Chapter 11—Posting to General and Subsidiary Ledgers Objectives: Define accounting terms related to posting to ledgers Identify accounting practices related to posting to ledgers Post separate items from a purchases, cash payments, and general journal to an accounts payable ledger Post separate items from a sales, cash receipts, and general journal to an accounts receivable ledger Post separate items from a cash payments and general journal to a general ledger Post special journal column totals to a general ledger Journalize and post correcting entries affecting customer accounts LESSON 11-1

LESSON 11-1: Posting to an Accounts Payable Ledger 4/28/2018 LESSON 11-1: Posting to an Accounts Payable Ledger subsidiary ledger—a ledger that is summarized in a single general ledger account accounts payable ledger—a subsidiary ledger containing only accounts for vendors from whom merchandise or other items are purchased on account accounts receivable ledger—a subsidiary ledger containing only accounts for charge customers controlling account—an account in a general ledger that summarizes all accounts in a subsidiary ledger

ACCOUNTS PAYABLE LEDGER AND GENERAL LEDGER CONTROLLING ACCOUNT page 299 A separate account is prepared for each vendor in the accounts payable subsidiary ledger. An account number is assigned to each vendor account to increase the ease of filing and locating the accounts. The total of all vendor account balances in the accounts payable ledger should always equal the balance of the controlling account, Accounts Payable. LESSON 11-1

ACCOUNTS PAYABLE LEDGER FORMS page 300 An accounts payable ledger form is designed to accommodate accounts with credit balances. Hobby Shack uses a 3-column accounts payable subsidiary ledger account form. The form has only one Balance column—Credit—because all vendor accounts have a normal credit balance. A separate accounts payable ledger form is prepared for each vendor account. A new vendor account is opened by writing the vendor name and vendor number on the heading of the ledger account and placing it in alphabetical order. LESSON 11-1

ACCOUNTS PAYABLE LEDGER FORMS page 300 1 2 3 4 5 6 1. Write the vendor name. 2. Write the vendor number. 3. Write the date. 4. Write the word Balance. 5. Place a check mark in the Post. Ref. column. 6. Write the balance. LESSON 11-1

POSTING FROM A PURCHASES JOURNAL TO AN ACCOUNTS PAYABLE LEDGER page 301 Hobby Shack’s purchases journal has only one amount column. The amount is a debit to Purchases and a credit to Accounts Payable. When a purchase on account is recorded in a purchases journal, the vendor’s name is written in the Account Credited column of the journal. The amount credited to Accounts Payable needs to be posted to the vendor’s accounts payable ledger account so that a record can be maintained of the amount owed to that vendor. An error in posting may cause a business to overpay or underpay its vendors. LESSON 11-1

POSTING FROM A PURCHASES JOURNAL TO AN ACCOUNTS PAYABLE LEDGER page 301 2 1 3 5 4 1. Write the date. 2. Write the journal page number. 4. Write the new account balance. 3. Write the credit amount. 5. Write the vendor number. LESSON 11-1

POSTING FROM A CASH PAYMENTS JOURNAL TO AN ACCOUNTS PAYABLE LEDGER page 302 When a business pays a vendor on an account, the business debits Accounts Payable to record the reduction in the accounts payable account and credits Cash to record the reduction in the cash account. A payment of cash is recorded in the cash payments journal , which has a special column for Accounts Payable debit. When a payment on account was recorded in a cash payments journal, the vendor’s name was written in the Account Title column of the journal and the amount debited in the Accounts Payable debit special columns. The amount debited to Accounts Payable needs to be posted to the vendor’s accounts payable ledger account to bring the vendor’s account up to date and record the correct balance still owed. LESSON 11-1

POSTING FROM A CASH PAYMENTS JOURNAL TO AN ACCOUNTS PAYABLE LEDGER page 302 2 1 5 3 1. Write the date. 2. Write the journal page number. 3. Write the debit amount. 4 4. Subtract the amount in the Debit column from the previous balance in the Credit column. Write the new balance. 5. Write the vendor number. LESSON 11-1

POSTING A CREDIT ENTRY FROM A GENERAL JOURNAL TO AN ACCOUNTS PAYABLE LEDGER page 303 2 1 5 3 4 1. Write the date. 4. Add the amount in the Credit column to the previous balance in the Credit Balance column. Write the new balance. 2. Write the general journal page number. 3. Write the amount. 5. Write the vendor number. LESSON 11-1

POSTING A DEBIT ENTRY FROM A GENERAL JOURNAL TO AN ACCOUNTS PAYABLE LEDGER page 303 2 1 3 5 4 1. Write the date. 4. Add the amount in the Debit column to the previous balance in the Debit Balance column. Write the new balance. 2. Write the general journal page number. 3. Write the amount. 5. Write the vendor number. LESSON 11-1

