5-1 1 accounting systems 5. 5-2 2 click to edit master title style click to edit master text styles...
TRANSCRIPT
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Accounting Systems
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1 Define and describe an accounting system.
2 Journalize and post transactions in a manual accounting system that uses subsidiary ledgers and special journals.
3 Describe and give examples of other subsidiary ledgers and modified special journals.
Accounting Systems
After studying this chapter, you should be able to:
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4 Describe and illustrate the use of a computerized accounting system.
5 Describe the basic features of e-commerce.
Accounting Systems (continued)
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Define and describe an accounting system.
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An accounting system is the methods and procedures for collecting, classifying, summarizing, and reporting a business’s financial and operating information.
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Accounting System
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As a business grows and changes, accounting systems also change in the following three-step process:• Step 1. Analyze user information
needs.• Step 2. Design the system to meet
the user needs.• Step 3. Implement the system.
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Accounting Systems Growth Process
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Once a system has been implemented, feedback, or input from the users of the information can be used to analyze and improve the system.
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Feedback
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Internal controls are policies and procedures that protect assets from misuse, ensure that business information is accurate, and ensure that laws and regulations are being followed.
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Internal Controls
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Processing methods are the means by which the system collects, summarizes, and reports accounting information. These methods may be either manual or computerized.
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Processing Methods
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Journalize and post transactions in a manual accounting system that uses subsidiary ledgers and special journals.
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A large number of individual accounts with a common characteristic can be grouped together in a separate ledger called a subsidiary ledger.
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Subsidiary Ledger
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The primary ledger, which contains all of the balance sheet and income statement accounts, is called a general ledger.
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General Ledger
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Each subsidiary ledger is represented in the general ledger by a summarizing account, called a controlling account.
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Controlling Account
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The individual customers’ accounts are arranged in alphabetical order in a subsidiary ledger called the accounts receivable subsidiary ledger or customers ledger.
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The individual creditors’ accounts are arranged in alphabetical order in a subsidiary ledger called the accounts payable subsidiary ledger, or creditors ledger.
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General Ledger and Subsidiary LedgersExhibit 1
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Each special journal is designed to be used for recording a single kind of transaction that occurs frequently.
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Special Journal
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SELLING
Providing services on account
Revenue JournalRevenue Journalrecorded in
Receipt of cash from any source
Cash Receipts JournalCash Receipts Journalrecorded in
Special Journals
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Purchase of items on account
Purchases JournalPurchases Journalrecorded in
Payment of cash for any purpose
Cash Payments JournalCash Payments Journalrecorded in
Special Journals
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BUYING
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The all-purpose two-column journal, called the general journal or simply the journal can be used for entries that do not fit into any of the special journals.
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General Journal
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The revenue journal is used for recording fees earned on account. Cash fees earned would be recorded in the cash receipts journal.
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Other Special Journals
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Revenue JournalExhibit 2
