APPENDIX I
Subsidiary Ledgers and Special Journals
LEARNING OBJECTIVES
IARY LEDGER.
2. EXPLAIN HOW COMPANIES USE SPECIAL JOURNALS
IN JOURNALIZING.
3. INDICATE HOW COMPANIES POST A MULTI-COLUMN
JOURNAL.
APPENDIX I REVIEW
Subsidiary Ledgers
1. (L.O. 1) A subsidiary ledger is a group of accounts with a common characteristic, assembled
individual balances.
2. Two common subsidiary ledgers are:
customers.
b. The accounts payable (or creditors’) ledger which collects transaction data with individual
creditors.
3. The summary account in the general ledger is called a control account and the balance in the
at the end of the period.
4. The advantages of using subsidiary ledgers are that they:
a. Show in a single account transactions affecting one customer or one creditor, thus providing up–
to-date information on specific account balances.
by using control accounts.
d. Make possible a division of labor in posting by having one employee post to the general ledger
while a different employee(s) post to the subsidiary ledgers.
Special Journals
5. (L.O. 2) To expedite journalizing and posting transactions, most companies use special journals in
6. The following are types of special journals:
d. Cash payments journal—all cash paid (including cash purchases).
7. If a transaction cannot be recorded in a special journal, it is recorded in the general journal. Special
process.
Sales Journal
8. For the sales journal,
a. Each entry results in a debit to Accounts Receivable and a credit to Sales Revenue at selling
Copyright © 2014 John Wiley & Sons, Inc. Weygandt, Financial Accounting, 9/e, Instructor’s Manual (For Instructor Use Only) I-3
c. All entries are made from sales invoices.
d. Postings are made daily to the individual accounts receivable in the subsidiary ledger and
monthly, in total, to Accounts Receivable, Sales Revenue, Cost of Goods Sold and Inventory in
the general ledger.
Cash Receipts Journal
9. The cash receipts journal is a columnar journal with debit columns for cash and sales discounts,
and credit columns for accounts receivable, sales, and “other” accounts. In addition there is a
receipts transactions:
a. Only one line is needed for each entry.
b. Each sale entry is accompanied by another entry that debits Cost of Goods Sold and credits
Inventory for cost.
procedures:
a. All column totals except the total for the Other Accounts column are posted once at the end of
the month to the account title or titles specified in the column heading.
column.
c. The individual amounts in a column, posted in total to a control account, are posted daily to the
subsidiary ledger account specified in the Accounts Credited column.
Purchases Journal
11. For the purchases journal,
d. Postings are made daily to the individual creditor accounts in the accounts payable subsidiary
12. The purchases journal can be expanded into a columnar journal by adding columns for supplies and
other accounts.
Cash Payments Journal
13. The cash payments journal has multiple columns because cash payments may be made for a
variety of purposes.
Effects of Special Journals on General Journal
14. Only transactions that cannot be entered in a special journal are recorded in the general journal.
When the entry involves both control and subsidiary accounts the following modifications are
required:
account.
LECTURE OUTLINE
A. Nature and Purpose of Subsidiary Ledgers.
(for example, all accounts receivable).
3. At the end of an accounting period, each general ledger control account
related subsidiary ledger.
4. The advantages of using subsidiary ledgers are that they:
a. Show in a single account transactions affecting one customer or one
creditor, thus providing up-to-date information on specific account
balances.
and accounts payable.
c. Help locate errors in individual accounts by reducing the number of
accounts in one ledger and by using control accounts.
d. Make possible a division of labor in posting to the general ledger and
subsidiary ledgers.
B. Special Journals.
1. Companies use special journals to record similar types of transactions.
Special journals frequently used are:
a. Sales journal.
b. Cash receipts journal.
c. Purchases journal.
d. Cash payments journal.
column journal would not have enough space for all possible cash
receipts transactions.
b. Generally, a cash receipts journal includes debit columns for Cash and
Sales Discounts, and credit columns for Accounts Receivable, Sales
cash sale occurs.
4. In the purchases journal, companies record all purchases of merchandise on
account. Each entry in this journal results in a debit to Inventory and a credit to
Accounts Payable.
disbursements of cash.
6. Only transactions that cannot be entered in a special journal are recorded in
the general journal.
C. Posting of Multi-Column Journals.
1. Companies post all column totals except for the Other Accounts column
once at the end of the month to the account title specified in the column
heading.
2. Companies do not post the total of the Other Accounts column. Instead, the
individual amounts comprising the total are posted separately to the general
ledger accounts specified in the Account Credited (Debited) column.
3. The individual amounts in a column posted in total to a control account are
posted daily to the subsidiary ledger accounts specified in the Account
Credited (Debited) column.
10 MINUTE QUIZ
Circle the correct answer.
True/False
1. The sales journal is used to record all sales of merchandise.
True False
account balances.
True False
3. In posting a multi-column journal, the total of the Other Accounts column is not posted.
True False
4. Each entry in the single-column purchases journal results in a debit to Inventory and a credit to
Accounts Payable.
True False
journal.
True False
Multiple Choice
a. Accounts Receivable total.
b. Sales Revenue total.
c. Cash total.
d. Other Accounts total.
2. The source for preparing the schedule of accounts receivable is the
a. accounts receivable controlling account.
b. sales journal.
c. accounts receivable subsidiary ledger.
d. trial balance.
a. cash receipts journal.
b. subsidiary ledger.
c. special journal.
d. general ledger.
4. Sales of merchandise for cash would be recorded in the
a. sales journal.
b. general journal.
c. purchases journal.
d. cash receipts journal.
a. cash receipts journal.
b. cash payments journal.
c. general journal.
d. sales journal.
ANSWERS TO QUIZ
True/False
Multiple Choice