LESSON POSTS TRANSACTIONS IN THE GENERAL AND

1 SUBSIDIARY LEDGERS

OBJECTIVES:
K. Identify general and subsidiary ledger;
S. Posts transactions in general and subsidiary ledger;
A. Appreciate the importance of ledger as
preparation in making the financial statements.

Sa Puregold, Always Panalo!

Puregold Price Club, Inc. is a chain of supermarkets established in 1998. It

is the leading retailer in the hypermarket format in the Philippines. Currently, it has
225 stores with over 1,500 suppliers and trade partners and over 230 000 sari-sari
stores and small business served. (Puregold.com 2015)

With its mission “to provide products, services and business opportunities
to every Filipino family,” Puregold strives to deliver only the best and most
affordable goods to its customers. (Puregold.com 2015) With over a thousand
transactions each day, can you imaginge how Puregold compile,
summarize, and translate these transactions to create financial statements?

Like all companies, Puregold uses an accounting information system

to collect and process data and to communicate it to users of financial
statements. It maintains books of account where all its financial information
are recorded and kept.
(Florendo, 2016)

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 PRE-TEST/PRE ACTIVITY

Direction: There are 7 hidden accounting words (parts of the ledger) in

the box below. Locate the words in the grid, running in one of the six
possible directions horizontally, vertically or diagonally. Write your answer on a
separate sheet of paper. Enjoy!

D F H R D H D H R W D K B Z A X
D A T E H L F E Z N H C M D S E
G H K F V F L D B E O F A U O Z
F G L E D G E R J I D E E R B K
I I L R G J G X E Z D X Z F G B
O C R E D I T E P D S F X X H L
E T I N E D S D Q L I L M R U I
D F H C D G Q E C B A L A N C E
D I D E B I T D D E C T E D S G
J U E J O T W T Y T C P I I U L
L T E K P T S Y U E O I Q O H J
G T F G L J E U H J U J D D N G
S U S K J L F G B K N K H G M F
S I A O G M U H F M T L J J B R

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II. WHAT YOU NEED TO KNOW
Review
Every day, companies engage in hundreds and thousands
of transactions especially those big companies that we know today.
Some of these transactions are purchasing goods, cash and credit sales,
investing to other companies, purchases of inventories, paying
payables, payment of expenses and many others.
To have a record of each transaction, or to keep track of
its transactions more efficiently, companies keep and maintain a set of
books and/or records called books of accounts. Books of accounts are
the finance records, ledgers, and journals that compose the company’s
accounts. These serve as the company’s financial memory and
comprise of every single business transactions and financial information
of a company.
Journal - is a chronological record of all company’s transactions listed
by date: the book of original entry.
(Florendo, 2016)

DISCUSSION
Before we will tackle ledger, let us have this general journal for our reference
later.
Date Accounts Titles and Explanation Ref Debit Credit
2021
January 1 Cash 101 200 000
Shayne, Capital 301 200 000
Owner’s Investment of cash in
the
business
January 2 # 140 50 000
Property, Plant and Equipment 301 50 000
Shayne, Capital
Owner’s investment of equipment
in
January 3 the business 121 20 500
# 101 20 500
Merchandise Inventory
Cash
Purchase of inventories from
January 4 supplier through cash 111 50 000
# 400 50 000
Accounts Receivable
Sales
Sale of inventories to customer
on 5
account
#
 Cost of Goods Sold
Merchandise Inventory
Sale of inventories to customer
#
Merchandise Inventory 121 40 000
January 8
Accounts Payable 201 40 000
Purchase of inventories from
supplier on account
#
Cash 101 60 000
January 12
Sales 400 60 000
Sale of inventories to customer
#
Cash 101 24 000
January 14
Accounts Receivable 111 24 000
Collection of customer’s
accounts
receivable
# 401 5 000
January 15
Sales Return and Allowances 111 5 000
Accounts Receivable
Return of merchandise from
customer
# 121 1 500
Merchandise Inventory 500 1 500
Cost of Goods Sold
Return of merchandise from
customer
# 201 10 000
January 25
Accounts Payable 101 10 000
Cash
Payment of accounts payable
to
supplier 302 2 000
January 30
# 101 2 000
Shayne, Drawing
Cash
Withdrawal of cash from the
business for her personal use 505 5 000
January 31
# 101 5 000
Salaries Expense
Cash
Paid salaries to employees for
the (Florendo, 2016)
month
#

