Chapter 13 Posting to General and Subsidiary Ledgers

A journal provides a permanent record of transactions listed in chronological order.  Journal entries are sorted and summarized by transferring them to a ledger.  The process of transferring from the journal to the ledger is called posting.

GENERAL LEDGER

A business' size, number of transactions, and type of transactions determine the number of ledgers used in an accounting system.

SUBSIDIARY LEDGERS

A business need to know the amount owed each vendor as well as the amount to be collected from each customer, Therefore separate accounts must be maintained for each customer and vendor.  These separate accounts for customers and vendors are kept in subsidiary ledgers one for customers(Accounts Receivable Ledger) and one for vendors(Accounts Payable Ledger).  Each of these ledgers are summarized in one general ledger account--Accounts Receivable Account and the Accounts Payable Account.

CONTROLLING ACCOUNTS

The total amount owed to all vendors is summarized in a single general ledger account, Accounts Payable.  The total amount to be collected from all charge customers is summarized in a single general ledger account, Accounts Receivable.  An account in a general ledger that summarizes all accounts in a subsidiary ledger is called a controlling account.  The balance of a controlling account equals the total of a related subsidiary ledger.

POSTING

Steps to posting--1.  Date, 2.  Write the journal page number in the Post. ref. column of the account, 3.  Debit or Credit the amount column, 4.  Determine the Balance, 5.  Return to the journal and write the account number in the Post Ref. column.

OPENING AN ACCOUNT

This simply means to write the account number and name on the account form and record a balance if there is one.

ASSIGNING ACCOUNT NUMBERS TO SUBSIDIARY LEDGER ACCOUNTS:

Accounts Payable will begin with the number 2 because they are liabilities hence:  210, 220, 230, etc.

Accounts Receivable will begin with the number 1 because they are assets hence 110, 120, 130, etc.

PROVING THE ACCURACY OF POSTING

A single error in posting may create many errors therefore 3 things are done to prove accuracy of posting:   1.  Cash is proved.,  2.  Subsidiary schedules are prepared to prove that the total of the balances in the subsidiary ledgers equals the balance of the controlling account in the general ledger., 3.  A trial balance is prepared to prove that debits equal credits in the general ledger.