Subsidiary Ledgers

and Special Journals

Controlling Accounts and Subsidiary
Ledger
 In the general journal, all transactions involving amount of
money receivable from customers are posted under
accounts receivable while all transactions involving
amount of money payable to creditors are posted under
accounts payable

 However, is possible only if the business has few customers

or creditors, if the business has hundreds of customers or
creditors, a subsidiary ledger is necessary
Controlling Accounts and Subsidiary
Ledger
Accounts Receivable Accounts Payable
Ledger Ledger
 A list of all customer  A list of all creditor accounts
accounts arranged in arranged in alphabetical
alphabetical order in a order on a separate ledger
separate ledger

The accounts receivable ledger and the accounts payable ledger are called
subsidiary ledgers.

The accounts they support – the accounts receivable and accounts payable
– are known as controlling accounts. The subsidiary ledgers of these
two controlling accounts show the details supporting their balances
ILLUSTRATION 1: Per general ledger, accounts receivable has a balance of
P100,000
General Ledger
Account: Account Receivable
Date Explanatio J.R. Debit Credit Balance
n
2016
May 31 Balance SJ1 100,000 100,000

The subsidiary ledgers to support the balance of the accounts receivable are as
follows
The Subsidiary Ledgers

Customer Name: Heartea Company

Date Term F Debit Credit Balance

2016
May 8 2/10, n/30 SJ1 35,000 35,000
The Subsidiary Ledgers
Customer Name : Royalty Merchandising

Date Term F Debit Credit Balance

2016
May 8 2/10, n/30 SJ1 20,000 20,000

Customer Name: Wintermelon Trading

Date Term F Debit Credit Balance

2016
May 10 2/10, n/30 SJ1 20,000 40,000
The Subsidiary Ledgers
Customer Name : Macha Company

Date Term F Debit Credit Balance

2016
May 10 2/10, n/30 SJ1 5,000 5,000

The total balances of the four customers in the subsidiary ledger is as

follows:

Heartea Co. P35,000

Royaltea Merchandising 20,000
Wintermelon Trading 40,000
Macha Co. 5,000
Total P100,000 This is the balance
of the

controlling account –
ILLUSTRATION 2: Per general ledger, accounts payable has a balance of P80,000

General Ledger
Account: Account Payable
Date Explanatio J.R. Debit Credit Balance
n
2016
May 31 Balance PJ1 80,000 80,000

The subsidiary ledgers to support the balance of the accounts pyable are as follows

The Subsidiary Ledgers

Supplier Name: Serenitea Co.

Date Term F Debit Credit Balance

2016
May 5 3/10, n/60 PJ1 40,000 40,000
The Subsidiary Ledgers
Supplier Name : Ulong Tea Trading

Date Term F Debit Credit Balance

2016
May 8 3/10, n/30 PJ1 25,000 25,000

Supplier Name: Taro Tea Co.

Date Term F Debit Credit Balance

2016
May 12 3/10, n/30 PJ1 15,000 15,000
The total balances of the three suppliers in the subsidiary ledger is as follows:

Serenitea Co. P45,000

Ulong Tea Trading 25,000
Taro Tea Co. 15,000
Total P 80,000 This is the balance
of the

controlling account –

accounts payable
Four Types of Special
Journals
 Special Journals
 are columnar books of original entry for recording similar
transactions
 their design and use depend on the needs of a specific
business entity
 merchandising business commonly has four types of
transactions
Transaction Special Journal

