Posting to General and Subsidiary Ledgers Chapter 12 Posting to General and Subsidiary Ledgers

OBJECTIVES: Define accounting terms relating to posting to ledgers Identify accounting practices related to posting to ledgers Post from a purchase journal to an accounts payable ledger Post from a cash payments journal and general journal to an accounts payable ledger Post from a sales journal to an accounts receivable ledger Post from a cash receipts journal to an accounts receivable ledger Post from a cash payments journal and a general journal to a general ledger Post journal totals to a general ledger

Subsidiary Ledgers, p. 272 A business needs to know the amount owed each vendor as well as the amount to be collected from each charge customer. Therefore, a separate account is needed for each vendor and each customer. Omni keeps a separate ledger for vendors and a separate ledger for customer. Each separate ledger is summarized in a single general ledger account. A ledger that is summarized in a single general ledger account is called a subsidiary ledger. A subsidiary ledger containing only accounts for vendors from whom items are purchased or bought on account is called an accounts payable ledger. A subsidiary ledger containing only accounts for charge customers is called an A/R ledger. Total amounts are summarized in single general ledger accounts: A/P for vendors and A/R for charge customers. An account in a general ledger that summarizes all accounts in a subsidiary ledger is called a controlling account.

Posting – look at CHART OF ACCOUNTS – pg 219 Posting sorting and summarizing journal transactions into individual ledger accounts. The size of a business determines how many ledgers they will have. GENERAL LEDGER: This ledger contains all the accounts necessary to prepare the financial statements. Contains a controlling account for each subsidiary ledger. CONTROLLING ACCOUNT: account in general ledger that summarizes all accounts of the corresponding subsidiary ledger Balance equals total of all account balances in its related subsidiary ledger Ex) Accounts Payable and Accounts Receivable

SUBSIDIARY LEDGER A set of ledger accounts that are summarized in a single general ledger controlling account Gives the details of a general ledger account. Business needs to know the amount owed to each vendor + amount that needs to be collected from each charge customer Separate account is needed for each vendor and each charge customer Accounts Payable Ledger - contains an account for each vendor from whom items are purchased ON ACCOUNT. Accounts Receivable Ledger - contains an account for each CHARGE customer.

Ch 12-1: Posting to an Accounts Payable Ledger Accounts Payable in the GL Controlling account 3 digit numbers: Account numbers all start with 2 –Liability 2nd two numbers – vendor number Number assignment method is same as Encore Vendors are arranged alphabetically in the ledger. Accounts have a normal CREDIT balance Procedure for adding new accounts is the same as previously used. 3-column form with CREDIT balance column

ACCOUNTS PAYABLE LEDGER AND GENERAL LEDGER CONTROLLING ACCOUNT Total of all vendor account balances in the Accounts Payable Ledger must equal balance of Accounts Payable Account in general ledger (controlling account).

STARTING A NEW PAGE FOR A VENDOR IN AN ACCOUNTS PAYABLE LEDGER 2 1 3 4 5 6 TO OPEN: 1. Write the vendor’s name on the account title. 2. Assign the account a number. ******************************** 1. Write the vendor name. 2. Write the vendor number. 3. Write the date. 4. Write Balance. (carried over from last month/page) 5. Place a check mark in the Post. Ref. column (not posted) 6. Write the account balance.

Carrying Balances from Page to Page In a Journal, use ‘Carried Forward’ and ‘Brought Forward’ In a ledger, use ‘Balance’

Posting from the Purchases Journal Post amounts individually to the Accounts Payable Subsidiary Ledger  to individual vendors’ accounts (very often). Vendor subsidiary ledger CREDIT Post column TOTALS to general ledger, controlling account (at of end of month). Purchases - DEBIT Accounts Payable - CREDIT

Steps in Posting to Ledger Write the date in the date column Write the journal page in the Post Ref. Column of the account. Write the credit or debit amount. Find the new credit balance of the account. Write the vendor number in the Post Ref column of the journal.

POSTING FROM A PURCHASES JOURNAL TO AN ACCOUNTS PAYABLE LEDGER 2 1 3 5 4 1. Write the date. 2. Write the journal page number. 3. Write the credit amount. 4. Calculate and write the new account balance. 5. Write the vendor number. Lesson 12-1, page 276

TERMS REVIEW subsidiary ledger accounts payable ledger accounts receivable ledger controlling account ****************************** TO DO: Work Together, page 277 On your own, page 277 Lesson 12-1, page 277

Posting from Other Journals to an Accounts Payable Ledger Chapter 12-2 Posting from Other Journals to an Accounts Payable Ledger

Posting from the Cash Payments Journal Post individually - OFTEN General Debit and Credit Columns to General Ledger Accounts Payable DEBIT Column to vendor’s subsidiary ledger accounts Post Totals – END OF MONTH Accounts Payable Column TOTAL to Accounts Payable Account as Debit. Cash Column TOTAL to Cash Account as Credit.

