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Iv. Lesson Proper WK 9

The document discusses the general ledger and subsidiary ledgers. The general ledger contains all accounts and transactions organized by the chart of accounts. Subsidiary ledgers provide more detail for individual accounts like accounts receivable or accounts payable. Controlling accounts in the general ledger summarize the transactions in subsidiary ledgers.
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0% found this document useful (0 votes)
32 views16 pages

Iv. Lesson Proper WK 9

The document discusses the general ledger and subsidiary ledgers. The general ledger contains all accounts and transactions organized by the chart of accounts. Subsidiary ledgers provide more detail for individual accounts like accounts receivable or accounts payable. Controlling accounts in the general ledger summarize the transactions in subsidiary ledgers.
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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BESTLINK COLLEGE

OF THE PHILIPPINES
FINANCIAL ACCOUNTING REPORTING
General Ledger and Subsidiary Ledger
IV. LESSON PROPER

LET’S BEGIN

Based on the preliminary activities, what did you notice about it?
_______________________________________________________
CONGRATULATIONS!
You may now proceed to the lesson.

Source:
Lesson 1 – General Ledger

The journal provides a day-by-day record of business transactions.

A complete set of all the accounts used by a business is called the General Ledger. The General
Ledger provides a complete record of the transactions entered in each account. The accounts are
numbered and arranged in the same ordered as the chart of accounts that is, accounts are
numbered and grouped by classification: Assets; Liabilities; Owner’s Equity; Revenue and Expense.

Four Column Account


A four column account contains column for the debit or credit transactions and column for debit and
credit running balance: In actual practice, businesses are more likely to use a version of the
4-column account. Figure shows an illustration of how the 4-column account is used. Note that the
heading for the 4-column has the account title and an account number. The account number is
taken from the chart of accounts and is used in the posting process.
The primary advantage of the four column account is that it maintains a running balance.

Source: Cabrera Elenita; Ledesma, Ester; and Lupisan, Ma. Concepcion “FINANCIAL ACCOUNTING AND REPORTING” GIC Enterprises & Co., Inc. Copyright 2020
Valx, Conrado; Peralta Jose; Valix Christian Aries “FINANCIAL ACCOUNTING AND REPORTING” GIC Enterprises & Co., Inc. Copyright 2020
Note: Every time there are transactions there is a running balance. You will go to group the
accounts as to assets, liabilities, revenue. This type of columnar ledger is done through computer
(Microsoft Excel)

Source: Cabrera Elenita; Ledesma, Ester; and Lupisan, Ma. Concepcion “FINANCIAL ACCOUNTING AND REPORTING” GIC Enterprises & Co., Inc. Copyright 2020
Valx, Conrado; Peralta Jose; Valix Christian Aries “FINANCIAL ACCOUNTING AND REPORTING” GIC Enterprises & Co., Inc. Copyright 2020
Example of General Ledger or T-account

Note: It is called classifying process because accounts are classified as to


assets, liabilities, equity, revenue and expense. We call these accounts as
T-account. These are on dividable posting coming from general journal

Source: Cabrera Elenita; Ledesma, Ester; and Lupisan, Ma. Concepcion “FINANCIAL ACCOUNTING AND REPORTING” GIC Enterprises & Co., Inc. Copyright 2020
Valx, Conrado; Peralta Jose; Valix Christian Aries “FINANCIAL ACCOUNTING AND REPORTING” GIC Enterprises & Co., Inc. Copyright 2020
Source: Cabrera Elenita; Ledesma, Ester; and Lupisan, Ma. Concepcion “FINANCIAL ACCOUNTING AND REPORTING” GIC Enterprises & Co., Inc. Copyright 2020
Valx, Conrado; Peralta Jose; Valix Christian Aries “FINANCIAL ACCOUNTING AND REPORTING” GIC Enterprises & Co., Inc. Copyright 2020
Source: Cabrera Elenita; Ledesma, Ester; and Lupisan, Ma. Concepcion “FINANCIAL ACCOUNTING AND REPORTING” GIC Enterprises & Co., Inc. Copyright 2020
Valx, Conrado; Peralta Jose; Valix Christian Aries “FINANCIAL ACCOUNTING AND REPORTING” GIC Enterprises & Co., Inc. Copyright 2020
Subsidiary Ledger

A subsidiary ledger consists of individual accounts with a common characteristic such as


1. Amounts collectible from customers – recorded in accounts receivable subsidiary
ledger
2. Amounts due to suppliers – recorded in accounts payable subsidiary ledger
3. Inventory
4. Plant assets
5. Cash in Bank

Subsidiary ledgers provide sufficient details that will support analysis of a specific
account. A general ledger account that is supported by a subsidiary ledger is called
controlling account.

Source: Cabrera Elenita; Ledesma, Ester; and Lupisan, Ma. Concepcion “FINANCIAL ACCOUNTING AND REPORTING” GIC Enterprises & Co., Inc. Copyright 2020
Valx, Conrado; Peralta Jose; Valix Christian Aries “FINANCIAL ACCOUNTING AND REPORTING” GIC Enterprises & Co., Inc. Copyright 2020
Example of Computerized Subsidiary Ledger (school setting)

Source: Cabrera Elenita; Ledesma, Ester; and Lupisan, Ma. Concepcion “FINANCIAL ACCOUNTING AND REPORTING” GIC Enterprises & Co., Inc. Copyright 2020
Valx, Conrado; Peralta Jose; Valix Christian Aries “FINANCIAL ACCOUNTING AND REPORTING” GIC Enterprises & Co., Inc. Copyright 2020
Interpretation:
The ledger of a student presents the debit and credits on her individual ledger. The
receivable started when she enrolled in the program. So then, every time she pays her
payment were immediately appeared in her ledger. So anytime that you wanted to view
her balance just search her name and the balance will appear. This ledger of the
students will go to continue until the students leave the school or until the time she
will finish her degree. All the students of the school will go to have their individual
subsidiary ledger.

