Accounting Systems and Internal Controls Accounting 21 st
- Slides: 91
Accounting Systems and Internal Controls Accounting, 21 st Edition Warren Reeve Fess Power. Point Presentation by Douglas Cloud Professor Emeritus of Accounting Pepperdine University © Copyright 2004 South-Western, a division of Thomson Learning. All rights reserved. Task Force Image Gallery clip art included in this electroni presentation is used with the permission of NVTech Inc.
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Objectives 1. Define an accounting system and After studying this describe its implementation. chapter, you should 2. List the three objectives of internal control, be able to: and define and give examples of the five elements of internal control. 3. Journalize and post transactions in a manual accounting system that uses subsidiary ledgers and special journals.
Objectives 4. Describe and give examples of additional subsidiary ledgers and modified special journals. 5. Apply computerized accounting to the revenue and collection cycle. 6. Describe the basic features of ecommerce.
Basic Accounting System
Analysis Design Implementation F E E D B A C K
Objectives of Internal Control To provide reasonable assurance that: 1. assets are safeguarded and used for business purposes. 2. business information is accurate. 3. employees comply with laws and regulations.
Elements of Internal Control 1. 2. 3. 4. 5. Control environment Risk assessment Control procedures Monitoring Information and communication
Elements of Internal Control 1. 2. 3. 4. 5. Control environment Risk assessment Control procedures Monitoring Information and communication
Management philosophy and operating style influences the control environment.
Elements of Internal Control 1. 2. 3. 4. 5. Control environment Risk assessment Control procedures Monitoring Information and communication
Once risks are identified, they can be analyzed to estimate their significance, to assess their likelihood of occurring, and to determine actions that will minimize them.
Elements of Internal Control 1. 2. 3. 4. 5. Control environment Risk assessment Control procedures Monitoring Information and communication
Control Procedures § § Competent Personnel Rotating Duties Mandatory Vacations Separating Responsibilities for Related Operations § Separating Operations, Custody of Assets, and Accounting § Proofs and Security Measures
Control Procedures § § Competent Personnel Rotating Duties Mandatory Vacations Separating Responsibilities for Related Operations § Separating Operations, Custody of Assets, and Accounting § Proofs and Security Measures
Separating Responsibilities for Otherwise, the following Relatedare Operations abuses possible: 1. Orders may be placed on the basis of friendship with a supplier, rather than on price, quality, and other objective factors. 2. The quantity and quality of supplies received may not be verified, thus causing payment for supplies not received or poor-quality supplies. 3. Supplies may be stolen by the employee. 4. The validity and accuracy of invoices may be verified carelessly.
Control Procedures § § Competent Personnel Rotating Duties Mandatory Vacations Separating Responsibilities for Related Operations § Separating Operations, Custody of Assets, and Accounting § Proofs and Security Measures
Custody of Assets Independent check Operations Accounting Independent check
Elements of Internal Control 1. 2. 3. 4. 5. Control environment Risk assessment Control procedures Monitoring Information and communication
Clues to Potential Problems Warning signs with regard to people: 1. 2. 3. 4. 5. Abrupt changes in lifestyle. Close social relationships with suppliers. Refusing to take a vacation. Frequent borrowing from other employees. Excessive use of alcohol or drugs.
Clues to Potential Problems Warning signs from the accounting system: 1. Missing documents or gaps in transaction numbers. 2. An unusual increase in customer refunds. 3. Differences between daily cash receipts and bank deposits. 4. Sudden increase in slow payments. 5. Backlog in recording transactions.
Manual Accounting Systems
General Ledger and Subsidiary Ledgers General Ledger Cash 11 Accounts Receivable Subsidiary Ledger Accts. Rec. 12 Customer Accounts A B C Supplies 14 Accounts Payable Subsidiary Ledger Accts. Pay. 21 Creditor Accounts A B C D D
Special Journals SELLING Providing services on account recorded in Revenue journal Receipt of cash from any source recorded in Cash receipts journal BUYING Purchase of items on account recorded in Purchases journal Payment of cash for any purpose recorded in Cash payments journal
The Revenue Journal Page 35 Revenue Journal Date Invoice No. Account Debited Post Ref. Accts. Rec. – Debit Fees Earned – Credit 1 1 2 2 3 3 4 4 5 5 6 6 All sales on account are recorded in this journal. Each sales invoice is listed in numerical order.
