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 SalesCR Inventory
July 5Robby Red$5,000$3,000
July 30Bobby Blue7,0005,000
TOTALS $12,000$8,000

Cash Receipts newspaper
Date Customer  DR Cash DR Sales CR accounts CR Sales DR price of goods Sold
 Discounts ReceivableCR Inventory
July 10Cash Sale1,5001,5001,000
July 15Robby Red4,950505,000
TOTALS 6,450505,0001,5001,000

These journals would be posted to the account Receivable manage account choose this:

Account: account Receivable    
July 31from Sales Journal12,00012,000
July 31from Cash Receipts Journal5,0007,000

The client (subsidiary) ledger would be updated for Robby Red and Bobby Blue as:

Customer Account: Robby Red    
July 5Sale5,0005,000
July 15Payment5,000-0-
Customer Account: Bobby Blue
July 15Sale7,0007,000

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$0
Bobby Blue7,000
Total accounts Receivable$ 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.

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These transactions were recorded, under the perpetual inventory method, in the complying with journals:

Purchases Journal 
DateVendorDR was Inventory
CR accounts Payable
July 12Gus Grass10,000
TOTALS 10,000

Cash Disbursement Journal
DateAccountDR Accts PayableCR Mdse InventoryCR Cash
July 25 Gus Grass7,5001507,350

 General Journal   
July 16Accounts Payable2,500
was Inventory2,500

These journals would certainly be posted to the Accounts Payable control account choose this:

Account: accounts Payable
July 16Gus Grass Return2,500-2,500
July 31from purchases Journal10,0007,500
July 31from Cash Disbursements Journal7,500-0-

The vendor (subsidiary) ledger would certainly be updated because that Gus Grass:

Vendor Account: Gus Grass
July 12Purchase10,00010,000
July 16Return2,5007,500
July 25Payment7,500-0-

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.