{"id":120,"date":"2015-03-18T23:45:17","date_gmt":"2015-03-18T23:45:17","guid":{"rendered":"https:\/\/courses.candelalearning.com\/finacct2x10xmaster\/?post_type=chapter&#038;p=120"},"modified":"2015-07-22T15:22:10","modified_gmt":"2015-07-22T15:22:10","slug":"subsidiary-ledgers-and-control-accounts","status":"web-only","type":"chapter","link":"https:\/\/courses.lumenlearning.com\/tcc-financialaccounting\/chapter\/subsidiary-ledgers-and-control-accounts\/","title":{"raw":"Subsidiary Ledgers and Control Accounts","rendered":"Subsidiary Ledgers and Control Accounts"},"content":{"raw":"A subsidiary ledger is a detailed list to support a control account.\u00a0 A control account appears on the balance sheet in summary or total, and are accounts like accounts receivable, accounts payable, and inventory.\u00a0 This video explains the theory (the video refers to a Debitor account which is Accounts Receivable and and a\u00a0Creditor account which is Accounts Payable. A Debtor is a customer and a Creditor is a vendor)\r\n\r\nhttps:\/\/youtu.be\/_U5ZyGibqKQ\r\n\r\nThis section will look at the transactions for Fooz Ball Town and how to post to subsidiary ledgers for accounts receivable and accounts payable.\r\n<h2>Accounts Receivable Subsidiary Ledger<\/h2>\r\nThe accounts receivable subsidiary ledger will contain an account for each individual customer.\u00a0 The sales, payments, and returns and allowances are recorded into the individual customer accounts as well as the bigger picture (control account) accounts receivable account.\u00a0 For Fooz Ball Town, the sales entries were:\r\n<ul>\r\n\t<li>July 5 Sold $5,000 of merchandise inventory, terms 1\/15, n 30, FOB Destination with a cost of goods sold of $3,000 to Robby Red.<\/li>\r\n\t<li>July 10\u00a0 Sold $1,500 of merchandise inventory for cash, FOB Shipping Point, with a cost of goods sold of $1,000.<\/li>\r\n\t<li>July 15 Received payment from Robby Red from July\u00a05 sale less the discount.<\/li>\r\n\t<li>July 30 Sold $7,000 of merchandise inventory, terms 1\/15, n 30, FOB Shipping point with cost of goods sold $5,000 to Bobby Blue.<\/li>\r\n<\/ul>\r\nThese entries were recorded in the sales journal and cash receipts journal as follows:\r\n<table>\r\n<tbody>\r\n<tr>\r\n<td colspan=\"4\"><strong>Sales Journal<\/strong><\/td>\r\n<\/tr>\r\n<tr>\r\n<td rowspan=\"2\"><strong>Date<\/strong><strong>\u00a0<\/strong><\/td>\r\n<td rowspan=\"2\"><strong>Customer<\/strong><strong>\u00a0<\/strong><\/td>\r\n<td style=\"text-align: center\"><strong>DR Accounts Receivable <\/strong><\/td>\r\n<td style=\"text-align: center\"><strong>DR Cost of goods sold\u00a0<\/strong><\/td>\r\n<\/tr>\r\n<tr>\r\n<td style=\"text-align: center\"><strong>CR Sales<\/strong><\/td>\r\n<td style=\"text-align: center\"><strong>CR Inventory<\/strong><\/td>\r\n<\/tr>\r\n<tr>\r\n<td>July 5<\/td>\r\n<td>Robby Red<\/td>\r\n<td style=\"text-align: center\">$5,000<\/td>\r\n<td style=\"text-align: center\">$3,000<\/td>\r\n<\/tr>\r\n<tr>\r\n<td>July 30<\/td>\r\n<td>Bobby Blue<\/td>\r\n<td style=\"text-align: center\">7,000<\/td>\r\n<td style=\"text-align: center\">5,000<\/td>\r\n<\/tr>\r\n<tr>\r\n<td><strong>TOTALS<\/strong><\/td>\r\n<td><strong>\u00a0<\/strong><\/td>\r\n<td style=\"text-align: center\"><strong>$12,000<\/strong><\/td>\r\n<td style=\"text-align: center\"><strong>$8,000<\/strong><\/td>\r\n<\/tr>\r\n<\/tbody>\r\n<\/table>\r\n&nbsp;\r\n<table>\r\n<tbody>\r\n<tr>\r\n<td colspan=\"6\"><strong>Cash Receipts Journal\u00a0\u00a0\u00a0<\/strong><\/td>\r\n<\/tr>\r\n<tr>\r\n<td rowspan=\"2\"><strong>Date\u00a0<\/strong><\/td>\r\n<td style=\"text-align: center\" rowspan=\"2\"><strong>Customer \u00a0<\/strong><strong>\u00a0<\/strong><\/td>\r\n<td style=\"text-align: center\" rowspan=\"2\"><strong>DR Cash\u00a0<\/strong><\/td>\r\n<td style=\"text-align: center\"><strong>DR Sales <\/strong><\/td>\r\n<td style=\"text-align: center\"><strong>CR Accounts <\/strong><\/td>\r\n<td style=\"text-align: center\" rowspan=\"2\"><strong>CR Sales\u00a0<\/strong><\/td>\r\n<td style=\"text-align: center\"><strong>DR Cost of goods Sold<\/strong><\/td>\r\n<\/tr>\r\n<tr>\r\n<td style=\"text-align: center\"><strong>\u00a0Discounts<\/strong><\/td>\r\n<td style=\"text-align: center\"><strong>\u00a0Receivable<\/strong><\/td>\r\n<td style=\"text-align: center\"><strong>CR Inventory<\/strong><\/td>\r\n<\/tr>\r\n<tr>\r\n<td>July 10<\/td>\r\n<td style=\"text-align: center\">Cash Sale<\/td>\r\n<td