Dual Entry Accounting: Recording, Journals, Ledgers, and Trial Balance

This article explains the importance of efficient accounting for an organization and the components of dual entry accounting such as recording, journals, ledgers, and trial balance. It provides examples and ledger balances of Tenney York company. It also covers how to prepare a bank reconciliation statement and reconcile accounts receivable and payable.

UNIT 10

Table of Contents
INTRODUCTION...........................................................................................................................3
MAIN BODY...................................................................................................................................3
P1 Recording dual entry accounting written records in a well-timed and accurate way.......3
2 A range of organization transactions with the help of dual entry accounting, journals and
ledgers.....................................................................................................................................5
Ledgers of Tenney York company :.......................................................................................6
Extract the ledger balances and record the transactions in Trial Balance............................11
Prepare Bank Reconciliation Statement...............................................................................13
The roles and differences b/w control and suspense accounts.......................................14
RECONCILIATION OF ACCOUNTS RECEIVABLE AND PAYABLE...................15
CONCLUSION..............................................................................................................................16
REFERENCES..............................................................................................................................17

INTRODUCTION
The accounting procedure is defined as the act of recording, summarising and analysing
financial transactions pertaining to a specific period of any type of organisation. In layman terms
the accounting procedure defines the management of monetary events which leads to smooth and
potent running of business. This procedure is not only beneficial for entities but also of great
significance for the government, oversight agencies and tax collection authorities (Arismaya,
2022). It chiefly is used for used for keeping track of all internal proceedings occurring in an
organization, which protects the employees along with the users of financial information from
any misconduct leading to impactful losses. The accounting is mainly implemented via three
core documents that are: Cash flow statement or a document defining all cash transactions,
Comprehensive Income Statement which summarizes standard net income and other income,
Balance Sheet or statement defining assets and liabilities and Equity Statements which
concentrates on Owner's Equity. In the following project, all of the essential principles related to
accounting are defined as well as an analysis related to transactions made in course of
furtherance of business. The most important aspect of accounting is to efficiently strike a balance
between assets and liabilities which is also discussed later via journal entries, ledgers, trial
balance and bank reconciliation in context to dual entry system of accounting. Through this
project, an individual will be able to implement and understand basic accounting methods to
monetary transactions. However, it should be noted that to perform efficient and effective
accounting for an organization, proper books of accounts and skilled personnels are required
(Centobelli and et.al., 2021). The underlying examples, simply provide a brief explanation or
summary about what the essence of accounting is all about, like for instance, how different types
of invoices, orders, statements, receipts are recorded and used for further assessment in
previously mentioned documents.
MAIN BODY
P1 Recording dual entry accounting written records in a well-timed and accurate way
Recording items or written records is essential to a enterprise corporate statements and a central
obligations of department of accounting. Not only will this assist for legal purposes, but it could
also prevent any disputes with your customers. Transactions can change the balances of the
accounts that occurs in any organization.

It is an accounting method which used to recorded the transactions in more than one account.
The total of debit and credit side must be equal or balance. A debited entry shows on the left side
of the account and credited transactions shows on the right side of an account (Duţescu, 2019).
Either these transactions help to increase the account balance or decrease. Its totally depends on
the account.
It has multi steps to record the business enterprise transactions or items.
To examine the items is a first step of this method. It helps to decide that which account will be
affected more.
To decide the category of account i.e. what will be debited or credited.
Documentation of the transaction in journal.
There are 3 golden rules for recording the transactions:
 receiver to the debited, given to the credited. (Personal A/C)
 What comes in- debit, what goes out- credit. (Real A/C)
 All the expenses and losses are debited, all the income and profit are credited. (Nominal
A/C)
Journal is a main entry book or an original entry book in which the event is first entered in
a linear order or sequence. As all transactions are originally documented in it, the document is
called the Book of Original Entry. The process by which the transaction is reported in the journal
is called journalising. The benefit of a report is the compilation of financial data in chronological
order. The journal's only drawback is that it is difficult to document all the heavy and
unmanageable transactions (Habibu Umar, 2021).
In the ledger, all accounts opens in different pages. All related transactions are collected in
register. Trial balance might be prepare with the help of its balances which assists to measure the
accounts in monetary terms and income and expenses A/C can be planned. For the purpose of
reflect the business's corporate conditions, a balance sheet can also be prepared. There are many
rules of posting the transactions in ledger that are discussed below :
1. All the related items account should be recorded at one side. There is no more than
one opening balance with same items accounts. These all should be assembled in one account.
2. In journal entry, there is any account which is debited so it will be record in same side
in ledger as same with the credited account.