POSTING FROM A CASH PAYMENTS JOURNAL TO AN ACCOUNTS PAYABLE SUBSIDIARY LEDGER 2 1 3 5 4 1. Date 2. Journal Page Number 3. Debit 4. Account Balance 5. Vendor Number Lesson 12-2, page 278

****Each transaction is posted individually**** POSTING FROM A CREDIT ENTRY FROM A GENERAL JOURNAL TO AN ACCOUNTS PAYABLE LEDGER 2 1 5 3 4 1. Date 2. Journal Page Number 3. Credit ****Each transaction is posted individually**** 4. Account Balance 5. Vendor Number

Completed Accounts Payable Ledger PAGE 280 All vendor accounts make up complete Accounts Payable Ledger After each Acct. Pay. ledger has been posted for the month, the credit balance in each vendor acct represents the amount the business owes each vendor How much is owed to vendor # 230? To Foxfire Supply? How much has Omni paid to African Importers? When did Omni make a payment to vendor no. 240?

PROVING THE ACCOUNTS PAYABLE LEDGER Schedule of Accounts Payable: *List all vendors account names and balances. *The total must equal the Accounts Payable account in general ledger controlling account Lesson 12-2, page 281

TERMS REVIEW schedule of accounts payable TO DO: Work Together, pg 282 On your own, pg 282 Lesson 12-2, page 282

Posting to an Accounts Receivable Ledger CHAPTER 12-3 Posting to an Accounts Receivable Ledger

Accounts Receivable Subsidiary Ledger Controlling account is Accounts Receivable Account numbers all start with 1- Assets Customers are arranged alphabetically in the ledger. Accounts have a normal DEBIT balance. Total of Accounts Receivable Ledger must equal balance of Accounts Receivable Account in the general ledger (controlling account).

ACCOUNTS RECEIVABLE LEDGER AND GENERAL LEDGER CONTROLLING ACCOUNT Total amount to be collected from all charge customers is summarized in a single general ledger account, Accounts Receivable Lesson 12-3, page 283

OPENING ACCOUNTS RECEIVABLE LEDGER FORMS 1. Customer Name 1 2. Customer Number 2 *3-column form with DEBIT balance column Lesson 12-3, page 284

Posting from Sales Journal Post amounts individually to each customer’s account in subsidiary ledger OFTEN Post Column Totals  End of month Accounts Receivable column total to General Ledger Accounts Receivable Account as debit. (controlling account) Sales and Sales Taxes Payable column totals to General Ledger accounts as credit.

POSTING FROM A SALES JOURNAL TO AN ACCOUNTS RECEIVABLE LEDGER 2 5 1 3 4 1. Write the date. 2. Write the journal page number. 3. Write the debit amount. 4. Calculate and write the new account balance. 5. Write the customer number. Lesson 12-3, page 285

TO DO: Work Together, pg 286 On your own, pg 286 App 12-1, 12-2, 12-3

REVIEW: What accounts are contained in an accounts payable ledger? What is the relationship between a controlling account and a subsidiary ledger? What is the title of the balance amount column of an accounts payable ledger form? In which column of the cash payments journal are the amounts that are posted individually to the accounts payable ledger?

Additional Posting to an Accounts Receivable Ledger CHAPTER 12-4 Additional Posting to an Accounts Receivable Ledger

Posting from Cash Receipts Journal Post individually - OFTEN General Debit and Credit Columns to General Ledger. Accounts Receivable Credit Column to customer accounts as credit. Post Totals – END OF MONTH Accounts Receivable, Sales, and Sales Taxes Payable Column TOTALS to General Ledger Accounts Credit. Cash Column TOTAL to Cash Account as Debit.

POSTING FROM A CASH RECEIPTS JOURNAL TO AN ACCOUNTS RECEIVABLE LEDGER 2 1 5 3 4 1. Date 2. Journal Page Number 3. Credit 4. Account Balance 5. Customer Number Lesson 12-4, page 287

Completed Accounts Receivable Ledger – pg 288 DEBIT amount = TOTAL Amount owed to business How much is owed by customer # 160? How many pymts has Children’s Paradise made? Schedule of accounts receivable – pg 289 Listing of all customer accounts, account balances, and total amount due from all customers Prepared after all entries are posted Total of balances = Accounts Receivable, general ledger account (controlling account)

PROVING THE ACCOUNTS RECEIVABLE LEDGER Schedule of Accounts Receivable: *Proves the accuracy of the accounts receivable subsidiary ledger. *The total of this statement must match balance of Accounts Receivable account in general ledger. Lesson 12-4, page 289

TERMS REVIEW schedule of accounts receivable TO DO: Work Together, pg 290 On your Own, pg 290 App 12-4 Lesson 12-4, page 290

Posting from JOURNALS to LEDGERS: Cash Payments Accounts Payable ledger General Ledger Cash Receipts Accounts Receivable ledger General ledger Purchases Sales General

CHAPTER 12-5: Posting from Journals to a General Ledger FROM SPECIAL JOURNALS Individual General amount DR and CR columns MONTHLY TOTAL Cash DR/CR MONTHLY TOTAL Sales Tax Payable MONTHLY TOTAL Sales CR MONTHLY TOTAL Purchases DR MONTHLY TOTAL Accounts Receivable/Payable DR/CR FROM GENERAL JOURNAL Individual DR and CR columns Omni uses 4-column general ledger form DR, CR, DR balance, CR balance