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The company will proceed to posting after journalizing the business
transactions in the general and subsidiary journals. Posting “involves the
transferring of journal entries to the ledger accounts to bring together the
effect of the transactions to the individual accounts of the company.”
Florendo, J., 2016

Ledger - the grouping of all accounts of a company showing its

respective outstanding balances.
- It is also called the book of final entry of accounting transactions.
The two kinds of ledgers:
1. General Ledger
2. Subsidiary Ledger

General Ledger
“The general ledger contains all the asset, liability, and owner’s equity
accounts of the company. Unlike journals that are arranged chronologically
(regardless of the accounts), the ledgers are usually grouped according to
their chart of accounts and arranged according to the order on how
they appear on the financial statements, starting from the asset accounts,
followed by the liability accounts, and finally, the equity accounts including
the revenues and expenses accounts. Each account is numbered based on
the chart of accounts for easier and faster reference. The general ledger
shows the amount outstanding on each of the company’s accounts as of
a certain date.” Florendo, J., 2016

Parts of the general ledger

Note: Please refer to the general ledger for cash.

1. Account Title - The general ledger contains all the company’s accounts and
its
balances. It is labeled with the corresponding account title such as CASH,
ACCOUNTS RECEIVABLE and many more.
2. Ledger Account Reference Number- Each company has its own chart of
accounts. The Ledger Account Reference Number corresponds to the
reference number assigned by the company to each account. In the
example,
CASH is assigned to a reference number 101 while ACCOUNTS RECEIVABLE is
assigned to reference number 111.
3. Date - The date of the transaction is also entered in reference to the journal.
4. Explanation - It is a brief description of the business transaction.
5. Reference - This shows the page number in which the transaction was posted.
6. Debit - Amounts debited to the account are entered.
7. Credit - Amounts credited to the account are entered.
8. Balance - What distinguished a ledger from the journal is the running
outstanding balances provided by the ledger. After every transaction, the
balances of each of the accounts are known without the need for further
computations. On year-end, these balances will be the basis of the amounts
presented in the financial statements of the company.
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 6 2
1 CASH NO. 101
3 Date 4 Explanation Ref Debit Credit Balance 8
2021 7
5
Jan 1 Investment of Capital by owner J1 200 000 200 000
3 Purchase of inventories from supplier J1 20 500 179 500
12 Sale of inventories to customer J1 60 000 239 500
14 Collection of customer’s accounts J1 24 000 263 500
receivable
25 Payment of accounts payable to J1 10 000 253 500
supplier
30 Withdrawal of cash from the J1 2 000 251 500
business
31 Paid salaries to employees for the J1 5 000 246 500
month
Balance 246 500

ACCOUNTS RECEIVABLE NO.

111
Date Explanation Ref Debit Credit Balance
2021
Jan 4 Sale of inventories to customer on J1 50 000 50 000
account
14 Collection of customer’s J1 24 000 26 000
accounts
15 receivable
Return of merchandise from J1 5 000 21 000
customer
Balance 21 000

INVENTORY NO.
121
Date Explanation Ref Debit Credit Balance
2021
Jan 3 Purchase of inventories from supplier J1 20 500 20 500
4 Sale of inventories to customer J1 15 000 5 500
8 Purchase of Inventories from supplier J1 40 000 45 500
on account
12 Sale of inventories to customer J1 18 000 27 500
15 Return of merchandise from J1 1 500 29 000
customer
Balance 29 000
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 PROPERTY, PLANT AND EQUIPMENT NO. 140
Date Explanation Ref Debit Credit Balance
2021
Jan 2 Owner’s investment of equipment in J1 50 000 50 000
the business
Balance 50 000