3. It is necessary to initiate any asset A/C or debited items from the debit side with the
using 'TO' as similar account that is in nature of credit side it should be start with using 'BY'.
2 A range of organization transactions with the help of dual entry accounting, journals and
ledgers.
JOURNAL ENTRIES IN BOOKS: -
Date Particulars Debit Credit
01/04/22 Bank
Cash
Flat/societies
Car
Capital
(organisation started with assets)
12000
4600
40000
15000
71600
02/04/22 Purchases
Home Ltd
(being furniture purchased)
8000
8000
05/04/22 Laptop
Printer
Bank
(being laptop and printer purchased)
6000
1000
7000
06/04/22 Bank
Sales
( goods sold)
3200
3200
10/04/22 Repair Expense
Cash
(expenses paid)
140
140
19/04/22 Home Ltd.
Purchases
(Furniture returned )
1500
1500

22/04/22 Bank
Rental Income
(Rent received in cash)
1000
1000
24/04/22 Rayan
Cash
Sales
(Goods sold in cash or credit)
500
2000
2500
25/04/22 Cash
Sales
(Goods sold to David)
1600
1600
26/04/22 Computer
Bank
( Computer purchase for cash payment)
3000
3000
28/04/22 Wages
Bank
(expenses paid to storekeeper)
950
950
29/04/22 Rent Expenses
Bank
(rent paid )
1050
1050
30/04/22 Drawings
Bank
(Amount withdrawn for drawings)
1400
1400
30/04/22 Cash
Rayan
(Rayan paid his liability against 150)
180
180
Ledgers of Tenney York company :
Bank A/C
Date Particulars LF Amt. Date Particulars LF Amt.

01/04/22 Capital 12000 05/04/22 Laptop 6000
06/04/22 Sales 3200 05/04/22 Printer 1000
22/04/22 Rental 1000 26/04/22 Computer 3000
28/04/22 Wages 950
29/04/22 Rent 1050
30/04/22 Drawings 1400
30/04/22 Balance c/d 2800
16200 16200
01/05/22 Balance brought
down
2800
Cash Account
Date Particulars LF Amount Date Particulars LF Amount
01/04/22 Capital 4600 10/04/22 Repair 140
24/04/22 Sales 2000
25/04/22 Sales 1600
30/04/22 Rayan 180 30/04/22 Balance c/d 8240
8380 8380
01/05/22 Balance b/d 8240
Flat Account
Date Particulars LF Amount Date Particulars LF Amount
01/04/22 Capital 40000 30/04/22 Balance c/d 40000
40000 40000
01/05/22 Balance b/d 40000

Car A/C
Date Particulars LF Amt. Date Particulars LF Amt.
01/04/22 Capital 15000 30/04/22 Balance carried
down
15000
15000 15000
01/05/22 Balance brought
down
15000
Capital Account
Date Particulars LF Amount Date Particulars LF Amount
01/04/22 Bank 12000
01/04/22 Cash 4600
01/04/22 Flat 40000
30/04/22 Balance c/d 71600 01/04/22 Car 15000
71600
01/04/22 Balance b/d 71600
Purchases Account
Date Particulars LF Amount Date Particulars LF Amount
02/04/22 Home Ltd 8000 19/04/22 Home Ltd 1500
30/04/22 Balance c/d 6500
8000 8000
01/05/22 Balance b/d 6500
Home Ltd Account
Date Particulars LF Amount Date Particulars LF Amount

19/04/22 Purchases 1500 02/04/22 Purchases 8000
30/04/22 Balance c/d 6500
8000 8000
01/05/22 Balance b/d 6500
Laptop Account
Date Particulars LF Amount Date Particulars LF Amount
05/04/22 Bank 6000 30/04/22 Balance c/d 6000
6000 6000
01/05/22 Balance brought
down
6000
Printer Account
Date Particulars LF Amount Date Particulars LF Amount
05/04/22 Bank 1000 30/04/22 Balance c/d 1000
1000 1000
01/05/22 Balance b/d 1000
Repair Account
Date Particulars LF Amount Date Particulars LF Amount
10/04/22 Cash 140 30/04/22 Balance c/d 140
140 140
01/05/22 Balance b/d 140
Rent Account
Date Particulars LF Amount Date Particulars LF Amount

