1. Accounting Practices 501 Chapter 5 Subsidiary ledgers Example Cathy Saenger, Senior Lecturer, Eastern Institute of Technology © Pearson 2011

2. Ch5B - Subs ledgers example 2 Let’s work our way through an example of the Accounts Receivable Subsidiary Ledger Accounts receivable subsidiary ledger

3. Ch5B - Subs ledgers example3 The Accounts Receivable Subsidiary Ledger contained the above accounts at 1 March G Green 450 B Blue 200 R Red 92 $742

4. Ch5B - Subs ledgers example4 Let’s look at the transactions that occurred during the month and post them to the subsidiary ledger Date Accounts Receivable Subsidiary Ledger Details DrCrBal G GREEN 1Opening bal450Dr B BLUE 1Opening bal200Dr R RED 1Opening bal92Dr Ref General Ledger Date Details DrCrBal ACC RECEIVABLE CONTROL 1Opening bal - 742Dr Ref $742 We’ll do the opening balances first Remember the Subsidiary Ledger is separate from the General Ledger G Green 450 B Blue 200 R Red 92 $742 The Acc Receivable Control account in the General Ledger balances with the total of the individual accounts in the subsidiary ledger

5. Ch5B - Subs ledgers example5 Date Accounts Receivable Subsidiary Ledger Details DrCrBal G GREEN 1Opening bal450Dr B BLUE 1Opening bal200Dr R RED 1Opening bal92Dr Ref General Ledger Date Details DrCrBal ACC RECEIVABLE CONTROL 1Opening bal - 742Dr Ref 9G Green27636240 10G Green-92-12-80 184 Date Sales Journal Details Acc rec Sales GST collec 22B Blue200 Date Cash Receipts Journal DetailsBank GST Coll Date General Journal DetailsDrCr 31Bad Debts80 GST12 Acc rec-R Red92 G Green 450 B Blue 200 R Red 92 $742 Acc rec $742

6. Ch5B - Subs ledgers example6 9G Green27636240 10G Green-92-12-80 184 Date Sales Journal Details Acc rec Sales GST collec 22B Blue200 Date Cash Receipts Journal DetailsBank GST Coll Date General Journal DetailsDrCr 31Bad Debts80 GST12 Acc rec-R Red92 G Green 450 B Blue 200 R Red 92 $742 Acc rec Totals from the journals are posted to the Accounts Receivable Control account and individual customers’ amounts are posted to the customer accounts in the Subsidiary Ledger. Transaction recorded in the General Journal will be posted to both the control account AND the individual customer’s account

7. Ch5B - Subs ledgers example7 Date Accounts Receivable Subsidiary Ledger Details DrCrBal G GREEN 1Opening bal450Dr B BLUE 1Opening bal200Dr R RED 1Opening bal92Dr Ref General Ledger Date Details DrCrBal ACC RECEIVABLE CONTROL 1Opening bal - 742Dr Ref 9G Green27636240 10G Green-92-12-80 184 Date Sales Journal Details Acc rec Sales GST collec 22B Blue200 Date Cash Receipts Journal DetailsBank GST Coll Date General Journal DetailsDrCr 31Bad Debts80 GST12 Acc rec-R Red92 G Green 450 B Blue 200 R Red 92 $742 31Sales834184SJ 31Receipts634200CRJ Dr Cr Dr Acc rec 31Bad DebtsNIL92 31Bad Debts65092 GJ Dr

8. Ch5B - Subs ledgers example 8 We can now post the individual customer amounts to the Subsidiary Ledger

9. Ch5B - Subs ledgers example9 Date Accounts Receivable Subsidiary Ledger Details DrCrBal G GREEN 1Opening bal450Dr B BLUE 1Opening bal200Dr R RED 1Opening bal92Dr Ref General Ledger Date Details DrCrBal ACC RECEIVABLE CONTROL 1Opening bal - 742Dr Ref 9G Green27636240 10G Green-92-12-80 184 Date Sales Journal Details Acc rec Sales GST collec 22B Blue200 Date Cash Receipts Journal DetailsBank GST Coll Date General Journal DetailsDrCr 31Bad Debts80 GST12 Acc rec-R Red92 G Green 450 B Blue 200 R Red 92 $742 31Sales834184SJ 31Receipts634200CRJ Dr Cr Dr Acc rec 31Bad DebtsNIL92 31Bad Debts65092 GJ Dr 9Sales726Dr276 SJ

10. Ch5B - Subs ledgers example10 Date Accounts Receivable Subsidiary Ledger Details DrCrBal G GREEN 1Opening bal450Dr B BLUE 1Opening bal200Dr R RED 1Opening bal92Dr Ref General Ledger Date Details DrCrBal ACC RECEIVABLE CONTROL 1Opening bal - 742Dr Ref 9G Green27636240 10G Green-92-12-80 184 Date Sales Journal Details Acc rec Sales GST collec G Green 450 B Blue 200 R Red 92 $742 31Sales834184SJ 31Receipts634200CRJ Dr 31Bad DebtsNIL92 31Bad Debts65092 GJ Dr 9Sales726Dr276 SJ The return on the 10 th has been recorded as a negative in the Sales Journal 10Sales Return634Dr92SJ

11. Ch5B - Subs ledgers example11 Date Accounts Receivable Subsidiary Ledger Details DrCrBal G GREEN 1Opening bal450Dr B BLUE 1Opening bal200Dr R RED 1Opening bal92Dr Ref General Ledger Date Details DrCrBal ACC RECEIVABLE CONTROL 1Opening bal - 742Dr Ref 9G Green27636240 10G Green-92-12-80 184 Date Sales Journal Details Acc rec Sales GST collec 22B Blue200 Date Cash Receipts Journal DetailsBank GST Coll Date General Journal DetailsDrCr 31Bad Debts80 GST12 Acc rec-R Red92 G Green 450 B Blue 200 R Red 92 $742 31Sales834184SJ 31Receipts634200CRJ Dr Cr Dr Acc rec 31Bad DebtsNIL92 31Bad Debts65092 GJ Dr 9Sales726Dr276 SJ CRJ22Cash receiptsNIL200 $634 10Sales Return634Dr92SJ

12. The total of the individual Accounts Receivable accounts in the Subsidiary Ledger will balance with the Accounts Receivable Control in the General Ledger Ch5B - Subs ledgers example12

13. Ch5B - Subs ledgers example13 Exactly the same applies to the Accounts Payable Subsidiary Ledger How was that?