Special journals are journals used to record transactions that repeatedly occur in a business hence reduces errors, saves time, and enhances efficiency in the manufacturing company. These special journals reduce the number of entries made in the general ledger, thus saves time. Therefore, these journals divide the general journals into groups to better control a firm's accounting systems. The four major special journals are the purchases journal, cash receipts, cash payment, and sales journals (Peasnell, 2020). The sales journals comprise of all the sales made during the financial year; the purchases journal captures all the purchases made on the account, the cash receipts journal records all the cash received from all the merchandise sold, and the cash payment journal that lists all the cash paid out including the purchases. The general journal is used to make and adjust other entries not captured in the special accounts, i.e., the depreciation expense.
Therefore, Ermler and Trump wholesalers should maintain the cash receipts journal, general journal, cash payment journal, cash receipts journal, and the sales journal in their manual accounting system. It is prudent and essential to include their column heading for easy understanding of the entries made in these special journals. In the sales journal, the customers' accounts will be debited, and the sales account credited. This is because the appliances are sold out to retailers on credit hence increasing the creditors. In the purchase journal, the inventory is debited since the purchases are made based on the manufacturers of appliances and parts. The invoice date is columned to show the money received by the two wholesalers in the cash receipt journal, and this cash received is debited in their cash receipt journals. The cash payment journal will include all the withdrawals made for their expenses and the fixed salary paid to the repairman twice a month. All the advertising bills are also recorded in the cash payment journal as received. This journal records all the payments made to the business employees and all the withdrawals made by Ermler and Trump. Cheques make these payments to the suppliers and all the merchandise operators.
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Control System and Subsidiary Accounts
Control systems are the procedures used by a company to streamline its accounting reporting and enhance reliability and accuracy in its accounting reports. The subsidiary account summarizes the control accounts in a detailed manner and tracks the transaction details such as the accounts payable and receivables. Subsidiary accounts are kept within the subsidiary ledger, summarized in the general ledger as control accounts. The principal subsidiary accounts to be maintained by Trump and Ermler are accounts receivable and accounts payable ledgers. They record all the creditors and debtors of their wholesale company. Account payable shows how much they owe to the outsiders, while account receivables show how much their debtors owe them. Hence, all the totals are later reflected in the general ledger. Ermler and Trump adapt both the control accounts and the subsidiary accounts, such as the accounts payable and accounts receivables.
The subsidiary accounts capture all the credit sales made, seventy-five percent of the total revenues sold on credit. All the liabilities such as the made; amount paid to the repairman must be included in the accounts payable subsidiary account. All the merchandise purchased on credit is recorded in the accounts receivable accounts since they owe the two wholesalers some cash. The reconciliation of the subsidiary accounts balances is made in the general ledgers. Trump and Ermler will adapt the accounts receivables and accounts payable ledgers as they record all their creditors' and debtors’ details, thus enabling them to control their manual accounting systems.
References
Peasnell, K. (2020). Editing Accounting and Business Research 1994-2006: the transition years in retrospect. Accounting and Business Research, 50(7), 702-712.