Source: Cabrera Elenita; Ledesma, Ester; and Lupisan, Ma. Concepcion “FINANCIAL ACCOUNTING AND REPORTING” GIC Enterprises & Co., Inc. Copyright 2020
Valx, Conrado; Peralta Jose; Valix Christian Aries “FINANCIAL ACCOUNTING AND REPORTING” GIC Enterprises & Co., Inc. Copyright 2020
Lesson 2 – The need for controlling accounts and subsidiary ledger

A controlling account is a summary account in the general ledger that represents numerous
accounts with a common title.
Up to now, we have recorded each business transaction in its own individual account in the ledger.
In a large business that deals with numerous transactions, this individual posting makes the ledger
quickly unmanageable. To avoid this problem, a firm will open a group accounts concerning like
transactions, such as accounts receivable and accounts payable, and summarize them in one acco
unt called a control account. The control account is placed in the general ledger instead of the
numerous individual accounts.
A subsidiary ledger is established when it is necessary for a business to keep a separate record of
similar accounts. A business may set up a subsidiary ledger for almost any account in the general
ledger. For example, a business may have a numerous transaction involving accounts receivable,
accounts payable, and would set up a subsidiary ledger for them. The control account in the
general ledger would be Notes Payable.

Source: Cabrera Elenita; Ledesma, Ester; and Lupisan, Ma. Concepcion “FINANCIAL ACCOUNTING AND REPORTING” GIC Enterprises & Co., Inc. Copyright 2020
Valx, Conrado; Peralta Jose; Valix Christian Aries “FINANCIAL ACCOUNTING AND REPORTING” GIC Enterprises & Co., Inc. Copyright 2020
The Accounts Payable Subsidiary Ledger

To streamline operations, business place the accounts of their individual credit customers in a
subsidiary ledger, called the accounts receivable subsidiary ledger.

The purpose of a subsidiary ledger account is to provide detail of a customer’s account to facilitate
filing and collection. The individual accounts for credit customers are maintained in alphabetical
order. The subsidiary ledger should contain information about all sales and collections from the
customer – the customer’s credit history. Posting to the subsidiary ledger and to the general ledger
is not double posting. The subsidiary ledger is not part of the general ledger and the subsidiary
ledger will not appear on the trial balance.
The control account in the general ledger that summarizes the debit and credit entries to customers’
accounts is Accounts Receivable, The sum of a subsidiary ledger account balance must agree with
the balance of the Accounts Receivable control account at the end of the period.

Source: Cabrera Elenita; Ledesma, Ester; and Lupisan, Ma. Concepcion “FINANCIAL ACCOUNTING AND REPORTING” GIC Enterprises & Co., Inc. Copyright 2020
Valx, Conrado; Peralta Jose; Valix Christian Aries “FINANCIAL ACCOUNTING AND REPORTING” GIC Enterprises & Co., Inc. Copyright 2020
The Accounts Payable Subsidiary Ledger

The individual accounts for creditors are maintained in numerical or alphabetical order
in a subsidiary ledger caked the accounts payable subsidiary ledger
The control account in the general ledger that summarizes the debit and credit entries
creditors’ account is Accounts Payable. The sum of the subsidiary ledger account
balance must agree with the balance of Accounts Payable control account in the general
ledger at the end of each period.

Source: Cabrera Elenita; Ledesma, Ester; and Lupisan, Ma. Concepcion “FINANCIAL ACCOUNTING AND REPORTING” GIC Enterprises & Co., Inc. Copyright 2020
Valx, Conrado; Peralta Jose; Valix Christian Aries “FINANCIAL ACCOUNTING AND REPORTING” GIC Enterprises & Co., Inc. Copyright 2020
Example of a Subsidiary ledger wherein the data posted were taken from
a sales journal.
On the left side the sales journal was presented and then on the right side is the
accounts receivable subsidiary ledger.

Source: Cabrera Elenita; Ledesma, Ester; and Lupisan, Ma. Concepcion “FINANCIAL ACCOUNTING AND REPORTING” GIC Enterprises & Co., Inc. Copyright 2020
Valx, Conrado; Peralta Jose; Valix Christian Aries “FINANCIAL ACCOUNTING AND REPORTING” GIC Enterprises & Co., Inc. Copyright 2020
Example of Purchase Journal the left side is the purchase journal. In this example the
purchase journal was presented this is the original entry is the purchase journal and then
the data in purchase journal were posted in the accounts payable subsidiary ledger. It is
very clear that the posting to the individual supplier will be simultaneous.

Source: Cabrera Elenita; Ledesma, Ester; and Lupisan, Ma. Concepcion “FINANCIAL ACCOUNTING AND REPORTING” GIC Enterprises & Co., Inc. Copyright 2020
Valx, Conrado; Peralta Jose; Valix Christian Aries “FINANCIAL ACCOUNTING AND REPORTING” GIC Enterprises & Co., Inc. Copyright 2020
We had just finished the discussion about General Ledger and
subsidiary Ledger. Let’s move on to the next higher level of
activity/ies or exercise/s that demonstrate your potential
skills/knowledge of what you have learned.

Source:

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