COMPLETED ACCOUNTS PAYABLE LEDGER page 304 All of the vendor accounts make up the complete accounts payable ledger. After the accounts payable ledger has been posted, the credit balance in each vendor account represents the amount the business owes each vendor. LESSON 11-1

PROVING THE ACCOUNTS PAYABLE LEDGER page 305 Schedule of accounts payable—a listing of vendor accounts, account balances, and total amount due all vendors; usually is prepared at the end of the month After all postings are complete, the total accounts payable shown on the schedule of accounts payable should be the same amount as the controlling account, Accounts Payable. If the amounts are the same, then the accounts payable ledger is proved. LESSON 11-1

Let’s do Work Together 11-1 and On Your Own 11-1 on textbook page 306. Lesson 11-1 Let’s do Work Together 11-1 and On Your Own 11-1 on textbook page 306. LESSON 11-1

LESSON 11-2: Posting to an Accounts Receivable Ledger A separate account is prepared for each customer in the accounts receivable subsidiary ledger. An account number is assigned to each customer account to increase the ease of filing and locating the accounts. Hobby Shack uses a 3 digit number to identify the type of account—asset—and to identify the specific customer. The total of all customer account balances in the accounts receivable ledger should always equal the balance of the controlling account, Accounts Receivable. The total amount to be collected from all charge customers is summarized in a single general ledger account, Accounts Receivable.

ACCOUNTS RECEIVABLE LEDGER AND GENERAL LEDGER CONTROLLING ACCOUNT LESSON 11-2 4/28/2018 ACCOUNTS RECEIVABLE LEDGER AND GENERAL LEDGER CONTROLLING ACCOUNT page 307 LESSON 11-2

ACCOUNTS RECEIVABLE LEDGER FORMS page 308 1 Customer name 2 Customer number An accounts receivable ledger form is designed to accommodate accounts with debit balances. Hobby Shack uses a 3-column accounts receivable subsidiary ledger account form. The form only has one balance column—debit—because all customer accounts have a normal debit balance. A separate accounts receivable ledger form is prepared for each customer account. LESSON 11-2

POSTING FROM A SALES JOURNAL TO AN ACCOUNTS RECEIVABLE LEDGER page 309 Hobby Shack’s sales journal has a special column for Accounts Receivable debit. When a sale on account is recorded in a sales journal, the customer’s name is written in the Account Debited column of the journal. The amount debited to Accounts Receivable needs to be posted to the customer’s accounts receivable ledger account so that a record can be maintained of the amount owed to the business by that customer. The frequent posting of sales helps to keep the customers’ accounts up to date. LESSON 11-2

POSTING FROM A SALES JOURNAL TO AN ACCOUNTS RECEIVABLE LEDGER page 309 2 5 1 3 4 1. Write the date. 4. Add the amount in the Debit column to the previous balance in the Debit Balance column. Write the new account balance. 2. Write the sales journal page number. 5. Write the customer number. 3. Write the debit amount. LESSON 11-2

POSTING FROM A CASH RECEIPTS JOURNAL TO AN ACCOUNTS RECEIVABLE LEDGER page 310 When a business receives payment on account from a customer, the business credits Accounts Receivable to record the reduction in the accounts receivable account and debits Cash to record the increase in the cash account. The amount credited to Accounts Receivable needs to be posted to the customer’s accounts receivable ledger account to bring the customer’s account up to date and record the correct balance still due from the customer. LESSON 11-2

POSTING FROM A CASH RECEIPTS JOURNAL TO AN ACCOUNTS RECEIVABLE LEDGER page 310 2 1 5 3 1. Write the date. 2. Write the cash receipts journal page number. 3. Write the credit amount. 4 4. Subtract the amount in the Credit column from the previous balance in the Debit Balance column. Write the new balance. 5. Write the customer number. LESSON 11-2

POSTING A CREDIT ENTRY FROM A GENERAL JOURNAL TO AN ACCOUNTS RECEIVABLE LEDGER page 311 2 1. Write the date. 2. Write the general journal page number. 1 3. Write the amount. 5 3 4. Subtract the amount in the Credit column from the previous balance in the Debit Balance column. Write the new balance. 4 5. Write the customer number. LESSON 11-2

COMPLETED ACCOUNTS RECEIVABLE LEDGER page 312 All of the customer accounts make up the complete accounts receivable ledger. After the accounts receivable ledger has been posted, the debit balance in each customer account represents the amount the customer owes the business. LESSON 11-2