style=\"text-align: center\">1,500<\/td>\r\n<td style=\"text-align: center\"><\/td>\r\n<td style=\"text-align: center\"><\/td>\r\n<td style=\"text-align: center\">1,500<\/td>\r\n<td style=\"text-align: center\">1,000<\/td>\r\n<\/tr>\r\n<tr>\r\n<td>July 15<\/td>\r\n<td style=\"text-align: center\">Robby Red<\/td>\r\n<td style=\"text-align: center\">4,950<\/td>\r\n<td style=\"text-align: center\">50<\/td>\r\n<td style=\"text-align: center\">5,000<\/td>\r\n<td style=\"text-align: center\"><\/td>\r\n<td style=\"text-align: center\"><\/td>\r\n<\/tr>\r\n<tr>\r\n<td><strong>TOTALS<\/strong><\/td>\r\n<td style=\"text-align: center\"><strong>\u00a0<\/strong><\/td>\r\n<td style=\"text-align: center\"><strong>6,450<\/strong><\/td>\r\n<td style=\"text-align: center\"><strong>50<\/strong><\/td>\r\n<td style=\"text-align: center\"><strong>5,000<\/strong><\/td>\r\n<td style=\"text-align: center\"><strong>1,500<\/strong><\/td>\r\n<td style=\"text-align: center\"><strong>1,000<\/strong><\/td>\r\n<\/tr>\r\n<\/tbody>\r\n<\/table>\r\nThese journals would be posted to the Accounts Receivable control account like this:\r\n<table style=\"background-color: #f0ebeb\">\r\n<tbody>\r\n<tr>\r\n<td colspan=\"5\"><strong>Account: Accounts Receivable<\/strong><strong>\u00a0<\/strong><strong>\u00a0<\/strong><strong>\u00a0<\/strong><strong>\u00a0<\/strong><\/td>\r\n<\/tr>\r\n<tr>\r\n<td><strong>Date<\/strong><\/td>\r\n<td><strong>Description<\/strong><\/td>\r\n<td style=\"text-align: center\"><strong>Debit<\/strong><\/td>\r\n<td style=\"text-align: center\"><strong>Credit<\/strong><\/td>\r\n<td style=\"text-align: center\"><strong>Balance<\/strong><\/td>\r\n<\/tr>\r\n<tr>\r\n<td>July 31<\/td>\r\n<td>from Sales Journal<\/td>\r\n<td style=\"text-align: center\">12,000<\/td>\r\n<td style=\"text-align: center\"><\/td>\r\n<td style=\"text-align: center\">12,000<\/td>\r\n<\/tr>\r\n<tr>\r\n<td>July 31<\/td>\r\n<td>from Cash Receipts Journal<\/td>\r\n<td style=\"text-align: center\"><\/td>\r\n<td style=\"text-align: center\">5,000<\/td>\r\n<td style=\"text-align: center\"><strong>7,000<\/strong><\/td>\r\n<\/tr>\r\n<\/tbody>\r\n<\/table>\r\nThe customer (subsidiary) ledger would be updated for Robby Red and Bobby Blue as:\r\n<table>\r\n<tbody>\r\n<tr>\r\n<td style=\"background-color: #f0ebeb\" colspan=\"5\"><strong>Customer Account: Robby Red<\/strong><strong>\u00a0<\/strong><strong>\u00a0<\/strong><strong>\u00a0<\/strong><strong>\u00a0<\/strong><\/td>\r\n<\/tr>\r\n<tr>\r\n<td style=\"background-color: #f0ebeb\"><strong>Date<\/strong><\/td>\r\n<td style=\"background-color: #f0ebeb\"><strong>Description<\/strong><\/td>\r\n<td style=\"background-color: #f0ebeb\"><strong>Debit<\/strong><\/td>\r\n<td style=\"background-color: #f0ebeb\"><strong>Credit<\/strong><\/td>\r\n<td style=\"background-color: #f0ebeb\"><strong>Balance<\/strong><\/td>\r\n<\/tr>\r\n<tr>\r\n<td style=\"background-color: #f0ebeb\">July 5<\/td>\r\n<td style=\"background-color: #f0ebeb\">Sale<\/td>\r\n<td style=\"text-align: center;background-color: #f0ebeb\">5,000<\/td>\r\n<td style=\"text-align: center;background-color: #f0ebeb\"><\/td>\r\n<td style=\"text-align: center;background-color: #f0ebeb\">5,000<\/td>\r\n<\/tr>\r\n<tr>\r\n<td style=\"background-color: #f0ebeb\">July 15<\/td>\r\n<td style=\"background-color: #f0ebeb\">Payment<\/td>\r\n<td style=\"text-align: center;background-color: #f0ebeb\"><\/td>\r\n<td style=\"text-align: center;background-color: #f0ebeb\">5,000<\/td>\r\n<td style=\"text-align: center;background-color: #f0ebeb\"><strong>-0-<\/strong><\/td>\r\n<\/tr>\r\n<tr>\r\n<td><\/td>\r\n<td><\/td>\r\n<td><\/td>\r\n<td><\/td>\r\n<td><\/td>\r\n<\/tr>\r\n<tr>\r\n<td style=\"background-color: #f0ebeb\" colspan=\"5\"><strong>Customer Account: Bobby Blue\u00a0\u00a0\u00a0\u00a0<\/strong><\/td>\r\n<\/tr>\r\n<tr>\r\n<td style=\"background-color: #f0ebeb\"><strong>Date<\/strong><\/td>\r\n<td style=\"background-color: #f0ebeb\"><strong>Description<\/strong><\/td>\r\n<td style=\"background-color: #f0ebeb\"><strong>Debit<\/strong><\/td>\r\n<td style=\"background-color: #f0ebeb\"><strong>Credit<\/strong><\/td>\r\n<td style=\"background-color: #f0ebeb\"><strong>Balance<\/strong><\/td>\r\n<\/tr>\r\n<tr>\r\n<td style=\"background-color: #f0ebeb\">July 15<\/td>\r\n<td style=\"background-color: #f0ebeb\">Sale<\/td>\r\n<td style=\"text-align: center;background-color: #f0ebeb\">7,000<\/td>\r\n<td style=\"text-align: center;background-color: #f0ebeb\"><\/td>\r\n<td style=\"text-align: center;background-color: #f0ebeb\"><strong>7,000<\/strong><\/td>\r\n<\/tr>\r\n<\/tbody>\r\n<\/table>\r\nAt the end of the period, a schedule is prepared to verify (or prove) the Accounts Receivable (control account) balance reported on the balance sheet.