Chapter

7-1
Basic Concepts Basic Concepts
of Accounting of Accounting
Information Information
Systems Systems
Subsidiary Subsidiary
Ledgers Ledgers
Special Special
Journals Journals
Computerized Computerized
accounting accounting
systems systems
Manual Manual
accounting accounting
systems systems
Example Example
Advantages Advantages
Sales journal Sales journal
Cash receipts Cash receipts
journal journal
Purchases Purchases
journal journal
Cash payments Cash payments
journal journal
Effects of special Effects of special
journals on journals on
general journal general journal
Accounting Information Systems Accounting Information Systems Accounting Information Systems Accounting Information Systems
Chapter
7-2
Used to keep track of individual balances.
Two common subsidiary ledgers are:
1. Accounts receivable (customers’)
2. Accounts payable (creditors’)
Subsidiary Ledgers Subsidiary Ledgers Subsidiary Ledgers Subsidiary Ledgers
LO 2 Describe the nature and purpose of a subsidiary ledger. LO 2 Describe the nature and purpose of a subsidiary ledger.
Each general ledger control account balance must
equal the composite balance of the individual accounts
in the related subsidiary ledger.
Chapter
7-3
Illustration 7-3
Subsidiary Ledgers Subsidiary Ledgers Subsidiary Ledgers Subsidiary Ledgers
LO 2 Describe the nature and purpose of a subsidiary ledger. LO 2 Describe the nature and purpose of a subsidiary ledger.
Relationship of general ledger and subsidiary ledgers
Chapter
7-4
1. Show in a single account transactions affecting
one customer or one creditor.
2. Free the general ledger of excessive details.
3. Help locate errors in individual accounts.
4. Make possible a division of labor.
Subsidiary Ledgers Subsidiary Ledgers Subsidiary Ledgers Subsidiary Ledgers
LO 2 Describe the nature and purpose of a subsidiary ledger. LO 2 Describe the nature and purpose of a subsidiary ledger.
Advantages of Subsidiary Ledgers
Chapter
7-5
Special Journals Special Journals Special Journals Special Journals
LO 3 Explain how companies use special journals in journalizing. LO 3 Explain how companies use special journals in journalizing.
Used to record similar types of transactions.
If a transaction cannot be recorded in a special journal,
the company records it in the general journal.
Illustration 7-5
Chapter
7-6
Each of the following is a subsidiary ledger
except the:
a. accounts receivable ledger.
b. accounts payable ledger.
c. customer’s ledger.
d. general ledger.
Review Question Review Question
Special Journals Special Journals Special Journals Special Journals
LO 3 Explain how companies use special journals in journalizing. LO 3 Explain how companies use special journals in journalizing.
Chapter
7-7
Special Journals Special Journals Special Journals Special Journals
LO 3 Explain how companies use special journals in journalizing. LO 3 Explain how companies use special journals in journalizing.
Sales Journal Illustration 7-6
Under a perpetual inventory system, one entry at selling price in Sales
Journal results in a debit to Accounts Receivable and a credit to Sales.
Another entry at cost results in a debit to Cost of Goods Sold and a
credit to Merchandise Inventory.
Chapter
7-8
Special Journals Special Journals Special Journals Special Journals
LO 3 Explain how companies use special journals in journalizing. LO 3 Explain how companies use special journals in journalizing.
Illustration 7-7
Companies make daily postings
from the sales journal to the
individual accounts receivable
in the subsidiary ledger.
POSTING THE SALES JOURNAL
Chapter
7-9
Special Journals Special Journals Special Journals Special Journals
LO 3 Explain how companies use special journals in journalizing. LO 3 Explain how companies use special journals in journalizing.
Illustration 7-7
Posting to the general ledger is
done monthly.
POSTING THE SALES JOURNAL
Chapter
7-10
One-line entry for each sales transaction saves
time.
Only totals, rather than individual entries, are
posted to the general ledger.
A division of labor results.
Advantages of Sales Journal
Special Journals Special Journals Special Journals Special Journals
LO 3 Explain how companies use special journals in journalizing. LO 3 Explain how companies use special journals in journalizing.
Chapter
7-11
Special Journals Special Journals Special Journals Special Journals
LO 3 Explain how companies use special journals in journalizing. LO 3 Explain how companies use special journals in journalizing.
In the cash receipts journal, companies record all receipts of cash.