The Revenue Journal Page 35 Revenue Journal Date 2006 1 Mar. 2 2 Invoice No. 615 Account Debited My. Music. Club. com Post Ref. Accts. Rec. – Debit Fees Earned – Credit 2 2 0 0 00 1 2 3 3 4 4 5 5 6 6 Performed services on credit to My. Music. com, $2, 200.
The Revenue Journal Page 35 Revenue Journal Date 2006 1 Mar. 2 2 Invoice No. 615 Account Debited Post Ref. Accts. Rec. – Debit Fees Earned – Credit My. Music. Club. com 2 2 0 0 00 1 2 3 3 4 4 5 5 6 6 Notice that only one line is required to make the entry.
Posting from the Revenue Journal Page 35 Revenue Journal Date 2006 1 Mar. 2 2 Invoice No. 615 Account Debited My. Music. Club. com Post Ref. Accts. Rec. – Debit Fees Earned – Credit 2 2 0 0 00 1 2 3 3 4 4 5 5 6 6 To update the My. Music. Club. com account, the $2, 200 debit is posted to the accounts receivable subsidiary ledger.
Posting from the Revenue Journal Page 35 Revenue Journal Date 2006 1 Mar. 2 2 Invoice No. 615 Post Ref. Account Debited Accts. Rec. – Debit Fees Earned – Credit 2 2 0 0 00 1 2 My. Music. Club. com 3 3 4 4 5 6 Accounts Receivable Subsidiary Ledger My. Music. Club. com Date 2006 Mar. 2 Item P. R. R 35 Debit 2, 200 Credit Balance 2, 200 5 6
Posting from the Revenue Journal Page 35 Revenue Journal Date 2006 1 Mar. 2 2 Invoice No. 615 Post Ref. Account Debited Accts. Rec. – Debit Fees Earned – Credit 2 2 0 0 00 1 2 My. Music. Club. com 3 3 4 4 5 6 Accounts Receivable Subsidiary Ledger My. Music. Club. com Date 2006 Mar. 2 Item P. R. R 35 Debit 2, 200 Credit Balance 2, 200 This procedure is repeated for each posting to the accounts receivable subsidiary ledger. 5 6
Posting from the Revenue Journal Page 35 Revenue Journal Date Invoice No. 2003 2006 1 Mar. 2 615 2 6 616 3 18 617 4 27 618 Account Debited My. Music. Club. com Rap. Zone. com Web Cantina My. Music. Club. com Post Ref. Accts. Rec. – Debit Fees Earned – Credit 2 2 0 0 00 1 1 7 5 0 00 2 2 6 5 0 00 3 3 0 00 4 5 5 6 6 Assume that similar entries were journalized and posted during the month of March.
Posting from the Revenue Journal Page 35 Revenue Journal Date 2006 1 Mar. 2 2 6 3 18 4 27 5 31 Invoice No. Account Debited 615 My. Music. Club. com 616 Rap. Zone. com 617 Web Cantina 618 My. Music. Club. com Post Ref. Accts. Rec. – Debit Fees Earned – Credit 2 2 0 0 00 1 1 7 5 0 00 2 2 6 5 0 00 3 3 0 00 4 9 6 0 0 00 6 5 6 On March 31, the revenue journal is totaled and ruled.
Posting the Revenue Journal Total Page 35 Revenue Journal Date 2006 1 Mar. 2 2 6 3 18 4 27 5 31 Invoice No. Account Debited 615 My. Music. Club. com 616 Rap. Zone. com 617 Web Cantina 618 My. Music. Club. com Post Ref. Accts. Rec. – Debit Fees Earned – Credit 2 2 0 0 00 1 1 7 5 0 00 2 2 6 5 0 00 3 3 0 00 4 9 6 0 0 00 6 5 6 Next, the revenue journal’s total ($9, 600) is posted to the general ledger.
Posting the Revenue Journal Total GENERAL LEDGER ACCOUNT Date Accounts Receivable Item 2006 Mar. 1 31 Post. Ref. Account No. 12 Balance Dr. Balance Cr. Dr. 3 400 00 R 35 9 600 00 Revenue Journal, page 35 13 000 00 Cr.
