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1 5 Accounting Systems. 2 1. Define an accounting system and describe its implementation. 2. Journalize and post transactions in a manual accounting system.

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Presentation on theme: "1 5 Accounting Systems. 2 1. Define an accounting system and describe its implementation. 2. Journalize and post transactions in a manual accounting system."— Presentation transcript:

1 1 5 Accounting Systems

2 2 1. Define an accounting system and describe its implementation. 2. Journalize and post transactions in a manual accounting system that uses subsidiary ledgers and special journals. After studying this chapter, you should be able to:

3 3 3. Describe and give examples of additional subsidiary ledgers and modified special journals. 4. Apply computerized accounting to the revenue and collection cycle. 5. Describe the basic features of e-commerce. After studying this chapter, you should be able to:

4 4 Define an accounting system and describe its implementation. Objective 1 5-1

5 55 Accounting Systems Growth Process

6 6  Identify the needs of those who use the business’s financial information.  Determine how the system should provide this information. Step 1: Analysis Three Step Process as a Business Grows and Changes 5-1

7 7  The system is designed so that it meets the users’ needs. Step 2: Design  The system is implemented and used. Step 3: Implementation 5-1

8 8 Once a system has been implemented, feedback, or input from the users of the information can be used to analyze and improve the system. 5-1 Feedback

9 9 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. 5-1 Internal Controls

10 10 Processing methods are the means by which the system collects, summarizes, and reports accounting information. These methods may be either manual or computerized. 5-1 Processing Methods

11 11 Journalize and post transactions in a manual accounting system that uses subsidiary ledgers and special journals. Objective 2 5-2

12 12 A large number of individual accounts with a common characteristic can be grouped together in a separate ledger called a subsidiary ledger. 5-2

13 13 The primary ledger, which contains all of the balance sheet and income statement accounts, is called a general ledger. 5-2

14 14 Each subsidiary ledger is represented in the general ledger by a summarizing account, called a controlling account. 5-2

15 15 The individual customers’ accounts are arranged in alphabetical order in a subsidiary ledger called the accounts receivable subsidiary ledger or customers ledger. 5-2

16 16 The individual creditors’ accounts are arranged in alphabetical order in a subsidiary ledger called the accounts payable subsidiary ledger, or creditors ledger. 5-2

17 17 Cash11 Accts. Pay.21 General Ledger Accts. Rec.12 Supplies14 Accounts Receivable Subsidiary Ledger A BCD Customer Accounts Accounts Payable Subsidiary Ledger A BCD Creditor Accounts General Ledger and Subsidiary Ledgers 5-2

18 18 SELLING Providing services on account Revenue journal Revenue journal recorded in Receipt of cash from any source Cash receipts journal Cash receipts journal recorded in Special Journals 5-2

19 19 BUYING Purchase of items on account Purchases journal recorded in Payment of cash for any purpose Cash payments journal recorded in 5-2 Special Journals

20 20 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. Special Journals 5-2

21 21 The revenue journal is used for recording fees earned on account. Cash fees earned would be recorded in the cash receipts journal. 5-2

22 22 Posting the Revenue Journal Revenue Journal Invoice Post Accts. Rec. – Debit Date No. Account Debited Ref. Fees Earned – Credit Page RapZone Web Cantina Accessories by Sintha Mar. 2615Accessories by Sintha

23 23 Revenue Journal Invoice Post Accts. Rec. – Debit Date No. Account Debited Ref. Fees Earned – Credit Page RapZone Web Cantina Accessories by Claire Mar. 2615Accessories by Sintha Accounts Receivable Subsidiary Ledger Date Item P.R. Debit CreditBalance Accessories by Sintha Mar. 2R352,200,0002,200,

24 24 Revenue Journal Invoice Post Accts. Rec. – Debit Date No. Account Debited Ref. Fees Earned – Credit Page RapZone Web Cantina Accessories by Claire Mar. 2615Accessories by Sintha Accounts Receivable Subsidiary Ledger Date Item P.R. Debit CreditBalance Accessories by Sintha Mar. 2R352,200,0002,200,

25 25 Revenue Journal Invoice Post Accts. Rec. – Debit Date No. Account Debited Ref. Fees Earned – Credit Page RapZone Web Cantina Accessories by Sintha Mar. 2615Accessories by Sintha

26 26 Revenue Journal Invoice Post Accts. Rec. – Debit Date No. Account Debited Ref. Fees Earned – Credit Page RapZone Web Cantina Accessories by Sintha Mar. 2615Accessories by Sintha Exhibit 2 Revenue Journal

