Ledger and Trial Balance
Senior 6 · Entrepreneurship
Ledger and Trial Balance
Lesson 2 of 4
25 min
When Mutoni pays her March rent of Frw 250,000 by bank transfer, two things happen at once: the business has used up a month of the shop (an expense of Frw 250,000), and the money in the bank has fallen by Frw 250,000. Neither record is complete without the other. Double entry writes down both halves, as a debit in one account and an equal credit in another. That is why, at the end of the month, the debits and credits of the whole ledger must agree.
In S2 and S5 you learned the rule for each type of account and wrote transactions in the books of prime entry. This lesson finishes the job: it takes a whole month of books and posts every entry to the ledger.
Definition
Double-entry bookkeeping: the system in which every transaction is recorded twice, as a debit in one account and a credit of the same amount in another, because every transaction gives something and receives something (its dual aspect). As a result, total debits always equal total credits:
Example: rent paid by bank, Frw 250,000: debit Rent (an expense), credit Bank (the asset given up).
You already know the rule by type of account (S2's DEAD CLIC). The three classes of account from Lesson 1 give the same answers, stated as three "golden rules". Use whichever you find quicker; they never disagree.
| Class of account | Debit | Credit |
|---|---|---|
| Personal | the receiver (who gets value from the business) | the giver (who gives value to the business) |
| Real | what comes in | what goes out |
| Nominal | expenses and losses | incomes and gains |
Check: Umucyo Builders pays Frw 500,000 into the bank. Bank is real and money comes in: debit Bank. Umucyo Builders is personal and is the giver: credit Umucyo Builders. The asset rule (debit an increase in an asset) gives the same answer.
| Book of prime entry | Each item is posted to | The total is posted to |
|---|---|---|
| Sales journal | Debit the customer's account (sales ledger) | Credit the Sales account |
| Returns inwards journal | Credit the customer's account (sales ledger) | Debit the Returns inwards account |
| Purchases journal | Credit the supplier's account (purchases ledger) | Debit the Purchases account |
| Returns outwards journal | Debit the supplier's account (purchases ledger) | Credit the Returns outwards account |
| Cash book | Receipts (debit side): credit the account named. Payments (credit side): debit the account named. | Nothing: the cash book is already the cash and bank accounts |
| General journal | Each line to the side the journal shows | Nothing |
When a journal total is posted, the Details column reads Sundry debtors or Sundry creditors ("sundry" means "various"), because the other half of the entry is spread over several personal accounts.
Mutoni opened her hardware shop on 1 March 2026. By 31 March her bookkeeper had written up these books. (Illustrative figures, Frw. Invoice and credit-note numbers are left out to save space.)
| Sales journal (credit sales of goods) | ||
|---|---|---|
| Date | Customer | Frw |
| 8 Mar | Umucyo Builders | 850,000 |
| 14 Mar | Gikongoro Contractors | 700,000 |
| 26 Mar | Gikongoro Contractors | 340,000 |
| Total | 1,890,000 | |
| Purchases journal (credit purchases of goods) | ||
|---|---|---|
| Date | Supplier | Frw |
| 3 Mar | Kivu Building Supplies | 1,500,000 |
| 6 Mar | Akagera Paints | 600,000 |
| 19 Mar | Akagera Paints | 450,000 |
| Total | 2,550,000 | |
| Returns journals | Date | Name | Frw |
|---|---|---|---|
| Returns inwards (from customers) | 16 Mar | Umucyo Builders | 50,000 |
| Returns outwards (to suppliers) | 12 Mar | Kivu Building Supplies | 100,000 |
| General journal | |||
|---|---|---|---|
| Date | Details | Dr (Frw) | Cr (Frw) |
| 2 Mar | Motorcycle | 1,200,000 | |
| Capital | 1,200,000 | ||
| Being the owner's delivery motorcycle brought into the business as capital | |||
| Cash book, debit side (receipts) | |||
|---|---|---|---|
| Date | Details | Cash (Frw) | Bank (Frw) |
| 1 Mar | Capital | 300,000 | 4,000,000 |
| 10 Mar | Sales | 420,000 | |
| 20 Mar | Umucyo Builders | 500,000 | |
| 28 Mar | Sales | 510,000 | |
| 30 Mar | Gikongoro Contractors | 700,000 | |
| 31 Mar | Cash (C) | 600,000 | |
| Cash book, credit side (payments) | |||
|---|---|---|---|
| Date | Details | Cash (Frw) | Bank (Frw) |
| 3 Mar | Shop fittings | 900,000 | |
| 18 Mar | Rent | 250,000 | |
| 22 Mar | Kivu Building Supplies | 900,000 | |
| 25 Mar | Wages | 180,000 | |
| 27 Mar | Drawings | 100,000 | |
| 29 Mar | Electricity | 35,000 | |
| 29 Mar | Purchases | 120,000 | |
| 31 Mar | Bank (C) | 600,000 | |
Definition
Contra entry: a transaction between the cash and bank columns of the cash book, such as paying cash into the bank. Both halves are in the cash book, so it is marked (C) and is not posted to any other account.
Example: on 31 March Mutoni pays Frw 600,000 of cash into the bank: credit the cash column, debit the bank column, both marked (C).
Tip
The cash book's opposite-side rule. An amount on the debit side of the cash book is posted to the CREDIT side of the other account, and an amount on the credit side is posted to the DEBIT side. Cash book and ledger account are the two halves of one double entry, so they must sit on opposite sides.
