A subsidiary ledger is a detailed list to assistance a regulate account. A manage account appears on the balance sheet in summary or total, and also are accounts prefer accounts receivable, accounts payable, and inventory. This video explains the concept (the video refers come a Debitor account i beg your pardon is accounts Receivable and and a Creditor account i m sorry is accounts Payable. A Debtor is a customer and also a Creditor is a vendor)
This ar will look in ~ the transactions for Fooz sphere Town and how to write-up to subsidiary ledgers because that accounts receivable and accounts payable.
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Accounts receivable Subsidiary Ledger
The account receivable subsidiary ledger will certainly contain one account because that each separation, personal, instance customer. The sales, payments, and returns and also allowances space recorded into the individual client accounts as well as the bigger snapshot (control account) account receivable account. For Fooz sphere Town, the sales entries were:
July 5 marketed $5,000 of was inventory, state 1/15, n 30, FOB destination with a cost of products sold that $3,000 to Robby Red.July 10 sold $1,500 of goods inventory for cash, FOB Shipping Point, with a cost of products sold the $1,000.July 15 received payment indigenous Robby Red indigenous July 5 sale less the discount.July 30 sold $7,000 of goods inventory, terms 1/15, n 30, FOB Shipping suggest with cost of items sold $5,000 come Bobby Blue.These entries were recorded in the sales journal and cash receipts journal as follows:
| Sales Journal | |||
| Date | Customer | DR account Receivable | DR price of goods sold |
| CR Sales | CR Inventory | ||
| July 5 | Robby Red | $5,000 | $3,000 |
| July 30 | Bobby Blue | 7,000 | 5,000 |
| TOTALS | $12,000 | $8,000 |
| Cash Receipts newspaper | ||||||
| Date | Customer | DR Cash | DR Sales | CR accounts | CR Sales | DR price of goods Sold |
| Discounts | Receivable | CR Inventory | ||||
| July 10 | Cash Sale | 1,500 | 1,500 | 1,000 | ||
| July 15 | Robby Red | 4,950 | 50 | 5,000 | ||
| TOTALS | 6,450 | 50 | 5,000 | 1,500 | 1,000 |
These journals would be posted to the account Receivable manage account choose this:
| Account: account Receivable | ||||
| Date | Description | Debit | Credit | Balance |
| July 31 | from Sales Journal | 12,000 | 12,000 | |
| July 31 | from Cash Receipts Journal | 5,000 | 7,000 |
The client (subsidiary) ledger would be updated for Robby Red and Bobby Blue as:
| Customer Account: Robby Red | ||||
| Date | Description | Debit | Credit | Balance |
| July 5 | Sale | 5,000 | 5,000 | |
| July 15 | Payment | 5,000 | -0- | |
| Customer Account: Bobby Blue | ||||
| Date | Description | Debit | Credit | Balance |
| July 15 | Sale | 7,000 | 7,000 |
At the end of the period, a schedule is prepared to verify (or prove) the accounts Receivable (control account) balance report on the balance sheet. This schedule is a listing of all customers with the ending quantities owed and also should always match the ending balance in account Receivable. The schedule of account receivable because that Fooz ball Town would certainly be:
| Fooz ball Town | |
| Schedule of accounts Receivable | |
| July 31 | |
| Robby Red | $0 |
| Bobby Blue | 7,000 |
| Total accounts Receivable | $ 7,000 |
Note: It would not be important to incorporate customers v zero balances yet it is consisted of here just so you can see exactly how the subsidiary ledger works. an alert how the schedule of accounts receivable balance equates to the ending accounts union balance (control account).
Accounts Payable Subsidiary Ledger
The account payable subsidiary ledgers functions the same method as account receivable v the control account of account payable and the subsidiary ledger a merchant ledger to provide a listing that everyone us owe. The purchases, payments, returns and allowances are videotaped in the individual vendor accounts as well as in the account payable account. The acquisition transactions because that Fooz round Town are:
July 12 to buy $10,000 of goods inventory, state 2/15, n 45, FOB location from Gus Grass.July 16 went back $2,500 of was damaged in shipment from July 12 purchase.July 25 Paid for the July 15 purchase from Gus Grass less the return and also discount.See more: Self Sufficiency Is The Key To Being Successful, Steps To Self Reliance
These transactions were recorded, under the perpetual inventory method, in the complying with journals:
| Purchases Journal | ||
| Date | Vendor | DR was Inventory |
| CR accounts Payable | ||
| July 12 | Gus Grass | 10,000 |
| TOTALS | 10,000 |
| Cash Disbursement Journal | ||||
| Date | Account | DR Accts Payable | CR Mdse Inventory | CR Cash |
| July 25 | Gus Grass | 7,500 | 150 | 7,350 |
| General Journal | |||
| Date | Account | Debit | Credit |
| July 16 | Accounts Payable | 2,500 | |
| was Inventory | 2,500 |
These journals would certainly be posted to the Accounts Payable control account choose this:
| Account: accounts Payable | ||||
| Date | Description | Debit | Credit | Balance |
| July 16 | Gus Grass Return | 2,500 | -2,500 | |
| July 31 | from purchases Journal | 10,000 | 7,500 | |
| July 31 | from Cash Disbursements Journal | 7,500 | -0- |
The vendor (subsidiary) ledger would certainly be updated because that Gus Grass:
| Vendor Account: Gus Grass | ||||
| Date | Description | Debit | Credit | Balance |
| July 12 | Purchase | 10,000 | 10,000 | |
| July 16 | Return | 2,500 | 7,500 | |
| July 25 | Payment | 7,500 | -0- |
The seller balance because that Gus Grass is $0 and also the account payable balance is $0. Because both are zero and match, it would not be necessary to prepare a schedule of accounts payable. If there is a balance, a schedule of account payable would certainly be all set in the same manner together accounts receivable.