.F. means Journal Folio. It records the Journal page or reference from which the entry was posted. For this learning system, dates are shown as 2026-April-01: year, month in words and date.

The seven-step posting system

1. Read the Journal entry completely, including narration.
2. Prepare one separate ledger for every unique account. Do not create the same ledger twice.
3. Post entries in chronological order.
4. If an account is debited in the Journal, enter the amount on the debit side of that account.
5. On the debit side, write To followed by the opposite account credited in the Journal.
6. If an account is credited in the Journal, enter the amount on the credit side of that account and write By followed by the opposite account debited.
7. After all entries are posted, total and balance each account. Recheck that total debit postings equal total credit postings for the complete set of transactions.

Illustration 1 — one simple Journal entry

On 2026-April-01, the proprietor started business with cash ₹1,00,000.

Posting logic: Cash is debited, so write the entry on the debit side of Cash Account as To Capital A/c. Capital is credited, so write it on the credit side of Capital Account as By Cash A/c.

Illustration 2 — cash purchase of goods

On 2026-April-03, goods were purchased for cash ₹20,000. Under ACCOUNTING LOGIC SYSTEM™, Purchases is treated as a goods-related Real Account. The classification helps in deciding the Journal entry; the posting procedure remains the same for every type of account.

Illustration 3 — credit sale and later receipt

On 2026-April-05, goods were sold on credit to Ravi for ₹15,000. On 2026-April-12, the full amount was received from Ravi.

Ravi Account has equal debit and credit totals, so no amount remains receivable from Ravi.

Illustration 4 — compound entry

On 2026-April-15, salaries ₹8,000 and rent ₹4,000 were paid together in cash.

Post To Cash A/c ₹8,000 in Salaries Account and To Cash A/c ₹4,000 in Rent Account. Cash has two opposite accounts, so its credit side should show By Salaries A/c ₹8,000 and By Rent A/c ₹4,000. Listing the opposite accounts separately creates a clear audit trail.

How to balance a ledger account

1. Add the debit side and credit side separately.
2. Write the larger total on both sides.
3. Find the difference between the two sides.
4. Enter the difference on the shorter side as Balance c/d (carried down).
5. Close the period by totaling both sides.
6. Bring the balance to the opposite side of the next period as Balance b/d (brought down).

If the debit side is greater, the account has a debit balance. Balance c/d appears on the credit side and Balance b/d appears on the debit side of the next period. If the credit side is greater, the account has a credit balance; the positions are reversed.

Illustration 5 — balancing Cash Account

Use these cash transactions: capital introduced ₹1,00,000; cash purchase ₹20,000; cash received from Ravi ₹15,000; salaries paid ₹8,000; rent paid ₹4,000.

On 2026-May-01, write To Balance b/d ₹83,000 on the debit side. This is the cash available at the beginning of May.

Common posting mistakes

• Writing “To” and “By” according to the Journal wording instead of the ledger side.
• Posting only one effect of a Journal entry.
• Writing the same account as its own opposite account.
• Creating duplicate ledgers for one account under slightly different names.
• Posting a compound entry as one unexplained amount instead of showing all opposite accounts.
• Balancing before all transactions for the period are posted.
• Confusing Balance c/d with an additional transaction.

Practice exercise

Journalise and post the following transactions, then balance Cash Account and Mohan Account:

1. 2026-May-01: Started business with cash ₹80,000.
2. 2026-May-03: Purchased goods for cash ₹18,000.
3. 2026-May-06: Purchased furniture for cash ₹10,000.
4. 2026-May-10: Sold goods on credit to Mohan ₹24,000.
5. 2026-May-18: Received cash from Mohan ₹24,000.
6. 2026-May-25: Paid wages ₹5,000 and rent ₹3,000 in cash.

Check your answer

Closing Cash balance: ₹68,000 debit. Mohan Account: nil balance. Total debits and credits in the Journal: ₹1,64,000 each. The compound payment creates separate Wages and Rent postings, while Cash Account shows both opposite accounts.

Where ledger fits in the accounting flow

Continue with independent practice. Follow the development of audited self-study worksheets, reusable exercise-solution packs and printable resources on the Premium Practice Resources page. These materials are not yet offered for sale, and no payment is collected on this lesson page.

Transaction → Accounts affected → Account type → Rule → Journal → Ledger → Trial Balance → Final Accounts.

Revise the previous lesson: Journal Entries Step by Step. Continue with the next lesson: Trial Balance Step by Step. Return to the ACCOUNTING LOGIC SYSTEM™ learning hub.