\u00a0 This schedule is a listing of all customers with the ending amounts owed and should always match the ending balance in Accounts Receivable.\u00a0 The schedule of accounts receivable for Fooz Ball Town would be:\r\n<table>\r\n<tbody>\r\n<tr>\r\n<td style=\"text-align: center\" colspan=\"2\"><strong>Fooz Ball Town\u00a0<\/strong><\/td>\r\n<\/tr>\r\n<tr>\r\n<td style=\"text-align: center\" colspan=\"2\"><strong>Schedule of Accounts Receivable\u00a0<\/strong><\/td>\r\n<\/tr>\r\n<tr>\r\n<td style=\"text-align: center\" colspan=\"2\"><strong>July 31\u00a0<\/strong><\/td>\r\n<\/tr>\r\n<tr>\r\n<td><\/td>\r\n<td><\/td>\r\n<\/tr>\r\n<tr>\r\n<td>Robby Red<\/td>\r\n<td style=\"text-align: center\">$0<\/td>\r\n<\/tr>\r\n<tr>\r\n<td>Bobby Blue<\/td>\r\n<td style=\"text-align: center\"><span style=\"text-decoration: underline\">7,000<\/span><\/td>\r\n<\/tr>\r\n<tr>\r\n<td><strong>Total Accounts Receivable<\/strong><\/td>\r\n<td style=\"text-align: center\"><strong>$ 7,000<\/strong><\/td>\r\n<\/tr>\r\n<\/tbody>\r\n<\/table>\r\n<em>Note:\u00a0 It would not be necessary to include customers with zero balances but it is included here just so you can see how the subsidiary ledger works.\u00a0<\/em> Notice how the schedule of accounts receivable balance equals the ending accounts receivable balance (control account).\r\n<h2>Accounts Payable Subsidiary Ledger<\/h2>\r\nThe accounts payable subsidiary ledgers works the same way as accounts receivable with the control account of accounts payable and the subsidiary ledger a vendor ledger to provide a listing of everyone we owe.\u00a0 The purchases, payments, returns and allowances are recorded in the individual vendor accounts as well as in the accounts payable account.\u00a0 The purchase transactions for Fooz Ball Town are:\r\n<ul>\r\n\t<li>July 12 Purchased $10,000 of merchandise inventory, terms 2\/15, n 45, FOB Destination from Gus Grass.<\/li>\r\n\t<li>July 16 Returned $2,500 of merchandise damaged in shipment from July 12 purchase.<\/li>\r\n\t<li>July 25\u00a0 Paid for the July 15 purchase from Gus Grass\u00a0less the return and discount.<\/li>\r\n<\/ul>\r\nThese transactions were recorded, under the perpetual inventory method, \u00a0in the following journals:\r\n<table>\r\n<tbody>\r\n<tr>\r\n<td colspan=\"2\"><strong>Purchases Journal\u00a0<\/strong><\/td>\r\n<\/tr>\r\n<tr>\r\n<td rowspan=\"2\"><strong>Date<\/strong><\/td>\r\n<td rowspan=\"2\"><strong>Vendor<\/strong><\/td>\r\n<td style=\"text-align: center\"><strong>DR Merchandise Inventory<\/strong><\/td>\r\n<\/tr>\r\n<tr>\r\n<td style=\"text-align: center\"><strong>CR Accounts Payable<\/strong><\/td>\r\n<\/tr>\r\n<tr>\r\n<td>July 12<\/td>\r\n<td>Gus Grass<\/td>\r\n<td style=\"text-align: center\">10,000<\/td>\r\n<\/tr>\r\n<tr>\r\n<td><strong>TOTALS<\/strong><\/td>\r\n<td><strong>\u00a0<\/strong><\/td>\r\n<td style=\"text-align: center\"><strong>10,000<\/strong><\/td>\r\n<\/tr>\r\n<\/tbody>\r\n<\/table>\r\n&nbsp;\r\n<table>\r\n<tbody>\r\n<tr>\r\n<td colspan=\"5\"><strong>Cash Disbursement Journal<\/strong><\/td>\r\n<\/tr>\r\n<tr>\r\n<td><strong>Date<\/strong><\/td>\r\n<td><strong>Account<\/strong><\/td>\r\n<td><strong>DR Accts Payable<\/strong><\/td>\r\n<td><strong>CR Mdse Inventory<\/strong><\/td>\r\n<td><strong>CR Cash<\/strong><\/td>\r\n<\/tr>\r\n<tr>\r\n<td>July 25<\/td>\r\n<td>\u00a0Gus Grass<\/td>\r\n<td style=\"text-align: center\">7,500<\/td>\r\n<td style=\"text-align: center\">150<\/td>\r\n<td style=\"text-align: center\">7,350<\/td>\r\n<\/tr>\r\n<\/tbody>\r\n<\/table>\r\n&nbsp;\r\n<table>\r\n<tbody>\r\n<tr>\r\n<td colspan=\"4\"><strong>\u00a0General Journal<\/strong><strong>\u00a0<\/strong><strong>\u00a0<\/strong><strong>\u00a0<\/strong><\/td>\r\n<\/tr>\r\n<tr>\r\n<td><strong>Date<\/strong><\/td>\r\n<td><strong>Account<\/strong><\/td>\r\n<td><strong>Debit<\/strong><\/td>\r\n<td><strong>Credit<\/strong><\/td>\r\n<\/tr>\r\n<tr>\r\n<td>July 16<\/td>\r\n<td>Accounts Payable<\/td>\r\n<td>2,500<\/td>\r\n<td><\/td>\r\n<\/tr>\r\n<tr>\r\n<td><\/td>\r\n<td>\u00a0\u00a0 Merchandise Inventory<\/td>\r\n<td><\/td>\r\n<td>2,500<\/td>\r\n<\/tr>\r\n<\/tbody>\r\n<\/table>\r\nThese journals