Selling of merchandise on credit Sales journal

Buying of merchandising on credit Purchase journal

Cash collections Cash receipts Journal

Cash payments Cash disbursements journal

 Special Journals
 the use of these journals saves time as transactions of the same
nature are grouped together in one journal

 the aggregate total is then posted to the general ledger as

compared to the general journal where each item is separately
posed

 a particular type of transaction can be handled by one person

thereby resulting in division of labor
 Special Journals
 no specialized skills is required of the person handling the task as
recording process under the special journal’s columnar headings
is simple

 beneficial to the management in analyzing the different classes

of business transactions as similar transactions are recorded in
one journal

 the use of special journals does not totally eliminate the use of
the general journal as transaction that do not involve sales on
account, purchases on account, cash receipt and cash payment
are recorded in the general journal
 Special Journals
 Examples of transactions that are recorded in the general journal:
 non-cash investment
 non-cash withdrawal of owner
 notes issued or received in a purchase or sales transaction
 credit memo or debit memo for account sales or purchases
 other assets sold or bought on account
Sales Journal
 Sales Journal
 records all sales transactions on account or with promissory note
 cash sales are not recorded in the sales journal but in the cash
receipts book
 sales of asset on account are not recorded in the sales journal but
in the general journal
 for sales transactions in which a promissory note is received, the
transaction is initially recorded in the sales journal then in the
general journal as:

Notes Receivable xxx

Accounts Receivable
xxx
 Sample Sales Journal

Date Customer F Terms Account Sales Output

Receivable Tax
Debit (Credit) (Credit)
Column Details

Date Date if the transaction

Customer Name of person or companyto whom the sale was made

F Folio or posting references which is checked when the account is

posted to the subsidiary ledger
Terms Credit terms of the sales transaction

Accounts Amount collectible from customer due to sales made on account

Receivable
Sales Sales price of merchandise sold

Output Tax Value Added Tax applicable to the sales

 Illustration

The following are the credit sales transactions of Jaden Sales for the month of July:

July 5 Jaden sold merchandise on credit to Camote Enterprise, P10,000 exclusive of

12%
VAT, Term 1/15, n/30.

July 7 Merchandise was sold on credit to Tee Mang Merchant, P15,000 exclusive of 12%
VAT, 2/10, n/30.

July 10 Merchandise was sold on credit to Mc Cuenta Shop, P5,000 exclusive of 12% VAT
3/15, n/30.

July 12 Jaden sold merchandise on account to King Oats Merchants, P20,000, exclusive
of
12% VAT 2/10, n/30.

July 15 Jaden Sales sold merchandise on account to KY Tradiong, P25,000 exclusive of

12%
VAT, 1/15, n/30.
 Sales Journal

Date Customer F Terms Accounts Sales Output

Receivable Tax
Debit (Credit) (Credit
)
July 5 Camote Enterprise / 1/15, n/30 11,200 10,000 1,200

7 Tee Mang Merchants / 2/10, n/30 16,800 15,000 1,800

10 Mc Cuenta Shop / 3/15, n/30 5,600 5,000 600

12 King Oats Merchants / 2/10, n/30 22,400 20,000 2,400

15 KY Trading / 1/15, n/30 28,000 25,000 3,000

84,000 75,000 9,000

(120) (410) (250)

General Ledger
Account: Accounts Receivable
Account No.: 120
Date Terms F Debit Credit Balance
2016
July 31 Balance SJ1 84,000 84,000

Account: Sales
Account No. 410
Date Terms F Debit Credit Balance
2016
July 31 Balance SJ1 75,000 75,000

Account: Output Tax

Account No. 250
Date Terms F Debit Credit Balance
2016
July 31 Balance SJ1 9,000 9,000
The Subsidiary Ledger to support the balance of the
A/R
Customer Name : Camote Enterprise

Date Terms F Debit Credit Balance

2016
July 5 1/15, n/30 SJ1 11,200 11,200

Customer Name : King Oats Merchants

Date Terms F Debit Credit Balance
2016
July 12 2/10, n/30 SJ1 22,400 22,400

Customer Name : KY Trading

Date Terms F Debit Credit Balance

2016
July 15 1/15, n/30 SJ1 28,000 28,000
The Subsidiary Ledger to support the balance of the
A/R
Customer Name : Mc Cuenta Shop