Worked Illustration: Supplier Part Payment and Closing Payable

Transactions: Goods were purchased on credit from Mehta Traders for ₹18,000. Later, ₹7,000 cash was paid to the supplier. Post both entries to Mehta Traders Account and calculate the outstanding payable.

Journal entries before ledger posting

Particulars	Debit (₹)	Credit (₹)
Purchases A/c Dr.	18,000	—
To Mehta Traders A/c	—	18,000
Being goods purchased on credit	—	—
Total	18,000	18,000

Particulars	Debit (₹)	Credit (₹)
Mehta Traders A/c Dr.	7,000	—
To Cash A/c	—	7,000
Being part payment made to the supplier	—	—
Total	7,000	7,000

The credit purchase creates a payable to Mehta Traders, so the supplier is credited. Part payment reduces that payable, so Mehta Traders Account is debited and Cash Account is credited.

Mehta Traders Account

Supplier ledger after part payment

Debit side	Amount (₹)	Credit side	Amount (₹)
To Cash A/c	7,000	By Purchases A/c	18,000
To Balance c/d	11,000	—	—
Total	18,000	Total	18,000

Outstanding payable: ₹18,000 − ₹7,000 = ₹11,000. Because the supplier still has a credit balance, Balance c/d is entered on the debit side to equalise the account. In the next period, ₹11,000 appears as Balance b/d on the credit side.

Opposite-account posting check

• Mehta Traders was credited in the credit-purchase entry, so its ledger credit side shows By Purchases A/c ₹18,000.
• Mehta Traders was debited in the payment entry, so its ledger debit side shows To Cash A/c ₹7,000.
• Cash was credited in the payment entry, so Cash Account records By Mehta Traders A/c ₹7,000 on its credit side.

Quick practice with verified answer

Goods were purchased on credit from Nisha Suppliers for ₹25,000 and ₹9,000 was later paid through bank. The payment entry is Nisha Suppliers A/c Dr. ₹9,000; To Bank A/c ₹9,000. The remaining payable is ₹16,000 credit. The supplier ledger totals ₹25,000 on each side after Balance c/d ₹16,000 is included.

Review the source entries in Journal Entries Step by Step and carry the final balances to Trial Balance Step by Step. When a Bank or Supplier balance appears on an unexpected side, use the actual Ledger-side Trial Balance example instead of classifying from the account name alone.

Ledger Posting — Frequently Asked Questions

What does posting mean in accounting?

Posting means transferring each journal entry to the relevant Ledger accounts. An account debited in the Journal is posted on its debit side, while an account credited in the Journal is posted on its credit side. The particulars name the opposite account so the double-entry trail remains clear.

Why does a supplier usually show a credit balance?

A credit purchase creates an amount payable to the supplier, so the supplier’s Personal Account is credited. A later payment reduces that payable and is posted on the debit side of the supplier’s account. For example, a ₹18,000 credit purchase followed by a ₹7,000 payment leaves an ₹11,000 credit balance.

What is the difference between Balance c/d and Balance b/d?

Balance c/d is the balancing figure used to close an account at the end of a period. The same balance is brought into the next period as Balance b/d on the side that represents its actual debit or credit nature. Thus, a supplier’s closing credit balance is carried down on the debit side for totaling and brought down on the credit side in the next period.

Does a balanced Ledger guarantee that every entry is correct?

No. Ledger balances help prepare the Trial Balance, but equal debit and credit totals do not detect every error. A completely omitted transaction or an entry posted to the wrong account can still leave the totals equal. See the worked Trial Balance comparison showing how a wrong account can keep totals equal, then recheck the source transaction, the Journal and both Ledger postings.

How is one compound Journal Entry posted to three Ledger Accounts?

For Supplier A/c Dr ₹5,000; To Bank A/c ₹4,800; To Discount Received A/c ₹200, post every account separately:

Ledger Account	Side	Particulars	Amount ₹
Supplier A/c	Debit	To Bank A/c	4,800
Supplier A/c	Debit	To Discount Received A/c	200
Bank A/c	Credit	By Supplier A/c	4,800
Discount Received A/c	Credit	By Supplier A/c	200

The Supplier debit totals ₹5,000, matching the Journal. Bank and Discount Received credits total ₹5,000. This preserves the double-entry check while showing the two opposite accounts separately. Review the compound Journal Entry before posting.

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Author
Ejaj Abubakar Rangunwala
M.Com., B.Ed., D.B.M.
Rangunwala Academy