ACCOUNTING SYSTEMS refining the journalizing process.

ACCOUNTING SYSTEMS

refining the journalizing process

Copyright © 1999, 2002, 2008 by M. Ray Gregg.

All Rights Reserved. 2

Chapter 1

Chapter 2

A = L + OE

+ +

900

Accounts Receivable Date Account Title Ref Debit Credit

900

Service Revenue

14



Time Saving Devices

Specialized JournalsSubsidiary Ledgers



Problems of HavingOnly One Journal

1. Only one person can work at a time

2. Book becomes VERY largeSolution

Specialized Journals




• Save a little time journalizing• Save a LOT of time posting



Problems of HavingOnly One Ledger

1. Only one person can work at a time

2. Book becomes VERY largeSolution

Subsidiary Ledgers



General Ledger



General Ledger

Drs.

Crs.



General Ledger



General Ledger Accounts ReceivableSubsidiary Ledger




ControlAccount



General Ledger DetailsSummary

Info.



General Ledger Details

Must Postto BOTH!




=



Subsidiary Ledgers

Accounts Receivable Accounts Payable




Purchases(multi-column)

ANY purchase on account

Journal Characteristics




Purchases(single column)

Sales

Cash Receipts

Cash Payments

General Journal

Purchase of MERCHANDISE on account

Sale of MERCHANDISE on account

ANY collection of cash

ANY cash disbursement

Anything that will not fit someplace else!




Think About Design




Mdse Inv.Dr.

Accts. Pay.Cr.

X X

XX XXXXX XXX



Think About Design




Purchases Journal P1Mdse Inv Dr.Accts Pay Cr.

XXXXXX



Think About Design

Sales Sale of MERCHANDISE on account




Think About Design

Cash Receipts ANY collection of cash





Cash Payments ANY cash disbursement




Caution!

Please continue to THINK in “two column” or “General Journal” format.

We will ALWAYS record our entries in “General Journal” format.

Caution



Caution!

SUGGESTIONS

1. On scratch paper (or at least in your head), decide what entry to make in “General Journal” form …

2. Select the appropriate special journal ...

THEN

3. Place the entries in the appropriate columns where the entry can be recorded most efficiently.



On May 14, purchased merchandise from Fabor and Son, 1/10,n/30, $6,900.

Sample Transaction

Date Account Title Ref Debit Credit

Merchandise Inventory 6,900

6,900Accounts Payable

14

PURCHASES JOURNAL

See Text Page 290, May 14



Purchases Journal P1

Date Account Credited Terms Ref

Fabor & Son14

Mdse Inv Dr.Accts Pay Cr.

1/10,n/30 6,900

PURCHASES JOURNAL






Fabor & Son14


1/10,n/30 6,900

PURCHASES JOURNAL

See Text 6, May 14

Note!(Important for HW)





Fabor & Son14


1/10,n/30 6,900

On May 14, purchased merchandise from Fabor and Son, 1/10,n/30, $6,900.

Comparison


Merchandise Inventory 6,900

6,900Accounts Payable

14



Sample TransactionReceived credit memo from Fabor & Son for merchandise returned, $???.


Merchandise Inventory

???Accts Payable - Fabor

???

GENERAL JOURNAL

Similar to Text Page 311



GENERAL JOURNAL

Similar to Text Page 311General Journal P1

Date Account Credited Ref

Accts Pay - Fabor & Son

Debit

???Merchandise Inventory

Credit

???



ComparisonReceived credit memo from Fabor & Son for merchandise returned, $???. Date Account Title Ref Debit Credit


???Accounts Payable

???

General Journal P1



Debit

???Merchandise Inventory

Credit

???



On May 23, paid Fabor and Son the amount due on the May 14 invoice.(Note: in the text example, the credit memo related to a different transaction.)

Sample Transaction

CASH PAYMENTS JOURNALSee Text Page 308, May 23

69



6,900Accts Pay - Fabor & Son

Cash 6,831

23



CASH PAYMENTS JOURNAL

See Text Page 308, May 23Cash Payments Journal CP1

Date Account Debited Ref

Fabor & Son

CashCr.

6,83123 106

Ck.No.

Other

Accounts

Dr.

AccountsPayable

Dr.

MdseInventory

Cr.

696,900



CASH PAYMENTS JOURNAL

See Text Page 308, May 23Cash Payments Journal CP1


Fabor & Son

CashCr.

6,83123 106

Ck.No.

Other

Accounts

Dr.

AccountsPayable

Dr.

MdseInventory

Cr.

696,900




Cash Payments Journal CP1


Fabor & Son

CashCr.

6,83123 106

Ck.No.

Other

Accounts

Dr.

AccountsPayable

Dr.

MdseInventory

Cr.

696,900

On May 23, paid Fabor and Son the amount due on the May 14 invoice.(Note: in the text example, the credit memo related to a different transaction.)

Comparison



6,900

69


Cash 6,831

23



On May 3, sold merchandise to Abbot Sisters, terms 2/10,n/30, $10,600.

