chapter 6 moving from day books through the ledgers to the trial balance
TRANSCRIPT
Chapter 6
Moving from Day Books
through the Ledgers to the Trial Balance
The Subsidiary Ledgers and the General Ledger
Every transaction must end up in the ledgers
There are three we will focus on:• Sales ledger • Purchases ledger • General ledger
Sales Ledger
This contains the "T" accounts of all the credit customers. Each "T" account here will tell the firm the exact amount due from each credit customer.
Sales Ledger
Look at the sales ledger accounts shown on the next slide so you can determine how much each customer owes
Sales Ledger
Date $ Date $Day3 4,000Day8 6,000
Date $ Date $Day4 5,000Day9 7,000
Customer C a/c
Details DetailsSalesSales
Customer D a/cDetails DetailsSalesSales
Sales Ledger
You should have determined the amounts owed by each debtor as:
• Customer C $ 10,000• Customer D $ 12,000
Sales Ledger: Balancing an account
Customer C a/c
Date Details $ Date Details $
Day3 Sales 4,000 Day10Balance
c/d 10,000
Day8 Sales 6,000
10,000 10,000
Day11Balance
b/d 10,000
Purchases Ledger
Supplier A a/c
Date Details $ Date Details $
Day10Balance
c/d 6,000 Day1 Purchases 3,000
Day3 Purchases 3,000
6,000 6,000
Day11 Balance b/d 6,000
Purchases Ledger
This contains all the "T" accounts of all the credit suppliers. Each "T" account here will give the firm the exact amount payable to each supplier
Subsidiary ledgers
The sales ledger and the purchases ledger are examples of subsidiary ledgers. Other examples of subsidiary ledgers are a fixed asset ledger and a payroll ledger. The purpose of subsidiary ledgers is to reduce the amount of detail found in the general ledger.
The General Ledger
This contains real accounts (assets, liabilities, and capital) and nominal accounts (revenue and expenses). Real accounts are maintained over several accounting periods, but nominal accounts are closed each period. There will be no personal "T" accounts for customers or suppliers in the general ledger.
The Trial Balance
The trial balance is a listing of all the general ledger account balances at a particular date. Its main purpose is to ensure that all the debit and credit entries we made in the ledgers are the same. Remember that every time we put a debit entry in an account, we also put a credit entry, of an equal amount, into another account.
Example of a Trial Balance
A. Finch
Trial balance as at 30 Feb 2007
Dr Cr
Bank 328,000
Capital 500,000
Purchases 25,000
Sales 3,000
Delivery van 150,000
503,000 503,000