managerial accounting

1. Accounting Information Systems
Collects and processes transaction data and communicates
financial information to decision makers.
Includes:
• All steps in the accounting cycle
• Documents that provide evidence of transactions
and the records, trial balances, worksheets, and
financial statements that result
• Manual or computerized accounting system
Describe the nature and purpose of a subsidiary ledger
Used to keep track of individual balances.
Two common subsidiary ledgers are:
1. Accounts receivable (customers’)
2. Accounts payable (creditors’)
Advantages of Subsidiary Ledgers
1. Show in a single account transactions affecting one customer or
one creditor.
2. Free the general ledger of excessive details.
3. Help locate errors in individual accounts.
4. Make possible a division of labor.
Ex. 111
After Shaw Company had completed all posting for the month of
December, the sum of the balances in the following accounts
payable subsidiary ledger did not agree with the balance of the
control account in the general ledger.
Name Austin's
——————————————————————————————————————————
Date Item Post. Ref. Debit Credit Balance
——————————————————————————————————————————
Dec. 2 P25 2,400 2,400
Name Beeman Company
——————————————————————————————————————————
Date Item Post. Ref. Debit Credit Balance
——————————————————————————————————————————
Dec. 1 Balance 7,600
10 CP23 7,600 —
20 P32 3,300 3,300
29 J15 500 3,800

2. Name Fryar Company
——————————————————————————————————————————
Date Item Post. Ref. Debit Credit Balance
——————————————————————————————————————————
Dec. 1 Balance 9,900
18 CP28 9,900 —
29 P34 10,600 700
Name Maria Lopez
——————————————————————————————————————————
Date Item Post. Ref. Debit Credit Balance
——————————————————————————————————————————
—
Dec. 8 P27 6,000 6,000
27 P33 8,000 14,000
Name Reed Supplies
——————————————————————————————————————————
Date Item Post. Ref. Debit Credit Balance
——————————————————————————————————————————
Dec. 1 Balance 8,200
7 P26 5,600 13,800
12 J11 420 12,380
20 CP29 6,000 18,380
The balance in the Accounts Payable control account of $37,180 has
been verified as correct. Also assume that the journals references in
the Post Ref. columns of the accounts payable subsidiary ledger
have been verified as correct.
Instructions
Determine the errors in the preceding accounts payable subsidiary
accounts and prepare a corrected schedule of accounts payable.
Ex. 112
On December 1, the accounts receivable control account balance in the general
ledger of the Titus Company was $9,000. The accounts receivable subsidiary
ledger contained the following detailed customer balances: Abel $1,500, Dole
$2,100, Fabb $2,600, and Hall $2,800. The following information is available from
the company's special journals for the month of December:
Cash Receipts Journal: Cash received from Fabb $1,900, from Abel $1,600,
from Reese $1,700, and from Dole $1,800.

3. Sales Journal: Sales to Reese $4,300, to Fabb $1,700, to Abel $2,300, and to
Hall $2,400.
Additionally, Fabb returned defective merchandise for credit for $900. Abel
returned defective merchandise for $600 which he had purchased for cash.
Instructions
(a) Using T-accounts for Accounts Receivable Control and the detail customer
accounts, post the activity for the month of December.
(b) Reconcile the accounts receivable control account with the subsidiary
ledger by preparing a detail list of customer balances at December 31.
Solution 112 (15 min.)
(a) Control Account: Accounts Receivable
9,000 (CR) 7,000
(SJ) 10,700 (G) 900
Bal. 11,800
Subsidiary Accounts:
Abel Dole
1,500 (CR) 1,600 2,100 (CR) 1,800
(S) 2,300 Bal. 300
Bal. 2,200
Fabb Hall
2,600 (CR) 1,900 2,800
(S) 1,700 (G) 900 (S) 2,400
Bal. 1,500 Bal. 5,200
Reese
(S) 4,300 (CR) 1,700
Bal. 2,600
(b) Listing of accounts receivable at end of the month:
Abel $ 2,200
Dole 300
Fabb 1,500
Hall 5,200
Reese 2,600
Total $11,800 Accounts receivable balance
BE 106
Indicate whether each of the following accounts would be shown in the general ledger
or subsidiary ledger.

4. 1. Cash ____________________
2. Accounts Receivable—Jones ____________________
3. Equipment ____________________
4. Accounts Payable—Smith ____________________
5. Common Stock ____________________
6. Sales ____________________
Solution 106 (3 min.)
1. General ledger 4. Subsidiary ledger
2. Subsidiary ledger 5. General ledger
3. General ledger 6. General ledger
E7-1B Cope Company uses both special journals and a general journal as
described in this chapter. On June 30, after all monthly postings had been
completed, the Accounts Receivable control account in the general ledger had a
debit balance of $200,000; the Accounts Payable control account had a credit
balance of $120,000. The July transactions recorded in the special journals are
summarized below. No entries affecting accounts receivable and accounts
payable were recorded in the general journal for July.
Sales journal
Purchases journal
Cash receipts journal
Cash payments journal
Total sales $252,000
Total purchases $151,000
Accounts receivable column total $211,000
Accounts payable column total $152,000
Instructions
(a) What is the balance of the Accounts Receivable control account after the
monthly postings on July 31?
(b) What is the balance of the Accounts Payable control account after the
monthly postings on July 31?
E7-3B On September 1 the balance of the Accounts Receivable control account
in the general ledger of Bridges Company was $12,960. The customers’
subsidiary ledger contained
account balances as follows: Gedeno $1,940, Verduzco $3,140, Fernetti $2,560,
Fanestil $5,320. At the end of September the various journals contained the
following information.
Sales journal: Sales to Fernetti $900; to Gedeno $1,400; to Miranda $1,500; to
Fanestil $1,200.
Cash receipts journal: Cash received from Fernetti $1,610; from Fanestil $2,600;
from Miranda $580; from Verduzco $2,100; from Gedeno $1,540.
General journal: An allowance is granted to Fanestil $325.
Instructions
(a) Set up control and subsidiary accounts and enter the beginning balances. Do

5. not construct the journals.
(b) Post the various journals. Post the items as individual items or as totals.
(c) Prepare a list of customers and prove the agreement of the controlling
account with the subsidiary ledger at September 30, 2017.
E7-4B Zelli Company has a balance in its Accounts Receivable control account
of $15,000 on January 1, 2017. The subsidiary ledger contains three accounts:
Kline Company, balance $6,000; Black Company, balance $3,700; and Finney
Company. During January, the following receivable-related transactions
occurred.
Credit Sales
$16,000
11,000
Collections
$12,000
4,000
Returns
$ -0-
4,500
Kline Company
Black Company
13,000 14,000 0 Finney Company
Instructions
(a) What is the January 1 balance in the Finney Company subsidiary account?
(b) What is the January 31 balance in the control account?
(c) Compute the balances in the subsidiary accounts at the end of the month.
E7-5B Magathan Company has a balance in its Accounts Payable control
account of $11,600 on January 1, 2017. The subsidiary ledger contains three
accounts: Smythe Company, balance $4,200; Edds Company, balance $2,600;
and Willhite Company. During January, the following receivable-related
transactions occurred.
Purchases
$9,500
7,350
Payments
$8,400
2,600
Returns
$ -0-
3,100
Smythe Company
Edds Company
8,900 9,500 0 Willhite Company
Instructions
(a) What is the January 1 balance in the Willhite Company subsidiary account?
(b) What is the January 31 balance in the control account?
(c) Compute the balances in the subsidiary accounts at the end of the month.