Chapter 7
Specialized Journals and
Subsidiary Ledgers

Leads to greater efficiency in a manual system
Allows for reduced postings to the general ledger
– Daily transactions are recorded in the subsidiary ledger and updated periodically
Cash Journal
Payroll Journal

General Ledger and Control
Accounts
Control accounts are used for general ledger accounts that have numerous entries. They supply the detail for each account
– Accounts Receivable
– Accounts Payable
– Prepaid Insurance
– Prepaid Expenses

Balances of the control accounts must equal the balance recorded on the general ledger
– Accounts Receivable Subsidiary Ledger– balances due from each guest or city ledger
(direct bill) account must total & equal the general ledger
– Accounts Payable Subsidiary Ledger– amounts due to each supplier must total and equal the amount recorded on the general ledger

Lodging Industry Accounts
Receivable - Trade
Guest Ledger – Guests currently in house or house accounts to be settled on a current basis
City Ledger – Departed guests. Have credit terms established. Can be guest or non-guest related.

Advantages
– Increased efficiency – one line used in the journal
– Time saved in posting to general ledger accounts – only column totals are posted to the general ledger, not individual detail

Improvements to internal controls
– Separation of duties in recording transactions
– Reduction of errors in general ledger postings as the number of transactions are reduced

Sales journal – S, SJ, or IJ
Cash receipts journal – CR or CJ
Purchases journal – P or PUR
Cash disbursements journal - CD
General journal - GJ

Supporting evidence /
Documentation
Posting references column
Amount

Used for posting all transactions on accounts
May be either cash or charge transactions
Also posted to customers individual subsidiary ledger simultaneously

Used to record cash inflows only
Headers to journal would include offset accounts to post credit to:
– Accounts Receivable
– Sales
– Other

Used to record all purchases on account
Headers can include different accounts for the type of purchase i.e.
– food purchases, beverage purchases, supply purchases

Records all transactions involving the payment of cash
– Accounts payable
– Petty cash
– Payroll
– Immediate disbursements

Records Payroll Expenses
– Salary expense
– Deductions
FWT – Income Taxes
FICA / Medicare
State & Local Taxes
Insurance
Other

A “catch-all” journal
Used to record transactions that do not fit into a specialized journal

Specialized Journals for Lodging
Front office cash receipts and disbursements journal
Allowance journal
Transfer journal

Problem 5
Problem 7
Problem 9