27 27 ACCOUNT Accounts Receivable Account No. 12 Balance Dr. Cr. Date Dr.Cr. Item Post. Ref Mar.1Balance R35 The debit total is posted from the revenue journal to Accounts Receivable in the general ledger. Revenue Journal, page

28 28 Revenue Journal Invoice Post Accts. Rec. – Debit Date No. Account Debited Ref. Fees Earned – Credit Page RapZone Web Cantina Accessories by Sintha Mar. 2615Accessories by Sintha (12) Indicates a debit posting of Rp9,600,000 to Accounts Receivable (General Ledger Account 12) 5-2

29 29 ACCOUNT Fees Earned Account No. 41 Balance Date Dr.Cr. Item Post. Ref Mar R35 The credit total is posted from the revenue journal to Fees Earned in the general ledger. Revenue Journal, page Dr. Cr.

30 30 Revenue Journal Invoice Post Accts. Rec. – Debit Date No. Account Debited Ref. Fees Earned – Credit Page RapZone Web Cantina Accessories by Sintha Mar. 2615Accessories by Sintha (12) Indicates a credit posting of Rp9,600,000 to Fees Earned (General Ledger Account 41) (41) 5-2

31 31 Example Exercise 5-1 The following revenue transactions occurred during December: 31 Record these transactions in a revenue journal as illustrated in Exhibit Dec. 5Invoice No. 302 to Budiman for services provided on account, Rp5,000,000. Dec. 9Invoice No. 303 to JoJo Enterprises for services provided on account, Rp2,100,000. Dec. 15Invoice No. 304 to Double D, Inc. for services provided on account, Rp3,250,000.

32 32 For Practice: PE 5-1A, PE 5-1B 32 Follow My Example Revenue Journal Invoice Post Accts. Rec. – Debit Date No. Account Debited Ref. Fees Earned – Credit Page JoJo Enterprises Double D Inc Dec. 5302Budiman

33 33 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. 5-2 Cash Receipts Journal

34 34 Mar. 1 Rent Revenue400, ,000 CASH RECEIPTS JOURNAL OtherAccounts PostAccounts ReceivableCash DateAccount Credited Ref.Cr.Cr.Dr. Page Web Cantina3,400,0003,400,000 28Accessories by Sintha2,200,0002,200, RapZone 1,750,0001,750,000 Date Item P.R. Debit CreditCr. Bal. ACCOUNT Rent Revenue Acct. No. 42 Mar. 1400,000400, GENERAL LEDGER 42 CR14 Cash Receipts Journal and Postings

35 35 Date Item P.R. Debit CreditBalance Web Cantina Mar. 1 Bal.3,400,000 18R352,650,0006,050, ,400,000 2,650, Mar. 1 Rent Revenue400, ,000 CASH RECEIPTS JOURNAL OtherAccounts PostAccounts ReceivableCash DateAccount Credited Ref.Cr.Cr.Dr. Page Web Cantina3,400,0003,400,000 28Accessories by Sintha2,200,0002,200, RapZone 1,750,0001,750,000 Accounts Receivable Subsidiary Ledger 42 CR14 5-2

36 36 After all journalizing and posting for the month to individual accounts is complete, the columns are totaled. 5-2

37 37 Mar. 1 Rent Revenue400, ,000 CASH RECEIPTS JOURNAL OtherAccounts PostAccounts ReceivableCash DateAccount Credited Ref.Cr.Cr.Dr. Page Web Cantina3,400,0003,400,000 28Accessories by Sintha2,200,0002,200, RapZone 1,750,0001,750, ,0007,350,0007,750,000 ( )(12)(11) Posted Cash Receipts Journal 5-2 A checkmark indicates that the items in this column are posted individually.

38 38 After posting, the total amount of the accounts in the accounts receivable subsidiary ledger should match the balance in the general ledger’s Accounts Receivable account. 5-2

39 39 Accounts Receivable—(Controlling) Balance, March 1, 2008 Rp3,400,000 Total debits (from revenue journal) 9,600,000 Total credits (from cash receipts journal) (7,350,000) Balance, March 31, 2008 Rp5,650,000 SolusiNet Customer Balance Summary Report, March 31, 2008 Accessories By Sintha Rp3,000,000 RapZone 0 Web Cantina 2,650,000 Total accounts receivable Rp5,650,

40 40 Example Exercise 5-2 The debits and credits from two transactions are presented in the following customer account: 40 Describe each transaction and the source of each posting. NAME Mitra Prima ADDRESS Jalan Raden Saleh No.94 July 1Bal. 625,000 7Inv. 35R ,000 31Inv. 31CR ,000 DateItemP.R. Dr.Cr.Balance 5-2