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Revenue Journal Postings to Ledger
Exhibit 3
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Revenue Journal Invoice Post Accts. Rec. – Debit Date No. Account Debited Ref. Fees Earned – Credit
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Exhibit 3 in Steps
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6 616 RapZone 1 7 5 0 00
18 617 Web Cantina 2 6 5 0 00
27 618 Accessories by Claire 3 0 0 0 00
2010
Mar. 2 615 Accessories by Claire 2 2 0 0 00
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Exhibit 3 in Steps
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Revenue Journal Page 35
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6 616 RapZone 1 7 5 0 00
18 617 Web Cantina 2 6 5 0 00
27 618 Accessories by Claire 3 0 0 0 00
2010
Mar. 2 615 Accessories by Claire 2 2 0 0 00
Date Item P.R. Debit Credit Balance
Mar. 2 R35 2,200 2,200
2010
Accounts Receivable Subsidiary Ledger
Accessories by Claire
Invoice Post Accts. Rec. – Debit Date No. Account Debited Ref. Fees Earned – Credit
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Exhibit 3 in Steps
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Revenue Journal Invoice Post Accts. Rec. – Debit Date No. Account Debited Ref. Fees Earned – Credit
Page 35
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Mar. 2 615 Accessories by Claire 2 2 0 0 00
6 616 RapZone 1 7 5 0 00
18 617 Web Cantina 2 6 5 0 00
27 618 Accessories by Claire 3 0 0 0 00
Date Item P.R. Debit Credit Balance
Mar. 2 R35 2,200 2,200
2010
Accounts Receivable Subsidiary Ledger
Accessories by Claire
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Revenue Journal Invoice Post Accts. Rec. – Debit Date No. Account Debited Ref. Fees Earned – Credit
Page 35
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6 616 RapZone 1 7 5 0 00
18 617 Web Cantina 2 6 5 0 00
27 618 Accessories by Claire 3 0 0 0 00
2010
Mar. 2 615 Accessories by Claire 2 2 0 0 00
Exhibit 3 in Steps
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Exhibit 3 in Steps
Revenue Journal Invoice Post Accts. Rec. – Debit Date No. Account Debited Ref. Fees Earned – Credit
Page 35
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6 616 RapZone 1 7 5 0 00
18 617 Web Cantina 2 6 5 0 00
27 618 Accessories by Claire 3 0 0 0 00
31 9 6 0 0 00
2010
Mar. 2 615 Accessories by Claire 2 2 0 0 00
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ACCOUNT Accounts Receivable Account No. 12
Balance
Dr. Cr.Date Dr. Cr.Item
Post. Ref.
2010Mar. 1 Balance 3 400 00
31 9 600 00 13 000 00 R35
The debit total is posted from the revenue journal to Accounts Receivable in the general ledger.
Revenue Journal, page 35
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Revenue Journal Invoice Post Accts. Rec. – Debit Date No. Account Debited Ref. Fees Earned – Credit
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6 (12)
Indicates a debit posting of $9,600 to Accounts Receivable (General Ledger Account 12)
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2010
Mar. 2 615 Accessories by Claire 2 2 0 0 00
6 616 RapZone 1 7 5 0 00
18 617 Web Cantina 2 6 5 0 00
27 618 Accessories by Claire 3 0 0 0 00
31 9 6 0 0 00
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ACCOUNT Fees Earned Account No. 41
Balance
Date Dr. Cr.ItemPost.
Ref.
2010
Mar. 31 9 600 00 R35
The credit total is posted from the revenue journal to Fees Earned in the general ledger.
Revenue Journal, page 35
9 600 00
Dr. Cr.
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Indicates a credit posting of $9,600 to Fees Earned (General Ledger Account 41)
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Revenue Journal Invoice Post Accts. Rec. – Debit Date No. Account Debited Ref. Fees Earned – Credit
Page 35
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2010
Mar. 2 615 Accessories by Claire 2 2 0 0 00
6 616 RapZone 1 7 5 0 00
18 617 Web Cantina 2 6 5 0 00
27 618 Accessories by Claire 3 0 0 0 00
31 9 6 0 0 00
(41)
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The following revenue transactions occurred during December:
Record these transactions in a revenue journal as illustrated in Exhibit 2 (Slide 23).
Dec. 5 Invoice No. 302 to Butler Company for services provided on account, $5,000.
Dec. 9 Invoice No. 303 to JoJo Enterprises for services provided on account, $2,100.
Dec. 15 Invoice No. 304 to Double D, Inc. for services provided on account, $3,250.
Example Exercise 5-12
Revenue Journal
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Revenue Journal Invoice Post Accts. Rec. – Debit Date No. Account Debited Ref. Fees Earned – Credit
Page
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9 303 JoJo Enterprises 2 1 0 0 00
15 304 Double D Inc. 3 2 5 0 00
Dec. 5 302 Butler Company 5 0 0 0 00
2Example Exercise 5-1 (continued)
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For Practice: PE 5-1A, PE 5-1B
Follow My Example 5-1
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All transactions that involve the receipt of cash are recorded in a cash receipts journal. Every entry recorded in the cash receipts journal will involve a debit to the “Cash Dr.” column.