would be posted to the Accounts\u00a0Payable control account like this:\r\n<table style=\"background-color: #f0ebeb\">\r\n<tbody>\r\n<tr>\r\n<td colspan=\"5\"><strong>Account: Accounts Payable<\/strong><\/td>\r\n<\/tr>\r\n<tr>\r\n<td><strong>Date<\/strong><\/td>\r\n<td><strong>Description<\/strong><\/td>\r\n<td style=\"text-align: center\"><strong>Debit<\/strong><\/td>\r\n<td style=\"text-align: center\"><strong>Credit<\/strong><\/td>\r\n<td style=\"text-align: center\"><strong>Balance<\/strong><\/td>\r\n<\/tr>\r\n<tr>\r\n<td>July 16<\/td>\r\n<td>Gus Grass Return<\/td>\r\n<td style=\"text-align: center\">2,500<\/td>\r\n<td style=\"text-align: center\"><\/td>\r\n<td style=\"text-align: center\">-2,500<\/td>\r\n<\/tr>\r\n<tr>\r\n<td>July 31<\/td>\r\n<td>from Purchases Journal<\/td>\r\n<td style=\"text-align: center\"><\/td>\r\n<td style=\"text-align: center\">10,000<\/td>\r\n<td style=\"text-align: center\">7,500<\/td>\r\n<\/tr>\r\n<tr>\r\n<td>July 31<\/td>\r\n<td>from Cash\u00a0Disbursements Journal<\/td>\r\n<td style=\"text-align: center\"><\/td>\r\n<td style=\"text-align: center\">7,500<\/td>\r\n<td style=\"text-align: center\"><strong>-0-<\/strong><\/td>\r\n<\/tr>\r\n<\/tbody>\r\n<\/table>\r\nThe\u00a0vendor (subsidiary) ledger would be updated for Gus Grass:\r\n<table>\r\n<tbody>\r\n<tr>\r\n<td style=\"background-color: #f0ebeb\" colspan=\"5\"><strong>Vendor Account: Gus Grass<\/strong><\/td>\r\n<\/tr>\r\n<tr>\r\n<td style=\"background-color: #f0ebeb\"><strong>Date<\/strong><\/td>\r\n<td style=\"background-color: #f0ebeb\"><strong>Description<\/strong><\/td>\r\n<td style=\"text-align: center;background-color: #f0ebeb\"><strong>Debit<\/strong><\/td>\r\n<td style=\"text-align: center;background-color: #f0ebeb\"><strong>Credit<\/strong><\/td>\r\n<td style=\"text-align: center;background-color: #f0ebeb\"><strong>Balance<\/strong><\/td>\r\n<\/tr>\r\n<tr>\r\n<td style=\"background-color: #f0ebeb\">July 12<\/td>\r\n<td style=\"background-color: #f0ebeb\">Purchase<\/td>\r\n<td style=\"text-align: center;background-color: #f0ebeb\"><\/td>\r\n<td style=\"text-align: center;background-color: #f0ebeb\">10,000<\/td>\r\n<td style=\"text-align: center;background-color: #f0ebeb\">10,000<\/td>\r\n<\/tr>\r\n<tr>\r\n<td style=\"background-color: #f0ebeb\">July 16<\/td>\r\n<td style=\"background-color: #f0ebeb\">Return<\/td>\r\n<td style=\"text-align: center;background-color: #f0ebeb\">2,500<\/td>\r\n<td style=\"text-align: center;background-color: #f0ebeb\"><\/td>\r\n<td style=\"text-align: center;background-color: #f0ebeb\">7,500<\/td>\r\n<\/tr>\r\n<tr>\r\n<td style=\"background-color: #f0ebeb\">July 25<\/td>\r\n<td style=\"background-color: #f0ebeb\">Payment<\/td>\r\n<td style=\"text-align: center;background-color: #f0ebeb\"><\/td>\r\n<td style=\"text-align: center;background-color: #f0ebeb\">7,500<\/td>\r\n<td style=\"text-align: center;background-color: #f0ebeb\"><strong>-0-<\/strong><\/td>\r\n<\/tr>\r\n<\/tbody>\r\n<\/table>\r\nThe vendor balance for Gus Grass is $0 and the accounts payable balance is $0.\u00a0 Since both are zero and match, it would not be necessary to prepare a schedule of accounts payable.\u00a0 If there is a balance, a schedule of accounts payable would be prepared in the same manner as accounts receivable.","rendered":"<p>A subsidiary ledger is a detailed list to support a control account.\u00a0 A control account appears on the balance sheet in summary or total, and are accounts like accounts receivable, accounts payable, and inventory.\u00a0 This video explains the theory (the video refers to a Debitor account which is Accounts Receivable and and a\u00a0Creditor account which is Accounts Payable. A Debtor is a customer and a Creditor is a vendor)<\/p>\n<p><iframe loading=\"lazy\" id=\"oembed-1\" title=\"6.7 Theory of Control and Subsidiary Accounts\" width=\"500\" height=\"375\" src=\"https:\/\/www.youtube.com\/embed\/_U5ZyGibqKQ?feature=oembed&#38;rel=0\" frameborder=\"0\" allowfullscreen=\"allowfullscreen\"><\/iframe><\/p>\n<p>This section will look at the transactions for Fooz Ball Town and how to post to subsidiary ledgers for accounts receivable and accounts payable.<\/p>\n<h2>Accounts Receivable Subsidiary Ledger<\/h2>\n<p>The accounts receivable subsidiary ledger will contain an account for each individual customer.\u00a0 The sales, payments, and returns and allowances are recorded into the individual customer accounts as well as the bigger picture (control account) accounts receivable account.