41 41 For Practice: PE 5-2A, PE 5-2B 41 Follow My Example 5-2 July 7Provided Rp86,000 services on account to Mitra Prima, itemized on invoice 35. Amount posted from page 12 of the revenue journal. July 31Cash of Rp122,000 was collected from Mitra Prima (invoice 31). Amount posted from page 4 of the cash receipts journal. 5-2

42 42 The purchases journal is designed for recording all purchases on account. 5-2

43 43 Accts.Other PostPayableSuppliesAccountsPost DateAccount CreditedRef.Cr.Dr.Dr.Ref.Amount PURCHASES JOURNAL Page 11 Journalizing in the Purchases Journal 2008 Mar. 3Toko Husin 600,000600,000 7Toko Desiana 420,000420,000 12Jujur 2,800,000Off. Equip.2,800 19Toko Desiana 1,450,0001,450,000 27Toko Husin 960,000960,000

44 44 Note that the March 12 purchase of office equipment for Rp2,800,000 is recorded as a debit in the “Other Accounts Dr.” column. Also note that the account title is written in for proper posting. 5-2

45 45 Accts.Other PostPayableSuppliesAccountsPost DateAccount CreditedRef.Cr.Dr.Dr.Ref.Amount PURCHASES JOURNAL Page Mar. 3Toko Husin600,000600,000 7Toko Desiana420,000420,000 12Jujur 2,800,000Off. Equip.2,800,000 19Toko Desiana 1,450,000 1,450,000 27Toko Husin960,000960,

46 46 Accts.Other PostPayableSuppliesAccountsPost DateAccount CreditedRef.Cr.Dr.Dr.Ref.Amount PURCHASES JOURNAL Page Mar. 3Toko Husin600,000600,000 7Toko Desiana420,000420,000 12Jujur 2,800,000Off. Equip.2,800,000 19Toko Desiana 1,450,000 1,450,000 27Toko Husin960,000960,000 Posting the Purchases Journal DateItemP.R. Dr.Cr.Balance Mar 3 600, , Accounts Payable Subsidiary Ledger Toko Husin 5-2 P11

47 47 Accts.Other PostPayableSuppliesAccountsPost DateAccount CreditedRef.Cr.Dr.Dr.Ref.Amount PURCHASES JOURNAL Page Mar. 3Toko Husin600,000600,000 7Toko Desiana420,000420,000 12Jujur 2,800,000Off. Equip.182,800,000 19Toko Desiana 1,450,000 1,450,000 27Toko Husin960,000960, Office Equipment (Account 18 in the general ledger) is debited for Rp2,800,000.

48 48 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 Rp2,800,000 total is not posted. 5-2

49 49 7Toko Desiana420,000420,000 12Jujur2,800,000Off. Equip.182,800,000 19Toko Desiana1,450,0001,450,000 27Toko Husin960,000960, ,230,0003,430,0002,800,000 ( ) ( )( ) Accts.Other PostPayable SuppliesAccountsPost DateAccount CreditedRef.Cr. Dr.Dr.Ref.Amount PURCHASES JOURNAL Page Mar. 3Toko Husin600,000600, ACCOUNT Accounts Payable No. 21 GENERAL LEDGER DateItemP.R. DebitCreditBalance Mar. 1Bal 1,230,000 6,230,0007,460,00031P

50 50 Accts.Other PostPayable SuppliesAccountsPost DateAccount CreditedRef.Cr. Dr.Dr.Ref.Amount 7Toko Desiana420,000420,000 12Jujur 2,800,000Off. Equip.182,800,000 19Toko Desiana 1,450,000 1,450,000 27Toko Husin960,000960, ,230,000 3,430,0002,800,000 ( ) ( )( ) PURCHASES JOURNAL Page Mar. 3Toko Husin600,000600, ACCOUNT Supplies No. 14 GENERAL LEDGER DateItemP.R. DebitCreditBalance Mar. 1Bal 2,500,000 3,430,0005,930,00031P

51 51 Example Exercise 5-3 The following purchase transactions occurred during October for Helping Hand Cleaners: Oct. 11Purchased cleaning supplies for Rp235,000, on account, from General Supplies. 19Purchased cleaning supplies for Rp110,000, on account, from Hutama Supplies. 24Purchased office equipment for Rp850,000, on account, from Office Warehouse. Record these transactions in a purchases journal as illustrated at the top of Exhibit

