5.2 Subsidiary Ledgers & Control Accounts

5.2 Subsidiary Ledgers & Control Accounts

Quick Answer: A control account in the general ledger shows the total for a group of similar items. The related subsidiary ledger lists each customer, supplier, asset, or employee separately. For TESDA Bookkeeping NC III posting competence, the control balance must equal the sum of subsidiary balances—especially for Accounts Receivable and Accounts Payable—and the same discipline extends to PPE and Payroll detail records used in industry practice.

Without subsidiaries, the general ledger would drown in hundreds of customer and supplier lines. Without control accounts, the trial balance would lose a clean single figure for AR or AP. Posting systems use both layers together.

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Control Account vs Subsidiary Ledger

Equality rule (non-negotiable):

$\text{Control account balance} = \sum \text{Subsidiary account balances}$

If Accounts Receivable control shows ₱156,800.00 Dr but the customer subsidiary totals ₱154,200.00, the books are not assessment-ready until the ₱2,600.00 gap is found and corrected.

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Accounts Receivable Subsidiary & Control

Structure

• General ledger: Account 1200 Accounts Receivable (control).
• Subsidiary: one sheet per credit customer (e.g., Cruz Mini-Mart, Dela Cruz Pharmacy, Rivera Sari-Sari).

Typical posting flow (periodic special-journal system)

1. Credit sales enter the Sales Journal with customer names.
2. Each sale is posted daily (or promptly) to the customer’s subsidiary account as a debit.
3. The Sales Journal’s Accounts Receivable / Sales totals are posted at period-end (often month-end) to the AR control (debit) and Sales (credit).
4. Cash collections from customers enter the Cash Receipts Journal, post to subsidiary credits promptly, and post totals to Cash (debit) and AR control (credit).

Philippine example

Opening AR control = ₱45,000.00, composed of:

During January, Sales Journal credit sales: Cruz ₱8,000.00; Dela Cruz ₱5,200.00. Cash Receipts from Rivera ₱11,500.00 (full settlement).

After posting:

AR control must also end at ₱46,700.00 after the summary postings (opening ₱45,000 + sales ₱13,200 − collections ₱11,500).

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Accounts Payable Subsidiary & Control

Mirror image of AR:

• Control: 2100 Accounts Payable (credit normal balance).
• Subsidiary: one account per supplier (ABC Trading, Laguna Millers, Metro Packaging).

Purchases on account → Purchase Journal → debit inventory/purchases and credit supplier subsidiaries; month-end totals credit AP control. Payments → Cash Payments Journal → debit supplier subsidiaries and AP control, credit Cash.

Equality check example

AP control credit balance must be ₱38,250.00. A difference of even ₱50.00 fails the NC III accuracy standard until reconciled.

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PPE Subsidiary (Plant Asset Register)

Property, plant, and equipment often use a fixed asset subsidiary / plant register while the general ledger keeps control titles such as:

• Equipment / Store Equipment / Delivery Equipment
• Accumulated Depreciation — Equipment (contra control)

Each PPE subsidiary record typically stores:

Why it matters for posting: when you buy a new asset for ₱48,000.00 cash, you debit the Equipment control and also open/update the EQ-014 subsidiary card. Depreciation adjusting entries update Accumulated Depreciation control and the per-asset depreciation fields. Disposal entries must clear both layers.

Sum of asset costs in the PPE subsidiary (for that class) should reconcile to the Equipment control debit balance; sum of per-asset accumulated depreciation should reconcile to the Accumulated Depreciation control credit.

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Payroll Subsidiary / Employee Earnings Records

Payroll systems maintain employee earnings records (a form of subsidiary) alongside payroll liability and expense controls:

Posting a payroll entry might debit Salaries Expense ₱120,000.00, credit various payables, and credit Cash/Net Pay—while each employee’s earnings record receives the breakdown (gross, deductions, net). Assessors may not always require a full payroll subsidiary in every project, but industry competence under the posting unit expects you to know that control totals must still agree with detailed payroll listings.

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Reconciliation Procedures

Perform a formal reconciliation whenever you foot subsidiaries or before extracting a trial balance:

1. Foot each subsidiary account; list ending balances.
2. Add the schedule of subsidiary balances.
3. Compare to the related control account balance in the general ledger.
4. If unequal, investigate in this order:
   • Omitted subsidiary posting (posted to control summary only, or vice versa)
   • Amount error (₱1,250.00 recorded as ₱1,520.00 — transposition)
   • Posted to wrong customer/supplier
   • Debit/credit side reversed in the subsidiary
   • Control total posted twice or not at all from the special journal
5. Correct with appropriate entries or posting corrections per firm policy; then recheck equality.

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Assessment Tips

• Never list every customer on the trial balance—only the control.
• When the project gives both a Sales Journal and customer names, expect two posting destinations: subsidiary (detail) and control (total).
• Keep subsidiary names spelled exactly as in source documents to avoid “missing” accounts that are really duplicates.
• Document your AR/AP schedule totals beside the control balance; assessors like visible proof of equality.

Subsidiary–control discipline is what turns mechanical posting into reliable receivable, payable, asset, and payroll information for Philippine MSMEs and for NC III demonstration.