\u00a0 For Fooz Ball Town, the sales entries were:<\/p>\n<ul>\n<li>July 5 Sold $5,000 of merchandise inventory, terms 1\/15, n 30, FOB Destination with a cost of goods sold of $3,000 to Robby Red.<\/li>\n<li>July 10\u00a0 Sold $1,500 of merchandise inventory for cash, FOB Shipping Point, with a cost of goods sold of $1,000.<\/li>\n<li>July 15 Received payment from Robby Red from July\u00a05 sale less the discount.<\/li>\n<li>July 30 Sold $7,000 of merchandise inventory, terms 1\/15, n 30, FOB Shipping point with cost of goods sold $5,000 to Bobby Blue.<\/li>\n<\/ul>\n<p>These entries were recorded in the sales journal and cash receipts journal as follows:<\/p>\n<table>\n<tbody>\n<tr>\n<td colspan=\"4\"><strong>Sales Journal<\/strong><\/td>\n<\/tr>\n<tr>\n<td rowspan=\"2\"><strong>Date<\/strong><strong>\u00a0<\/strong><\/td>\n<td rowspan=\"2\"><strong>Customer<\/strong><strong>\u00a0<\/strong><\/td>\n<td style=\"text-align: center\"><strong>DR Accounts Receivable <\/strong><\/td>\n<td style=\"text-align: center\"><strong>DR Cost of goods sold\u00a0<\/strong><\/td>\n<\/tr>\n<tr>\n<td style=\"text-align: center\"><strong>CR Sales<\/strong><\/td>\n<td style=\"text-align: center\"><strong>CR Inventory<\/strong><\/td>\n<\/tr>\n<tr>\n<td>July 5<\/td>\n<td>Robby Red<\/td>\n<td style=\"text-align: center\">$5,000<\/td>\n<td style=\"text-align: center\">$3,000<\/td>\n<\/tr>\n<tr>\n<td>July 30<\/td>\n<td>Bobby Blue<\/td>\n<td style=\"text-align: center\">7,000<\/td>\n<td style=\"text-align: center\">5,000<\/td>\n<\/tr>\n<tr>\n<td><strong>TOTALS<\/strong><\/td>\n<td><strong>\u00a0<\/strong><\/td>\n<td style=\"text-align: center\"><strong>$12,000<\/strong><\/td>\n<td style=\"text-align: center\"><strong>$8,000<\/strong><\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<p>&nbsp;<\/p>\n<table>\n<tbody>\n<tr>\n<td colspan=\"6\"><strong>Cash Receipts Journal\u00a0\u00a0\u00a0<\/strong><\/td>\n<\/tr>\n<tr>\n<td rowspan=\"2\"><strong>Date\u00a0<\/strong><\/td>\n<td style=\"text-align: center\" rowspan=\"2\"><strong>Customer \u00a0<\/strong><strong>\u00a0<\/strong><\/td>\n<td style=\"text-align: center\" rowspan=\"2\"><strong>DR Cash\u00a0<\/strong><\/td>\n<td style=\"text-align: center\"><strong>DR Sales <\/strong><\/td>\n<td style=\"text-align: center\"><strong>CR Accounts <\/strong><\/td>\n<td style=\"text-align: center\" rowspan=\"2\"><strong>CR Sales\u00a0<\/strong><\/td>\n<td style=\"text-align: center\"><strong>DR Cost of goods Sold<\/strong><\/td>\n<\/tr>\n<tr>\n<td style=\"text-align: center\"><strong>\u00a0Discounts<\/strong><\/td>\n<td style=\"text-align: center\"><strong>\u00a0Receivable<\/strong><\/td>\n<td style=\"text-align: center\"><strong>CR Inventory<\/strong><\/td>\n<\/tr>\n<tr>\n<td>July 10<\/td>\n<td style=\"text-align: center\">Cash Sale<\/td>\n<td style=\"text-align: center\">1,500<\/td>\n<td style=\"text-align: center\"><\/td>\n<td style=\"text-align: center\"><\/td>\n<td style=\"text-align: center\">1,500<\/td>\n<td style=\"text-align: center\">1,000<\/td>\n<\/tr>\n<tr>\n<td>July 15<\/td>\n<td style=\"text-align: center\">Robby Red<\/td>\n<td style=\"text-align: center\">4,950<\/td>\n<td style=\"text-align: center\">50<\/td>\n<td style=\"text-align: center\">5,000<\/td>\n<td style=\"text-align: center\"><\/td>\n<td style=\"text-align: center\"><\/td>\n<\/tr>\n<tr>\n<td><strong>TOTALS<\/strong><\/td>\n<td style=\"text-align: center\"><strong>\u00a0<\/strong><\/td>\n<td style=\"text-align: center\"><strong>6,450<\/strong><\/td>\n<td style=\"text-align: center\"><strong>50<\/strong><\/td>\n<td style=\"text-align: center\"><strong>5,000<\/strong><\/td>\n<td style=\"text-align: center\"><strong>1,500<\/strong><\/td>\n<td style=\"text-align: center\"><strong>1,000<\/strong><\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<p>These journals would be posted to the Accounts Receivable control account like this:<\/p>\n<table style=\"background-color: #f0ebeb\">\n<tbody>\n<tr>\n<td colspan=\"5\"><strong>Account: Accounts Receivable<\/strong><strong>\u00a0<\/strong><strong>\u00a0<\/strong><strong>\u00a0<\/strong><strong>\u00a0<\/strong><\/td>\n<\/tr>\n<tr>\n<td><strong>Date<\/strong><\/td>\n<td><strong>Description<\/strong><\/td>\n<td style=\"text-align: center\"><strong>Debit<\/strong><\/td>\n<td style=\"text-align: center\"><strong>Credit<\/strong><\/td>\n<td style=\"text-align: center\"><strong>Balance<\/strong><\/td>\n<\/tr>\n<tr>\n<td>July 