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Cash Receipts Journal
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Cash Receipts Journal and Postings
Exhibit 4
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Mar. 1 Rent Revenue 400 400
CASH RECEIPTS JOURNAL
Other Accounts Post Accounts Receivable Cash
Date Account Credited Ref. Cr. Cr. Dr.
Page 14
2010
19 Web Cantina 3,400 3,400
28 Accessories by Claire 2,200 2,200
30 RapZone 1,750 1,750
Date Item P.R. Debit Credit Cr. Bal.
ACCOUNT Rent Revenue Acct. No. 42
GENERAL LEDGER
42
CR14
Exhibit 4 in Steps
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Mar. 12010
400
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Date Item P.R. Debit Credit Balance
Web Cantina
Mar. 1 Bal. 3,400
18 R35 2,650 6,050
2010
3,400 2,650
19
Mar. 1 Rent Revenue 400 400
CASH RECEIPTS JOURNAL
Other Accounts Post Accounts Receivable Cash
Date Account Credited Ref. Cr. Cr. Dr.
Page 14
2010
19 Web Cantina 3,400 3,400
28 Accessories by Claire 2,200 2,200
30 RapZone 1,750 1,750
Accounts Receivable Subsidiary Ledger
42
CR14
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After all journalizing and posting to individual accounts for the month is complete, the columns are totaled.
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Mar. 1 Rent Revenue 400 400
CASH RECEIPTS JOURNAL
Other Accounts Post Accounts Receivable Cash
Date Account Credited Ref. Cr. Cr. Dr.
Page 14
2010
19 Web Cantina 3,400 3,400
28 Accessories by Claire 2,200 2,200
30 RapZone 1,750 1,750
42
400 7,350 7,750( ) ( ) ( )
A checkmark indicates that items in this column are
posted individually.
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The total amount of the accounts in the accounts receivable subsidiary ledger should match the balance in the general ledger’s Accounts Receivable account.
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Accounts Receivable—(Controlling)
Balance, March 1, 2010 $3,400
Total debits (from revenue journal) 9,600
Total credits (from cash receipts journal) (7,350)
Balance, March 31, 2010 $5,650
NetSolutions’ Accounts Receivable Subsidiary LedgerCustomer Balance Summary Report, March 31, 2010
Accessories By Claire $3,000
RapZone 0
Web Cantina 2,650
Total accounts receivable $5,650
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Example Exercise 5-22
Accounts Receivable Subsidiary LedgerThe debits and credits from two transactions are presented in the following customer account:
Describe each transaction and the source of each posting.
NAME Sweet Tooth ConfectionsADDRESS 1212 Lombard St.
July 1 Bal. 6257 Inv. 35 R12 86 711
31 Inv. 31 CR4 122 589
Date Item P.R. Dr. Cr. Balance
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July 7 Provided $86 services on account to Sweet Tooth Confections, itemized on invoice 35. Amount posted from page 12 of the revenue journal.
31 Cash of $122 was collected from Sweet Tooth Confections (invoice 31). Amount posted from page 4 of the cash receipts journal.
Example Exercise 5-2 (continued)
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For Practice: PE 5-2A, PE 5-2B
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Follow My Example 5-2
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The purchases journal is designed for recording all purchases on account.
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Purchases Journal
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Purchases Journal and Postings
Exhibit 5
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Exhibit 5 in Steps
Accts. OtherPost Payable Supplies Accounts Post
Date Account Credited Ref. Cr. Dr. Dr. Ref. Amount
PURCHASES JOURNAL Page 11
2010
Mar. 3 Howard Supplies 600 600 7 Donnelly Supplies 420 420
12 Jewett Bus. Sys. 2,800 Off. Equip. 2,80019 Donnelly Supplies 1,450 1,45027 Howard Supplies 960 960
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2
PURCHASES JOURNAL Page 11
2010
Mar. 3 Howard Supplies 600 600 7 Donnelly Supplies 420 420
12 Jewett Bus. Sys. 2,800 Off. Equip. 2,80019 Donnelly Supplies 1,450 1,45027 Howard Supplies 960 960
Accts. OtherPost Payable Supplies Accounts Post
Date Account Credited Ref. Cr. Dr. Dr. Ref. Amount
Note that the March 12 purchase of office equipment for $2,800 is recorded as a debit in the “Other Accounts Dr.” column. Also note that the account title is written in for proper posting.
