How to post from books of prime entry to the ledger

Step by step

1. Total each book of prime entry. Add up each day book and the cash book for the period.
2. Post individual accounts. Post each customer or supplier entry to their personal account in the sales or purchases ledger.
3. Post the totals to the nominal ledger. Post the day book total to the matching nominal account, such as sales or purchases.
4. Keep debits equal to credits. Check that the individual and total postings keep the ledger in balance.
5. Use folio references. Record a folio against each posting so entries can be traced later.

Worked example

A sales day book total of RM1,000 is credited to sales, while each customer is debited individually.

Understanding the method

A business records transactions in date order in books of prime entry: the sales day book, purchases day book, returns day books, cash book and journal. The ledger then sorts the same transactions by account.

Posting is the bridge between the two. Keeping them separate reduces errors and lets many similar transactions be summarised before they reach the ledger.

Every debit needs a credit. Take the sales day book. Each sale is posted individually to the debit of that customer's account in the sales ledger, because the customer now owes more.

At the end of the period, the total is posted as one figure to the credit of the sales account in the general ledger, because income has risen. The business needs each customer's own balance but only one sales figure.

The purchases day book works the other way. Credit each supplier's account with the individual amounts, and debit the purchases account with the total. Returns books reverse these.

The cash book is both a book of prime entry and a ledger account, so the other side of each entry is posted to the relevant account. A journal entry already states both sides, so post exactly the debit and credit it gives.

In an exam, you may be given completed day books to post, or invoices and credit notes to enter in the correct book first. Ask three questions: which account is affected, does it increase or decrease, and is that a debit or a credit?

Here is an example. The sales day book lists three credit sales: RM500, RM800 and RM700. Debit the customers' accounts RM500, RM800 and RM700 in the sales ledger.

Then credit the sales account in the general ledger with the total of RM2,000. The three debits (2,000 in total) equal the one credit.

If one customer later returns goods worth RM100, the credit note goes in the sales returns day book. Credit that customer's account RM100, and debit the returns inwards account with the total.

To check, the individual postings to personal accounts must add up to the total posted to the nominal account. A trial balance drawn from the ledger should then balance. If it does not, a posting went to the wrong side, was left out or had the wrong amount.

Common mistakes include posting the individual amounts to the general ledger as well as the total, which double-counts. Another is posting the total to a personal account instead of the individual figures. Others are getting the direction of returns wrong and putting a cash sale through the sales day book. Cash sales belong in the cash book.

If you lose track of which postings go to personal accounts and which go to nominal accounts, we can help. One of our teachers can post a set of day books with you and check each side. Book a trial class

Related skills

• How to prepare a sales day book
• How to prepare a purchases day book
• How to balance off a ledger account

The methods here are standard accounting practice, with original figures. For your exam board's exact requirements, see exam boards and Sources.