31<\/td>\n<td>from Sales Journal<\/td>\n<td style=\"text-align: center\">12,000<\/td>\n<td style=\"text-align: center\"><\/td>\n<td style=\"text-align: center\">12,000<\/td>\n<\/tr>\n<tr>\n<td>July 31<\/td>\n<td>from Cash Receipts Journal<\/td>\n<td style=\"text-align: center\"><\/td>\n<td style=\"text-align: center\">5,000<\/td>\n<td style=\"text-align: center\"><strong>7,000<\/strong><\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<p>The customer (subsidiary) ledger would be updated for Robby Red and Bobby Blue as:<\/p>\n<table>\n<tbody>\n<tr>\n<td style=\"background-color: #f0ebeb\" colspan=\"5\"><strong>Customer Account: Robby Red<\/strong><strong>\u00a0<\/strong><strong>\u00a0<\/strong><strong>\u00a0<\/strong><strong>\u00a0<\/strong><\/td>\n<\/tr>\n<tr>\n<td style=\"background-color: #f0ebeb\"><strong>Date<\/strong><\/td>\n<td style=\"background-color: #f0ebeb\"><strong>Description<\/strong><\/td>\n<td style=\"background-color: #f0ebeb\"><strong>Debit<\/strong><\/td>\n<td style=\"background-color: #f0ebeb\"><strong>Credit<\/strong><\/td>\n<td style=\"background-color: #f0ebeb\"><strong>Balance<\/strong><\/td>\n<\/tr>\n<tr>\n<td style=\"background-color: #f0ebeb\">July 5<\/td>\n<td style=\"background-color: #f0ebeb\">Sale<\/td>\n<td style=\"text-align: center;background-color: #f0ebeb\">5,000<\/td>\n<td style=\"text-align: center;background-color: #f0ebeb\"><\/td>\n<td style=\"text-align: center;background-color: #f0ebeb\">5,000<\/td>\n<\/tr>\n<tr>\n<td style=\"background-color: #f0ebeb\">July 15<\/td>\n<td style=\"background-color: #f0ebeb\">Payment<\/td>\n<td style=\"text-align: center;background-color: #f0ebeb\"><\/td>\n<td style=\"text-align: center;background-color: #f0ebeb\">5,000<\/td>\n<td style=\"text-align: center;background-color: #f0ebeb\"><strong>-0-<\/strong><\/td>\n<\/tr>\n<tr>\n<td><\/td>\n<td><\/td>\n<td><\/td>\n<td><\/td>\n<td><\/td>\n<\/tr>\n<tr>\n<td style=\"background-color: #f0ebeb\" colspan=\"5\"><strong>Customer Account: Bobby Blue\u00a0\u00a0\u00a0\u00a0<\/strong><\/td>\n<\/tr>\n<tr>\n<td style=\"background-color: #f0ebeb\"><strong>Date<\/strong><\/td>\n<td style=\"background-color: #f0ebeb\"><strong>Description<\/strong><\/td>\n<td style=\"background-color: #f0ebeb\"><strong>Debit<\/strong><\/td>\n<td style=\"background-color: #f0ebeb\"><strong>Credit<\/strong><\/td>\n<td style=\"background-color: #f0ebeb\"><strong>Balance<\/strong><\/td>\n<\/tr>\n<tr>\n<td style=\"background-color: #f0ebeb\">July 15<\/td>\n<td style=\"background-color: #f0ebeb\">Sale<\/td>\n<td style=\"text-align: center;background-color: #f0ebeb\">7,000<\/td>\n<td style=\"text-align: center;background-color: #f0ebeb\"><\/td>\n<td style=\"text-align: center;background-color: #f0ebeb\"><strong>7,000<\/strong><\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<p>At the end of the period, a schedule is prepared to verify (or prove) the Accounts Receivable (control account) balance reported on the balance sheet.\u00a0 This schedule is a listing of all customers with the ending amounts owed and should always match the ending balance in Accounts Receivable.\u00a0 The schedule of accounts receivable for Fooz Ball Town would be:<\/p>\n<table>\n<tbody>\n<tr>\n<td style=\"text-align: center\" colspan=\"2\"><strong>Fooz Ball Town\u00a0<\/strong><\/td>\n<\/tr>\n<tr>\n<td style=\"text-align: center\" colspan=\"2\"><strong>Schedule of Accounts Receivable\u00a0<\/strong><\/td>\n<\/tr>\n<tr>\n<td style=\"text-align: center\" colspan=\"2\"><strong>July 31\u00a0<\/strong><\/td>\n<\/tr>\n<tr>\n<td><\/td>\n<td><\/td>\n<\/tr>\n<tr>\n<td>Robby Red<\/td>\n<td style=\"text-align: center\">$0<\/td>\n<\/tr>\n<tr>\n<td>Bobby Blue<\/td>\n<td style=\"text-align: center\"><span style=\"text-decoration: underline\">7,000<\/span><\/td>\n<\/tr>\n<tr>\n<td><strong>Total Accounts Receivable<\/strong><\/td>\n<td style=\"text-align: center\"><strong>$ 7,000<\/strong><\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<p><em>Note:\u00a0 It would not be necessary to include customers with zero balances but it is included here just so you can see how the subsidiary ledger works.\u00a0<\/em> Notice how the schedule of accounts receivable balance equals the ending accounts receivable balance (control account).<\/p>\n<h2>Accounts Payable Subsidiary Ledger<\/h2>\n<p>The accounts payable subsidiary ledgers works the same way as accounts receivable with the control account of accounts payable and the subsidiary ledger a vendor ledger to provide a listing of everyone we owe.