Subsidiary Ledgers Chapter 8 Joudrey

Subsidiary Ledgers A growing firm will have a rapid increase in the number of customers who will purchase goods or services on account. Accounts must be kept for each customer so the firm can keep track of who owes them money and in what amounts. If this company were to list all of these on their financial statements (balance sheet) it would be very lengthy. Same is true for accounts payable.

Subsidiary Ledgers A subsidiary ledger contains accounts of a similar type, organized in alphabetical order. The two most common are the accounts receivable ledger and the accounts payable ledger.

Accounts Receivable Ledger The customers’ accounts are replaced in the general ledger by a single account called the “Accounts Receivable Control Account”. This account represents the total owing by all customers.

Accounts Payable Ledger The creditors’ accounts are replaced in the general ledger by a single account called the “Accounts Payable Control Account”. This account represents the total this firm owes to others firms.

Schedule of Accounts Receivable: This is prepared to verify the accuracy of the accounts receivable ledger. This schedule is a list of the customer accounts and balances. This total will be the total that you will include on the balance sheet and the trial balance for accounts receivable.

Schedule of Accounts Receivable:

Schedule of Accounts Payable: This is prepared to verify the accuracy of the accounts payable ledger. This schedule is a list of the creditor accounts and balances. This total will be the total that you will include on the balance sheet and the trial balance for accounts payable.

Schedule of Accounts Payable:

Duties of an Accounts Payable Clerk: 1.Process purchase invoices (purchase invoice is a bill from a creditor (someone you owe money to)) – details on purchase invoice and purchase order must match 2.Record purchase invoices – increase how much you owe another company (debit = credit) 3.Pay creditors – when it is time to pay the creditors a cheque must be printed 4.Update creditor’s accounts – decrease the amount you owe to this business (debit = credit) 5.Prepare a schedule of accounts payable

Duties of an Accounts Receivable Clerk: 1.Process sales invoice (sales invoice is a bill you are sending to someone who owes you money) – look over for errors (ex. make sure quantity x amount is correct) 2.Record sales invoices – increase the amount this customer owes the company 3.Process cash received from customers – cash received will decrease customer account balances 4.Prepare a schedule of accounts receivable

Accounts Receivable Clerk The accounts payable clerk and the accounts receivable clerk report to their accounting supervisor. They provide them with copies of sales invoices, list of cash receipts, purchase invoices and cheque copies.

Activities to Hand In: Assignment 1 (due Wednesday): Questions 5, 6 and 10 on page 365 Exercises 1-6 on page Assignment 2 (due Friday): Exercises 9 and 10 on page Test tomorrow