Chapter 12 Posting to General and Subsidiary Ledgers

12. 1 Posting to a General Ledger

§ Separate account needed for each customer and vendor § Separate ledger for customers and vendors § A ledger that is summarized in a single general ledger account is a subsidiary ledger. § A subsidiary ledger containing only accounts for vendors from whom items are purchased or bought on account is called an accounts payable ledger.

§ A subsidiary ledger containing only accounts for charge customers is called an accounts receivable ledger. § An account in a general ledger that summarizes all accounts in a subsidiary ledger is called a controlling account. § Balance in the controlling account = total of all account balances in its related subsidiary ledger.

§ Posting to the general ledger can be done throughout the month-depends on # of transactions § Postings must be done at the end of the month. § Separate amounts are not posted individually for special amount columnsonly the totals are posted for special amount columns.

§ A is placed in parentheses below the general debit and credit columns to indicate that column totals are not posted individually. § The account number is written in parentheses below special amount columns to show they are posted individually.

12. 2 Posting to an Accounts Payable Ledger

§ Each vendor has a 3 -digit number. § The 1 st digit is the division in which the controlling account appears in the general ledger – accounts payable. § The second 2 numbers show where the account is in the subsidiary ledger. § Accounts in the subsidiary ledger can be located by number or name. § When balance in vendor account changes, the balance of the controlling account or Accounts Payable changes.

§ Opening a new account § Write the vendor name on the heading § Write the vendor number on the heading § The vendor name is on the first purchase invoice received.

12. 3 Posting to an Accounts Receivable Ledger

§ First digit 1 shows the controlling account is an asset-Accounts Receivable. § The next two numbers show the customer number. § When the balance of a customer account changes, the balance of the controlling account or Accounts Receivable changes. § Total of all the customer accounts equals the balance of the Accounts Receivable account.

§ Accounts Receivable has a debit balance so there is only a debit balance column on the form. § To open an account: § Write the customer name on the heading § Write the customer number on the heading § Totals of Accounts Receivable special amount columns are posted to the general ledger at the end of each month.

12. 4 Accuracy of Accounting Records

§ To prove the accuracy of posting: § Cash is proved § Subsidiary ledgers must equal controlling account totals § A trial balance is prepared to prove debits equals credits in the general ledger § A listing of vendor accounts, account balances, and total amount due all vendors is called a schedule of accounts payable.

§ A listing of customer accounts, account balances, and total amount due from all customers is called a schedule of accounts receivable.