Date Terms F Debit Credit Balance

2016
July 10 3/15, n/30 SJ1 5,600 5,600

Customer Name : Tee Mang Merchants

Date Terms F Debit Credit Balance
2016
July 7 2/10, n/30 SJ1 16,800 16,800
Cash Receipts Journal
Cash Receipts Journal

 all transactions involving inflows of cash or receipts of cash are

recorded in cash receipts journal

 whenever there is an increase in cash, the transaction is always

recorded in cash receipts journal
Cash Receipts Journal

 Cash transaction include:

- cash investment of owner
- simultaneous cash with a non-cash investment of owner
- sale of merchandise and other assets of cash basis
- sale of merchandise and other assets with down payment
- return and allowances of merchandise purchase on cash basis
- collection of accounts and notes receivable
- proceeds of loan
- discounting of promissory notes
 Cash Receipts Journal (Sample)

Accounts
Sales Receivable Output
Received Cash Sales Sundry
Date OR No. Discount Tax F Debit Credit
From Debit Credit Accounts
Debit Credit

Debit Credit
Column Details

Date Date if the transaction

Date Date of transaction

Received from Person or company that is the source of cash

OR No. Official receipt number issued to the company or customer for the
payment of the account
Cash Debit Amount of cash received

Sales Amount of sales discount if payment is received within the discount

Discount period
Accounts Amount of cash receivable from the customer or paid by the
Receivable customer
Column Details

Date Date if the transaction

Sales Amount of sales on cash basis

Output Tax Value Added Tax applicable to the sales

Sundry Other accounts affected by the receipts of cash not related to sales
Account transaction or collection of account sales
F Folio where the account number of the account under the sundry
column is written once the transaction is posted indication posting
reference
 Illustration

The following are additional transactions of Geuel Enterprises for the month of
July.

July 2 Bud Bernard made an additional cash investment of P500,000.

10 Geuel Enterprises sold merchandise for cash exclusive of 12%

VAT,
P150,000.

21 Geuel Enterprises collected P2,000 from Mc Cuenta Shop

26 Proceeds of loan from Mito Bank amount to P300,000.

28 KY Trading’s account is settled in full for P27,700 and a sales

discount of
P250.
 Cash Receipts Journal

Accounts
Sales Receivable
Received OR Cash Sales Output Tax Sundry
Date Discount F Debit Credit
From No. Debit Credit Credit Accounts
Debit

Debit Credit

July 500,000.
2 Bud Bernard 00 Bud, Capital 310 500,000.00

168,000.
10Customers 00 150,000.00 18,000.00

Mc Cuenta
21 Shop 2,000.00 2,000.00

300,000. Loan
26Mito Bank 00 Payable 230 300,000.00

27,700.0 28,000.0
28KY Trading 0 250.00 0

997,700. 30,000.0
00 250.00 0 150,000.00 18,000.00 800,000.00
(100) (480) (120) (410) (280)
General Ledger
Account: Cash Account No.:
100
Date Explanatio J.R. Debit Credit Balance
n
2016
July 31 Balance CRJ1 997,700 997,700

Account: Account Receivable Account No.: 120

Date Explanati J.R. Debit Credit Balance

on
2016
July 31 Balance SJ1 84,000 84,000
CRJ 30,000 54,000
Note: P84,000 is the amount of the sales journal
General Ledger
Account: Output Tax Account No.:
250
Date Explanati J.R. Debit Credit Balance
on
2016
July 31 Balance SJ1 9,000 9,000
CRJ 18,000 27,000

Account: Loan Payable Account No.: 230

Date Explanatio J.R. Debit Credit Balance

n
2016
July 26 Balance CRJ1 300,000 300,000
General Ledger
Account: B. Capital Account No.:
310
Date Explanatio J.R. Debit Credit Balance
n
2016
July 2 Balance CRJ1 500,000 500,000

Account: Sales Account No.:

410
Date Explanati J.R. Debit Credit Balance
on
2016
July 31 Balance SJ1 75,000 75,000
CRJ1 150,000 225,000
Note: P75,000 is the amount of the sales journal
General Ledger
Account: Sales Discount Account No.:
480
Date Explanatio J.R. Debit Credit Balance
n
2016
July 31 Balance CRJ1 250 250
The subsidiary ledgers affected by the cash receipts
transactions are:

Customer Name: Mc Cuenca Shop

Date Terms F Debit Credit Balance
July 10 3/15, n/30 SJ1 5,600 5,600
July 21 CRJ1 2,000 3,600

Customer Name: KY Trading

Date Terms F Debit Credit Balance
July 15 1/15, n/30 SJ1 28,000 28,000
July 21 CRJ1 28,000 -0-
Purchases Journal
Purchases Journal

 records all purchase transactions on account or with

promissory note

 for purchase transactions in which a promissory note is

issued, the transaction is initially recorded in the purchases
journal and is then recorded in the general journal as
follows:

Accounts Payable xxx

Notes Payable xxx
Sample Purchase
Journal
Date Supplier F Terms Purchase Input Tax Accounts
s (Debit) (Debit) Payable
Credit
Column Details

Date Date of transaction

Supplier Person or company from whom the purchase was made

F Folio or posting reference which is checked when the account is

posted in the subsidiary ledger
Purchases Purchase price of merchandize bought

Input Tax Value-Added-Tax applicable to the purchase

Accounts Amount payable to supplier for purchases made on account

Payable
 Illustration

July 2 Geuel Enterprise purchase merchandise on account from No

Kia
exclusive of 12% VAT, 30,000. Term: 1/10, n/30

4 Merchandise was purchased on account from Alco Tel

Merchants,
P20,000 exclusive of 12% VAT, Terms: 1/15, n/30.

8 Purchases were made from Sun Sung Shop, P25,000

exclusive of
12% VAT, Terms: 3/10, n/30.

11 Geuel Enterprises purchased merchandise on credit from

Sonnie Merchants, P50,000 exclusive of 12% VAT, Terms: 1/15,
n/30.
 Purchases Journal
Date Supplier F Terms Purchase Input Tax Accounts
s (Debit) (Debit) Payable
Credit

July 2 No Kia Shop / 1/10, n/30 30,000 3,600 33,600

4 Alco Tel Merchants / 1/15, n/30 20,000 2,400 22,400

8 Sun Sung Shop / 3/10, n/30 25,000 3,000 28,000

11 Sonnie Merchats / 1/15, n/30 50,000 6,000 56,000

15 El Gee Trading / 2/15, n/60 10,000 1,200 11,200

135,000 16,200 151,200

(510) (180) (220)

Purchases Journal

At the end of the month, the totals of the amount column of the
purchase journal are posted to the corresponding accounts in the
general ledger, namely accounts payable and purchases.

Once the totals are posted to their respective accounts in the

general ledger, their account numbers are written below the total in
the purchases journal to signify posting
General Ledger
Account: Accounts Payable
Account No.: 220
Date Explanati JR Debit Credit Balance
on
2016
July 31 Balance PJ1 151,200 151,200

Account: Purchases
Account No. 510
Date Terms F Debit Credit Balance
2016
July 31 Balance PJ1 135,000 135,000

Account: Input Tax

Account
Date No. 180
Terms F Debit Credit Balance
2016
July 31 Balance PJ1 16,200 16,200
The subsidiary ledgers to support the balance of accounts
payable are:
Supplier Name: Alco Tel Merchants
Date Terms F Debit Credit Balance
July 4 1/15, n/30 PJ1 22,400 22,400

Supplier Name: El Gee Trading

Date Terms F Debit Credit Balance
July 15 2/15, n/30 PJ1 11,200 11,200

Supplier Name: No Kia Shop

Date Terms F Debit Credit Balance
July 2 1/10, n/30 PJ1 33,600 33,600
The subsidiary ledgers to support the balance of accounts
payable are:
Supplier Name: Sonnie Merchants
Date Terms F Debit Credit Balance
July 11 1/15, n/30 PJ1 56,000 56,000

