Accounting
Chapter 12
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A business’s size, number of transactions, and type of transactions
determine the number of ledgers used in an accounting system
Subsidiary Ledger
Accounts Payable Ledger
Accounts Receivable Ledger
o Total amounts are summarized in single general ledger accounts:
Accounts Payable for vendors and Accounts Receivable for charge
customers
Controlling Account-balance equals the total of all account balances in
related subsidiary ledger
Section 1
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Assign a vendor number to each account in the Accounts Payable Ledger
Three digit number often used:
o 1st # identifies the division where the controlling account is located
in general ledger
o 2nd and 3rd # show location within the subsidiary ledger
Accounts are arranged alphabetically-new accounts assigned with middle
number method
When balance of a vendor account is changed so is the Accounts Payable
balance
Total of all vendor account balances in the Account Payable ledger equals
the balance of Accounts Payable in general ledger
Open vendor account with vendor name and number on top line
When start new page-carry balance forward and place a check mark in
Post Ref. Column
Posting from Purchases to Accounts Payable Ledger
o Date, Purchase journal page (p#) in Post. Ref., write credit
amount, add to get new balance, finally write vendor number in the
Purchases journal Post. Ref. Column
*P=Purchase journal page
Section 2
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Each entry in Accounts Payable Debit column of a cash payments journal
affect a vendor account
Post from Cash Payments to Accounts Payable Ledger
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Date, CP number in Post. Ref. Write debit amount in vendor debit column,
subtract for a new credit balance, write vendor number in cash payments
journal Post. Ref.
Posting a credit entry from a General Journal to Accounts Payable Ledger
Date, G number in Post. Ref., write amount in credit column, add to get
new balance, write vendor number to the right of the diagonal line in
General Journal Post. Ref.
Proving the Accounts Payable Ledger is done monthly
Schedule of Accounts Payable
A Schedule of Accounts Payable is prepared after all entries in a journal
are posted
Accounts Payable Ledger proved by seeing if the balances of Accounts
Payable in a general ledger equals the total of schedule of accounts
payable
Section 3
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Accounts Receivable-customer number starts with 1 to indicate it is an
asset
When balance of a customer account in an Accounts Receivable ledger is
changed, the balance of the controlling account Accounts Receivable is
also changed
Total of all customers account balances in Accounts Receivable ledger
equals the balance of the Accounts Receivable controlling account
Total amount to be collected from all charge customers is summarized in a
single general ledger account-Accounts Receivable
Accounts Receivable subsidiary ledger form is similar to Accounts payable
subsidiary form except has a debit balance column because assets have a
normal debit balance
Open customer account the same as open vendor accounts
Post the same way from Sales journal as from Purchases except use S# in
Post. Ref.
The controlling account in the general ledger, Accounts Receivable, is also
increased by the posting entry
At the end of the month, the Sales journals Accounts Receivable Debit
column total is posted to the controlling account, Account Receivable, in
general ledger
Section 4
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Posting from a cash receipts journal to an Accounts Receivable ledger
o The customer has paid on account
o Date, CR#, credit amount in credit column of customer account,
subtract amount in credit column to get new debit balance, write
customer number in CR journal
Schedule of Accounts Receivable
o Schedule of Accounts Receivable prepared after all entries in a
journal posted
o Prove when the balances of the Accounts Receivable in general
ledger equals the total of Schedule of Accounts Receivable
Section 5
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When use up all the lines of an account in a general ledger have to open a
new page
Record the account name, account number, and account balance on new
page
o Use date, balance, check mark in Post. Ref., and list the debit or
credit in balance column
Amounts in cash payments journal entries are recorded in either general
amount columns or special amount columns
Each amount in the General columns are posted individually to general
ledger accounts that are designated in Account Title column
Only the monthly total of each special amount column is posted to a
general ledger account
Post CP journal general column amounts like have in past to general
ledger accounts
Only exception are the vendor accounts which have already been posted
to a subsidiary ledger
When post Accounts Payable credit from General Journal the Post. Ref.
Number is to the left of the diagonal
Posting
Steps in Posting:
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Transfer the date from journal to account
Fill in the Post. Ref. Column in the account
Transfer the amount from journal to account
Find the new balance of the account
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Return to the Journal and fill in the Post. Ref. Column
Three Ledgers
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General Ledger-4 Digit Account Numbers
o Assets
o Liabilities
o Owner’s Equity
o Revenue
o Cost of Merchandise
o Expenses
Accounts Payable Ledger
o Listing of all VENDORS whom we buy from on account
o Alphabetical order
o 3 Digit Account Numbers-beginning with 2
o Liabilities
Accounts Receivable Ledger
o Listing of all CHARGE CUSTOMERS whom we sell to on account
o Alphabetical order
o 3 Digit Account Numbers-beginning with
o Assets
Posting from Special Journals
o Purchases Journal- each entry is posted to the account in the Accounts
Payable Ledger
o Total- is posted to two separate accounts in the General Ledger- Debit of
purchases and Credit of Accounts Payable
o Cash Payments Journal- each entry in the Accounts Payable debit column
is posted to an account in the Accounts Payable Ledger
o Totals- are posted to an account in the General Ledger: Accounts
Receivable debit, Cash Credit
o Sales Journal- each entry in the Account Receivable Debit column is
posted to an account in the Accounts Receivable Ledger
o Totals- are posted to an account in the General Ledger: Accounts
Receivable, Sales Credit, Sales Tax Payable Credit
o Cash Receipts Journal- each entry in the Accounts Receivable Credit
column is posted to an account in the Accounts Receivable Ledger
- each entry in a General Column is posted to an account in the
General ledger
o Totals- are posted to an account in the General Ledger: Accounts
Receivable
credit, Sales credit, Sales Tax Payable Credit, Cash Debit
o General Journal- each entry is posted to an account in the General Ledger
Order of Posting
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Sales Journal
Purchases Journal
General Journal
Cash Receipts Journal
Cash Payments Journal
* all entries may NOT be in chronological order