1. HFT 2401 Chapter 7 Specialized Journals and Subsidiary Ledgers

2. Specialized Journals 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

3. 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

4. Control Accounts 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

5. 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.

6. Specialized Journals 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

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

8. Types of Journals Used Sales journal – S, SJ, or IJ Cash receipts journal – CR or CJ Purchases journal – P or PUR Cash disbursements journal - CD General journal - GJ

9. Requirements for Posting Supporting evidence / Documentation Posting references column Amount

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

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

12. Purchases Journal 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

13. Cash Disbursements Journal Records all transactions involving the payment of cash –Accounts payable –Petty cash –Payroll –Immediate disbursements

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

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

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

17. Homework Problem 5 Problem 7 Problem 9