Chapter 11 Note:

Subsidiary Ledger Systems

As a business grows so do the number of credit customers (A/R) & Suppliers (A/P)

General Ledgers may have too many accounts to track

Create Subsidiary Ledger

A/R sub ledger

A/P sub ledger

A/R Sub Ledger

Contains all credit customers

Each has an account, e.g. A/R Hocking

Duties of an A/R Clerk:

1. Process Sales Invoice

2. Record sales Invoice

3. Process cash received from customers

4. Prepare a schedule of accounts receivable

A/P Sub ledger

Same as A/R but for amounts owed to suppliers

Each supplier has an account in A/P sub ledger

Duties of the A/P Clerk:

 1. Process Purchase Invoices

2. Record Purchase Invoice

3. Pay Creditors

4. Update Creditors Accounts

5. Prepare a Schedule of Accounts Payable

Duties of accounting supervisor

Maintain general journal & ledger

Journalize & post to A/R & A/P control accounts (see pg. 475 shown below)

Compare control accounts to A/R & A/P schedules

Concerned with:

Sales, profits, expenses

Expansion, processes, employee efficiency etc.

Advantages of sub ledgers

Division of Labour:

Specialize & become efficient

Helps deal with large volume of transactions

Accounting Control:

Checks accuracy of records

Less fraud

The Synoptic Journal

Also known as a specialized journal, a multi-columnar journal or columnar

journal

It is a journal containing:
 Column headings for often used accounts (e.g. bank, A/R, A/P, Revenue)

Shows many transactions on 1 Page

Batch posting (post only totals on the last day of the month), saves
time entries in other accounts column get posted individually (like
normal)

Suitable for small businesses with many repeated transactions

Disadvantage book is large & cumbersome

At the end of the month, the columns are totaled & cross-balanced

Journal is then posted to the ledger

Posting reference in ledger in Sn & the page number (e.g. Sn4)

Special Journals

Used for midsize companies

Many repetitive transactions

Examples:

ANSWER

ANSWER

ANSWER

ANSWER

Special Journal Sales Journal

All sales ANSWER

Post totals to ANSWER

PR column indicates posting to A/R sub ledger

Special Journal Purchases Journal

All ANSWER made on account (ANSWER)

Special Journal Cash Receipts Journal

All cash account ANSWER entries (cash ANSWER)

If transaction is part cash it is made in the cash journal

Debit to ANSWER indicated with a ANSWER

Special Journal Cash Payments Journal

All cash ANSWER or ANSWER (ANSWER to Cash)

Special Journals

All totaling, balancing & posting procedures are the same as for the Synoptic Journal

Only the posting reference in the ledger differs;

S, P, CP & CR instead of Sn

Advantages over Synoptic:

ANSWER

ANSWER

General Journal

All other transactions, e.g. owner donates a vehicle to the business, adjusting &
closing entries