\u00a0 The purchases, payments, returns and allowances are recorded in the individual vendor accounts as well as in the accounts payable account.\u00a0 The purchase transactions for Fooz Ball Town are:<\/p>\n<ul>\n<li>July 12 Purchased $10,000 of merchandise inventory, terms 2\/15, n 45, FOB Destination from Gus Grass.<\/li>\n<li>July 16 Returned $2,500 of merchandise damaged in shipment from July 12 purchase.<\/li>\n<li>July 25\u00a0 Paid for the July 15 purchase from Gus Grass\u00a0less the return and discount.<\/li>\n<\/ul>\n<p>These transactions were recorded, under the perpetual inventory method, \u00a0in the following journals:<\/p>\n<table>\n<tbody>\n<tr>\n<td colspan=\"2\"><strong>Purchases Journal\u00a0<\/strong><\/td>\n<\/tr>\n<tr>\n<td rowspan=\"2\"><strong>Date<\/strong><\/td>\n<td rowspan=\"2\"><strong>Vendor<\/strong><\/td>\n<td style=\"text-align: center\"><strong>DR Merchandise Inventory<\/strong><\/td>\n<\/tr>\n<tr>\n<td style=\"text-align: center\"><strong>CR Accounts Payable<\/strong><\/td>\n<\/tr>\n<tr>\n<td>July 12<\/td>\n<td>Gus Grass<\/td>\n<td style=\"text-align: center\">10,000<\/td>\n<\/tr>\n<tr>\n<td><strong>TOTALS<\/strong><\/td>\n<td><strong>\u00a0<\/strong><\/td>\n<td style=\"text-align: center\"><strong>10,000<\/strong><\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<p>&nbsp;<\/p>\n<table>\n<tbody>\n<tr>\n<td colspan=\"5\"><strong>Cash Disbursement Journal<\/strong><\/td>\n<\/tr>\n<tr>\n<td><strong>Date<\/strong><\/td>\n<td><strong>Account<\/strong><\/td>\n<td><strong>DR Accts Payable<\/strong><\/td>\n<td><strong>CR Mdse Inventory<\/strong><\/td>\n<td><strong>CR Cash<\/strong><\/td>\n<\/tr>\n<tr>\n<td>July 25<\/td>\n<td>\u00a0Gus Grass<\/td>\n<td style=\"text-align: center\">7,500<\/td>\n<td style=\"text-align: center\">150<\/td>\n<td style=\"text-align: center\">7,350<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<p>&nbsp;<\/p>\n<table>\n<tbody>\n<tr>\n<td colspan=\"4\"><strong>\u00a0General Journal<\/strong><strong>\u00a0<\/strong><strong>\u00a0<\/strong><strong>\u00a0<\/strong><\/td>\n<\/tr>\n<tr>\n<td><strong>Date<\/strong><\/td>\n<td><strong>Account<\/strong><\/td>\n<td><strong>Debit<\/strong><\/td>\n<td><strong>Credit<\/strong><\/td>\n<\/tr>\n<tr>\n<td>July 16<\/td>\n<td>Accounts Payable<\/td>\n<td>2,500<\/td>\n<td><\/td>\n<\/tr>\n<tr>\n<td><\/td>\n<td>\u00a0\u00a0 Merchandise Inventory<\/td>\n<td><\/td>\n<td>2,500<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<p>These journals would be posted to the Accounts\u00a0Payable control account like this:<\/p>\n<table style=\"background-color: #f0ebeb\">\n<tbody>\n<tr>\n<td colspan=\"5\"><strong>Account: Accounts Payable<\/strong><\/td>\n<\/tr>\n<tr>\n<td><strong>Date<\/strong><\/td>\n<td><strong>Description<\/strong><\/td>\n<td style=\"text-align: center\"><strong>Debit<\/strong><\/td>\n<td style=\"text-align: center\"><strong>Credit<\/strong><\/td>\n<td style=\"text-align: center\"><strong>Balance<\/strong><\/td>\n<\/tr>\n<tr>\n<td>July 16<\/td>\n<td>Gus Grass Return<\/td>\n<td style=\"text-align: center\">2,500<\/td>\n<td style=\"text-align: center\"><\/td>\n<td style=\"text-align: center\">-2,500<\/td>\n<\/tr>\n<tr>\n<td>July 31<\/td>\n<td>from Purchases Journal<\/td>\n<td style=\"text-align: center\"><\/td>\n<td style=\"text-align: center\">10,000<\/td>\n<td style=\"text-align: center\">7,500<\/td>\n<\/tr>\n<tr>\n<td>July 31<\/td>\n<td>from Cash\u00a0Disbursements Journal<\/td>\n<td style=\"text-align: center\"><\/td>\n<td style=\"text-align: center\">7,500<\/td>\n<td style=\"text-align: center\"><strong>-0-<\/strong><\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<p>The\u00a0vendor (subsidiary) ledger would be updated for Gus Grass:<\/p>\n<table>\n<tbody>\n<tr>\n<td style=\"background-color: #f0ebeb\" colspan=\"5\"><strong>Vendor Account: Gus Grass<\/strong><\/td>\n<\/tr>\n<tr>\n<td style=\"background-color: #f0ebeb\"><strong>Date<\/strong><\/td>\n<td style=\"background-color: #f0ebeb\"><strong>Description<\/strong><\/td>\n<td style=\"text-align: center;background-color: #f0ebeb\"><strong>Debit<\/strong><\/td>\n<td style=\"text-align: center;background-color: #f0ebeb\"><strong>Credit<\/strong><\/td>\n<td style=\"text-align: center;background-color: #f0ebeb\"><strong>Balance<\/strong><\/td>\n<\/tr>\n<tr>\n<td style=\"background-color: #f0ebeb\">July 