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PURCHASES JOURNAL Page 11
2010
Mar. 3 Howard Supplies 600 600 7 Donnelly Supplies 420 420
12 Jewett Bus. Sys. 2,800 Off. Equip. 2,80019 Donnelly Supplies 1,450 1,45027 Howard Supplies 960 960
Date Item P.R. Dr. Cr. Balance
Mar 3 600 6002010
Accounts Payable Subsidiary Ledger
Howard Supplies
P11
2
Accts. Other Post Payable Supplies AccountsPost
Date Account Credited Ref. Cr. Dr. Dr. Ref. Amount
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PURCHASES JOURNAL Page 11
2010
Mar. 3 Howard Supplies 600 600 7 Donnelly Supplies 420 420
12 Jewett Bus. Sys. 2,800 Off. Equip. 18 2,80019 Donnelly Supplies 1,450 1,45027 Howard Supplies 960 960
This posting reference indicates Office Equipment (Account 18) was debited in the general ledger for $2,800.
2
Accts. Other Post Payable Supplies AccountsPost
Date Account Credited Ref. Cr. Dr. Dr. Ref. Amount
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At the end of March, all columns are totaled and equality of debits and credits is verified. Then the total amount in the “Accounts Payable Cr.” and “Supplies Dr.” columns are posted. Because Office Equipment was posted earlier, the $2,800 total is not posted.
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7 Donnelly Supplies 420 420 12 Jewett Bus. Sys. 2,800 Off. Equip. 18 2,80019 Donnelly Supplies 1,450 1,45027 Howard Supplies 960 96031 6,230 3,430 2,800
( ) ( ) ( )
Accts. OtherPost Payable Supplies Accounts Post
Date Account Credited Ref. Cr. Dr. Dr. Ref. Amount
PURCHASES JOURNAL Page 11
2010
Mar. 3 Howard Supplies 600 600
21
ACCOUNT Accounts Payable No. 21
GENERAL LEDGER
Date Item P.R. Debit Credit Balance
Mar. 1 Bal 1,2306,230 7,46031 P11
2010
Supplies would be debited for $3,430 and
14 written in the parentheses.
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Example Exercise 5-32
Purchases Journal
The following purchase transactions occurred during October for Helping Hand Cleaners:
Oct. 11 Purchased cleaning supplies for $235, on account, from General Supplies.
19 Purchased cleaning supplies for $110, on account, from Hubble Supplies.
24 Purchased office equipment for $850, on account, from Office Warehouse.
Record these transactions in a purchases journal as illustrated at the top of Exhibit 5 (Slide 47).
5-54Click the button to go to Slide 47. To return to this slide type “54” and press “Enter.”
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Example Exercise 5-3 (continued) 2
PURCHASES JOURNAL
Accts. OtherPost Payable Supplies Accounts Post
Date Account Credited Ref. Cr. Dr. Dr. Ref. Amount
Oct. 11 General Supplies 235 235 19 Hubble Supplies 110 110 24 Office Warehouse 850 Off. Equip. 18 850
5-55
For Practice: PE 5-3A, PE 5-3B
Follow My Example 5-3
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All transactions involving a credit to Cash are recorded in the cash payments journal.
2
Cash Payments Journal
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2
Cash Payments Journal and Postings
Exhibit 6
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CASH PAYMENTS JOURNAL
Other AccountsCk. Post Accounts Payable Cash
Date No. Account Debited Ref. Dr. Dr. Cr
PAGE 7
2010Mar. 2 150 Rent Expense 1,600 1,600
On March 2, issued Check 150 for rent of $1,600.
Exhibit 6 in Steps
Left click button to skip “Exhibit 6 in Steps”
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The accounts listed in the “Other Accounts Dr.” column are posted on a regular basis. Rent Expense is posted to account number 52.
