Acca f3 Financial Accounting (int) Study Text

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5: Ledger accounts and double entry   Part C  The use of double entry and accounting systems 

Question

Petty cash 

Summit Glazing operates an imprest petty cash system. The imprest amount is $150.00. At the end of the 

period the totals of the four analysis columns in the petty cash book were as follows. 

 $ 

Column 1 

23.12

Column 2 

6.74

Column 3 

12.90

Column 4 

28.50

How much cash is required to restore the imprest amount? 

Answer

$71.26. This is the total amount of cash that has been used. 

8 The receivables and payables ledgers 

The receivables and payables ledgers contain the 

personal accounts of individual customers and 

suppliers. They do not normally form part of the double-entry system. 

8.1 Impersonal accounts and personal accounts 

The accounts in the nominal ledger (ledger accounts) relate to types of income, expense, asset, liability – 

rent, sales, trade receivables, payables etc – rather than to the person to whom the money is paid or from 

whom it is received. They are therefore called 

impersonal accounts. However, there is also a need for 

personal accounts, most commonly for receivables and payables, and these are contained in the 

receivables ledger and payables ledger. 

8.2 The receivables ledger 

The sales day book provides a chronological record of invoices sent out by a business to credit 

customers. For many businesses, this might involve very large numbers of invoices per day or per week. 

The same customer might appear in several different places in the sales day book, for sales made on 

credit at different times. So a customer may owe money on several unpaid invoices. 

In addition to keeping a chronological record of invoices, a business should also keep a record of how 

much money each individual credit customer owes, and what this total debt consists of. The need for a 

personal account for each customer is a practical one. 

(a) 

A customer might telephone, and ask how much he currently owes. Staff must be able to tell him. 

(b) 

It is a common practice to send out statements to credit customers at the end of each month, 

showing how much they still owe, and itemising new invoices sent out and payments received 

during the month. 

(c) 

The managers of the business will want to keep a check on the credit position of an individual 

customer, and to ensure that no customer is exceeding his credit limit by purchasing more goods. 

(d) 

Most important is the need to match payments received against debts owed. If a customer makes a 

payment, the business must be able to set off the payment against the customer's debt and 

establish how much he still owes on balance. 

The

receivables ledger is a ledger for customers' personal accounts. 

Receivables ledger accounts are written up as follows. 

Key term 

FAST FORWARD

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Part C  The use of double entry and accounting systems

  5:  Ledger accounts and double entry

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(a) 

When entries are made in the sales day book (invoices sent out), they are subsequently also made 

in the 

debit side of the relevant customer account in the receivables ledger.

(b) 

Similarly, when entries are made in the cash book (payments received), or in the sales returns day 

book, they are also made in the 

credit side of the relevant customer account. 

Each customer account is given a reference or code number, and it is that reference which appears in the 

sales day book. We say that amounts are posted from the sales day book to the receivables ledger. 

Here is an example of how a receivables ledger account is laid out. 

ENOR COLLEGE 

A/c no: RL 9

$

$

Balance b/f

250.00

10.1.X0  Sales – SDB 48 

 

(invoice no 250)

1,264.60

Balance c/d

1,514.60

1,514.60

1,514.60

11.1.X0 Balance 

b/d

1,514.60   

 

The debit side of this personal account, then, shows amounts owed by Enor College. When Enor pays 

some of the money it owes it will be entered into the cash book (receipts) and subsequently 'posted' to the 

credit side of the personal account. For example, if the college paid $250 on 10.1.20X0, it would appear as 

follows.

ENOR COLLEGE 

A/c no: RL 9

$

$

Balance b/f

250.00

10.1.X0  Cash

250.00

10.1.X0  Sales – SDB 48 

 

(invoice no 250)

1,264.60

Balance c/d

1,264.60

1,514.60

1,514.60

11.1.X0 Balance 

b/d

1,264.60   

 

The opening balance owed by Enor College on 11.1.X0 is now $1,264.60 instead of $1,514.60, because of 

the $250 receipt which came in on 10.1.X0. 

8.3 The payables ledger 

The payables ledger, like the receivables ledger, consists of a number of personal accounts. These are 

separate accounts for 

each individual supplier, and they enable a business to keep a continuous record of 

how much it owes each supplier at any time. 

The

payables ledger is a ledger for suppliers' personal accounts. 

After entries are made in the purchase day book, cash book, or purchase returns day book – ie after 

entries are made in the books of prime entry – they are also made in the relevant supplier account in the 

payables ledger. Again we say that the entries in the purchase day book are 

posted to the suppliers' 

personal accounts in the payables ledger. 

Here is an example of how a payables ledger account is laid out. 

COOK & CO 

 

 

 

A/c no: PL 31

$

$

Balance c/d

515.00

 

Balance b/f

200.00

 

15 Mar 20X8

 Invoice 

received

 PDB 

37

315.00

515.00

515.00

 

16 March 20X8

 Balance 

b/d

515.00

Key term 

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