52 52 PURCHASES JOURNAL For Practice: PE 5-3A, PE 5-3B 52 Follow My Example Accts.Other PostPayableSuppliesAccountsPost DateAccount CreditedRef.Cr.Dr.Dr.Ref.Amount Oct. 11General Supplies235,000235,000 19Hutama Supplies110,000110,000 24Office Warehouse850,000Off. Equip.18850,000

53 53 All transactions involving a credit to Cash are recorded in the cash payments journal. 5-2 Cash Payments Journal

54 54 CASH PAYMENTS JOURNAL OtherAccounts Ck.PostAccounts PayableCash DateNo.Account DebitedRef.Dr.Dr.Cr PAGE Mar. 2150Rent Expense 1,600,0001,600,000 On March 2, issued Check 150 for rent of Rp1,600,000.

55 55 CASH PAYMENTS JOURNAL OtherAccounts Ck.PostAccounts PayableCash DateNo.Account DebitedRef.Dr.Dr.Cr PAGE Mar. 2150Rent Expense1,600,0001,600,000 On March 15, issued Check 151 to Guntur on account, Rp1,230, Guntur1,230,0001,230,

56 56 Let’s post to the accounts payable subsidiary ledger at this time to keep the creditors’ account current. 5-2

57 57 CASH PAYMENTS JOURNAL OtherAccounts Ck.PostAccounts PayableCash DateNo.Account DebitedRef.Dr.Dr.Cr PAGE Mar. 2150Rent Expense 1,600,0001,600, Guntur1,230,0001,230,000 Accounts Payable Subsidiary Ledger Grayco Supplies Mar. 3Bal. 1,230,000 DateItemP.R. Dr.Cr.Balance 1,230, CP7 

58 58 CASH PAYMENTS JOURNAL OtherAccounts Ck.PostAccounts PayableCash DateNo.Account DebitedRef.Dr.Dr.Cr PAGE Mar. 2150Rent Expense 1,600,0001,600, Guntur1,230,0001,230,000  21152Jujur.2,800,0002,800, Toko Desiana420,000420, Utilities Expense 1,050,0001,050, Toko Husin600,000600,000 Journalize the remainder of March’s cash disbursements. 5-2

59 59 21 CASH PAYMENTS JOURNAL OtherAccounts Ck.PostAccounts PayableCash DateNo.Account DebitedRef.Dr.Dr.Cr PAGE Mar. 2150Rent Expense1,6001, Grayco Supplies1,2301,230  21152Jewett Business Sys.2,8002, Donnelly Supplies Utilities Expense1,0501, Howard Supplies Journalized the remainder of March’s cash disbursements. 59 CASH PAYMENTS JOURNAL OtherAccounts Ck.PostAccounts PayableCash DateNo.Account DebitedRef.Dr.Dr.Cr PAGE Mar. 2150Rent Expense 1,600,0001,600, Guntur1,230,0001,230,000  21152Jujur2,800,0002,800, Toko Desiana420,000420, Utilities Expense 1,050,0001,050, Toko Husin600,000600,000 Post to individual creditor’s accounts.    5-2

60 60 CASH PAYMENTS JOURNAL OtherAccounts Ck.PostAccounts PayableCash DateNo.Account DebitedRef.Dr.Dr.Cr PAGE Mar. 2150Rent Expense1,6001, Grayco Supplies1,2301, Jewett Business Sys.2,8002, Donnelly Supplies Utilities Expense1,0501, Howard Supplies CASH PAYMENTS JOURNAL OtherAccounts Ck.PostAccounts PayableCash DateNo.Account DebitedRef.Dr.Dr.Cr PAGE Mar. 2150Rent Expense 1,600,0001,600, Guntur1,230,0001,230, Jujur2,800,0002,800, Toko Desiana420,000420, Utilities Expense 1,050,0001,050, Toko Husin 600,000600,000      The journal is ruled, summed, and verified for equality of debits and the “Cash Cr.” column. 31 2,650,0005,050,0007,700,

61 61 CASH PAYMENTS JOURNAL OtherAccounts Ck.PostAccounts PayableCash DateNo.Account DebitedRef.Dr.Dr.Cr PAGE Mar. 2150Rent Expense1,6001, Grayco Supplies1,2301, Jewett Business Sys.2,8002, Donnelly Supplies Utilities Expense1,0501, Howard Supplies CASH PAYMENTS JOURNAL OtherAccounts Ck.PostAccounts PayableCash DateNo.Account DebitedRef.Dr.Dr.Cr PAGE Mar. 2150Rent Expense 1,600,0001,600, Guntur1,230,0001,230, Jujur2,800,0002,800, Toko Desiana420,000420, Utilities Expense 1,050,0001,050, Toko Husin600,000600,000      31 2,650,0005,050,0007,700,000 Items in the “Other Accounts Dr.” column are posted. Then the totals for “Accounts Payable Dr.” and “Cash Cr.” are posted. (21)(11) ( )  