Sample Transaction

SALES JOURNAL



Accounts Receivable 10,600

10,600Sales

5/3

Cost of Goods Sold


6,360

6,360

3



SALES JOURNAL

See Text Page 299, May 3Sales Journal S1


Abbot Sisters

COGS Dr.Mdse Inv Cr.

6,3605/3

InvoiceNo.

Accts Rec Dr.Sales Cr.

10,600



SALES JOURNAL

See Text Page 299, May 3Sales Journal S1


Abbot Sisters


6,3605/3

InvoiceNo.


10,600

Note!(important for HW)



Comparison

Sales Journal S1


Abbot Sisters


6,3605/3

InvoiceNo.


10,600

Accounts Receivable 10,600

10,600Sales


Cost of Goods Sold


6,360

6,360

5/3

3 Cost of Goods Sold 6,360 Merchandise Inventory 6,360



On May 10, received balance due from Abbot Sisters.

Sample Transaction

CASH RECEIPTS JOURNAL



Sales Discount

10,388

212

Cash

Accts Rec -- Abbot 10,600




See Text Page 303, May 10Cash Receipts Journal CR1


Abbot Sisters

OtherAccounts

Cr.

21210

CashDr.

10,388

SalesDiscounts

Dr.SalesCr.

AcctsRecvble

Cr.

10,600



Cash Receipts Journal CR1


Abbot Sisters

OtherAccounts

Cr.

21210

CashDr.

10,388

SalesDiscounts

Dr.SalesCr.

AcctsRecvble

Cr.

10,600

On May 10, received balance due from Abbot Sisters.

Comparison


Sales Discount

10,388

212

Cash

Accts Rec -- Abbot 10,600Sales Discount 212



1. Foot (sum the columns).

Posting from Multi-Column Journals




2. Cross-foot (prove the equality of debits and credits).





2. Cross-foot (prove the equality of debits and credits.


3. Post column TOTALS (to General Ledger).

Rule: Post columntotals ONLY!







Anyexceptions?







Yes.Two.




2. Cross-foot (prove the equality of debits and credits).



4. Post individual entries from “other” column (to General Ledger).

5. Post individual entries from “A/R” and “A/P” columns (to subsidisary ledgers).






Abbot Sisters

OtherAccounts

Cr.

21210

CashDr.

10,388

SalesDiscounts

Dr.SalesCr.

AcctsRecvble

Cr.

10,600

5/1 Karns,Capital 5,000 5,000

7 Cash Sales 1,900 1,900

12 Cash Sales 2,600 2,600

Babson Co. 22717 11,123 11,350 22 Notes Payable 6,000 6,000

43937,011 21,950 4,500 11,000



.




Abbot Sisters

OtherAccounts

Cr.

21210

CashDr.

10,388

SalesDiscounts

Dr.SalesCr.

AcctsRecvble

Cr.

10,600


7 Cash Sales 1,900 1,900

12 Cash Sales 2,600 2,600


43937,011 21,950 4,500 11,000

Drs.

Crs.






Abbot Sisters

OtherAccounts

Cr.

21210

CashDr.

10,388

SalesDiscounts

Dr.SalesCr.

AcctsRecvble

Cr.

10,600


7 Cash Sales 1,900 1,900

12 Cash Sales 2,600 2,600


43937,011 21,950 4,500 11,000

(1)







Abbot Sisters

OtherAccounts

Cr.

21210

CashDr.

10,388

SalesDiscounts

Dr.SalesCr.

AcctsRecvble

Cr.

10,600


7 Cash Sales 1,900 1,900

12 Cash Sales 2,600 2,600


43937,011 21,950 4,500 11,000

(61)(1)




Abbot Sisters 10,600



Date Account Credited RefOther

Accounts Cr.

21210

CashDr.

10,388

SalesDiscounts

Dr.SalesCr.

AcctsRecvble

Cr.


7 Cash Sales 1,900 1,900

12 Cash Sales 2,600 2,600


43937,011 21,950 4,500 11,000

(61)(1)

Anyexceptions?







Accounts Cr.

21210

CashDr.

10,388

SalesDiscounts

Dr.SalesCr.

AcctsRecvble

Cr.


7 Cash Sales 1,900 1,900

12 Cash Sales 2,600 2,600


43937,011 21,950 4,500 11,000

(61)(1)

To A/RSubsidiary

Ledger



General Ledger Details

Must Postto BOTH!







Accounts Cr.

21210

CashDr.

10,388

SalesDiscounts

Dr.SalesCr.

AcctsRecvble

Cr.


7 Cash Sales 1,900 1,900

12 Cash Sales 2,600 2,600


43937,011 21,950 4,500 11,000

(61)(1) (4)

To A/RCONTROLAccountin G/L






Abbot Sisters

OtherAccounts

Cr.

21210

CashDr.

10,388

SalesDiscounts

Dr.SalesCr.

AcctsRecvble

Cr.

10,600


7 Cash Sales 1,900 1,900

12 Cash Sales 2,600 2,600


43937,011 21,950 4,500 11,000

(61)(1) (4) (60) (x)



…and have agood week

in accounting!

ACCOUNTING SYSTEMS refining the journalizing process.

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Transcript of ACCOUNTING SYSTEMS refining the journalizing process.