What types of subsidiary ledgers are used in manufacturing companies (Part II)?

In our computerized world most accounting records are maintained in accounting software databases or spreadsheets, and accountants don’t think much in terms of general ledger or subsidiary ledgers like they did when most accounting records were maintained on paper. However, such concepts still exist. In this second part of the two-part article we will look at examples of accounts payable subsidiary ledger (i.e., accounts payable aging), inventory subsidiary ledger, and fixed assets subsidiary ledger.

1. Accounts payable subsidiary ledger (accounts payable aging)

Note: This is the second part of the two-part article. For the first part, refer to What types of subsidiary ledgers are used in manufacturing companies (Part I)?.

Accounts payable subsidiary ledger (also called accounts payable aging) provides the details of vendor balances as of a particular date (e.g., balance sheet date). An accounts payable subsidiary ledger (aging) is used to determine the balance of accounts payable by invoice and how long the vendor invoices have been outstanding (unpaid). All invoices are grouped into “buckets” to show their age. For example, aging “buckets” can be as follows:

  • current
  • 1-30 days
  • 31-60 days
  • 61-90 days
  • 91-120 days
  • Older than 120 days

The determination of how long an invoice has been unpaid is normally done from the invoice due date.

Accounts payable subsidiary ledgers are reconciled to corresponding Accounts Payable general ledger account(s).

Accounts payable subsidiary ledgers can be used to see how a company manages its payments to vendors and cash flows. For example, when accounts payable in “older” aging buckets increase, the company may be trying to increase the time it takes to pay vendor invoices and increase its net cash flows. This may be a result of cash flow problems in the company. Alternatively, the company may have negotiated new payment terms with significant vendors allowing it to pay later.

An example of an accounts payable aging table is presented below.


Invoice #




1-30 Days

31-60 Days

61-90 Days

> 90 Days

Vendor A





Vendor A






Vendor B






Vendor C











Note that the amount without an associated invoice number has a negative (debit) balance of $33.38 which may represent a debit memo, advance payment made to a vendor, or amount owned to the company by a vendor. For a more detailed discussion about unusual balances and what to do with them, refer to the article Accounting for unusual account balances and offsetting.

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