The posting of the cash receipts journal is similar to the posting of
the sale journal. See complete Illustration 7-9 in the text.
Illustration 7-9 Cash Receipts Journal
Chapter
7-12
Special Journals Special Journals Special Journals Special Journals
LO 3 Explain how companies use special journals in journalizing. LO 3 Explain how companies use special journals in journalizing.
$3,200
Chapter
7-13
Special Journals Special Journals Special Journals Special Journals
LO 3 Explain how companies use special journals in journalizing. LO 3 Explain how companies use special journals in journalizing.
J. Darby
Lenninger
Farley
Deering & Son
Grinnell Bros.
Merchandise
inventory
June 1
Chapter
7-14
Cash sales of merchandise are recorded in the:
a. cash payments journal.
b. cash receipts journal.
c. general journal.
d. sales journal.
Review Question Review Question
Special Journals Special Journals Special Journals Special Journals
LO 3 Explain how companies use special journals in journalizing. LO 3 Explain how companies use special journals in journalizing.
Chapter
7-15
Which of the following is not one of the credit
columns in the cash receipts journal:
a. Other accounts.
b. Accounts payable.
c. Accounts receivable.
d. Sales.
Review Question Review Question
Special Journals Special Journals Special Journals Special Journals
LO 3 Explain how companies use special journals in journalizing. LO 3 Explain how companies use special journals in journalizing.
Chapter
7-16
Special Journals Special Journals Special Journals Special Journals
LO 4 Indicate how companies post a multi LO 4 Indicate how companies post a multi- -column journal. column journal.
Illustration 7-13
In the purchases journal,
companies record all purchases of
merchandise on account.
Purchases Journal
Chapter
7-17
Special Journals Special Journals Special Journals Special Journals
LO 4 Indicate how companies post a multi LO 4 Indicate how companies post a multi- -column journal. column journal.
Illustration 7-13
Purchases Journal
Chapter
7-18
All of the following are advantages of using
subsidiary ledgers except they:
a. show transactions affecting one customer or
one creditor in a single account.
b. free the general ledger of excessive details.
c. eliminate errors in individual accounts.
d. make possible a division of labor.
Review Question Review Question
Special Journals Special Journals Special Journals Special Journals
LO 3 Explain how companies use special journals in journalizing. LO 3 Explain how companies use special journals in journalizing.
Chapter
7-19
Special Journals Special Journals Special Journals Special Journals
In a cash payments (cash disbursements) journal, companies
record all disbursements of cash.
The procedures for posting the cash payments journal are similar to
those for other journals.
Illustration 7-16 Cash Payments Journal
LO 4 Indicate how companies post a multi LO 4 Indicate how companies post a multi- -column journal. column journal.
Chapter
7-20
Credit purchases of equipment or supplies other
than merchandise are recorded in the:
a. cash payments journal.
b. cash receipts journal.
c. general journal.
d. purchases journal.
Review Question Review Question
Special Journals Special Journals Special Journals Special Journals
LO 4 Indicate how companies post a multi LO 4 Indicate how companies post a multi- -column journal. column journal.
Chapter
7-21
Cash payments of merchandise are recorded in
the:
a. cash payments journal.
b. cash receipts journal.
c. general journal.
d. purchases journal.
Review Question Review Question
Special Journals Special Journals Special Journals Special Journals
LO 4 Indicate how companies post a multi LO 4 Indicate how companies post a multi- -column journal. column journal.
Chapter
7-22
Special journals substantially reduce the
number of entries that companies make in the
general journal.
Only transactions that cannot be entered in a
special journal are recorded in the general
journal.
Also, correcting, adjusting, and closing entries
are made in the general journal.
Effects of Special Journals on the General Journal
Special Journals Special Journals Special Journals Special Journals
LO 4 Indicate how companies post a multi LO 4 Indicate how companies post a multi- -column journal. column journal.
Chapter
7-23
“Copyright © 2008 John Wiley & Sons, Inc. All rights reserved.
Reproduction or translation of this work beyond that permitted
in Section 117 of the 1976 United States Copyright Act without
the express written permission of the copyright owner is
unlawful. Request for further information should be addressed
to the Permissions Department, John Wiley & Sons, Inc. The
purchaser may make back-up copies for his/her own use only
and not for distribution or resale. The Publisher assumes no
responsibility for errors, omissions, or damages, caused by the
use of these programs or from the use of the information
contained herein.”
Copyright Copyright Copyright Copyright