Bookkeeping 14. Subsidiary Ledgers Flashcards
- If you keep track of MANY customers and how much they owe you, you may want to keep them in separate folders called:
SUBSIDIARY LEDGERS.
- When a large number of customers and creditor accounts must be kept, you use:
SUBSIDIARY LEDGERS. The totals for these accounts are recorded in controlling accounts kept in the GENERAL LEDGER.
- One SUBSIDIARY LEDGER would be:
The ACCOUNTS RECEIVABLE SUBSIDIARY LEDGER.
Another one would be the ACCOUNTS PAYABLE SUBSIDIARY LEDGER.
- ONE PAGE SUMMARIES of the SUBSIDIARY LEDGERS are called:
CONTROLLING ACCOUNTS, and they are kept in the GENERAL LEDGER as the ACCOUNTS RECEIVABLE SUMMARY ACCOUNT and the ACCOUNTS PAYABLE SUMMARY ACCOUNT.
- A customer returns a dress because it does not fit well. This transaction is called a
SALES RETURN
- Suppose a customer notices a button is missing from a dress on display and she is given a price reduction. This is a
SALES ALLOWANCE.
- In a SALES RETURN, if a cash refund was given, what accounts are affected?
SALES RETURNS AND ALLOWANCES ACCOUNT is debited and the CASH ACCOUNT is credited.
- If a SALES RETURN was made and it was originally purchased on credit, what accounts are affected?
- ACCOUNTS RECEIVABLE is credited
2. CUSTOMER’S ACCOUNT is credited in both the SUBSIDIARY LEDGER FOR ACCOUNTS RECEIVABLE and the CONTROL ACCOUNT
- A SALES ALLOWANCE may be handled like a DISCOUNT. A CREDIT SALES RETURN, however, generally requires a
CREDIT MEMORANDUM to be issued to document the amount that was credited to the customer’s account.
- When a seller collects SALES TAX, what account is used to record it?
SALES TAX PAYABLE, a LIABILITY ACCOUNT.
- In a charge sale of $100 with 6% sales tax, the buyer is billed $106. What accounts are affected?
DEBIT-ACCOUNTS RECEIVABLE-$106
CREDIT-SALES-$100
CREDIT-SALES TAX PAYABLE-$6
- When the SALES TAX is paid to the state, what accounts are affected?
DEBIT-SALES TAX PAYABLE
CREDIT-CASH
