Subsidary Ledgers and Special Journals
Special Journals and Subsidiary Ledgers
The four different types of special journals are sales journal, cash receipts journal, purchase journal, and cash payments journal. Special journals reduce the time needed to complete the posting process and they permit greater division of labor, this allows several people to record entries in different journals at the same time. When a transaction cannot be recorded in a special journal it is recorded in a general journal. A sales journal would be used for all sales of merchandise on account. A cash receipt journal would be used for all cash received including cash sales. A purchase journal would be used for all purchases of merchandise on account. A cash payments journal would be used for all cash paid including cash purchases.
A subsidiary ledger is a group of accounts with a common characteristic. It is an an expansion of and an addition to, the general ledger. The subsidiary ledger frees the general ledger from the details of individual balances. There are two common subsidiary ledgers, they are the accounts receivable and accounts payable. The accounts payable subsidiary ledger is also called customer’s subsidiary ledger that collects the transaction data of individual customers. The accounts payable ledger is also called the creditors’ subsidiary ledger that collects the transaction data of individual creditors. The advantages of using subsidiary ledgers are that they show in a single account transactions affecting one customer or one creditor and providing up-to-date information on specific account balances. Subsidiary ledgers also free the general ledger of too many details and because of this a trial balance of the general ledger does not contain many numbers of individual account balances. They can help locate errors on individual accounts by reducing the number of accounts in one ledger and by using control accounts. They make possible a division of
The four different types of special journals are sales journal, cash receipts journal, purchase journal, and cash payments journal. Special journals reduce the time needed to complete the posting process and they permit greater division of labor, this allows several people to record entries in different journals at the same time. When a transaction cannot be recorded in a special journal it is recorded in a general journal. A sales journal would be used for all sales of merchandise on account. A cash receipt journal would be used for all cash received including cash sales. A purchase journal would be used for all purchases of merchandise on account. A cash payments journal would be used for all cash paid including cash purchases.
A subsidiary ledger is a group of accounts with a common characteristic. It is an an expansion of and an addition to, the general ledger. The subsidiary ledger frees the general ledger from the details of individual balances. There are two common subsidiary ledgers, they are the accounts receivable and accounts payable. The accounts payable subsidiary ledger is also called customer’s subsidiary ledger that collects the transaction data of individual customers. The accounts payable ledger is also called the creditors’ subsidiary ledger that collects the transaction data of individual creditors. The advantages of using subsidiary ledgers are that they show in a single account transactions affecting one customer or one creditor and providing up-to-date information on specific account balances. Subsidiary ledgers also free the general ledger of too many details and because of this a trial balance of the general ledger does not contain many numbers of individual account balances. They can help locate errors on individual accounts by reducing the number of accounts in one ledger and by using control accounts. They make possible a division of