29/04/22 Bank 1050 22/04/22 Bank 1000
31/10/21 Balance c/d 50
1050 1050
01/05/22 Balance b/d 50
Rayan A/C
Date Particulars LF Amt. Date Particulars LF Amt.
24/04/22 Sales 500 30/04/22 Cash 180
31/10/21 Balance carried
down
320
500 500
01/05/22 Balance brought
down
320
Sales Account
Date Particulars LF Amount Date Particulars LF Amount
06/04/22 Bank 3200
24/04/22 Rayan 500
30/04/22 Balance C/d 7300 24/04/22 Cash 2000
25/04/22 Cash 1600
7300 7300
01/05/22 Balance b/d 7300
Computer Account
Date Particulars LF Amount Date Particulars LF Amount
26/04/22 Bank 3000 30/04/22 Balance c/d 3000

3000 3000
01/05/22 Balance b/d 3000
Wages Account
Date Particulars LF Amount Date Particulars LF Amount
28/04/22 Bank 950 30/04/22 Balance c/d 950
950
01/05/22 Balance b/d 950
Drawings Account
Date Particulars LF Amount Date Particulars LF Amount
30/04/22 Bank 1400 30/04/22 Balance c/d 1400
1400 1400
01/05/22 Balance b/d 1400
Extract the ledger balances and record the transactions in Trial Balance.
Trial balance refers to the accounting report worksheet in which all the ledgers balance is
recorded into debit and credit account column in which totals are equal. The debits and credits
involves all the business transaction of a company foe a certain period of time. Trial balance
prepare i to ensure that the entries in the bookkeeping is mathematically correct.
The main purpose of trial balance is to analyse that the debit balance value must be balanced to
the sum of all credit balance value but if the total of debit balance does not match with the value
of the credit column then this indicates that there is some error in the nominal ledger account. So,
it is essential to find out error before making profit and loss account (Nepomuceno and Rech,
2022).
Types of Trial Balance:
There are various types of trial balance, firstly when the trial balance is printed known as
unadjusted trial balance. After that if there is any error found by the accounting team they make

adjustments to match the financial statements into the compliance with the accounting
framework known as adjusted trial balance. In the Last period closed and the report known as
post-closing trial balance (Pacini, Rogers and Swingen, 2002).
Limitation
 An error of original entry: Error of original entry states that when there is wrong
amount in both the sides of transaction.
 An error of omission: It states when the item or transaction is fully eliminate from the
accounting records.
 An error of reversal: This error states that when the entry is recorded to correct or
balance the amount. These errors does not affect the totals.
 An error of commission: It states that when entries is made right in the correct account
but the value is wrong. But this not effect t5he totals.
 An error of principles: Error of principle states that when entries is made right in t5he
correct amount but use the wrong type of account (Qiu and et.al., 2018).
 Compensating Error: Compensating error states that when there is unrelated multiple
errors leads to imbalance, which leads to together cancel each account.
Preparation of Trial Balance as on 30th April 2022:
Particulars Debit Credit
Bank 2800
Cash 8240
Flat 40000
Car 15000
Capital 71600
Purchases 6500
Home Ltd 6500
Computer 3000
Printer 1000
Repair Expenses 140

Rent 50
Rayan 320
Laptop 6000
Wages 950
Drawings 1400
Sales 7300
TOTAL 85400 85400
Prepare Bank Reconciliation Statement
Bank reconciliation statement represents a summary of business and banking operations
such as withdrawals and deposits. The statement ensures that payments have been done and cash
is deposited in bank on time (Shen and Han, 2020). It should be made at regular intervals to
ensure correctiveness of cash records. It is used to check the accuracy of amount in the bank.
Business needs to make reconciliation statement to match the closing bank balance recorded in
books of accounts with actual bank balance shown by the bank. Activities are recorded on daily,
monthly basis depending upon the value of transactions. If volume of transactions is high then
reconciliation activities are recorded on daily to shift payment risk and cheque bounce. It is also
known as bank passbook, in which all deposits are shown on the credit side or withdrawals are
shown on debit column and if withdrawal arises more than deposits then it is overdraft. Process
of preparing reconciliation statement starts by comparing pass book with cash book and if
balance does not matches then display them in statement after analysing its cause, then deduction
of cheques which are deposited but not collected after that recording of directly deposited
amount. These differences occur due to various reasons like cheque issued by bank but not
deposited for payment yet, cheque paid but not cleared by bank, interest charged by bank,
amount directly deposited in bank account without recording and also due to discounted bills
dishonoured. There are two different ways of preparing the statement: Filing of statement after
summarizing cash book balance and documenting of statement without summarizing cash book
balance. This statement identifies errors made by either customer or bank and helps in rectify
them (Sinha, 2020). Also detect if any fraud activity occurred by bank or other party. Rules of