STARTING A NEW PAGE FOR AN ACCOUNT IN A GENERAL LEDGER 2 1 3 4 5 6 1. Write the account title. 2. Write the account number. 3. Write the date. 4. Write Balance. 5. Place a check mark in the Post. Ref. column. 6. Write the account balance. Lesson 12-5, page 291

POSTING FROM THE GENERAL AMOUNT COLUMNS OF A CASH PAYMENTS JOURNAL TO A GENERAL LEDGER 2 5 1 3 4 1. Write the date. 2. Write the journal page number. 3. Write the debit amount. 4. Calculate and write the new account balance. 5. Write the general ledger account number in the Post. Ref. column of the journal. Lesson 12-5, page 292

POSTING A DEBIT ENTRY FROM A GENERAL JOURNAL TO A GENERAL LEDGER 2 5 1 3 4 1. Write the date. 2. Write the journal page number. 3. Write the amount. 4. Calculate and write the new account balance. 5. Write the general ledger amount number in the Post. Ref. column of the general journal. Lesson 12-5, page 293

POSTING A CREDIT ENTRY FROM A GENERAL JOURNAL TO A GENERAL LEDGER 2 1 5 3 4 1. Write the date. 2. Write the general journal page number. 3. Write the amount. 4. Calculate and write the new account balance. 5. Write the general ledger account number. Lesson 12-5, page 294

TO DO: Work together, pg 295 On your own, pg 295

Posting Totals to a General Ledger CHAPTER 12-6 Posting Totals to a General Ledger

Posting Totals of a Sales Journal to a General Ledger End of month Prove and Rule Post totals of Special Amount Columns SALES journal: TOTAL: Acct Rec DR Sales CR Sales Tax Payable CR

POSTING TOTALS OF A SALES JOURNAL TO A GENERAL LEDGER 2 1. Date 2. Journal Page Number 3 3. Column Total 1 5 4. Account Balance Account Number *In parentheses BELOW amount column total 4 Lesson 12-6, page 296

POSTING TOTALS OF A PURCHASES JOURNAL TO A GENERAL LEDGER Purchases journal – one special amount column: Purchases DR; Accounts Payable CR Total and rule at end of each month Post to general journal in 2 general ledger accounts

POSTING TOTALS OF A PURCHASES JOURNAL TO A GENERAL LEDGER 2 1. Date 2. Journal Page Number 1 3 3. Column Total 5 4. Account Balance 5. Account Number 4 Lesson 12-6, page 297

Prove DR=CR, rule, at end of each month POSTING TOTALS OF THE SPECIAL AMOUNT COLUMNS OF A CASH RECEIPTS JOURNAL TO A GENERAL LEDGER Cash Receipts Journal: 4 special amount columns; + General DR and General CR Acct Rec CR - TOTALS Sales CR - TOTALS Sales Tax Payable CR - TOTALS Cash DR - TOTALS General DR/CR – INDIVIDUAL (check mark at bottom) Prove DR=CR, rule, at end of each month Post totals to individual general ledger accounts

POSTING TOTALS OF THE SPECIAL AMOUNT COLUMNS OF A CASH RECEIPTS JOURNAL TO A GENERAL LEDGER 2 1. Date 2. Journal Page Number 1 3 5 3. Column Total 4. Account Balance 5. Account Number 4 Lesson 12-6, page 298

POSTING TOTALS OF A CASH PAYMENTS JOURNAL TO A GENERAL LEDGER Cash Payments Journal: 2 special amount columns + General DR/CR Account Payable DR - TOTALS Cash CR - TOTALS General DR/CR – INDIVIDUAL (Check mark) TOTAL, Prove DR=CR, rule, at end of each month Post TOTALS to individual general ledger accounts

POSTING TOTALS OF A CASH PAYMENTS JOURNAL TO A GENERAL LEDGER – PG 298 1 3 5 1. Date 2. Journal Page Number 4 3. Column Total 4. Account Balance 5. Account Number Lesson 12-6, page 300

SUMMARY: Omni posts vendor and customer accounts periodically throughout the month so that balance of subsidiary ledgers are up to date Amounts in General Debit / Credit, Accounts Payable, and Accounts Receivable need to be posted individually! Special Amount Columns Totals to be posted at end of month Prove, Rule, and Post to General ledger at end of month need to be brought up to date only when preparing financial statements (before trial balance can be prepared)

Order of Posting Journals Sales Journal Purchases Journal General Journal Cash Receipts Journal Cash Payments Journal **This order USUALLY puts amounts in correct chronological order, but there may be exceptions depending on how frequently items are posted during the month***

TO DO: Work Together, pg 302 On your own, pg 302 App Problems 12-5, 12-6 Ch 12 QUIZ – WEDNESDAY THURSDAY – Finish Summary Ch 12 TEST - FRIDAY