Each entry is posted to both the appropriate general ledger accounts and the individual customer accounts. Instead, all of these customer accounts are contained into one subsidiary ledger and reported on the main record as a single number. Accountants and bookkeepers can look through the sub if they want more details about individual customer accounts.

Furthermore, a subsidiary journal entry is no different than an entry in the general ledger. The only stipulation is that the entry has to agree with a corresponding entry in the general journal. At the end of an accounting period, the balance of every control accounts of general ledger becomes equal to the total of balances of individual accounts of the related subsidiary ledger.

The purpose of keeping subsidiary ledgers is for accuracy and efficiency.
Record all transactions using the sales journal, purchases
journal, cash receipts journal, cash disbursements journal, and the
general journal and post to the accounts receivable and accounts
payable subsidiary ledgers.
Accounts receivable account included in the general ledger above is a control account, i.e. a summary account that summaries accounts receivable subsidiary ledger.
In subsidiary ledgers, individual ledger accounts are maintained in alphabetical order.

In lieu of this system subsidiary ledgers are maintained to know amount receivable from an individual debtor and the amount payable to an individual creditor. A subsidiary ledger is an addition of a general ledger used to record each account’s receivables and accounts payable separately. This schedule of accounts receivable—often called an accounts receivable trial balance—is totaled. At the end of the accounting period, after the postings have been completed, a list is made of all the individual subsidiary accounts.

Post the transactions to the subsidiary ledger and (using T-accounts) to the general ledger accounts. We post entries from the sales journal daily to the accounts receivable subsidiary ledger but monthly to Sales and to the Accounts Receivable general ledger account. Only the accounts receivable and accounts payable columns are posted to the subsidiary ledgers. Part of the period-end closing process is to post the information in a subsidiary ledger to the general ledger.

For example, as shown above, the balance of accounts payable or general ledger will be equal to the total of balances of individual accounts – X, Y and Z of the accounts payable subsidiary ledger. A general ledger is the set of all accounts where journal entries are posted. It is the main database of accounting transactions and provides input for preparation of a trial balance and eventually a complete set of financial statements. The general ledger is a master ledger containing a summary of all the accounts that a company uses in operating its business.

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Cash Management subsidiary ledger is used to manage cash and its reconciliation with the bank. This ledger contains all cash receipts and payments, including bank deposits and withdrawals. This sub-ledger is periodically reconciled with the bank statements to ensure balances match and account for the missing transactions.

Posting from Subsidiary Ledgers

Accounts receivable subsidiary ledger provides quick access to each customer’s balance and account activity. If financial statements are prepared monthly, the balances of control accounts of the general ledger are ascertained at the end of the month. In the subsidiary ledger, postings are given daily in the individual subsidiary ledger accounts, and balances are ascertained daily.

On 24 September 2014, XYZ, Inc. made cash sales worth $20,000 and credit sales of $5,000 to Mr A, $10,000 to Mr B and $15,000 to Mr C. By 30 September 2014, Mr A paid his complete balance while Mr B paid $6,000. The individual cards serve as a subsidiary ledger to the controlling Equipment account. We record purchases of inventory for cash in the cash disbursements journal. Now that you have seen four special journals and two special ledgers, it is time to put all the pieces together. With a clear understanding of subsidiary ledger; for more learning use our complete guideline on principles of accounting. Balances of subsidiary account remain up-to-date as the postings are given daily.

What is the difference between a subsidiary ledger and a general ledger?

In our case, after all the calculations, we have got the final balance for the Cash account to be $13,190. In a similar fashion, list all other accounts against the Cash account. Harold Averkamp (CPA, MBA) has worked as a university accounting instructor, accountant, and consultant for more than 25 years. A financial professional will offer guidance based on the information provided and offer a no-obligation call to better understand your situation.

A subledger contains details of transactions within different categories on a business’s chart of accounts. Those detailed transactions determine a subsidiary ledger total, which then is relayed to the general ledger to provide a larger financial snapshot of a business. A subsidiary ledger, or subledger, tracks the details of specific types of transactions and what happens in specific categories within a business’s chart of accounts. Accounting software allows companies to sort accounts payable according to the dates when payments will be due. Accounts payable subsidiary ledger and fixed assets subsidiary ledger are other commonly used subsidiary ledgers. Yes, the accounts receivable is a subledger since all the credit sale accounts of a business are recorded in the same.

(Figure)The following transactions occurred for Donaldson Inc. during the month of July. If you check Accounts Receivable in the general ledger, you see the balance is $2,989, and the balance in Accounts Payable is $6,071. If the numbers did not match, we would have to find out where the https://business-accounting.net/ error was and then fix it. ExcelDemy is a place where you can learn Excel, and get solutions to your Excel & Excel VBA-related problems, Data Analysis with Excel, etc. We provide tips, how to guide, provide online training, and also provide Excel solutions to your business problems.

These payables are short-term debts or IOUs from one company to another company. The total amount of payables owed to suppliers is recorded as accounts payable on the general ledger. The Accounts Receivable subsidiary ledger shows sales on credit by a business. The ledger provides invoice dates and numbers, credit memorandums, payments made against the credit sales, discounts, and returns and allowances. The subledger system prevents fraud and errors in the accounting records, and it categorizes the transactions according to three types—the fixed asset sub-ledger, the Accounts Receivable sub-ledger, and the accounts payable sub-ledger.