MGT101 - Financial Accounting - I - Lecture Handout 13

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VOUCHERS AND POSTING TO LEDGERS ACCOUNTS

Learning Objectives:

After studying this lecture, you should be able to:

Understand different types of vouchers.
How to book entry in voucher?
Carrying forward the balance of an account.

Voucher

In book keeping, voucher is the first document to record an entry. Vouchers are the documentary evidence of each financial transaction. Normally three types of vouchers are used:

Receipt voucher
Payment voucher
Journal voucher

Receipt Voucher

Receipt voucher is used to record cash or bank receipt. Receipt vouchers are of two types:

Cash receipt voucher
Bank receipt voucher

Cash receipt voucher denotes receipt of cash. Bank receipt voucher indicates receipt of cheque or demand draft. Standard format of cash receipt voucher is given below:

Name of the Organization
Bank Receipt / Cash Receipt OR Receipt Voucher
Date:		No:
Cash / Bank code:		Description / Title:
Description / Title of Account	Code #	Credit Amount



Total:
Narration:
Prepared By:		Checked By:

Payment Voucher

Payment voucher is used to record a payment of cash or cheque. Payment vouchers are of two types:

Cash Payment voucher
Bank Payment voucher

Cash Payment voucher denotes Payment of cash. Bank Payment voucher indicates payment by cheque or demand draft. Standard format of cash Payment voucher is given below:

Name of the Organization
Bank Payment / Cash Payment OR Payment Voucher
Date:		No:
Cash / Bank code:		Description / Title:
Description / Title of Account	Code #	Debit Amount



Total:
Narration:
Prepared By:		Checked By:

Journal Voucher

Journal voucher is used to record transactions that do not affect cash or bank. Standard format of journal voucher is given hereunder:

Name of the Organization
Journal Voucher
Date:		No:
Cash / Bank code:		Description / Title:
Description / Title of Account	Code #	Debit Amount	Credit Amount



Total:
Narration:
Prepared By:		Checked By:

How to Carry Forward a Balance?

It is already mentioned that in ‘T’ account, at the end of accounting period, if one side is greater than the other side, balancing figure will be written on the lesser side as balance. For instance, if amount on debit side is greater than the amount on credit side, the balancing figure is written on the credit side as balance & it is known as Debit Balance. On the other hand, if amount on the credit side is greater than that of amount on the debit side, the balance is shown on the debit side. It is called the Credit Balance.

At the start of next accounting period, these balances are carried forward. Debit balance is written on the credit side, but it is the excess of debit side over the credit side, when it is carried forward, it is written on the debit side. For example, ledger account of cash is given below:

Cash Account Account code # 1
Date	Particulars	Code #	Dr. (Rs.)	Date	Particulars	Code #	Cr. (Rs.)
1-3-02 13-3-02 21-3-02	Capital a/c Sales a/c Received from debtors	02 07 08	150,000 12,000 25,000	5-3-02 7-3-02 10-3-02 21-3-02 23-3-02 25-3-02 29-3-02	Office furniture Purchases a/c Carriage a/c Paid to creditors Salaries a/c Rent a/c Stationery a/c	03 04 05 06 09 10 11	2,000 9,000 250 7,000 2,500 3,000 2,000
					Balance		161,250
	Total		187,000		Total		187,000

This cash account is showing the balance of Rs. 161,250 on the credit side. This balance is excess of debit side over the credit side and, therefore, is called the debit balance.
When it is carried forward it is written on the debit side because debit side of the cash account is greater & Rs. 161,250 is the balancing amount of the debit side of cash account. So, it is an asset & it will be used for further expenses in the forth coming period.

Let’s take another example:

Accrued Expenses Account Account code # 13
Date	Particulars	Code #	Amount Rs. (Dr.)	Date	Particulars	Code #	Amount Rs. (Cr.)
31-3-02	Balance		5,000		Accrued bills	12	5,000
	Total		5,000		Total		5,000

In this account, balance is written on the debit side & it is called the credit balance. As this balance represents excess of credit side over debit side, when it is carried forward it is again written on the credit side.
It can also be explained like this:

Debit balance when carried forward, is written on the debit side
Credit balance when carried forward, is written on the credit side

This is further explained with the help of the following solved illustration:

Illustration

Following is the Trial Balance of Saeed & Sons for the month ended January 31, 2002

Saeed & Sons. Trial Balance As on January 31, 2002
Title of Account	Code	Dr. Rs.	Cr. Rs.
Cash Account	01	55,000
Accrued expense Account	02		10,000
Bank Account	03	25,000
Loan Account	04		100,000
Furniture Account	05	20,000
Office Equipment	06	10,000
Total		110,000	110,000

In the month of February, following transactions took place:

No.	Date	Particulars
01	Feb 07	They purchased stationery worth of Rs. 5,000
02	Feb 10	They paid their first installment of loan Rs. 10,000
03	Feb 12	They received a cheque from a customer of Rs. 5,000
04	Feb 17	Accrued expenses of Rs. 5,000 are paid.
05	Feb 20	They purchased furniture of Rs. 1,000
06	Feb 23	Office equipment of Rs. 2,000 is sold
07	Feb 25	Staff salaries are paid by cheque Rs. 10,000
08	Feb 28	Sold goods for cash Rs.2,000

Solution: The ledger accounts of Saeed & Sons will bear the following changes:

Cash Account Account code # 1
Date	Particulars	Code #	Amount Rs. (Dr.)	Date	Particulars	Code #	Amount Rs. (Cr.)
1-2-02 23-2-02 28-2-02	Balance c/f Office equipment. Sales a/c	06 01	55,000 2,000 2,000	7-2-02 10-2-02 17-2-02	Stationery Loan a/c Accrued expenses Furniture a/c Balance c/d	10 04 02 05	5,000 10,000 5,000 1,000 38,000
	Total		59,000		Total		59,000

Accrued Expenses Account code # 2
Date	Particulars	Code #	Amount Rs. (Dr.)	Date	Particulars	Code #	Amount Rs. (Cr.)
17-2-02	Accrued expenses Balance c/d	01	5,000 5,000	1-1-02	Balance c/f		10,000
	Total		10,000		Total		10,000

Bank Account Account code # 3
Date	Particulars	Code #	Amount Rs. (Dr.)	Date	Particulars	Code #	Amount Rs. (Cr.)
17-2-02 12-2-02	Balance c/f Cheque received	01 07	25,000 5,000	25-2-02	Salaries a/c Balance c/d		10,000 20,000
	Total		30,000		Total		30,000

Loan Account Account code # 4
Date	Particulars	Code #	Amount Rs. (Dr.)	Date	Particulars	Code #	Amount Rs. (Cr.)
10-2-02	Installment paid Balance c/d	01	10,000 90,000		Balance c/f		100,000
	Total		100,000		Total		100,000

Furniture Account Account code # 5
Date	Particulars	Code #	Amount Rs. (Dr.)	Date	Particulars	Code #	Amount Rs. (Cr.)
10-2-02 20-2-02	Balance c/f Furniture a/c	01	20,000 1,000	23-2-02	Balance c/d		21,000
	Total		21,000		Total		21,000

Office Equipment Account Account code # 6
Date	Particulars	Code #	Amount Rs. (Dr.)	Date	Particulars	Code #	Amount Rs. (Cr.)
10-2-02	Balance c/f		10,000		Office Equipment Balance c/d	01	2,000 8,000
	Total		10,000		Total		10,000

Balance C/F is balance carried forward & Balance C/D is balance Carried down.