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Demo 3.4: Post general ledger entries

ACCOUNTS PAYABLE (AP) ACCOUNTING
In the section on master data we explained that organizations use subledgers
to track money owed to individual vendors. We further explained that sub-
ledgers are not part of the general ledger but instead are associated with special
accounts in the general ledger known as reconciliation accounts. In accounts
payable accounting, the accounts payable subledger consists of individual ven-
dor accounts. The subledger account number is created when the vendor master
record is created. The vendor master record and the vendor subledger account
share the same account number. The associated reconciliation account is
a general ledger account that is designated as the reconciliation account. The
association between the vendor account and the reconciliation account is
established in the defi nition of the vendor master record. We discuss vendor
master data and its link to the general ledger in the context of the procurement
process in Chapter 4.
In the GBI general ledger, account #300700, accounts payable recon-
ciliation, is the designated account. Let’s consider a scenario in which GBI
purchases offi ce supplies from three vendors. Each vendor has a designated
vendor account number that is also the subledger account number. The pur-
chases are as follows: $2,000 from Vendor 1, $1,000 from Vendor 2, and $4,000
from Vendor 3. Further, GBI makes these purchases on credit and then pays
the vendors at a later date via a check. As illustrated in Figure 3-15, Steps 1–3
record the purchases from each vendor. Each purchase results in a debit to
the supplies expense account and a credit to the appropriate vendor account.
Postings to the vendor accounts are automatically posted to the reconciliation
account, accounts payable reconciliation, as indicated by the arrows. Note that
the AP reconciliation account does not track the details of each transaction;
rather, it maintains only the total values. Payments, recorded in Steps 4–6,
result in a credit posting to the bank account and a debit posting to the appro-
priate vendor account. Again, these debit postings are also automatically made
to the reconciliation account, accounts payable reconciliation.

Demo 3.5: Review reconciliation and non-reconciliation
AP accounts.

ACCOUNTS RECEIVABLE (AR) ACCOUNTING
Whereas accounts payable accounting is concerned with vendors, accounts
receivable accounting is concerned with customers. When businesses need to
track money owed by each customer separately, they create an account in the
accounts receivable subledger for each customer with a corresponding des-
ignated general ledger account (the reconciliation account). The customer
subledger account is created when the customer master record is created,
and they share the same account number. The association between the cus-
tomer account and the reconciliation account is established in the defi nition
of the customer master record. We discuss this procedure in the context of

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