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CASH PAYMENTS JOURNAL
Other AccountsCk. Post Accounts Payable Cash
Date No. Account Debited Ref. Dr. Dr. Cr
PAGE 7
2010Mar. 2 150 Rent Expense 1,600 1,600
General Ledger
Account Rent Expense
Mar. 2 1,600 1,600
Date Item P.R. Dr. Cr. Balance2010
Account No. 52
52
2
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15 151 Grayco Supplies 1,230 1,230
2
CASH PAYMENTS JOURNAL PAGE 7
Other AccountsCk. Post Accounts Payable Cash
Date No. Account Debited Ref. Dr. Dr. Cr
2010Mar. 2 150 Rent Expense 1,600 1,600
On March 15, issued Check 151 to Grayco Supplies on account, $1,230.
52
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Let’s post to the accounts payable subsidiary ledger at this time to keep the creditors’ account current.
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CASH PAYMENTS JOURNAL
Other AccountsCk. Post Accounts Payable Cash
Date No. Account Debited Ref. Dr. Dr. Cr
PAGE 7
2010Mar. 2 150 Rent Expense 1,600 1,600
15 151 Grayco Supplies 1,230 1,230
Accounts Payable Subsidiary Ledger
Grayco Supplies
Mar. 3 Bal. 1,230
Date Item P.R. Dr. Cr. Balance
1,230 --- 15 CP7
2010
52
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Now, let’s journalize the remainder of March’s cash disbursements. Following that, let’s post to the individual creditors’ accounts.
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CASH PAYMENTS JOURNAL
Other AccountsCk. Post Accounts Payable Cash
Date No. Account Debited Ref. Dr. Dr. Cr
PAGE 7
2010Mar. 2 150 Rent Expense 1,600 1,600
15 151 Grayco Supplies 1,230 1,23021 152 Jewett Business Sys. 2,800 2,80022 153 Donnelly Supplies 420 42030 154 Utilities Expense 1,050 1,05031 155 Howard Supplies 600 600
52
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CASH PAYMENTS JOURNAL
Other AccountsCk. Post Accounts Payable Cash
Date No. Account Debited Ref. Dr. Dr. Cr
PAGE 7
2010Mar. 2 150 Rent Expense 1,600 1,600
15 151 Grayco Supplies 1,230 1,23052
54
2
21 152 Jewett Business Sys. 2,800 2,80022 153 Donnelly Supplies 420 42030 154 Utilities Expense 1,050 1,05031 155 Howard Supplies 600 600
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The journal is ruled, summed, and verified for equality of debits and the “Cash Cr.” column.
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CASH PAYMENTS JOURNAL
Other AccountsCk. Post Accounts Payable Cash
Date No. Account Debited Ref. Dr. Dr. Cr
PAGE 7
2008Mar. 2 150 Rent Expense 1,600 1,600
15 151 Grayco Supplies 1,230 1,23021 152 Jewett Business Sys. 2,800 2,80022 153 Donnelly Supplies 420 42030 154 Utilities Expense 1,050 1,05031 155 Howard Supplies 600 600
CASH PAYMENTS JOURNAL
Other AccountsCk. Post Accounts Payable Cash
Date No. Account Debited Ref. Dr. Dr. Cr
PAGE 7
2010Mar. 2 150 Rent Expense 1,600 1,600
15 151 Grayco Supplies 1,230 1,230
31 2,650 5,050 7,700
52
54
2
21 152 Jewett Business Sys. 2,800 2,80022 153 Donnelly Supplies 420 42030 154 Utilities Expense 1,050 1,05031 155 Howard Supplies 600 600
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CASH PAYMENTS JOURNAL
Other AccountsCk. Post Accounts Payable Cash
Date No. Account Debited Ref. Dr. Dr. Cr
PAGE 7
2008Mar. 2 150 Rent Expense 1,600 1,600
15 151 Grayco Supplies 1,230 1,23021 152 Jewett Business Sys. 2,800 2,80022 153 Donnelly Supplies 420 42030 154 Utilities Expense 1,050 1,05031 155 Howard Supplies 600 600
CASH PAYMENTS JOURNAL
Other AccountsCk. Post Accounts Payable Cash
Date No. Account Debited Ref. Dr. Dr. Cr
PAGE 7
2010Mar. 2 150 Rent Expense 1,600 1,600
15 151 Grayco Supplies 1,230 1,23021 152 Jewett Business Sys. 2,800 2,80022 153 Donnelly Supplies 420 42030 154 Utilities Expense 1,050 1,05031 155 Howard Supplies 600 600
31 2,650 5,050 7,700
52
54
(21) (11)( )
2
The totals for “Accounts Payable Dr.” and “Cash Cr.” are posted.
