Chapter 12

Subsidiary ledger:



A subsidiary ledger is a ledger that is summarized in a single general ledger account.

There are two types of subsidiary ledgers that we will be using:

1. Accounts payable ledger
2. Accounts receivable ledger

Controlling account:

A controlling account is an account in a general ledger that summarizes all accounts in a subsidiary ledger. It's balance equals the total of all account balances in its related subsidiary ledger.

The two types are also accounts recievable and accounts payable.

Controlling accounts are maintained in the subsidiary ledger. Their relationship to a subsidiary ledger is that subsidiary ledgers should equal controlling accounts.

There are two types of schedules that we will prepare:

1. Schedule for accounts payable
2. Schedule for accounts recievable

What are the rules for posting a journal's column total?

1. Place a check mark in parentheses below the General Debit and Credit column totals to indicate that they are not posted
2. The general ledger account number of the account listed in the column heading is written in parentheses below the special amount column to show that the totals are posted

Why is the 3-column account form used in an accounts receivable ledger a Debit balance?

The balance cannot change from a debit to a credit because once the balance is paid off, no more money is owed.

What is the title of the balance amount column of the accounts payable ledger form and why is it used?

It is a credit balance. Once all the money is paid off no more is owed, therefore it cannot be a debit balance.

Steps for starting a new page in an accounts payable ledger:

1. Write the vendor name on the vendor line
2. Write the vendor number on the vendor no. line
3. Write the date in the date column
4. Write the word Balance in the item column
5. Place a check mark in the Post Ref column
6. Write the account balance in the Credit Balance column

Steps for posting to accounts receivable ledger:

1. Write the date in the date column
2. Write the journal page number in the Post Ref column
3. Write debit amount in the debit column
4. Add the amount in the debit column to the previous balance in the debit column. Write the new account balance in the debit balance column
5. Write the customer number in the Post Ref column