Worked example 1: posting the sales side of the business
Post Mutoni's sales journal, returns inwards journal and customer receipts to the ledger.
Step 1: the sales journal. Debit each customer with each invoice; credit Sales with the month's total, Frw 1,890,000.
Step 2: the returns inwards journal. Credit Umucyo Builders with Frw 50,000; debit the Returns inwards account with the total, Frw 50,000.
Step 3: the cash book receipts. Umucyo's Frw 500,000 and Gikongoro's Frw 700,000 are on the DEBIT side of the cash book (bank column), so they go to the CREDIT side of the customers' accounts, with "Bank" as the details. The two cash sales (10 and 28 March) are credited to Sales with "Cash" as the details.
Result:
| Gikongoro Contractors (sales ledger) | |||||
|---|---|---|---|---|---|
| Dr | Cr | ||||
| Date | Details | Frw | Date | Details | Frw |
| 14 Mar | Sales | 700,000 | 30 Mar | Bank | 700,000 |
| 26 Mar | Sales | 340,000 | |||
| Sales account (general ledger) | |||||
|---|---|---|---|---|---|
| Dr | Cr | ||||
| Date | Details | Frw | Date | Details | Frw |
| 10 Mar | Cash | 420,000 | |||
| 28 Mar | Cash | 510,000 | |||
| 31 Mar | Sundry debtors | 1,890,000 | |||
Umucyo Builders' account is the one you drew in Lesson 1. Check the dual aspect: the Sales account's credits total , and every franc of it has a matching debit in the cash book or in a customer's account.
Worked example 2: posting the cash book payments and the general journal
Step 1: payments. Each payment is on the CREDIT side of the cash book, so it is DEBITED to the account named: Shop fittings Frw 900,000, Rent Frw 250,000, Kivu Building Supplies Frw 900,000, Wages Frw 180,000, Drawings Frw 100,000, Electricity Frw 35,000 and Purchases Frw 120,000. The details column names the column used: "Bank" or "Cash".
Step 2: the capital receipts and the general journal. The owner's money (Frw 300,000 cash and Frw 4,000,000 in the bank) is on the debit side of the cash book, so Capital is credited twice. The general journal adds the motorcycle: debit Motorcycle, credit Capital, Frw 1,200,000.
| Capital account (general ledger) | |||||
|---|---|---|---|---|---|
| Dr | Cr | ||||
| Date | Details | Frw | Date | Details | Frw |
| 1 Mar | Cash | 300,000 | |||
| 1 Mar | Bank | 4,000,000 | |||
| 2 Mar | Motorcycle | 1,200,000 | |||
Step 3: the Purchases account. It collects the cash purchase from the cash book and the purchases journal total.
| Purchases account (general ledger) | |||||
|---|---|---|---|---|---|
| Dr | Cr | ||||
| Date | Details | Frw | Date | Details | Frw |
| 29 Mar | Cash | 120,000 | |||
| 31 Mar | Sundry creditors | 2,550,000 | |||
Step 4: the contra. The 31 March deposit of Frw 600,000 is marked (C) on both sides of the cash book and is not posted anywhere else.
Posting is now complete. The two purchases ledger accounts:
| Kivu Building Supplies (purchases ledger) | |||||
|---|---|---|---|---|---|
| Dr | Cr | ||||
| Date | Details | Frw | Date | Details | Frw |
| 12 Mar | Returns outwards | 100,000 | 3 Mar | Purchases | 1,500,000 |
| 22 Mar | Bank | 900,000 | |||
| Akagera Paints (purchases ledger) | |||||
|---|---|---|---|---|---|
| Dr | Cr | ||||
| Date | Details | Frw | Date | Details | Frw |
| 6 Mar | Purchases | 600,000 | |||
| 19 Mar | Purchases | 450,000 | |||
The general ledger accounts that received only one entry:
| Account | Side | Date | Details | Frw |
|---|---|---|---|---|
| Motorcycle | Dr | 2 Mar | Capital | 1,200,000 |
| Shop fittings | Dr | 3 Mar | Bank | 900,000 |
| Rent | Dr | 18 Mar | Bank | 250,000 |
| Wages | Dr | 25 Mar | Cash | 180,000 |
| Drawings | Dr | 27 Mar | Cash | 100,000 |
| Electricity | Dr | 29 Mar | Cash | 35,000 |
| Returns inwards | Dr | 31 Mar | Sundry debtors | 50,000 |
| Returns outwards | Cr | 31 Mar | Sundry creditors | 100,000 |
Together with the cash book, the three ledgers now hold every March transaction twice. In Lesson 3 we balance each account; in Lesson 4 we list the balances and test whether they agree.
Warning
Three posting mistakes examiners look for. (1) Posting a cash sale to a customer's account: a cash customer never becomes a debtor, so cash sales go straight from the cash book to the Sales account. (2) Posting the journal TOTAL to the personal accounts, or the individual invoices to the Sales account, which counts the sales twice. (3) Posting a contra entry to the ledger, which records the deposit a second time.
Joe Siwale, "The Sales day book, Sales Ledger and the General Ledger" (about 20 minutes). Watch how each invoice in the sales day book (the sales journal) is posted to the customer's account in the sales ledger, and the total to the Sales account in the general ledger.
Practice
Sources and credits
Written by Ganzaa: Mutoni's books and ledger, the posting diagram, the tables, the worked examples and the practice items. The businesses, names and figures are illustrative (2026).