ACCOUNTS PAYABLE NO. 201

Date Explanation Ref Debit Credit Balance
2021
Jan 8 Purchase of inventories from supplier J1 40 000 40 000
on account
25 Payment of accounts payable J1 10 000 30 000
to
supplier
Balance 30 000

SHAYNE, CAPITAL NO. 301

Date Explanation Ref Debit Credit Balance
2021
Jan 1 Investment of Capital by owner J1 200 000 200 000
2 Owner’s investment of equipment J1 50 000 250 000
Balance 250 000

SHAYNE, CAPITAL NO. 302

Date Explanation Ref Debit Credit Balance
2021
Jan Withdrawal of cash from the J1 2 000 2 000
30 business
Balance 2 000

SALES NO. 400

Date Explanation Ref Debit Credit Balance
2021
Jan 4 Sale of inventories to customer on J1 50 000 50 000
account
12 Sale of inventories to customer J1 60 000 110 000
Balance 110 000

SALES RETURN NO. 401

Date Explanation Ref Debit Credit Balance
2021

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 Jan 15 Return of merchandise from J1 5 000 5 000
customer
Balance 5 000

COST OF GOODS SOLD NO. 500

Date Explanation Ref Debit Credit Balance
2021
Jan 4 Sale of inventories to customer J1 15 000 15 000
12 Sale of inventories to customer J1 18 000 33 000
15 Return of merchandise from J1 1 500 31 500
customer
Balance 31 500

SALARIES EXPENSE NO. 405

Date Explanation Ref Debit Credit Balance
2021
Jan 31 Paid salaries to employees for the J1 5 000 5 000
month
Balance 5 000

Subsidiary Ledger

Large companies have lots of transactions from their customers who buy
goods and merchandise on credit. If these companies utilize general ledger,
can you imagine the time they will spend in order to determine the
outstanding balances of its individual customers? How about for the
company’s individual creditors?

In order to ease the burden, large companies use subsidiary ledger.

Subsidiary ledger - “It is a group of accounts with a similar characteristic (e.g.,

accounts receivable and accounts payable). It is an additional record to
the general ledger utilized by the company to track the per-individual
accounts of the company’s customers, creditors, and the like.” Florendo, J.,
2016

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 Relationship of General Ledger and Subsidiary Ledger

General Ledger Subsidiary Ledger

CASH
CUSTOMER A

ACCOUNTS RECEIVABLE CUSTOMER B

CUSTOMER C
ACCOUNTS PAYABLE
CREDITOR X
REVENUES
CREDITOR Y

CREDITOR Z
REVENUE

The two most common types of Subsidiary Ledger:

1. Accounts Receivable Ledger - “It is used mainly to track the individual

account balances of the company’s customers.” Florendo, J., 2016
2. Accounts Payable Ledger - “ It displays the outstanding balances of
each of the creditors of the company.” Florendo, J., 2016
Example:
A. Accounts Receivable Subsidiary Ledger
KMA Corp.
Date Ref Debit Credit Balance
2021
April 5 J1 60 000 60 000
10 J1 30 000 90 000
30 J1 10 000 80 000
AFA Corp.
Date Ref Debit Credit Balance
2021
April 7 J1 50 000 50 000
19 J1 20 000 30 000
29 J1 34 000 64 000

As you noticed the format of the subsidiary ledger is similar to the general
ledger. The only difference is that, the accounts receivable subsidiary
ledger provides a running balance of each of the company’s customers
account. In the example above, it is recognized that the balances of KMA
Corp and AFA Corp are Php 80, 000.00 and Php 64, 000.00 respectively.

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 B. Accounts Payable Subsidiary Ledger

ZJA Corp

Date Ref Debit Credit Balance

2018
Apri l 1 J1 20 000 20 000
11 J1 40 000 60 000
13 J1 55 000 115 000
28 J1 10 000 125 000

AFPA Corp

Date Ref Debit Credit Balance

2021
April 3 J1 11 000 11 000
5 J1 13 000 24 000
16 J1 26 000 50 000
29 J1 30 000 80 000

PASAL Inc.