reconciliation statement are debit balance of cash book should match the credit balance in
passbook. Credit balance indicates unfavourable condition and debit shows favourable situations
in cash book. The key terminologies of reconciliation account are Deposit in Transit means cash
or cheques that are recorded in cash book but not recorded in pass book.
Bank Reconciliation as on 30th April 2022
$ $
Balance as per cash book 8240
Add: Cheques issued but not presented 2000
Add: Interest earned on bank account 160
Add: Electronic transfer from client 250
Add: Cheque for insurance premium incorrectly recorded 100 2510
Less: Deposits not reflected on bank statement 5000
Less: Service charge on bank statement 250
Less: Cheque deposited but dishonoured 2700 7950
Balance as per bank statement 2800
The roles and differences b/w control and suspense accounts
A suspense A/C is an account which is made by the companies for recording the
transaction which are not clear or decided. These types transactions are still have to be verify or
determine by the organisations. It contains entries where there are uncertainness and variances.
For example if any individual send the money to other person via bank transfer but the individual
send that money into to wrong amount then, until the issue will be resolve that money will
transferred in a suspense account (Song, 2018). From the above example it is concluded that
suspense account is a temporary account it is not here for whole accounting year once the issue
will be resolved then this account will be dissolve automatically. There are two types of suspense
account-

Mortgage Suspense account- This account is used by the debtor when any lender fails to pay the
monthly amount of loan repayment. And if they receive that amount after some time then this
account will write-off by the debtor.
Brokerage Suspense Account- It is like general businesses suspense account which is temporary
and hold the funds until the entries will be completed.
while
Control Account- This account contains a summary of all the transaction which are recorded in
the subsidiary books. It helps the organisation to summarise the receipts and payments of the
organisation because both of them contains a large amount of entries. This account helps the
organisation by saving the time when all the accounts are being audited by auditors of the
company and reduce their burden. It also helps in rectifying the error of omission because if any
organisation forget to do a entry in their subsidiaries it is possible for the organisation to do that
entry in control account (Sun and et al., 2018).
Control Account are mostly used by big scale companies because these companies contains large
amount of entries in their day to day operations and by help of this account the organisations can
easily evaluate there entries and save their time and money. Small scale organisations can also
make it but it is worthy when they have so transactions in their daily life (Zhan Her, Hu and Du,
2018).
RECONCILIATION OF ACCOUNTS RECEIVABLE AND PAYABLE
The reconciliation of accounts receivables and payables is a process where the unpaid
customer billings and due amounts of the creditors are balanced with the general ledger amounts,
this process is vital as it proves that the amounts in general ledger is justified and tallies with the
receivable and payables vouchers or invoices. The information related to reconciliation of
accounts receivable and payable are not mentioned or detailed in the above mentioned scenario,
hence could not be analysed (Wang and et al., 2018).

CONCLUSION
Through all of the above examples, it is clear that recording the monetary transactions
will help entities in running a business or following the Going Concern Assumption which
defines that a business no matter the nature, should be capable of running itself for a substantial
period of time. Through this assumption, one can understand how critical it is to maintain
financial statements or follow accounting, as it is capable of tracking all of the information
related to business in which the organization is dealing in. For instance the Journal Entries define
the accounts which are debited and credited such as purchases being made from Home Ltd., here
the purchase account is made from Home Ltd. whom the money is due hence they are defined as
creditors and purchase being an expense is debited. Afterwards, the transaction is posted in
ledger account, trial balance etc. Hence the above given analysis can help in defining scope of
accounting as well as for recording the day to day transactions of an entity, along with
suggestions made to the mentioned owner in context to amount used for personal use.

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