PROVING THE ACCOUNTS RECEIVABLE LEDGER page 313 Schedule of accounts receivable—a listing of customer accounts, account balances, and total amount due from all customers; usually is prepared at the end of the month After all posting is completed, the total accounts receivable shown on the schedule of accounts receivable should be the same amount as the balance of the controlling account, Accounts Receivable. If the amounts are the same, then the accounts receivable ledger is proved. LESSON 11-2

Let’s do Work Together 11-2 and On Your Own 11-2 on textbook page 314. Lesson 11-2 Let’s do Work Together 11-2 and On Your Own 11-2 on textbook page 314. LESSON 11-1

LESSON 11-3: Posting from Journals to a General Ledger 4/28/2018 LESSON 11-3: Posting from Journals to a General Ledger Hobby Shack uses a 4-column general ledger account form with amount columns for Debit, Credit, Balance Debit, and Balance Credit. A separate general ledger account form is prepared for each account listed in the chart of accounts.

STARTING A NEW PAGE FOR AN ACCOUNT IN A GENERAL LEDGER 1 2 3 4 5 6 1. Write the account title. 2. Write the account number. 3. Write the date. 4. Write the word Balance in the Item column. 5. Place a check mark in the Post. Ref. column. 6. Write the balance. LESSON 11-3

POSTING FROM THE GENERAL AMOUNT COLUMNS OF A CASH PAYMENTS JOURNAL TO A GENERAL LEDGER page 316 2 3 1 5 1. Write the date. 2. Write the journal page number. 3. Write the debit amount. 4 4. Add the amount in the Debit column to the previous balance in the Balance Debit column. Write the new balance. 5. Write the general ledger account number. LESSON 11-3

POSTING FROM THE GENERAL AMOUNT COLUMNS OF A CASH PAYMENTS JOURNAL TO A GENERAL LEDGER page 316 Special journal entries are recorded in either General amount columns or special amount columns. Each amount in the General columns of special journals is posted individually to the general ledger account written in the Account Title column. Separate amounts listed in special amount columns of a special journal are not posted individually to the general ledger—only the totals are posted. LESSON 11-3

POSTING A DEBIT ENTRY FROM A GENERAL JOURNAL TO A GENERAL LEDGER page 317 2 1. Write the date. 2. Write the general journal page number. 1 3 5 3. Write the amount. 4. Calculate and write the new account balance. 4 5. Write the general ledger account number. Each debit amount in the general journal is posted individually to the debit column of the general ledger account written in the Account Title column. LESSON 11-3

POSTING A CREDIT ENTRY FROM A GENERAL JOURNAL TO A GENERAL LEDGER page 318 2 1. Write the date. 2. Write the general journal page number. 1 5 3 3. Write the amount. 4. Calculate and write the new account balance. 5. Write the general ledger account number. 4 LESSON 11-3

Let’s do Work Together 11-3 and On Your Own 11-3 on textbook page 319. Lesson 11-3 Let’s do Work Together 11-3 and On Your Own 11-3 on textbook page 319. LESSON 11-1

LESSON 11-4: Posting Special Journal Totals to a General Ledger The column totals of the special columns of special journals are posted to the general ledger account named in the special column heading. The special amount columns of the sales journal are Accounts Receivable Debit, Sales Credit, and Sales Tax Payable Credit. The Accounts Receivable column total is posted as a debit to the accounts receivable general ledger account. The Sales column total is posted as a credit to the sales general ledger account. The Sales Tax Payable column total is posted as a credit to the sales tax payable general ledger account.

POSTING TOTALS OF A SALES JOURNAL TO A GENERAL LEDGER LESSON 11-4 4/28/2018 POSTING TOTALS OF A SALES JOURNAL TO A GENERAL LEDGER page 320 2 1. Write the date. 2. Write the sales journal page number. 1 3 3. For each column and account, write the column total. 5 4. For each account, calculate and write the new account balance. 4 5. In the sales journal, write the general ledger account number. LESSON 11-4

POSTING THE TOTAL OF A PURCHASES JOURNAL TO A GENERAL LEDGER page 321 Column totals of all special columns of special journals are posted to the general ledger account named in the special column heading. The Purchases journal has only one special amount column. However, the column heading indicates that the amount represents both a debit to Purchases and a credit to Accounts Payable. The total is posted to both accounts in the column heading. LESSON 11-4

POSTING THE TOTAL OF A PURCHASES JOURNAL TO A GENERAL LEDGER page 321 2 1. Write the date. 2. Write the purchases journal page number. 3. For each account, write the purchases journal column total. 3 1 5 4. For each account, calculate and write the new balance. 5. Write the purchases general ledger account number and the accounts payable general ledger account number. 4 LESSON 11-4