Posting the Revenue Journal Total Page 35 Revenue Journal Date 2006 1 Mar. 2 2 6 3 18 4 27 5 31 6 Invoice No. Account Debited 615 My. Music. Club. com 616 Rap. Zone. com 617 Web Cantina 618 My. Music. Club. com Post Ref. Accts. Rec. – Debit Fees Earned – Credit 2 2 0 0 00 1 1 7 5 0 00 2 2 6 5 0 00 3 3 0 00 4 9 6 0 0 00 5 (12)(41) 6 By placing the account number here, we indicate that $9, 600 has been debited to Accounts Receivable in the general ledger.
Posting the Revenue Journal Total GENERAL LEDGER ACCOUNT Date 2006 Mar. 31 Fees Earned Item Post. Ref. R 35 Account No. 41 Balance Dr. Cr. 9 600 00
Posting the Revenue Journal Total Page 35 Revenue Journal Date 2006 1 Mar. 2 2 6 3 18 4 27 5 31 6 Invoice No. Account Debited 615 My. Music. Club. com 616 Rap. Zone. com 617 Web Cantina 618 My. Music. Club. com Post Ref. Accts. Rec. – Debit Fees Earned – Credit 2 2 0 0 00 1 1 7 5 0 00 2 2 6 5 0 00 3 3 0 00 4 9 6 0 0 00 5 (12)(41) 6 Placing “ 41” here indicates that $9, 600 has been posted to the credit side of Fees Earned in the general ledger.
The Cash Receipts Journal
The Cash Receipts Journal All transactions that involve the receipt of cash are recorded in the cash receipts journal.
The Cash Receipts Journal CASH RECEIPTS JOURNAL Date 2006 Account Credited Mar. 1 Rent Revenue Post Ref. Page 14 Other Accounts Cr. Accounts Receivable Cr. 400 Net. Solutions received $400 cash on March 1 for the month’s rent. Cash Dr. 400
The Cash Receipts Journal CASH RECEIPTS JOURNAL Date Account Credited Mar. 1 19 28 30 Rent Revenue Web Cantina My. Music. Club. com Rap. Zone. com 2006 Post Ref. Page 14 Other Accounts Cr. Accounts Receivable Cr. 400 3, 400 2, 200 1, 750 Cash Dr. 400 3, 400 2, 200 1, 750 During March, Net. Solutions collected cash from three customers.
Posting the Cash Receipts Journal CASH RECEIPTS JOURNAL Date Account Credited Mar. 1 19 28 30 Rent Revenue Web Cantina My. Music. Club. com Rap. Zone. com 2006 Post Ref. Page 14 Other Accounts Cr. Accounts Receivable Cr. 400 3, 400 2, 200 1, 750 Cash Dr. 400 3, 400 2, 200 1, 750 Each account under “Accounts Receivable Cr. ” is posted to the accounts receivable subsidiary ledger.
Posting the Cash Receipts Journal CASH RECEIPTS JOURNAL Date Account Credited Mar. 1 19 28 30 Rent Revenue Web Cantina My. Music. Club. com Rap. Zone. com 2006 Page 14 Post Ref. Other Accounts Cr. Accounts Receivable Cr. Cash Dr. 400 3, 400 2, 200 1, 750 Accounts Receivable Subsidiary Ledger Web Cantina Date Item P. R. Debit Credit 2006 Mar. 1 Bal. R 35 2, 650 19 Balance 3, 40018 6, 050 3, 400 2, 650
Posting the Cash Receipts Journal CASH RECEIPTS JOURNAL Date Account Credited Mar. 1 19 28 30 Rent Revenue Web Cantina My. Music. Club. com Rap. Zone. com 2006 Page 14 Post Ref. Other Accounts Cr. Accounts Receivable Cr. Cash Dr. 400 3, 400 2, 200 1, 750 Accounts Receivable Subsidiary Ledger Web Cantina Date Item P. R. Debit Credit 2006 Mar. 1 Bal. R 35 2, 650 19 CR 14 Balance 3, 40018 6, 050 3, 400 2, 650
The Cash Receipts Journal After all journalizing and posting to the accounts receivable subsidiary ledger for the month is complete, the columns are totaled.
