Study Surgery

Q. I am having great difficulty with double entry credits and debits. Just when I thought I had got my head around this, I am now confused as to why the subsidiary ledger is not part of the double entry. I remember DEAD CLIC AND PEARLS but it does not seem to apply to everything.

A. When you post the sales day book to the main ledger (in a traditional manual system), you will post the totals:

Dr Debtors / Sales Ledger Control Account

Cr Sales (in the P&L a/c)

Cr VAT

This will give you the total debtors figure but it doesn’t tell you how much individual customers owe you. You need to know this so that you can chase them for payment!

So, as well as posting the totalsfrom the day book to the main ledger, you will post the gross value of each i ndividual sale (including VAT) to the individual debtor (sales ledger) accounts. Provided you added up the sales day book properly, the amounts you post to the individual sales ledger accounts will equal the amount you posted to the sales ledger control account (SLCA). If you included each sales ledger account in the main ledger it would be umpteen feet thick! So you simply post the total. The sales ledger is a “memorandum ledger” that gives you the detailed breakdown of the totals posted to the SLCA.

Also, it is probably the accountant who posts the totals to the main ledger. The sales ledger assistant will post the individual sales to the sales ledger. The monthly sales ledger reconciliation is therefore a check on both.

Simon Deane BA ACA is Managing Director of a private training partner