Date Ref Debit Credit Balance

2021
April 4 J1 80 000 80 000
20 J1 120 000 200 000

Just like accounts receivable subsidiary ledger, the format for accounts
payable subsidiary ledger is the same as that of the general ledger. It provides
a running balance of each of the company’s suppliers or creditors. Base on
the example, the balances of ZJA and Co, AFPA Corp and PASAL Inc. are Php
125, 000.00, Php 80, 000.00 and Php 200, 000.00 respectively.

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What are the advantages of subsidiary ledgers?
1. Transactions are grouped according to each of the individual
customer accounts of the company.
2. It provides up-to-date information on the different individual
account balances of customers in the accounts receivable, as well as
creditors in the accounts payable.
3. Subsidiary ledgers help in detecting errors and misstatements in
posting of entries in the ledger.
4. In the year-end or month-end, the company can easily reconcile
the balance of the general ledger account to the total of the
individual subsidiary ledgers to determine whether there are
transactions not posted.
5. Like the special journal, the subsidiary ledger allows greater division of
labor for the company. As two kinds of ledgers are being
utilized, different employees can post in the general ledger and in the
subsidiary ledgers simultaneously.
(Florendo, 2016)

III. WHAT HAVE I LEARNED

POST TEST:

Problem Solving:

KriMa Green Thumb started her own business in selling pots and
plants in January 2021. During the first month of her business, she
journalized the following transactions in the business’ General
Journal. Post the transactions in General Ledger.

General Journal
Date Account Titles and Explanation Ref Debit Credit
2021
January 1 Cash 101 20 000
KriMa Green Thumb, Capital 301 20 000
Owner’s Investment of Cash in the
business
Date Account Titles and Explanation Ref Debit Credit
January 2 Cash 101 60 000
Loan Payable 210 60 000
Cash loan from the bank
#
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January 3 Inventory 121 50 000
Accounts Payable 201 50 000
Purchase of pots and plants from
supplier on account
#
January 8 Accounts Receivable 111 30 000
Sales 400 30 000
Sale of pots and plants to customer
on account
#
Cost of Goods Sold 500 40 000
Inventory 121 40 000
Sale of bags to customer
#
January 10 Inventory 121 30 000
Accounts Payable 201 30 000
Purchase of pots and plants from
supplier on account
#
January 15 Accounts Payable 201 20 000
Cash 101 20 000
Payment of accounts payable
to
supplier
January 20 # 101 15 000
Cash 111 15 000
Accounts Receivable
Collection of customer’s
accounts
January 30 receivable 505 4 000
# 101 4 000
Rent Expense
Cash
Payment of rent for the month

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 REFERENCES

Florendo, Joselito G. Fundamentals of Accountancy, Business, and

Management 1. 856 Nicanor Reyes, Sr. St. Sampaloc, Manila: Rex Printing
Company, Inc., June 2016: Pp 164,167-170, 179-183.

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 SYNOPSIS AND ABOUT THE AUTHOR

SYNOPSIS

This SLK (Self-Learning Kit) is about introducing the students to

general and subsidiary ledger. This SLK includes definition and
importance of general and subsidiary ledger.

There is a word search to help the students familiarize with the

different parts of the general ledger.

Find enjoyment in learning this SLK and go over the discussion and
examples if you have not yet mastered a concept.

AUTHOR

The Author: Krista Marie Pastidio Almogen, graduated

at St. Francis College - Guihulngan with a degree of
Bachelor of Science in Business Administration major in
Banking and Finance. Studied Bachelor of Secondary
Education - Crash Program at Foundation University.
Studied Master of Arts in Teaching Mathematics at CTU
Moalboal campus in 2016. She worked at Semigire
Corporation from 2009-2016. She is currently teaching
at Sibulan National High School Balugo Extension as
grade 11 STEM Adviser.

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