The Cash Receipts Journal CASH RECEIPTS JOURNAL Date 2006 Mar. 1 19 28 30 31 Account Credited Rent Revenue Web Cantina My. Music. Club. com Rap. Zone. com Page 14 Post Ref. Other Accounts Cr. Accounts Receivable Cr. 400 3, 400 2, 200 1, 750 7, 350 Cash Dr. 400 3, 400 2, 200 1, 750 7, 750 The total “Cash Dr. ” column equals the total of the two credit columns.
Posting the Cash Receipts Journal CASH RECEIPTS JOURNAL Date 2006 Mar. 1 19 28 30 31 Account Credited Rent Revenue Web Cantina My. Music. Club. com Rap. Zone. com Page 14 Post Ref. Other Accounts Cr. Accounts Receivable Cr. 400 3, 400 2, 200 1, 750 7, 350 Cash Dr. 400 3, 400 2, 200 1, 750 7, 750 GENERAL LEDGER Account: Accounts Receivable No. 12 The three circled are Balance Date Item P. R. items Debit Credit Mar. Bal general posted to 1 the ledger. 3, 400 Let’s post 31 Accounts. R 35 Receivable 9, 600 2006 13, 000
Posting the Cash Receipts Journal CASH RECEIPTS JOURNAL Date 2006 Mar. 1 19 28 30 31 Account Credited Rent Revenue Web Cantina My. Music. Club. com Rap. Zone. com Page 14 Post Ref. Other Accounts Cr. Accounts Receivable Cr. 400 3, 400 2, 200 1, 750 7, 350 Cash Dr. 400 3, 400 2, 200 1, 750 7, 750 GENERAL LEDGER Account: Accounts Receivable Date Item P. R. 2006 Mar. 1 Bal 3, 400 31 CR 14 R 35 13, 000 Debit Credit 9, 6007, 350 No. 12 Balance 5, 650
Posting the Cash Receipts Journal CASH RECEIPTS JOURNAL Date 2006 Mar. 1 19 28 30 31 Account Credited Rent Revenue Web Cantina My. Music. Club. com Rap. Zone. com Page 14 Post Ref. Other Accounts Cr. Accounts Receivable Cr. 400 3, 400 2, 200 1, 750 7, 350 ( ) (12) Cash Dr. 400 3, 400 2, 200 1, 750 7, 750
Posting the Cash Receipts Journal The $7, 750 total in the Cash Debit column is posted to Cash in a similar manner.
Posting the Cash Receipts Journal The $400 credit to Rent Revenue could have been posted earlier, but posting it at the same time as other general ledger accounts is proper.
Posting the Cash Receipts Journal A completely posted cash receipts journal is shown in the next slide.
Posted Cash Receipts Journal CASH RECEIPTS JOURNAL Date 2006 Mar. 1 19 28 30 31 Account Credited Rent Revenue Web Cantina My. Music. Club. com Rap. Zone. com Page 14 Post Ref. 42 Other Accounts Cr. Accounts Receivable Cr. 400 Cash Dr. 400 3, 400 2, 200 1, 750 7, 350 400 3, 400 2, 200 1, 750 7, 750 ( ) (12) (11)
Accounts Receivable Control Account GENERAL LEDGER ACCOUNT Accounts Receivable Date Item P. R. Mar. 1 Bal 3, 400 31 R 35 CR 14 13, 000 Debit Credit No. 12 Balance 9, 6007, 350 If the accounts receivable account in the general ledger only shows summary totals, where are the individual customer balances? 5, 650
Accounts Receivable Control Account GENERAL LEDGER ACCOUNT Accounts Receivable Date Item P. R. Mar. 1 Bal 3, 400 31 R 35 CR 14 13, 000 Debit Credit 9, 6007, 350 No. 12 Balance 5, 650 My. Music. Club. com Date Item 3/2 Accounts Receivable Subsidiary Ledger P. R. Debit Credit Balance R 35 2, 200 R 35 3, 000 2, 200 3/27 5, 200 Rap. Zone. com 3/28 CR 14 Date Item P. R. Debit Credit Balance 2, 2003, 000 3/6 R 35 1, 750 3/30 CR 14 Web Cantina 1, 750 -Date Item P. R. Bal. 3, 400 3/18 R 35 6, 050 Debit Credit Balance 3/1 2, 650
The purchases journal is designed for recording all purchases on account.
