Chapter 5
Accounting Entries in Special Journal and Subsidiary Ledger
1
Topics
1. Purchase Journal and A/P Subsidiary Ledger
2. Sales Journal and A/R Subsidiary Ledger
3. Cash Book
4. Cash Receipts Journal
5. Cash Payment Journal
Objectives
• Understand usefulness of special journals and subsidiary ledgers
• Record business transaction in the proper special journals and subsidiary ledgers
Accounting Record Process
2
General Journal General Ledger Trial Balance
General Journal
Special Journal
General Ledger (Control A/C)
Subsidiary Ledger (AP/AR)
Purchase Journal Sales Journal Cash Receipt Journal Cash Payment Journal
Chp 5
Why do we need special journal and subsidiary ledgers?
3
Usefulness of Special Journals and Subsidiary Ledgers
• Large entities usually have numbers of repeating transactions (e.g. sales,
purchases, payment, cash receipt)
• These transactions cause excessive accounting records in General Journal
• Free the general ledger of excessive details
• Show in a single account transactions affecting one customer or one creditor
• Help locate errors in individual accounts
• Make possible a division of labor in posting
Expanding the Special Journals
4
Special Journal is 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.
Types of Ledgers
5
1. General Ledgers (GL)
o Recording business transaction from general journal (GJ)
o Summarizing the remaining amount of each account
o Posting each of general ledger to trial balance (TB)
o E.g. Accounts receivable, Accounts Payable
2. Subsidiary Ledgers
o Contains the details to support a general ledger control account
o Provide details of individual customers or individual creditors
7
AC No.102
ACCOUNT NAME ACCOUNT NAME
25X9 25X9
Jun 1 B/F 500,000 - Jun 13 Sales Return and Allowance 50,000 -
26 Sales Journals 200,000 - 20 Cash Receipt Journal 350,000 -
31 Carry forward 300,000 -
Accounts Receivable (A/R)
Y/M/D DEBIT Y/M/D CREDIT
GENERAL LEDGER
R01Transactions Ref.
25X9
Jun 1 B/F 300,000 - 300,000 -
13 Sales Return and Allowance GJ1 - 50,000 - 250,000 -
20 Cash Receipt Journal CR1 150,000 - 100,000 -
R02
Transactions Ref.
25X9
Jun 1 B/F 200,000 - 200,000 -
26 Sales Journal S1 200,000 - 400,000 -
20 Cash Receipt Journal CR1 100,000 - 300,000 -
Company B
Y/M/D Debit Credit Balance
SUBSIDIARY LEDGER - Accounts Receivable
Y/M/D Debit Credit Balance
Company A
Special Journals
8
1. Purchase Journal
2. Sales Journal
3. Cash Book
4. Cash Receipt Journal
5. Cash Payment Journal
1. Purchase Journal
9
o Reference: “P”
o Used for “Credit Purchase of Goods or Inventories” ONLY
o Cash purchase will be recorded in Cash Payment Journal
o Not used to record purchase of non-current assets or other assets
o Supporting evidence: Invoice, Delivery Note, Purchase order
Example 1
10
ABC Company uses special journals and subsidiary journals to record business
transactions of the company. The following transactions occurs in June 25X9.
Jun 1 Purchase inventory 5,000 Baht on credit from Company X. Cash discount condition is 2/10, n/30. Attached invoice no. P2661
5 Purchase computer 15,000 Baht on credit from IT Company
9 Purchase inventory 7,000 Baht on credit from Company Y. Cash discount condition is 5/10, n/60. Attached invoice no. 4X910
14 Purchase inventory 15,000 Baht on credit from Company X. Cash discount condition is 2/10, n/30. Attached invoice no. T245
Y/M/D ACCOUNT NAME AC No. DEBIT CREDIT
25X9
Jun 5 Dr. Office equipment 111 15,000 -
Cr. Accounts Payable 201 15,000 -
Buy Computer on credit
GENERAL JOURNAL PAGE 1
11
Page_1_
Invoice
No.Creditor Name
Credit
TermRef.
25X9
Jun 1 P2661 Company X 2/10, n/30 P 5,000 -
9 4X910 Company Y 5/10, n/60 P 7,000 -
14 T245 Company Z 2/10, n/30 P 15,000 -
30 Dr. Purchase/ Cr. Accounts Payable 501/201 27,000 -
PURCHASE JOURNAL
BalanceY/M/D
AC No.501
ACCOUNT NAME ACCOUNT NAME
25X9
Jun 30 Purchase Journal 27,000 -
AC No.201
ACCOUNT NAME ACCOUNT NAME
25X9
Jun 30 Purchase Journal 27,000 -
Accounts Payable (A/P)
Y/M/D DEBIT Y/M/D CREDIT
GENERAL LEDGER
Purchase
Y/M/D DEBIT Y/M/D CREDIT
P01
Transactions Ref.
25X9
Jun 1 Purchase Journal P.1 5,000 - 5,000 -
P02Transactions Ref.
25X9
Jun 9 Purchase Journal P.1 7,000 - 7,000 -
P03Transactions Ref.
