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The individual cards serve as a subsidiary ledger to the controlling Equipment account. Similar subsidiary accounts are maintained for payables and, depending on the firm’s needs, for other accounts such as Property, Plant, and Equipment. My Accounting Course  is a world-class educational resource developed by experts to simplify accounting, finance, & investment analysis topics, so students and professionals can learn and propel their careers. For information pertaining to the registration status of 11 Financial, please contact the state securities regulators for those states in which 11 Financial maintains a registration filing. Postings to the general ledger accounts are likewise indicated by noting the general ledger accounts in the Ref. column.

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With these details in the subsidiary ledger, the Accounts Receivable account in the general ledger can report summary amounts for the accounts receivable activity. The use of accounting software can simplify the process of maintaining multiple subledger accounts, eliminating the need to record multiple transactions manually. It can also reduce the amount of time you need to spend on researching and reconciling out-of-balance accounts. Record the following transactions for Store Inc. in the special journals and post to the general ledger provided. Use the perpetual inventory method and the gross method of dealing with sales terms. A subsidiary ledger is useful to accountants and bookkeepers for a variety of reasons.

Examples of subsidiary ledgers are the accounts payable ledger, accounts receivable ledger, fixed assets ledger, inventory ledger, and purchases ledger. In job order costing systems, the job cost sheets (or job cost records) will serve as the subsidiary ledger containing the details for the general ledger account Work in Process. The Work in Process account will now be a control account containing summary amounts for direct materials, direct labor, factory overhead applied, transfers to finished goods, etc. Manufacturing personnel will have full access to the job cost sheets without having access to other information in the general ledger. A subsidiary ledger contains the details to support a general ledger control account. For instance, the subsidiary ledger for accounts receivable contains the information for each of the company’s credit sales to customers, each customer’s remittance, return of merchandise, discounts, and so on.

Advantages of an Accounts Receivable Subsidiary Ledger

Companies can have various payables owed to vendors or suppliers at any given time. 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. This sub ledger lists contains all of the account details for every credit customers including dates, balances, payments, and purchases made by each customer. Even a small company can have hundreds of customers who purchase goods on credit. If each customer account was reported in the general ledger, there would be several hundred accounts receivable accounts to sift through when analyzing the main ledger.

1. It can also reduce the amount of time you need to spend on researching and reconciling out-of-balance accounts.
2. This schedule of accounts receivable—often called an accounts receivable trial balance—is totaled.
3. The accounts payable subsidiary ledger is a breakdown of the total amount of payables listed on the general ledger.
4. Like other subsidiary ledgers, the accounts receivable subsidiary ledger merely provides details of the control account in the general ledger.

Using accounting software also eliminates the need to roll subledger account totals up into your general ledger at month-end. Additionally, it automates the entire journal entry process, so the only month-end entries you’ll need to complete are adjusting entries for interest, depreciation, and amortization. A subledger or subsidiary disposition in commercial real estate ledger provides the details that make up the balance of specific general ledger accounts. Because general ledger accounts only provide an ending balance for each particular account, a subsidiary ledger is used to provide the details that result in that general ledger balance. When subsidiary accounts are maintained, it is necessary to post journal entries to both the general ledger (or controlling account) and the subsidiary account.

11 Financial’s website is limited to the dissemination of general information organizations pertaining to its advisory services, together with access to additional investment-related information, publications, and links. The schedule of accounts receivable for the customers in our example is shown next. This schedule of accounts receivable—often called an accounts receivable trial balance—is totaled.

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The accounts payable subsidiary ledger is similar to other subsidiary ledgers in that it merely provides details of the control account in the general ledger. Other subsidiary account ledgers include the accounts receivable subsidiary ledger, the inventory subsidiary ledger, and the equipment subsidiary ledger. Since the total of the accounts receivable subsidiary ledger must agree with the balance shown in the accounts receivable general ledger account, the system helps us find mistakes.

It contains a set of related accounts whose balances in total will equal the balance in the controlling account. Note that each account used by the company has its own account section in the general ledger. Fourth, dividing subsidiary accounts into related sub-ledgers, multiple people can perform bookkeeping procedures. For instance, one person can be in charge of the accounts receivable listings and another person can be in charge of the accounts payable listings.

Using an accounting software application will track your subledger totals and automatically transfer the total of those transactions to your general ledger, eliminating the need to manually track them. Each entry is posted to both the appropriate general ledger accounts and the individual customer accounts. To maintain control, postings to subsidiary accounts should be made on a daily basis. By contrast, postings to general ledger accounts need to be made only periodically.

If you’re still using a manual accounting system, there are some things you’ll need to pay close attention to when using a subledger. At Finance Strategists, we partner with financial experts to ensure the accuracy of our financial content. The articles and research support materials available on this site are educational and are not intended to be investment or tax advice. All such information is provided solely for convenience purposes only and all users thereof should be guided accordingly.

The sum of all invoices in the accounts receivable subsidiary ledger should equal that of the accounts receivables on the general ledger, also known as the control account. The transaction total in your subsidiary ledger account should always match the total in your general ledger. For example, if you have multiple accounts receivable subledger accounts that currently equal $15,000, your accounts receivable balance in your general ledger should also be $15,000. If the balances do not match, you should reconcile the account to determine the reason for the difference. An accounts receivable subsidiary ledger is an accounting ledger that shows the transaction and payment history of each customer to whom the business extends credit.