Subsidiary Ledgers A Subsidiary ledger is a group

Subsidiary Ledgers A Subsidiary ledger is a group of accounts with a common characteristic, assembled together to facilitate the recording process by freeing the general ledger from details concerning individual balances. Used to keep track of individual balances. Two common subsidiary ledgers are: 1. Accounts receivable (customers’) 2. Accounts payable (creditors’) Each general ledger control account balance must equal the composite balance of the individual accounts in the related subsidiary ledger. Chapter 7 -1 SO 2 Describe the nature and purpose of a subsidiary ledger.

Subsidiary Ledgers Relationship of general ledger and subsidiary ledgers Illustration 7 -3 Chapter 7 -2 SO 2 Describe the nature and purpose of a subsidiary ledger.

Subsidiary Ledgers Advantages of Subsidiary Ledgers 1. Show in a single account transactions affecting one customer or one creditor. 2. Free the general ledger of excessive details. 3. Help locate errors in individual accounts. 4. Make possible a division of labor. Chapter 7 -3 SO 2 Describe the nature and purpose of a subsidiary ledger.

Special Journals Used to record similar types of transactions. Illustration 7 -5 If a transaction cannot be recorded in a special journal, the company records it in the general journal. Chapter 7 -4 SO 3 Explain how companies use special journals in journalizing.

Special Journals Sales Journal Illustration 7 -6 Under a perpetual inventory system, one entry at selling price in Sales Journal results in a debit to Accounts Receivable and a credit to Sales. Another entry at cost results in a debit to Cost of Goods Sold and a credit to Merchandise Inventory. Chapter 7 -5 SO 3 Explain how companies use special journals in journalizing.

Special Journals Illustration 7 -7 POSTING THE SALES JOURNAL Companies make daily postings from the sales journal to the individual accounts receivable in the subsidiary ledger. Chapter 7 -6 SO 3 Explain how companies use special journals in journalizing.

Special Journals Illustration 7 -7 POSTING THE SALES JOURNAL Posting to the general ledger is done monthly. Chapter 7 -7 SO 3 Explain how companies use special journals in journalizing.

Special Journals Cash Receipts Journal Illustration 7 -9 In the cash receipts journal, companies record all receipts of cash. The posting of the cash receipts journal is similar to the posting of the sale journal. “Other Accounts can include Capital, Drawing, & Prepaids. Chapter 7 -8 An (x) below the "Other Accounts" column in a cash receipts journal indicates the total is not posted to the general ledger.

Special Journals Illustration 7 -13 Purchases Journal Daily postings are made from the purchases journal to the accounts payable subsidiary ledger. Chapter 7 -9 SO 4 Indicate how companies post a multi-column journal.

Special Journals Illustration 7 -13 Purchases Journal At the end of the accounting period, the company posts totals to the general ledger. Chapter 7 -10 SO 4 Indicate how companies post a multi-column journal.

Special Journals Cash Payments Journal Illustration 7 -16 In a cash payments (cash disbursements) journal, companies record all disbursements of cash. The procedures for posting the cash payments journal are similar to those for other journals. In posting a multi-column journal, the total of the Other Accounts column is not posted. Chapter 7 -11 SO 4 Indicate how companies post a multi-column journal.