Supplier Name: Sun Sung Shop

Date Terms F Debit Credit Balance
July 8 3/10, n/30 PJ1 28,000 28,000
Cash Payments
Journal
Cash Payments Journal

 all transactions involving outflow of cash or payment of cash

are recorded in the cash payments journal or cash
disbursements journal

 whenever there is a decrease in cash, the transaction is

always recorded in the cash payments journal
Cash Payments Journal
 cash transactions include cash withdrawal of owner
- simultaneous cash with a non-cash withdrawal of owner
- purchase of merchandise and other assets on cash basis
- purchase of merchandise and other assets with down payment
- returns and allowances of merchandise sold on cash basis
- payment of freight
- payment of expenses
- payment of accounts
- payment of loans
- payment of promissory notes including dishonored notes
- issuance and replenishment of petty cash fund
 Cash Payments Journal (Sample)

Accounts
Purchase Payable
Cash Purchases Input Tax Sundry
Date Paid to Check No. Discount F Debit Credit
Credit Debit Debity Account
Credit

Debit Credit
Column Details

Date Date of transaction

Paid to Person or company to whom cash was paid

Check No. Check number issued to the company or supplier as payment for the
account
Cash Amount of cash paid

Input Tax Value-Added-Tax applicable to the purchase

Purchase Amount of purchase discount if payment was made within the

Discount discount period
Column Details

Accounts Amount of cash due or paid to the supplier

Payable
Purchases Amount of merchandise bought

Input Tax Value-Added-Tax applicable to the purchase

Sundry Other accounts affected by the disbursement of cash not related to

Accounts purchase transaction or payment of account purchases
F Folio in which the account number under the sundry column is
written once the transaction is posted indicating posting reference
 Illustration

The following are additional transactions of Geuel Enterprises for the

month of July:

July 18 Account with Sun Sung Shop was settled in full. Check
No. 00025

20 Merchandise was purchased for cash, P78,400 inclusive of

12% VAT

22 Geuel Enterprises settled account with No Kia Shop in full.

Check
No. 00026

29 Bud Bernard withdrew P50,000 for personal use

31 Geuel Enterprises made partial payment of loan to Mito

 Cash Payments Journal

Accounts
Purchase Payable Input
Check Cash Purchases Sundry
Date Paid to Discount Tax F Debit Credit
No. Credit Debit Account
Credit Debity
Debit Credit

Sun Sung 28,00

July 18 Shop 00025 27,250 750 0

Cash
20 Purchases 78,400 70,000 8,400

33,60
22No Kia Shop 00026 33,600 0

Bud B,
29 Bernado 50,000 Drawing 420 50,000

Loan
31Mito Bank 00027 200,000 Payable 230 200,000

61,60
389,250 750 0 70,000 8,400 250,000

(100) (520) (210) (510) (155)

General Ledger
Account: Cash Account No.:
100
Date Explanati J.R. Debit Credit Balance
on
2016
July 31 Balance CRJ1 997,750 997,750
Balance CRJ1 389,650 608,100
Note: The total amount posted from the cash receipts journal is
P997,750.

Account: Accounts Payable Account No.:

210
Date Explanati J.R. Debit Credit Balance
on
2016
July 31 Balance PJ1 151,200 151,200
Balance CPJ1 61,600 89,600
Note: P151200 is the amount of the accounts payable journal.
General Ledger
Account: Loan Payable Account No.:
230
Date Explanati J.R. Debit Credit Balance
on
2016
July 31 Balance CRJ1 300,000 300,000

Note: The Balance

total amount CRJ1 200,000
posted from the cash receipts journal100,000
is
P300,000.

Account: B. Drawing Account No.:

420
Date Explanati J.R. Debit Credit Balance
on
2016
July 31 Balance CPJ1 50,000 50,000
General Ledger
Account: Purchases Account No.:
510
Date Explanati J.R. Debit Credit Balance
on
2016
July 31 Balance CRJ1 300,000 300,000

Note: The Balance

total amount CRJ1 200,000
posted from the cash receipts journal100,000
is
P300,000.