Journalizing in the Purchases Journal Date 2006 Page 11 PURCHASES JOURNAL Accts. Other Post Payable Supplies Accounts Post Account Credited Ref. Cr. Dr. Ref. Amount Mar. 3 Howard Supplies 600 On March 3, 2003, Net. Solutions purchased supplies from Howard Supplies, $600.
Posting the Purchases Journal Date Page 11 PURCHASES JOURNAL Accts. Other Post Payable Supplies Accounts Post Account Credited Ref. Cr. Dr. Ref. Amount 2006 Mar. 3 Howard Supplies 600 Accounts Payable Subsidiary Ledger Howard Supplies Date 2006 Item P. R. Dr. Cr. Balance Mar 3 the accounts payable 600 To keep subsidiary ledger current, this entry is posted on March 3.
Posting the Purchases Journal Date 2006 Page 11 PURCHASES JOURNAL Accts. Other Post Payable Supplies Accounts Post Account Credited Ref. Cr. Dr. Ref. Amount Mar. 3 Howard Supplies 600 Accounts Payable and Supplies will be posted as totals.
Journalizing in the Purchases Journal Date 2006 Page 11 PURCHASES JOURNAL Accts. Other Post Payable Supplies Accounts Post Account Credited Ref. Cr. Dr. Ref. Amount Mar. 3 Howard Supplies 7 Donnelly Supplies 600 420 On March 7, Net. Solutions purchased supplies from Donnelly Supplies, $420.
Journalizing in the Purchases Journal Date 2006 Page 11 PURCHASES JOURNAL Accts. Other Post Payable Supplies Accounts Post Account Credited Ref. Cr. Dr. Ref. Amount Mar. 3 Howard Supplies 7 Donnelly Supplies 600 420
Journalizing in the Purchases Journal Date 2006 Page 11 PURCHASES JOURNAL Accts. Other Post Payable Supplies Accounts Post Account Credited Ref. Cr. Dr. Ref. Amount Mar. 3 Howard Supplies 7 Donnelly Supplies 12 Jewett Bus. Sys. 600 420 2, 800 600 420 Off. Equip. Because On March there 12, isn’t Net. Solutions a special purchased column for office Office equipment Equipment from , this. Jewett purchase Business was recorded under Systems, “Other $2, 800. Accounts Dr. ” 2, 800
Journalizing in the Purchases Journal Date 2006 Mar. 3 7 12 19 27 Page 11 PURCHASES JOURNAL Accts. Other Post Payable Supplies Accounts Post Account Credited Ref. Cr. Dr. Ref. Amount Howard Supplies Donnelly Supplies Jewett Bus. Sys. Donnelly Supplies Howard Supplies 600 420 2, 800 1, 450 960 600 420 Off. Equip. 2, 800 1, 450 960 Now, let’s look at the rest of March’s entries (assume that all postings to the accounts payable subsidiary ledger have been made).
Totaling the Purchases Journal Page 11 PURCHASES JOURNAL Accts. Other Post Payable Supplies Accounts Post Account Credited Ref. Cr. Dr. Ref. Amount Date 2006 Mar. 3 7 12 19 27 31 Howard Supplies Donnelly Supplies Jewett Bus. Sys. Donnelly Supplies Howard Supplies 600 420 2, 800 1, 450 960 6, 230 600 420 Off. Equip. 1, 450 960 3, 430 2, 800 At the end of March, all columns are totaled $6, 230 = $3, 430 + $ 2, 800 and equality of debits and credits is verified.