62 62 Accounts Payable Control and Subsidiary Ledger Accounts Payable— (Control) Balance, March 1, 2008 Rp1,230,000 Total credits (from purchases journal) 6,230,000 Total debits (from cash payments journal) (5,050,000) Balance, March 31, 2008 Rp2,410,000 SolusiNet Supplier Balance Summary Report March 31, 2008 Toko Desiana Rp1,450,000 Guntur 0 Toko Husin 960,000 Jujur 0 Total Rp2,410,

63 63 Example Exercise 5-4 The debits and credits from two transactions are presented in the following creditor’s (supplier’s) account: 63 Describe each transaction and the source of each posting. NAME Lusiana ADDRESS Jalan Palmerah Selatan No.10 Aug. 1Bal. 320,000 12Bill 101CP36 200, ,000 22Bill 106P16 140, ,000 DateItemP.R. Dr.Cr.Balance 5-2

64 64 For Practice: PE 5-4A, PE 5-4B 64 Follow My Example 5-4 Aug. 12Paid Rp200,000 to Lusiana on account (Bill 101). Amount posted from page CP36 of the cash payments journal. Aug. 22Purchased Rp140,000 of services on account from Lusiana itemized on Bill 106. Amount posted from page P16 of the purchases journal. 5-2

65 65 Describe and give examples of additional subsidiary ledgers and modified special journals. Objective 3 5-3

66 66 A business may modify its special journals by adding one or more columns for recording transactions that occur frequently. 5-3 Modified Special Journals

67 67 On November 2, SolusiNet issued Invoice No. 842 to Tulus Abadi for Rp4,770,000, which included sales taxes of Rp270,000.

68 Modified Revenue Journal Revenue Journal Page 40 Nov Tulus Abadi InvoiceAccts. Rec.Fees EarnedSales Tax. Pay DateNo. Account Debited

69 69 Revenue Journal InvoiceAccts. Rec.Fees EarnedSales Tax. Pay DateNo. Account Debited PRDr.Cr.Cr. Page 40 Nov Tulus Abadi Rp4,770,000 is debited to Tulus Abadi in the accounts payable subsidiary ledger

70 70 Revenue Journal Page 40 Nov Litten Co A checkmark indicates that the amount has been posted. InvoiceAccts. Rec.Fees EarnedSales Tax. Pay DateNo. Account Debited PRDr.Cr.Cr.

71 71 On November 3, issued Invoice No. 843 to Kumbang for Rp1,166,000, which included sales taxes of Rp66,

72 Revenue Journal Page 40 Nov Tulus Abadi Kumbang InvoiceAccts. Rec.Fees EarnedSales Tax. Pay DateNo. Account Debited PRDr.Cr.Cr.

73 73 Example Exercise 5-5 The state of Tennessee has a 7% sales tax. Sukmajaya, had two revenue transactions as follows: Aug. 3Issued Invoice No. 58 to Helena Company for services provided on account, Rp1,400,000, plus VAT 19Issued Invoice No. 59 to Kalam Enterprises for services provided on account, Rp900,000, plus VAT. Record these transactions in a revenue journal as illustrated in the previous section

74 74 For Practice: PE 5-5A, PE 5-5B 74 Follow My Example Revenue Journal Aug Helena Kalam InvoiceAccts. Rec.Fees EarnedSales Tax. Pay DateNo. Account Debited PRDr.Cr.Cr.

75 75 Apply computerized accounting to the revenue and collection cycle. Objective 4 5-4

76 76 A database collects, stores, and organizes information in a retrievable format. 5-4 Database

77

78 78 At any time, managers may request reports from the software. 1)The customer balance summary. 2)The fees earned by customer detail. 3)The cash receipts. 5-4

79 79 Describe the basic features of e-commerce. Objective 5 5-5

80 80 Using the Internet to perform business transactions is termed e-commerce. 5-5 e-Commerce

81 81 When transactions are between a company and a consumer, it is termed B2C (business-to- consumer) e-commerce. 5-5 B2C

82 82 Three more advanced areas where the Internet is being used for business purposes are:  Supply chain management (SCM)  Consumer relationship management (CRM)  Product life-cycle management (PLM) 5-5


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