Section 12.1 - Subsidiary Ledger (A/R and A/P) System
In many larger businesses, individual customers’ accounts and individual suppliers’ accounts are kept in separate ledgers known as subsidiary ledgers.
More specifically, debtor customer accounts can be found in the accounts receivable ledger while creditor supplier accounts can be found in the accounts payable ledger.
The main ledger, now referred to as the general ledger, contains the receivables and payables control accounts, i.e., Accounts Receivable account and Accounts Payable account. (see p. 506 or below link).
At any given point in time, the total of the individual debtor customer balances in the Accounts Receivable subsidiary ledger should equal the balance in the Accounts Receivable control account found in the general ledger. The same is true with respect to the individual creditor supplier accounts in the Accounts Payable subsidiary ledger and the Accounts Payable control account in the general ledger.
For every sales invoice, the accounts receivable clerk makes one debit entry to the appropriate customer account in the subsidiary ledger while the general ledger clerk must record a complete, balanced accounting entry (debits = credits) for that same transaction in the appropriate journal.
Section 12.2 - Synoptic Journal (Two-Journal System)
In many small or mid-sized businesses, a specialized, multi-columnar journal known as a synoptic journal is often employed to record routine entries involving the most commonly used accounts, e.g., Bank, Accounts Receivable, Sales, HST Payable, etc. (see pp. 528-529 or below link).
A synoptic journal is typically employed in conjunction with a traditional, two-column journal like the one we have been using in this class.
In this two-journal system, the traditional journal is still employed to record non-routine or complex transactions.
Section 12.3 - Five-Journal System
In many larger companies, a five-journal system is employed in order to account for the growing complexity and variety of business transactions. Each journal is restricted to a particular type of transaction. (see p. 544 or below link)
In this system, the Sales Journal is used only to record sales on account while the Purchases Journal is only employed for purchases on account. Meanwhile, the Cash Receipts Journal displays any transaction that increases the bank balance (cash in) while the Cash Payments Journal displays any transaction that decreases the bank balance (cash out). Finally, the General Journal is used for any transaction that does not fit into any of the previous four categories.
Click here for a link to a graphic representation of the subsidiary ledger system, synoptic journal and five journal system: