LEDGER BALANCING (IE) EXAMPLE

LEDGER BALANCING IE EXAMPLE

FOR OLD BUSINESS

The following are some of the balancing appearing in the ledger of trader on 31-12-1995. Compute gross profit taking and closing stock as Rs 12000.

Opening stock 1-1-95                                             - 6000

Purchases                                                                - 48000

Purchases returns                                                    - 4000

Sales                                                                        - 63200

Sales returns                                                            - 1600

Wages                                                                      - 4000

Solution :

Cost of goods sold = Opening stock + net purchases + Wages – Closing stock

= Rs.6000 + 44000 + 4000 – 12000

= Rs 42000

Net sales = Sales – Sales Returns

= Rs 63,200 - 1600

= Rs 61,600

Gross Profit = Net Sales – Cost of goods sold

= Rs 61,600 – 42,000

= Rs 19,600

Balancing – Meaning

Balancing

After the ledger posting the next stage is “balancing” the accounts , we have seen that account is debited whenever its receives the benefit of the transaction and is credited when ever it gives the benefit of the transaction,Generally both the sides of account will not be equal.Either the debit side total may be more than the credit side total or the credit side total may be more than the debit side

total.An account is said to show a debit balance if debit side is heavier and is said to show a credit balance if the credit side is heavier.The process of showing the debit or credit balance of a particular account ' or ' striking the balance '

The difference between the total debits and the total credits of an account is called the balance.

'ie',,,, the net result of debits and credits in an account is the balance.

Balancing may be defined as the process of finding the difference between total debits and total credits of an account and writing of the difference in the lighter side so that the total of two sides becomes equal.