Self Balancing Ledger System: Meaning, Diagram, Examples

Under the Self Balancing Ledger System, the separate trial balance of Each Ledger can be prepared without the help of other ledgers.

Self Balancing Ledger System: Definition, Examples, Diagram

Self Balancing Ledger System: Meaning

Each Ledger is Self Balancing Ledger System in the system on the self-balancing system some additional columns drawn in general so that the analysis of each entry pertaining to the specific ledger is also given in the analysis column.

It already discussed in the sectional balancing system and the basic principle of the Self Balancing Ledger System is that the double entry is completed within the Ledger itself. the ledger which contains debit entry is provided with the credit entry and the one which contains credit and it is provided with a debit entry.

This is effected by opening an additional account called General Ledger Adjustment Account in each of sales and purchase ledger and two accounts 1. Sales ledger adjustment account and 2. Purchase ledger adjustment account in the general ledger.

Self Balancing Ledger System: Diagram

Example 1.

You have been furnished with the following information by MS Rajeev Agencies Balotra:

Opening Balances	Credit	Debit
Bought Ledger	270900	29000
Sales Ledger	–	327000

Purchase return 2,700
cheque issued in favor of creditors 8,32,800
acceptance of bills payable 1,00,000
received from debtors 13,42000
discount allowed 7,500
credit sales 18,27,000
credit 9,27,600
discount received 22,500
bills receivable 6,00,000

You have to prepare: (1) purchase/bought ledger adjustment account in general ledger (2) Sales ledger adjustment account in general ledger and (3) General ledger adjustment account in the Sales Ledger.

In General Ledger

Sales Ledger Adjustment Account

Bought/Purchase Ledger Adjustment Account

importance of self balancing ledger system — importance of self-balancing ledger system

In Sales Ledger

General Ledger Adjustment Account

Example 2.

Shri Ram Narayan has ledgers in use, Namely: Sales Ledger, purchase ledger and the nominal ledger which are all kept on the self-balancing system.

From the following particulars for the year 2009-10 prepare the Adjustment Accounts as they would appear in the nominal ledger as on 31st March 2010.

The balance of sundry creditors as of 1st April 2009 6,570, the balance of sundry debtors as of 1st April 2009 3,760.

Credit purchase 67,000
Return outward 700
Credit Sales 90,000
Sales return 1,500
Cash sales 9,500
Paid to creditors allows fans to customers 39,000
Allowances to customers 500
Allowances received 900
Bad debates previously written off now recovered 3,000
bill receivable received from debtors 26,800
Collection from debtors 59,000
Credit balance transferred from purchase ledger to sales ledger 600
bill receivable dishonored 1200
Bill payable accepted 24,000
bad debts are written off 2,000
dr.balance transfer from sales ledger to purchase ledger 900

In Nominal Ledger

Sales Ledger Adjustment Account

Purchase Ledger Adjustment Account

Example 3.

Ramesh maintenance his books on Self Balancing Ledger System from the following particulars to prepare control accounts in 1. Bought/Purchase ledger and 2. Sales ledger.

1st April 2009 balance of Purchase/Bought ledger debit 700 and credit 30,640, the balance of sales ledger debit 66,930 and credit 1,865. transactions during the year 2009-10 were as follows:

Credit purchase 72,700
Sales 1,35,000
Sales return 500
Bad debts 1,000
Purchase return 2,500
Cash paid to creditors 57,500
Discount received 320
Bill Receivable received 10,000
Bill Receivable Dishonoured 2,500
Cash paid to debtors 137
Credit sales 1,16,000
Cash purchases 11800
Provision for bad and doubtful debts 270
Bad debts recovered 600
Cash received from debtors 8,3000
Discount allowed 650
Interest charged to debtors 592
Bill payable accepted 8,000
Notary charges debited to party 10
On 31 March 2010 dr. The balance of bought Ledger 980
On 31 March 2010 cr. The balance of sales Ledger 266

In Bought Ledger

General Ledger Adjustment Account

In Sales Ledger

General Ledger Adjustment Account

What is self balancing system of ledger — What is self-balancing system of ledger?

Thus, now you know how Self Balancing ledger System works in accounting.

KMC says

November 14, 2018 at 3:44 PM

11/14/2018; November;
Google, Inc.;

Staff Member;

Please Note;

O Self Balance is Correct;

As, in Covered Thru Insurance; A Company;

Thank You;
KMC

- Khurram Mustansir says
  
  September 4, 2019 at 7:20 PM
  
  So, Sales Ledger Adj a/c in General Ledger = “Debtor a/c” and General Ledger Adj A/c in Sales Ledger = “Sales A/c”, and same goes for purchases…
  
  - Manma says
    
    September 5, 2019 at 10:36 AM
    
    how can i help you?

Self Balancing Ledger System: Definition, Examples, Diagram

Self Balancing Ledger System: Meaning