Posting the Purchases Journal Date 2006 Mar. 3 7 12 19 27 31 Page 11 PURCHASES JOURNAL Accts. Other Post Payable Supplies Accounts Post Account Credited Ref. Cr. Dr. Ref. Amount Howard Supplies Donnelly Supplies Jewett Bus. Sys. Donnelly Supplies Howard Supplies 600 420 2, 800 1, 450 960 6, 230 600 420 Off. Equip. 1, 450 960 3, 430 The next step is to post to the general journal. 2, 800
Date 2006 Mar. 3 7 12 19 27 31 Page 11 PURCHASES JOURNAL Accts. Other Post Payable Supplies Accounts Post Account Credited Ref. Cr. Dr. Ref. Amount Howard Supplies Donnelly Supplies Jewett Bus. Sys. Donnelly Supplies Howard Supplies 600 420 2, 800 1, 450 960 6, 230 600 420 Off. Equip. 1, 450 960 3, 430 2, 800 GENERAL LEDGER ACCOUNT Accounts Payable Date Item P. R. Mar. 1 Bal 31 P 11 1, 230 Debit Credit 6, 230 2, 800 No. 21 Balance 7, 460
Date 2003 Mar. 3 7 12 19 27 31 Page 11 PURCHASES JOURNAL Accts. Other Post Payable Supplies Accounts Post Account Credited Ref. Cr. Dr. Ref. Amount Howard Supplies Donnelly Supplies Jewett Bus. Sys. Donnelly Supplies Howard Supplies 600 420 2, 800 1, 450 960 6, 230 (21) 600 420 Off. Equip. 1, 450 960 3, 430 2, 800 GENERAL LEDGER ACCOUNT Accounts Payable Date Item P. R. Mar. 1 Bal 31 P 11 1, 230 Debit Credit 6, 230 2, 800 No. 21 Balance 7, 460
Date 2003 Mar. 3 7 12 19 27 31 Page 11 PURCHASES JOURNAL Accts. Other Post Payable Supplies Accounts Post Account Credited Ref. Cr. Dr. Ref. Amount Howard Supplies Donnelly Supplies Jewett Bus. Sys. Donnelly Supplies Howard Supplies 600 420 2, 800 1, 450 960 6, 230 (21) 600 420 Off. Equip. 18 1, 450 960 3, 430 (14) Supplies is posted as a total of $3, 430 to general ledger account 21. Office Equipment is posted individually. 2, 800
Date 2006 Mar. 3 7 12 19 27 31 Page 11 PURCHASES JOURNAL Accts. Other Post Payable Supplies Accounts Post Account Credited Ref. Cr. Dr. Ref. Amount Howard Supplies Donnelly Supplies Jewett Bus. Sys. Donnelly Supplies Howard Supplies 600 420 2, 800 1, 450 960 6, 230 (21) 600 420 Off. Equip. 18 1, 450 960 3, 430 (14) Net. Solutions had only one entry in the “Other Accounts Dr. ” column. If there were others, they would be posted individually. Therefore, the total is not posted. A check mark indicates that the total was not posted. 2, 800 ( )
The Cash Payments Journal
All payments are recorded in the cash payments journal. Net. Solutions makes all payments by check.
Let’s make all of the cash payment journal entries for March.
CASH PAYMENTS JOURNAL Date 2006 Mar. 2 Ck. No. 150 Account Debited Rent Expense Other Accounts Post Accounts Payable Ref. Dr. 1, 600 On March 2, Net. Solutions paid the rent for March by issuing Check No. 150 for $1, 600. PAGE 7 Cash Cr 1, 600
CASH PAYMENTS JOURNAL Date 2006 Mar. 2 15 Ck. No. 150 151 Account Debited Rent Expense Grayco Supplies PAGE 7 Other Accounts Post Accounts Payable Ref. Dr. Cash Cr 1, 600 1, 230 On March 15, issued Check No. 151 to Grayco Supplies on account, $1, 230. 1, 600 1, 230
CASH PAYMENTS JOURNAL Date 2006 Mar. 2 15 Ck. No. 150 151 Account Debited Rent Expense Grayco Supplies PAGE 7 Other Accounts Post Accounts Payable Ref. Dr. 1, 600 1, 230 Cash Cr 1, 600 1, 230 Accounts Payable Subsidiary Ledger Grayco Supplies Let’s post to the accounts payable Date Item P. R. Dr. Cr. Balance subsidiary Mar. ledger at this time to keep 3 Bal. 15 CP 7 1, 230 --the creditor’s account current.
