(Merchandising Concern) ACC111

SPECIAL JOURNALS

Control Accounts and Subsidiary Ledgers

A subsidiary ledger is a detailed list to support a control account.

Control account- keeps the general ledger clean of details, but contains the correct balances used for
preparing a company's financial statements.
Subsidiary ledger- allows for tracking transactions within the control account in further detail.

 Accounts Receivable control account

 Accounts Payable control account

 Each Account customer has a subsidiary A/R ledger

 Each supplier has a subsidiary A/P ledge

Example
Accounts Receivable General Ledger control account had the following information

Accounts Receivable
Debit Credit
38,000 9,000
3,000 4,000
41,000 13,000
28,000

The General ledger Accounts receivable to appear in the trial balance is 28,000.

____________________________________________________________________________

Accounts Receivable Subsidiary Ledgers

Accounts Receivable – Customer A

Debit Credit
5,000 2,000
3,000 3,000
8,000 5,000
3,000

Accounts Receivable – Customer B

Debit Credit
10,000 2,000
1,000
10,000 3,000
7,000

Accounts Receivable – Customer C

Debit Credit
11,000 3,000
11,000 3,000
8,000

Accounts Receivable – Customer D

Debit Credit
12,000 2,000
12,000 2,000
10,000
 (Merchandising Concern) ACC111

Schedule of Accounts Receivable

Class Company
Schedule of Accounts Receivable
December 31, 2019

A/R - Customer A 3,000

A/R – Customer B 7,000
A/R – Customer C 8,000
A/R – Customer D 10,000

Total Accounts Receivable in control account 28,000

____________________________________________________________________________

Special Journals
1. Sales Journal (SJ)
2. Purchases Journal (PJ)
3. Cash Receipts Journal (CRJ)
4. Cash Disbursements Journal
____________________________________________________________________________
General Journal - Transactions that are not specifically recorded in the special journals are recorded here.

Recorded transactions here includes:

 Sales returns made by account customers
 Non cash investments by owners
 Purchase returns to supplier made on account
 Adjusting entries
 Closing entries
 All entries/transactions not recorded in the special journals.
____________________________________________________________________________
Sales Journal
 All sales on account are recorded here.
 Amounts recorded in the sales journal are posted daily in the subsidiary ledger to keep a current record
of the accounts receivable from each customer.
 At the end of the month, when the total sales in the sales journal have been totaled and ruled, the total
sales figure is posted to the general ledger as debit to the Accounts Receivable control account and
credit to sales account.

________________________________________________________________________________________
Purchases Journal
 Designed to account for purchases of merchandise, supplies and other assets on Account.
 Column headings may include purchases, office supplies, store supplies and accounts payable. (See
next presentation)
 The amounts in the accounts payable column are posted to the accounts payable subsidiary ledger on
a daily basis.
 At the end of the month, the columns are totaled, and the journal is balanced to ensure total debits
equal total credits.
 (Merchandising Concern) ACC111

____________________________________________________________________________
Cash Disbursements Journal
 All payments made for cash are recorded here.
 Column heading are presented in the next slide
 (Merchandising Concern) ACC111
VATABLE TRANSACTIONS (VAT TRANSACTIONS)

Transaction:
• On Feb 2, 2020 sold MDSE amounting to P200,000 terms: COD less 5% FOB
destination freight prepaid. Freight paid is P12,000.
Journal Entry:
Cash 190,000
Sales 169,643
VAT Output 20,357
Freight out 10,714
VAT Input 1,286
Cash 12,000
• The customer return some defective merchandise with a list price of P20,000.

Sales returns 16,964

VAT Output 2,036
Cash 19,000

________________________________________________________________________________________
Transaction:
• Sold MDSE amounting to P300,000 terms 2/10; n/30. FOB destination freight prepaid.
Freight paid is P16,000.
Journal Entry:
Accounts Receivable 300,000
Sales 267,857
VAT Output 32,143
Freight out 14,286
VAT Input 1,714
Cash 16,000
• The customer return some defective merchandise 50,000.
Sales returns 44,643
VAT Output 5,357
Accounts Receivable 50,000
• Collected the account of customer within the discount period, (2/10; n/30)
Cash 245,000
Sales Discount 4,464
VAT Output 536
Accounts Receivable 250,000
 (Merchandising Concern) ACC111

Transaction:
•
purchased MDSE amounting to P300,000 terms 2/10; n/30 FOB destination shipping point
freight collect. Freight paid amounted to 9,000.
Journal Entry:
Purchases 267,857
VAT Input 32,143
Accounts Payable 300,000

Freight In 8,036
VAT Input 964
Cash 9,000
• Return defective merchandise to supplier amounting to P15,000.
Accounts Payable 15,000
Purchase returns & allowances 13,393
VAT Input 1,607
• Paid the supplier the amount due to supplier within the discount period.
Accounts Payable 285,000
Cash 279,300
Purchase Discount 5,089
VAT Input 611

Additional examples in the computation of VAT Output/VAT Input:

Determine the amount of VAT Output and the amount of sales to be recorded in the following sales
transaction:
Invoice Price Sales VAT Output
1. 450,000 401,786 48,214
2. 320,000 285,714 34,286
3. 980,000 875,000 105,000
4. 80,000 71,429 8,571
5. 165,000 147,321 17,679

VALUE ADDED TAX – 12% of the cost of purchased and sold (purchases and sales)
vat input=input tax (buyer’s POV)

 Along with purchases and purchase returns and allowances.

 Along with payment of account.

vat output=output tax (seller’s POV)

 Along with Sales and Sales Returns and allowances.