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Accounts Payable (Control)
Balance, March 1, 2010 $1,230Total credits (from purchases journal) 6,230Total debits (from cash payments journal) (5,050)Balance, March 31, 2010 $2,410
NetSolutionsSupplier Balance Summary Report
March 31, 2010
Donnelly Supplies $1,450Grayco Supplies 0Howard Supplies 960Jewett Business Systems 0Total $2,410
Accounts Payable Control Account and Subsidiary Ledger
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Example Exercise 5-42
Accounts Payable Subsidiary Ledger
The debits and credits from two transactions are presented in the following creditor’s (supplier’s) account:
Describe each transaction and the source of each posting.
NAME Lassiter Services, Inc.
ADDRESS 301 St. Bonaventure Ave.
Aug. 1 Bal. 32012 Inv. 101 CP36 200 12022 Inv. 106 P16 140 260
Date Item P.R. Dr. Cr. Balance
5-71
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Example Exercise 5-4 (continued) 2
Aug. 12 Paid $200 to Lassiter Services, Inc. on account (Inv. 101). Amount posted from page 36 of the cash payments journal.
22 Purchased $140 of services on account from Lassiter Services, Inc. itemized on Invoice 106. Amount posted from page 16 of the purchases journal.
5-72
For Practice: PE 5-4A, PE 5-4B
Follow My Example 5-4
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Describe and give examples of other subsidiary ledgers and modified special journals.
3
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A business may modify its special journals by adding one or more columns for recording transactions that occur frequently.
3
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Nov. 2 NetSolutions issued Invoice No. 842 to Litten Company for $4,770, which included sales taxes of $270.
3 Issued Invoice No. 843 to Kauffman Supply Company for $1,166, which included sales taxes of $66.
3
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Modified Special Journal
3
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The state of Tennessee has a 7% sales tax. Volunteer Services, Inc., a Tennessee company, had two revenue transactions as follows:Aug. 3 Issued Invoice No. 58 to Helena Company for
services provided on account, $1,400, plus sales tax.
19 Issued Invoice No. 59 to K-Jam Enterprises forservices provided on account, $900, plus sales tax.
Record these transactions in a revenue journal as illustrated in the previous slides.
Example Exercise 5-53
Modified Revenue Journal
5-77
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Example Exercise 5-5 (continued) 3
Revenue Journal
Aug. 3 58 Helena Company 1 498 00 1 400 00 98 00
19 59 K-Jam Enterprises 963 00 900 00 63 00
Invoice Accts. Rec. Fees Earned Sales Tax. PayDate No. Account Debited PR Dr. Cr. Cr.
5-78
For Practice: PE 5-5A, PE 5-5B
Follow My Example 5-5
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Describe and illustrate the use of a computerized accounting system.
4
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Computerized Accounting System
1. Computerized systems simplify the record-keeping process in that transactions are recorded in electronic forms and, at the same time, posted electronically to general and subsidiary ledger accounts.
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2. Computerized systems are generally more accurate than manual systems.
3. Computerized systems provide management with current account balance information to support decision making, since account balances are posted as the transactions occur.
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Exhibit 7 Revenue and Cash Receipts in QuickBooks©
(continued)
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4
Exhibit 7Revenue and Cash Receipts in QuickBooks© (continued)
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Describe the basic features of e-commerce.
5
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Using the Internet to perform business transactions is termed e-commerce.
5
e-Commerce
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When transactions are between a company and a consumer, it is termed B2C (business-to-consumer) e-commerce.
5
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Three more advanced areas where the Internet is being used for business purposes are:1. Supply chain management (SCM)
2. Consumer relationship management (CRM)
3. Product life-cycle management (PLM)
5
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