CASH PAYMENTS JOURNAL Date 2006 Mar. 2 15 21 Ck. No. 150 151 152 Account Debited PAGE 7 Other Accounts Post Accounts Payable Ref. Dr. Rent Expense Grayco Supplies Jewett Business Sys. 1, 600 1, 230 2, 800 On March 21, issued Check No. 152 as payment on account to Jewett Business Systems, $2, 800. Cash Cr 1, 600 1, 230 2, 800
CASH PAYMENTS JOURNAL Date 2006 Mar. 2 15 21 22 Ck. No. 150 151 152 153 Account Debited PAGE 7 Other Accounts Post Accounts Payable Ref. Dr. Rent Expense Grayco Supplies Jewett Business Sys. Donnelly Supplies. 1, 600 1, 230 2, 800 420 On March 22, issued Check No. 153 as payment on account to Donnelly Supplies, $420. Cash Cr 1, 600 1, 230 2, 800 420
CASH PAYMENTS JOURNAL Date 2006 Mar. 2 15 21 22 30 Ck. No. 150 151 152 153 154 Account Debited PAGE 7 Other Accounts Post Accounts Payable Ref. Dr. Rent Expense Grayco Supplies Jewett Business Sys. Donnelly Supplies. Utilities Expense Cash Cr 1, 600 1, 230 2, 800 420 1, 050 On March 30, issued Check No. 154 as payment for utility bill, $1, 050. 1, 600 1, 230 2, 800 420 1, 050
CASH PAYMENTS JOURNAL Date 2006 Mar. 2 15 21 22 30 31 Ck. No. 150 151 152 153 154 155 Account Debited PAGE 7 Other Accounts Post Accounts Payable Ref. Dr. Rent Expense Grayco Supplies Jewett Business Sys. Donnelly Supplies. Utilities Expense Howard Supplies 1, 600 1, 230 2, 800 420 1, 050 600 On March 31, issued Check No. 155 on account to Howard Supplies, $600 Cash Cr 1, 600 1, 230 2, 800 420 1, 050 600
CASH PAYMENTS JOURNAL Date 2006 Mar. 2 15 21 22 30 31 31 Ck. No. 150 151 152 153 154 155 Account Debited Rent Expense Grayco Supplies Jewett Business Sys. Donnelly Supplies. Utilities Expense Howard Supplies PAGE 7 Other Accounts Post Accounts Payable Ref. Dr. 1, 600 1, 230 2, 800 420 1, 050 2, 650 600 5, 050 The journal is ruled, summed, and verified for equality of debits and the “Cash Cr. ” column. Cash Cr 1, 600 1, 230 2, 800 420 1, 050 600 7, 700
CASH PAYMENTS JOURNAL Date 2006 Mar. 2 15 21 22 30 31 31 Ck. No. 150 151 152 153 154 155 Account Debited Rent Expense Grayco Supplies Jewett Business Sys. Donnelly Supplies. Utilities Expense Howard Supplies PAGE 7 Other Accounts Post Accounts Payable Ref. Dr. 52 54 1, 600 5, 050 1, 600 1, 230 2, 800 420 1, 050 600 7, 700 (21) (11) 1, 230 2, 800 420 1, 050 2, 650 ( ) Cash Cr Individual items in the “Other Accounts Dr. ” column are posted. Then the totals for “Accounts Payable Dr. ” and “Cash Cr. ” are posted.
Accounts Payable Control Accounts Payable
GENERAL LEDGER Accounts Payable (Controlling) ACCOUNT Accounts Payable Accounts Jewett Business Payable Systems Subsidiary also has a zero balance, so Ledger that account was omitted for space reasons. Date Item P. R. Debit Credit Mar. 1 Bal 1, 230 31 P 11 6, 230 7, 460 Donnelly Supplies 31 Date Item CP 7 P. R. Mar 2 19 22 No. 12 P 11 CP 7 5, 050 Credit Debit 420 1, 450 420 Balance 2, 410 Balance 420 1, 870 1, 450 Grayco Supplies Date Item P. R. Mar 1 Bal. 15 CP 7 Debit Credit Balance 1, 230 0 -- 1, 230 Howard Supplies Date Mar 3 27 31 Item P. R. P 11 CP 7 Debit Credit 600 960 600 Balance 600 1, 560 960
Advantages of a Computerized Accounting System Over a Manual Accounting System 1. Computerized systems simplify the recordkeeping process. 2. Computerized systems are generally more accurate. 3. Computerized systems provide management current account balance information to support decision making.
The Revenue and Collection Cycle in Quick. Books From Exhibit 10, page 203 of textbook Mail invoice to customer
The Revenue and Collection Cycle in Quick. Books Continued From Exhibit 10, page 203 of textbook
The Revenue and Collection Cycle in Quick. Books Continued From Exhibit 10, page 203 of textbook
Advanced Areas Where the Internet is Being Used for Business Purposes üSupply chain management (SCM) üCustomer relationship management (CRM) üProduct life-cycle management (PLM)
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