Account: Purchase Discount Account No.:

520
Date Explanati J.R. Debit Credit Balance
on
2016
July 31 Balance CPJ1 750 750

Note: Balances from previous transactions of Geuel Enterprises are

also
shown on the general ledger
General Ledger
Account: Input Tax Account No.:
155
Date Explanati J.R. Debit Credit Balance
on
2016
July 31 Balance PJ1 16,200 16,200

Note: The Balance

total amount CPJ1
posted from the8,400 24,600
purchase journal is P16,200.
The subsidiary ledgers to support the balance of accounts
payable are:
Supplier Name: No Kia Shop
Date Terms F Debit Credit Balance
July 2 1/10, n/30 PJ1 33,600 33,600
22 CPJ1 33,600 -0-

Supplier Name: Sun Sung Shop

Date Terms F Debit Credit Balance
July 8 3/10, n/30 PJ1 28,000 28,000
18 CPJ1 28,000 -0-
The General Journal
General Journal
 Transactions that cannot be recorded in the special journals are
recorded in the general journal
 Transactions like:
- provision of doubtful accounts
- write offs of doubtful accounts
- depreciation
- non-cash investments and withdrawals of owner
- issuance of a note in lieu of an account
 Owner's Investment

Accounts Affected
Transactions Journal
Debit Credit
Cash investment only Cash Owner, Capital Cash Receipts Journal

Cash and non-cash asset Cash

investment Asset Account Owner, Capital Cash Receipts Journal

Non-cash asset
investment only Asset Account Owner, Capital General Journal

Sale of Merchandise
Sales on cash Cash Sales Cash Receipts Journal

Sales on account Accounts Receivable Sales Sales Journal

Sales with down payment Cash

and balance on account Accounts Receivable Sales Cash Receipts Journal
 Accounts Affected
Transactions Journal
Debit Credit
Cash Sales Cash Receipts Journal
Notes
Sales with down payment and Receivable
receipt of a note for the
balance
Cash Sales Sales Journal
Notes
Sales with down payment, Receivable
receipt of a note for a certain Accounts Receivable
amount and the balance on
account
Receipt of a note for the sale
Accounts Receivable Sales Sales Journal

Note Receivable Accounts Receivable General Journal

Receipt of a note for a certain

amount and the balance on Accounts Receivable Sales Sales Journal
account
Note Receivable Accounts Receivable General Journal

Receipt of payment for the Cash Accounts Receivable Cash Receipts Journal
account

Cash Notes Receivable Cash Receipts Journal

Receipt of payment for the note

Accounts Receivable
Receipt of payment for the Cash Cash Receipts Journal
Notes Receivable
account and the note
 Owner's Withdrawal
Cash Payments
Cash Withdrawal Owner, Drawing Cash Journal

Cash Cash Payments

Owner, Drawing
Cash and non-cash asset Asset Account Journal
withdrawal

Fixed asset withdrawal Owner, Drawing Fixed Asset General Journal

Merchandise withdrawal Owner, Drawing Purchases General Journal

Supplies withdrawal Owner, Drawing Supplies General Journal

 Purchase of Merchandise

Purchases for cash Purchases Cash Cash Payments Journal

Purchases on account Purchases Accounts Payable Purchases Journal

Cash
Purchases Accounts Payable Cash Payments Journal
Purchases with down payment and the balance
of account

Cash
Purchases Notes Payable Cash Payments Journal
Purchase with down payment and issuance of a
note for the balance

Cash
Notes Payable
Purchases Cash Payments Journal
Purchases with down payment, issuance of a Accounts
note for a certain amount and the balance of Payable
account
Purchases Journal
Purchases Accounts Payable General
Issuance of a note for the purchase Accounts Payable Notes Payable Journal

Payment of the account Accounts Payable Cash Cash Payments Journal

Payment of the note Notes Payable Cash Cash Payments Journal

Accounts Payable Cash Cash Payments Journal
Payment of the account and the note Notes Payable
Issuance of an note for a certain amount and
the balance on account Purchases Accounts Payable General Journal
Accounts Payable Notes Payable Purchases Journal