POSTING SPECIAL AMOUNT COLUMN TOTALS OF A CASH RECEIPTS JOURNAL TO A GENERAL LEDGER page 322 Column totals of all special columns of special journals are posted to the general ledger account named in the special column heading. The special amount columns of the cash receipts journal are: Accounts Receivable Credit, Sales Credit, Sales Tax Payable Credit, Sales Discount Debit, and Cash Debit. The Accounts Receivable column total is posted as a credit to the accounts receivable general ledger account. The Sales Credit and Sales Tax Payable Credit column totals are posted as a credit to their general ledger accounts. The Sales Discount Debit and Cash Credit column totals are posted as a debit to their general ledger accounts. LESSON 11-4

POSTING SPECIAL AMOUNT COLUMN TOTALS OF A CASH RECEIPTS JOURNAL TO A GENERAL LEDGER page 322 2 1. Date 2. Journal page number 1 3 3. Column total 5 4. Account balance 5. Account number 4 LESSON 11-4

POSTING SPECIAL AMOUNT COLUMN TOTALS OF A CASH PAYMENTS JOURNAL TO A GENERAL LEDGER page 324 Column totals of all special columns of special journals are posted to the general ledger account named in the special column heading. The special amount columns of the cash payments journal are: Accounts Payable Debit, Purchases Discounts Credit, and Cash Credit. The Accounts Payable column total is posted as a debit to the accounts payable general ledger account. The Purchases Discounts Credit and Cash Credit column totals are posted as a credit to their general ledger accounts. LESSON 11-4

POSTING SPECIAL AMOUNT COLUMN TOTALS OF A CASH PAYMENTS JOURNAL TO A GENERAL LEDGER page 324 2 1 3 5 1. Date 2. Journal page number 4 3. Column total 4. Account balance 5. Account number LESSON 11-4

Postings Hobby Shack posts vendor and customer accounts periodically during the month so that the balances of these subsidiary ledgers will be up to date. The general ledger accounts need to be up to date before preparing financial statements. Hobby Shack prepares monthly financial statements so Hobby Shack posts all the general ledger accounts before a trial balance is prepared. The individual postings to the general ledger accounts may also be done periodically during the month, but must always be done at the end of the month. LESSON 11-1

Order of Posting From Special Journals The journals should be posted in the following order: Sales Journal Purchases Journal General Journal Cash Receipts Journal Cash Payments Journal LESSON 11-1

Let’s do Work Together 11-4 and On Your Own 11-4 on textbook page 326. Lesson 11-4 Let’s do Work Together 11-4 and On Your Own 11-4 on textbook page 326. LESSON 11-1

LESSON 11-5: Correcting Errors in Subsidiary Ledger Accounts Accounting procedures must be established to correct the errors that occur in an accounting system. What effect would there be on financial statements resulting from a sale on account being recorded to the wrong customer account? There is no effect on total accounts receivable on the financial statements; however, affected accounts in the accounts receivable ledger are incorrect.

JOURNALIZING CORRECTING ENTRIES AFFECTING CUSTOMER ACCOUNTS LESSON 11-5 4/28/2018 JOURNALIZING CORRECTING ENTRIES AFFECTING CUSTOMER ACCOUNTS page 327 December 10. Discovered that a sale on account to Cumberland Center on December 3 was incorrectly charged to the account of Country Crafters, $412.00. Memorandum No. 56. 2 4 1 5 3 6 1. Write the date. 5. Write the name of incorrectly charged customer. 2. Write the name of correct customer. 6. Write the amount. 3. Write the memorandum number. 4. Write the amount. LESSON 11-5 GREEN

POSTING CORRECTING ENTRIES AFFECTING CUSTOMER ACCOUNTS LESSON 11-5 4/28/2018 POSTING CORRECTING ENTRIES AFFECTING CUSTOMER ACCOUNTS page 328 2 1 3 5 1. Write the date. 2. Write the general journal page number. 3. Write the amount. 4. Calculate and write the new account balances. 4 5. Write the appropriate customer number in the Post. Ref. columns. LESSON 11-5 GREEN

Let’s do Work Together 11-5 and On Your Own 11-5 on textbook page 329. Lesson 11-5 Let’s do Work Together 11-5 and On Your Own 11-5 on textbook page 329. LESSON 11-1

Chapter 11 Problems Application Problem 11-1 Application Problem 11-2 Mastery Problem 11-6 Challenge Problem 11-7 LESSON 11-1