25X9
Jun 14 Purchase Journal P.1 15,000 - 15,000 -
Company ZY/M/D Debit Credit Balance
Balance
Company YY/M/D Debit Credit Balance
SUBSIDIARY LEDGER - Accounts Payable
Company X
Y/M/D Debit Credit
2. Sales Journal
12
o Reference: “S”
o Used for “Credit Sales of Goods or Products” ONLY
o Cash receipt will be recorded in Cash Receipt Journal
o Not used to record sales of non-current assets or other assets
o Supporting evidence: Invoice, Delivery Note, Billing Note
13
Page_1_
Invoice
No.Creditor Name
Credit
TermRef.
25X9
Jun 3 S7745 Company M 2/15, n/45 P 7,000 -
5 S7746 Company O 2/15, n/45 P 17,000 -
22 S7747 Company P 2/15, n/45 P 25,000 -
30 Dr. Accounts Receivable/ Cr. Sales 102/401 49,000 -
SALES JOURNAL
Y/M/D Balance
AC No.102
ACCOUNT NAME ACCOUNT NAME
25X9
Jun 30 Sales Journal 49,000 -
AC No. 401
ACCOUNT NAME ACCOUNT NAME
25X9
Jun 30 Sales Journal 49,000 -
Sales
Y/M/D DEBIT Y/M/D CREDIT
CREDIT
GENERAL LEDGER
Accounts Receivable
Y/M/D DEBIT Y/M/D
S01
Transactions Ref.
25X9
Jun 3 Sales Journal P.1 7,000 - 7,000 -
S02Transactions Ref.
25X9
Jun 5 Sales Journal P.1 17,000 - 17,000 -
S03Transactions Ref.
25X9
Jun 22 Sales Journal P.1 25,000 - 25,000 -
Company PY/M/D Debit Credit Balance
Y/M/D Debit Credit Balance
Y/M/D Debit Credit Balance
Company O
SUBSIDIARY LEDGER - Accounts Receivable
Company M
3. Cash Book
14
o Reference: “C”
o Contain all cash receipts and cash payment
o Similar with “General Ledger – Cash”
o Used in small entities with not many cash transaction
o Large entities need 2 cash books; cash receipt and cash payment
o At the end of month, net amount from cash book is posted to general
journal
Transaction A/C No.Transaction A/C No.
Y/M/DCash on
handDiscount
Y/M/D
Cash on
handDiscount
Cash at
Bank
Cash at
Bank
Transaction A/C No.Transaction A/C No.
Y/M/DCash at
Bank Y/M/D
Cash at
Bank
Cash on
hand
Cash on
hand
Transaction A/C No. Transaction A/C No. AmountY/M/D Amount Y/M/D
15
One-Column Cash Book
Two-Column Cash Book
Three-Column Cash Book
Payment
Cash outCash in
Receipt
Receipt Payment
4. Cash Receipt Journal
16
o Reference: “CR”
o Contain only cash receipt
o Used in Large entities with many cash receipt transaction
o At the end of month, net amount from cash receipt journal is posted
to general journal
17
Example: Cash receipt transactions of Acc-BA Company are as follows;
Jun 15 Receive 20,000 Baht check from sales to HH Company
Jun 21 Receive 5,000 Baht cash from sales to JJ Company
Jun 24 Receive cash from sales to PP Company on Jun 20th under cash discount condition 2/10, n/30.
Acc-BA Company receives cash 6,860 Baht and gives sales discount 140 Baht
Jun 25 Receive cash 3,000 Baht from office rental income
A/C NameA/C
No.
25X9
Jun 15 Receive check from sales AB457 20,000 20,000 -
Jun 21 Receive cash from sales AB449 5,000 - 5,000
Jun 24 Receive A/R - PP Company AB258 6,860 - 140 - 7,000 -
Jun 25 Receive cash from rental income AB445 3,000 Rental income 402 3,000 -
Jun 30 Total 14,860 - 20,000 - 140 - 7,000 - 25,000 - 3,000 -
Sales
Other accounts
Amount
Cash Receipt Journal
Y/M/D Transaction Ref.
Debit Credit
Cash on
hand
Cash at
Bank
Sales
Discount
Accounts
receivable
5. Cash Payment Journal
18
o Reference: “CP”
o Contain only cash payment
o Used in Large entities with many payment transaction
o At the end of month, net amount from cash payment journal is posted
to general journal
19
Example: Cash Payment transactions of Acc-BA Company are as follows;
Jun 5 Pay check 15,000 Baht for products purchased from TT Company
Jun 12 Pay cash 2,000 Baht for electricity expense of May
Jun 22 Pay check for products purchased from DD Company on Jun 20th. The debt amount is 5,000 Baht
and Acc-BA Company get discount 100 Baht under cash discount term 2/10, n/30
Jun 25 Pay cash 23,000 Baht for products purchased from XX Company in May
A/C NameA/C
No.
25X9
Jun 5 Pay cheque for purchases of goods T9822 15,000 - 15,000 -
Jun 12 Pay cash for electricity 101-52 2,000 - Utility Expenses 507 2,000 -
Jun 22 Pay bebt by cheque to DD Company T9822 4,900 - 100 - 5,000 -
Jun 25 Pay debt by cash to XX Company X2X04 23,000 - - 23,000 -
Jun 30 Total 25,000 19,900 100 - 28,000 15,000 2,000 -
Purchase
Discount
Ref.TransactionY/M/D
Credit Debit
Amount
Other accountsAccounts
PayablePurhase
Cash on
hand
Cash at
Bank
Cash Payment Journal