This is how an liability ledger looks like before closure:
| Bank Loan Account (Liability) | |||
|---|---|---|---|
|
Debit |
Credit |
||
|
|
- |
15 Dec 2011 - Cash |
$10,000 |
In order to close the account, we must first total both sides. The credit side adds up to $10,000 where as the debit side does not contain any balance. Therefore, as $10,000 is higher than the total of debit side, we write this amount at the end of both sides.
Closing figure is the balancing figure on the debit side which in this case is $10,000.
Being a balance sheet ledger account, the closing balance will be carried forward to the next accounting period.
This is how the liability ledger will look like after closure:
| Bank Loan Account (Liability) | |||
|---|---|---|---|
|
Debit |
Credit |
||
|
31 Dec 2011 - Balance c/d |
$10,000 |
15 Dec 2011 - Cash |
$10,000 |
|
|
$10,000 |
|
$10,000 |
The closing balance amount of $10,000 will be posted in the trial balance in respect of the bank loan.