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47 Basics of Accounting & Information Processing T-accounts 11.3 Control and Subsidiary Accounts
Some general ledger accounts are made of many sub-components. For instance, a company may have
total accounts receivable of $19,000, consisting of amounts due from Compton, Fisher, and Moore.
The accounting system must be sufficient to reveal the total receivables, as well as amounts due from
each customer. Therefore, sub-accounts are used. For instance, in addition to the regular general
ledger account, separate auxiliary receivable accounts would be maintained for each customer, as
shown in the following illustration: ACCOUNTS RECEIVABLE: SUBSIDIARY LEDGERS ACCOUNT: Compton
Date Description Jan. 1, 20X5 Journal page 1 Date ACCOUNT: Accounts Receivable
Description Jan. 1, 20X5 Journal page 1/Compton Jan. 12, 20X5 Journal page 1/Fisher Jan. 24, 20X5 Journal page 2/Sunderman Credit Balance forward Jan. 11, 20X5 Jan. 30, 20X5 *
Journal page 2/Moore Description Jan. 1, 20X5
$ 30,000 $ 6,000 $
$ 6,000 6,000 36,000 Jan. 12, 20X5 Debit Journal page 1 Credit Balance Balance forward $ 15,000
$ 11,000 4,000 ACCOUNT: Sunderman $ 11,000 25,000 Date 8,000
2,000 Balance ACCOUNT: Fisher ACCOUNTS RECEIVABLE: CONTROL LEDGER Date Credit Balance forward Jan. 11, 20X5 Debit 17,000 Jan. 1, 20X5 Balance forward Jan. 24, 20X5 Journal page 2 19,000 Description Debit Credit Balance
$ 8,000 $ 8,000 - Credit Balance ACCOUNT: Moore
Date Description Jan. 1, 20X5 Balance forward Jan. 30, 20X5 Journal page 2 Debit $ 7,000
$ 2,000 ENDING BALANCES MUST AGREE WITH CONTROL ACCOUNT
BEGINNING BALANCES MUST AGREE WITH CONTROL ACCOUNT 9,000 $ 19.000
$ 30.000 The total receivables are the sum of all the individual receivable amounts. Thus, the Accounts
Receivable general ledger account total is said to be the “control account” or control ledger, as it
represents the total of all individual “subsidiary account” balances.
The company’s chart of accounts will likely be based upon some convention such that each subsidiary
account is a sequence number within the broader chart of accounts. For instance, if Accounts Receivable
bears the account number 102, you would expect to find that individual customers might be numbered as
102.001, 102.002, 102.003, etc. It is simply imperative that a company be able to reconcile subsidiary
accounts to the broader control account that is found in the general ledger. Here, computers can be
particularly helpful in maintaining the detailed and aggregated data in perfect harmony. 48...
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This document was uploaded on 09/24/2013.
- Summer '13