1. Appendix E-1

2. Appendix E-2 Subsidiary Ledgers and Special Journals Subsidiary Ledgers and Special Journals Kimmel Accounting, Second Edition Appendix E

3. Appendix E-3 1. 1.Describe the nature and purpose of a subsidiary ledger. 2. 2.Explain how companies use special journals in journalizing. 3. 3.Indicate how companies post a multi-column journal. Study Objectives

4. Appendix E-4 Used to keep track of individual balances. Two common subsidiary ledgers are: 1. Accounts receivable (customers’) 2. Accounts payable (creditors’) Subsidiary Ledgers SO 1 Describe the nature and purpose of a subsidiary ledger. Each general ledger control account balance must equal the composite balance of the individual accounts in the related subsidiary ledger.

5. Appendix E-5 Illustration E-2 Subsidiary Ledgers SO 1 Describe the nature and purpose of a subsidiary ledger. Relationship of general ledger and subsidiary ledgers

6. Appendix E-6 1. Show in a single account transactions affecting one customer or one creditor. 2. Free the general ledger of excessive details. 3. Help locate errors in individual accounts. 4. Make possible a division of labor. Subsidiary Ledgers SO 1 Describe the nature and purpose of a subsidiary ledger. Advantages of Subsidiary Ledgers

7. Appendix E-7 Special Journals SO 2 Explain how companies use special journals in journalizing. Used to record similar types of transactions. If a transaction cannot be recorded in a special journal, the company records it in the general journal. Illustration E-4

8. Appendix E-8 Each of the following is a subsidiary ledger except the: a.accounts receivable ledger. b.accounts payable ledger. c.customer’s ledger. d.general ledger. Review Question Special Journals SO 2 Explain how companies use special journals in journalizing.

9. Appendix E-9 Special Journals SO 2 Explain how companies use special journals in journalizing. Sales Journal Illustration E-5 Under a perpetual inventory system, one entry at selling price in Sales Journal results in a debit to Accounts Receivable and a credit to Sales. Another entry at cost results in a debit to Cost of Goods Sold and a credit to Merchandise Inventory.

10. Appendix E-10 Special Journals SO 2 Explain how companies use special journals in journalizing. Illustration E-6 Companies make daily postings from the sales journal to the individual accounts receivable in the subsidiary ledger. POSTING THE SALES JOURNAL

11. Appendix E-11 Special Journals SO 2 Explain how companies use special journals in journalizing. Illustration E-6 Posting to the general ledger is done monthly. POSTING THE SALES JOURNAL

12. Appendix E-12 One-line entry for each sales transaction saves time. Only totals, rather than individual entries, are posted to the general ledger. A division of labor results. Advantages of Sales Journal Special Journals SO 2 Explain how companies use special journals in journalizing.

13. Appendix E-13 Special Journals SO 2 Explain how companies use special journals in journalizing. In the cash receipts journal, companies record all receipts of cash. The posting of the cash receipts journal is similar to the posting of the sale journal. See complete Illustration E-8 in the text. Illustration E-8 Cash Receipts Journal

14. Appendix E-14 Special Journals SO 2 Explain how companies use special journals in journalizing. $3,200 Exercise:

15. Appendix E-15 Special Journals SO 2 Explain how companies use special journals in journalizing. J. Darby Lenninger Farley Deering & Son Grinnell Bros. Merchandise inventory June 1 Exercise:

16. Appendix E-16 Cash sales of merchandise are recorded in the: a.cash payments journal. b.cash receipts journal. c.general journal. d.sales journal. Review Question Special Journals SO 2 Explain how companies use special journals in journalizing.

17. Appendix E-17 Which of the following is not one of the credit columns in the cash receipts journal: a.Other accounts. b.Accounts payable. c.Accounts receivable. d.Sales. Review Question Special Journals SO 2 Explain how companies use special journals in journalizing.

18. Appendix E-18 Special Journals SO 3 Indicate how companies post a multi-column journal. Illustration E-11 In the purchases journal, companies record all purchases of merchandise on account. Purchases Journal

19. Appendix E-19 Special Journals SO 3 Indicate how companies post a multi-column journal. Illustration E-11 Purchases Journal

20. Appendix E-20 All of the following are advantages of using subsidiary ledgers except they: a.show transactions affecting one customer or one creditor in a single account. b.free the general ledger of excessive details. c.eliminate errors in individual accounts. d.make possible a division of labor. Review Question Special Journals SO 2 Explain how companies use special journals in journalizing.

21. Appendix E-21 Special Journals In a cash payments (cash disbursements) journal, companies record all disbursements of cash. The procedures for posting the cash payments journal are similar to those for other journals. Illustration E-15 Cash Payments Journal SO 3 Indicate how companies post a multi-column journal.

22. Appendix E-22 Credit purchases of equipment or supplies other than merchandise are recorded in the: a.cash payments journal. b.cash receipts journal. c.general journal. d.purchases journal. Review Question Special Journals SO 3 Indicate how companies post a multi-column journal.

23. Appendix E-23 Cash payments of merchandise are recorded in the: a.cash payments journal. b.cash receipts journal. c.general journal. d.purchases journal. Review Question Special Journals SO 3 Indicate how companies post a multi-column journal.

24. Appendix E-24 Special journals substantially reduce the number of entries that companies make in the general journal. Only transactions that cannot be entered in a special journal are recorded in the general journal. Also, correcting, adjusting, and closing entries are made in the general journal. Effects of Special Journals on the General Journal Special Journals SO 3 Indicate how companies post a multi-column journal.

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