The process of gathering and storing Financial Transaction data in the Accounting System is accomplished through the use of both:

Ledgers: which maintain Account Balances
Journals: which maintain the line by line detail of each Transaction.

Ledgers:
I’m starting with Ledgers because we’ve gone through the basic organization of the Accounting System from Double Entry (debit/credit) Transaction Posting, to the Chart of Accounts and finally the General Ledger. I’ll stay on the topic of the General Ledger first and then back up to the Journals where each transaction is originally posted.
In Accounting, there are two types of Ledgers, the General Ledger (Book of final entry) and Subsidiary (Sub) Ledgers. The Accounts for the General Ledger come from the Chart of Accounts. The Accounts for the Subledgers depend on the specific purpose of the Subledger.
If you remember in the “Chart of Accounts - Basics”, I said that Accounts should only be created to describe types of things not individual things themselves. Well, in some cases especially in the case of cash substitutes like Accounts Payable and Accounts Receivable more detail is required. So, to maintain the summary nature of the Chart of Accounts/General Ledger and to provide more detail, Subsidiary (Sub) Ledgers were developed.
Everything that is posted into Subledgers is also posted into the General Ledger and they act together to provide progressive levels of detail/summary.

The two most common Subledgers are:

The Accounts Payable Subledger: which maintains a list of Vendors (or creditors) and their individual Account Balances. Each individual Vendor represents a Subledger (Accounts Payable - Vendor) Account.
The Accounts Receivable Subledger: which maintains a list of Customers and their individual Account Balances. Each individual Customer represents a Subledger (Accounts Receivable - Customer) Account.

Each Subledger relates directly to a General Ledger Account that requires more detail than the General Ledger can offer. These GL Accounts are often referred to as control accounts. The Balance of a Control Account should always be equal to the total of its related Subledger Account Balances. As you can see, the total of the Accounts Payable Subledger below equals the Balance of the related General Ledger Accounts Payable Account.

General Ledger
Account	Description	Debits	Credits

1000	Checking Account	$44,350
1200	Accounts Receivable	$0
1500	Office Equipment	$1,300
1520	Office Furniture	$1,650
2000	Accounts Payable		$1,700
4000	Sales		$50,000
7000	Rent	$3,000
7020	Office Supplies	$150
7040	Subscriptions	$300
7060	Utilities	$125
7100	Fuel	$275
7200	Repairs and Maintenance	$500
7300	Credit Card Interest and Fees	$50

Totals		$51,700	$51,700

Accounts Payable Subledger
Account	Description	Balance

ACEC	Ace Credit Card Corp.	$1,700
JOHN	Johnson Management	$0
SHEL	Shelton Oil	$0

Totals	(see GL Account 2000)	$1,700

The listings above are Ledger Account summaries. Both the General Ledger and the Subledgers actually have a more detailed section for each Account. Those sections include summarized entries and balances along with references indicating which journals those entries originated in.
The tables below show an example of a Subledger Account and an example of the corresponding General Ledger Account.

Accounts Payable Subledger						Account: ACEC
Transaction Date	Jrnl	Ref	Description	Debit	Credit	Balance
			Beginning Balance			$0
8/01/08	AP	23	123_0808 (invoice)		$2,500	$2,500
8/31/08	CD	37	123_0808 (payment)	$2,500		$0
9/01/08	AP	55	123_0908 (invoice)		$1,700	$1,700

General Ledger						Account: 2000
Transaction Date	Jrnl	Ref	Description	Debit	Credit	Balance
			Beginning Balance			$0
8/01/08	AP	23	Accounts Payable Invoices		$2,500	$2,500
8/31/08	CD	37	Cash Disbursements	$2,500		$0
9/01/08	AP	55	Accounts Payable Invoices		$1,700	$1,700

Because there can be multiple Subledgers, there are also multiple Journals. The Jrnl field indicates which journal the entry came from. The AP’s in the jrnl field mean that those entries came from the Accounts Payable Journal and the CD entry came from the Cash Disbursements Journal which is the journal that maintains detail for Cash Outflows. The Jrnl and Ref field together give a cross reference that enable the user to access more detail about each entry.

Journals:
All financial transactions are recorded in Journals. The Journal maintains each individual transaction line by line. Just as there are two types of Ledgers, there are also two types of Journals: The General Journal and the Subsidiary Journals. Most entries will originate in Subsidiary Journals, however, if none of the GL Accounts affected by an entry have a related subsidiary journal, the entry will originate in the General Journal.
Everything that is posted into Subsidiary Journals is also posted into the General Journal. Journals act together with Ledgers to provide progressive levels of detail/summary.
Subsidiary Journal:
The format for Transactions in the the Subledger Journals is similar to the format for the General Journal that I’ve used in previous posts except they require at least three more columns in the grid. One for the Subledger Account, one for an Invoice Number and one for a Reference Number. This entry in the Accounts Payable Journal shows the detail for the both of the Ledger entries above that indicate Jrnl = AP and Ref = 55.
This entry records A Credit Card Statement into Accounts Payable, which includes the purchase of a Chair and a Desk along with Credit Card charges.

Accounts Payable Journal
Subledger Account	Invoice #	Transaction Date	Ref	GL Account	Description	Debit	Credit
ACEC	123_908	9/01/08	55	2000	Ace Credit Card Corp.		$1,700
				1520	Chair	$750
				1520	Desk	$900
				7300	Credit Card Interest & Fees	$50

Note that the Vendor Account, the Invoice #, Transaction Date and Ref# are not re-entered for each line. It is assumed that those three items remain the same for each of their balancing entries.

** Important: Individual transactions for each Subledger Account must have a unique identifying number, in this case, its an Invoice Number. That number combined with the Subledger Account creates a unique pair that prevents duplicate payments and provide a way for each party to reference the transaction for payments or if disputes or questions arise.

General Journal:
Since the system requires that all financial transactions have an entry in the General Ledger, they must also have an entry in the General Journal. This requires some duplication of effort but it is necessary. So, once the entries are posted to the Subledger Journals, they are then summarized and posted to the General Journal after which the Balances in the General Ledger are updated.

General Journal
Transaction Date	Jrnl	Ref	Account	Description	Debit	Credit
9/01/08	AP	55	1520	Furniture & Fixtures	$1,650
9/01/08	AP	55	7300	Credit Card Interest & Fees	$50
9/01/08	AP	55	2000	Accounts Payable		$1,700

The Path of entries for Financial Entries:
Transactions containing a GL Account that is related to a subsidiary journal start with the Subsidiary Journal otherwise they start with the General Journal
Subsidiary Journal –> Post to Subsidiary Ledger by its Account –> Post to General Journal —-> Summarize and post to General Ledger by GL Account.