12<\/td>\n<td style=\"background-color: #f0ebeb\">Purchase<\/td>\n<td style=\"text-align: center;background-color: #f0ebeb\"><\/td>\n<td style=\"text-align: center;background-color: #f0ebeb\">10,000<\/td>\n<td style=\"text-align: center;background-color: #f0ebeb\">10,000<\/td>\n<\/tr>\n<tr>\n<td style=\"background-color: #f0ebeb\">July 16<\/td>\n<td style=\"background-color: #f0ebeb\">Return<\/td>\n<td style=\"text-align: center;background-color: #f0ebeb\">2,500<\/td>\n<td style=\"text-align: center;background-color: #f0ebeb\"><\/td>\n<td style=\"text-align: center;background-color: #f0ebeb\">7,500<\/td>\n<\/tr>\n<tr>\n<td style=\"background-color: #f0ebeb\">July 25<\/td>\n<td style=\"background-color: #f0ebeb\">Payment<\/td>\n<td style=\"text-align: center;background-color: #f0ebeb\"><\/td>\n<td style=\"text-align: center;background-color: #f0ebeb\">7,500<\/td>\n<td style=\"text-align: center;background-color: #f0ebeb\"><strong>-0-<\/strong><\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<p>The vendor balance for Gus Grass is $0 and the accounts payable balance is $0.\u00a0 Since both are zero and match, it would not be necessary to prepare a schedule of accounts payable.\u00a0 If there is a balance, a schedule of accounts payable would be prepared in the same manner as accounts receivable.<\/p>\n\n\t\t\t <section class=\"citations-section\" role=\"contentinfo\">\n\t\t\t <h3>Candela Citations<\/h3>\n\t\t\t\t\t <div>\n\t\t\t\t\t\t <div id=\"citation-list-120\">\n\t\t\t\t\t\t\t <div class=\"licensing\"><div class=\"license-attribution-dropdown-subheading\">All rights reserved content<\/div><ul class=\"citation-list\"><li>Theory of Control and Subsidiary Accounts. <strong>Authored by<\/strong>: Michael Allison. <strong>Located at<\/strong>: <a target=\"_blank\" href=\"https:\/\/youtu.be\/_U5ZyGibqKQ\">https:\/\/youtu.be\/_U5ZyGibqKQ<\/a>. <strong>License<\/strong>: <em>All Rights Reserved<\/em>. <strong>License Terms<\/strong>: Standard YouTube License<\/li><\/ul><\/div>\n\t\t\t\t\t\t <\/div>\n\t\t\t\t\t <\/div>\n\t\t\t <\/section>","protected":false},"author":276,"menu_order":2,"template":"","meta":{"_candela_citation":"[{\"type\":\"copyrighted_video\",\"description\":\"Theory of Control and Subsidiary Accounts\",\"author\":\"Michael Allison\",\"organization\":\"\",\"url\":\"https:\/\/youtu.be\/_U5ZyGibqKQ\",\"project\":\"\",\"license\":\"arr\",\"license_terms\":\"Standard YouTube License\"}]","CANDELA_OUTCOMES_GUID":"","pb_show_title":"on","pb_short_title":"","pb_subtitle":"","pb_authors":[],"pb_section_license":""},"chapter-type":[],"contributor":[],"license":[],"class_list":["post-120","chapter","type-chapter","status-web-only","hentry"],"part":133,"_links":{"self":[{"href":"https:\/\/courses.lumenlearning.com\/tcc-financialaccounting\/wp-json\/pressbooks\/v2\/chapters\/120","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/courses.lumenlearning.com\/tcc-financialaccounting\/wp-json\/pressbooks\/v2\/chapters"}],"about":[{"href":"https:\/\/courses.lumenlearning.com\/tcc-financialaccounting\/wp-json\/wp\/v2\/types\/chapter"}],"author":[{"embeddable":true,"href":"https:\/\/courses.lumenlearning.com\/tcc-financialaccounting\/wp-json\/wp\/v2\/users\/276"}],"version-history":[{"count":14,"href":"https:\/\/courses.lumenlearning.com\/tcc-financialaccounting\/wp-json\/pressbooks\/v2\/chapters\/120\/revisions"}],"predecessor-version":[{"id":1904,"href":"https:\/\/courses.lumenlearning.com\/tcc-financialaccounting\/wp-json\/pressbooks\/v2\/chapters\/120\/revisions\/1904"}],"part":[{"href":"https:\/\/courses.lumenlearning.com\/tcc-financialaccounting\/wp-json\/pressbooks\/v2\/parts\/133"}],"metadata":[{"href":"https:\/\/courses.lumenlearning.com\/tcc-financialaccounting\/wp-json\/pressbooks\/v2\/chapters\/120\/metadata\/"}],"wp:attachment":[{"href":"https:\/\/courses.lumenlearning.com\/tcc-financialaccounting\/wp-json\/wp\/v2\/media?parent=120"}],"wp:term":[{"taxonomy":"chapter-type","embeddable":true,"href":"https:\/\/courses.lumenlearning.com\/tcc-financialaccounting\/wp-json\/pressbooks\/v2\/chapter-type?post=120"},{"taxonomy":"contributor","embeddable":true,"href":"https:\/\/courses.lumenlearning.com\/tcc-financialaccounting\/wp-json\/wp\/v2\/contributor?post=120"},{"taxonomy":"license","embeddable":true,"href":"https:\/\/courses.lumenlearning.com\/tcc-financialaccounting\/wp-json\/wp\/v2\/license?post=120"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}