Ledger Account Examples

Examples of Ledger Account

The following Ledger accounts example provides an outline of the most common Ledgers. The ledger accounts are the separate records of the business transactions carried by an entity which are prepared using the reference of the daily journal entries and are related to a specific account which can be an asset or a liability, capital or equity, expense item or revenue item.

Basically, a ledger account contains information about the opening and the closing balances of a particular account and the periodical debit and credit adjustments on the basis of journal entries prepared on a daily basis. The most important information that a ledger account provides is the periodical (usually annual) closing balances about a specific item or account. The ledger accounts are important in the formation of trial balances and also the financial statements of the company.

Common Examples of Ledger Accounts

Some common examples of ledger accounts are:

1. Cash
2. Inventory
3. Fixed Assets
4. Accounts Receivable
5. Capital
6. Debt
7. Accounts Payable
8. Accrued Expenses
9. Sales or Revenue
10. Dividend
11. Interest Income
12. Operating Expenses
13. Administrative Expenses
14. Depreciation
15. Taxes

Practical Examples of Ledger Accounts

In order to better understand the working of ledger accounts, let’s discuss some ledger accounts examples:-

Example #1

Mr. John Wick wants to start a new clothing business. He has a total sum of $100,000 in his savings that can be invested. He owns a small shop at a primary location that can be used to start a retail clothing outlet. For the store, he purchased furniture including shelves, a counter desk and other equipment for $15,000. He also hires a staff of two for customer support and other office work for $5,000 each.

Mr. Wick decided to start with men’s clothing and purchased a complete range of men clothes from the wholesale market which costs him around $75,000. The initial purchase got sold in a period of not more than 1 month for a total of $95000.

Mr. Wick wants to journalize these transactions and create ledger accounts for the month of April 2019.

• Journal Entries

• Ledger Accounts Example

Example #2

David Baker wants to start a forging factory, where he can manufacture high-quality chef and military knives. On January 1, 2018, he invested a sum of $1,000,000 as capital and started The Damascus Forging Works. He took a bank loan of $750,000 @ 5% PA and invests the remaining amount of $250,000 from his own savings. He opened a current account and deposited $800,000.

Afterward, he made the following transactions

• On Jan 2, he rented a factory in the nearby industrial area for $20,000 per month and deposited $100,000 in advance by cheque.
• On Jan 4, Mr. Baker purchased the necessary machinery for $500,000, paid by cheque.

After setting up the factory, he started production from 5^thJan and following transactions took place during the 1^st year:-

Since Mr. Baker maintained all the accounting records himself, he wants our help to create ledger accounts for the firm.

The ledger accounts:-

Recommended Articles

This has been a guide to Ledger Account Examples. Here we discuss most common examples of ledger account along with journal entry and explanations. You can learn more about financing from the following articles –

• Examples of T-Account
• Compare – General Ledger vs Trial Balance
• What is Accounts Payable Ledger?
• Journal vs Ledger – Compare