Subsidiary ledgers slides

 What is the General Ledger?
 What is a specialised journal? Name five
specialised journals?
 If Mary owes John $5,000, where in John’s
accounting records this transaction will
appear?
 If Mary pays off $2,000, where would John’s
accountant record this transaction?
 How would the above two transactions affect
John’s Trial Balance?

…uhmmm… I
wonder who owes
us the money?

Is it Monica?

Is it Erica?

Is it Tina? Would the
General Ledger
help answer this
Is it Rita?
question?

 No, the General Ledger would only give us
the total value of the accounts receivable,
but not how much Monica, Erica, Rita and
Tina owe us individually
 However, the information about individual
debts and payments is necessary to the
business to collect cash to pay salaries,
purchase inventory, finance purchases of
NCA, expansions and so on
 Subsidiary ledger (or supporting ledger) is
the answer!

 Subsidiary ledger provides the listing of
individual accounts receivable, as well as
details of specific customer tax invoices,
receipts & credit notes
 This information comes from the sales
distribution SD & cash receipts CR journals

 Review the prescribed textbook and answer
the following questions

 The totals of Sales Distributions and Cash
Receipts journals are posted to _____________
on a _________ basis. The account the totals are
posted to is known as
____________________________
 Details from Sales Distribution and Cash
Receipts journals are posted to the
_____________ in the a/r subsidiary ledger on a
_________ basis
 What is debited in total (from SD journal) to the
a/r control account is also ___________ to the
subsidiary ledger individual account
 What is credited in total (from CR journal) to
the a/r control account is also ____________ to
the individual account of the subsidiary ledger

 The totals of Sales Distributions and Cash
Receipts journals are posted to _____________
The General Ledger
on a _________ basis. The account the totals are
monthly
posted to is known as
____________________________
Accounts Receivable Control Account

 Details from Sales Distribution and Cash
Receipts journals are posted to the
Individual accounts
_____________ in the a/r subsidiary ledger on a
_________ basis
daily
 What is debited in total (from SD journal) to the
a/r control account is also ___________ to the
debited
subsidiary ledger individual account
 What is credited in total (from CR journal) to
the a/r control account is also credited
____________ to
the individual account of the subsidiary ledger

 At the end of the month, total of individual
accounts from the subsidiary ledger is
______________ to the A/R Control account in
the General ledger
 The inventory system used by the business has
/ has no impact on the subsidiary ledger

 At the end of the month, total of individual
accounts from the subsidiary ledger is
______________ to the A/R Control account in
reconciled

the General ledger
 The inventory system used by the business has
/ has no impact on the subsidiary ledger

We are going to use PERIODIC
inventory system for this topic

A/c Rec A Sales Distribution Journal of [ ] SD 1
Dr Accounts
Receivable
Inv/ and/or Acc'nts GST Any
Date Adj Particulars Fol Receiv Sales Payable A/c
A/c Rec B
Dr
Dr Cr Cr Cr
A/c Rec C
Dr
Accounts GST
Receivable Payable Any
Control Sales A/c
Posting
Dr Cr Cr Cr
Sales
Distribution
Journal

How does the
Subsidiary Ledger
change the postings
to the General
Ledger?
(compare postings to GL with
and without AR Ledger)

It doesn’t!
Postings to the General Ledger
are still the same!

A/c Rec A Cash Receipts Journal of [ ] CR 1
Cr
Acc’nt Disc GST
Bank s Rec Allow Pay Sales
A/c Rec B
Cr
Dr Cr (Dr) Cr Cr
A/c Rec C
Cr
Acc Receiv Discount GST
BANK CONTROL Allowed Pay SALES
Posting
Dr Cr Dr Cr Cr
Cash
Receipts
Journal

True or False:
- The General Ledger accumulates information
from the sales distribution journal only
- The purpose of the Debtors Ledger is to
provide information about which customers
owe money to the business, and how much
- The Debtors Ledger accumulates information
from all journals.
- Each month all journals are totalled and
posted to the General Ledger
- The purpose of the General Ledger is to
organise and summarise the individual
transactions listed in all the journals

 Itis all the same for AR subsidiary ledger, but
in reverse!!!

It is when our Monica (or Erica, Tina or Rita)
consider their liabilities to TELSTRA, Energy
Australia, OfficeWorks and other suppliers

 There are no changes to the preparation of
the PD and the CP journals
 The Creditors Ledger accumulates
information from the PD and the CP journals
 The purpose of the Creditors Ledger is to
provide knowledge about which suppliers the
business owes money, and how much

A/c Pay A Purchases Distribution Journal of [ ] PD 1
Cr
Acc’nts Purch Any
Payab ases GST Rec a/c
A/c Pay B
Cr
Cr Dr Dr Dr
A/c Pay C
Cr
Accounts GST
Payable Receivable Any
Control Purchases A/c
Posting
Cr Dr Dr Dr
Purchases
Distribution
Journal

A/c Pay A Cash Payments Journal of [ ] CP 1
Dr Acc’nt Purc
s Disc GST hase
Bank Payab Rec’d Rec s
A/c Pay B
Dr
Cr Dr (Cr) Dr Dr
A/c Pay C
Dr
Acc Payable Discount GST
BANK CONTROL Received Rec Purchases
Posting
Cr Dr Cr Dr Dr
Cash
Payments
Journal

 unnecessary detail is kept out of the general
ledger
 a trial balance can be prepared without
reference to the subsidiary ledgers
 in preparation of financial report, details of
individual debtors/creditors are not always
necessary and the control account provides a
concise summary
 errors can be detected through the
reconciliation of the control accounts with
the subsidiary ledgers

 The Creditors Ledger accumulates
information from the General Ledger
 There are changes required to the
preparation and format of the purchase
distribution journal and the cash payment
journal, when using A/P Subsidiary ledger
 At the end of each month, the PD journal is
totalled and cross-balanced: the total of the
Purchases account column should equal the
total of all the other account columns
 The individual account transactions that
make up the total A/P column in the PD
journal are credited to their respective
accounts in the separate A/P ledger

Subsidiary ledgers slides

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