1. CENTURY 21 ACCOUNTING © Thomson/South-Western 1 LESSON 5-1 PART II: ACCOUNTING ADJUSTMENTS AND VALUATION Overview: Intro to accounting procedures and their importance to management Procedures to control/protect assets: Vouchers and inventory planning and valuation Chapter 5: Voucher systems Chapter 6: Inventory management

2. CENTURY 21 ACCOUNTING © Thomson/South-Western 2 LESSON 5-1 OfficeMart: sells office furniture and supplies Chart of Accounts, pg 141 Merchandising business organized as corporation Similarities: Assets Liabilities Equity Revenue Cost of merchandise Expenses Differences: Not departmentalized Used voucher system for cash payments Stockholder’s equity section  only one income summary account Operating expenses  divided into selling and administrative expenses Admin exp  do not clearly relate to sales effort

3. CENTURY 21 ACCOUNTING © Thomson/South-Western 3 LESSON 5-1 CHAPTER 5: A VOUCHER SYSTEM Objectives: Define accounting terms related to a voucher system Identify accounting concepts and practices related to a voucher system Prepare a voucher Journalize data from vouchers in a voucher register Journalize voucher payment transactions in a check register Journalize purchases returns and allowances and payroll transactions in a voucher system

4. CENTURY 21 ACCOUNTING © Thomson/South-Western LESSON 5-1 Vouchers and Voucher Registers

5. CENTURY 21 ACCOUNTING © Thomson/South-Western 5 LESSON 5-1 Accounting systems MUST include Procedures for: Recording and reporting accurate and up to date financial info To assist mgmt in controlling company’s daily operations Procedures and records to control and protect assets  CASH! Voucher: business form used to show an authorized person’s approval for cash pymt Voucher system: set of procedures for controlling cash pymts by preparing and approving vouchers before pymts are made NO check can be issued w/out proper authorized voucher

6. CENTURY 21 ACCOUNTING © Thomson/South-Western 6 LESSON 5-1 VERIFYING AN INVOICE page 145 1.Stamp 2.Quantities 3.Items and prices 4.Calculations 5.Initials

7. CENTURY 21 ACCOUNTING © Thomson/South-Western 7 LESSON 5-1 A VOUCHER – source doc for cash payment August 1. Purchased merchandise on account from O’Riley Company, $3,500.00. Voucher No. 647. Purchases 3,500.00 Voucher’s Payable 3,500.00 page 145 *Prepared for each invoice received *Vouchers payable  liability  replaces Accounts Payable *Unpaid vouchers  kept in unpaid vouchers file

8. CENTURY 21 ACCOUNTING © Thomson/South-Western 8 LESSON 5-1 PREPARING A VOUCHER FROM AN INVOICE page 146 Section 1—Payee Information Section 2—Accounts Affected Section 3—Voucher Approval Section 4—Information about where the voucher is recorded Section 5—Information about the payment of the voucher

9. CENTURY 21 ACCOUNTING © Thomson/South-Western 9 LESSON 5-1 PREPARING A VOUCHER FROM AN INVOICE A form is printed on outside of voucher to summarize contents and provide space for approving pymts Voucher is folded so related docs can be placed inside AKA voucher jacket Section 1: Calculate due date using invoice Write check AT LEAST 2 days prior Record voucher number on invoice’s verification stamp

10. CENTURY 21 ACCOUNTING © Thomson/South-Western 10 LESSON 5-1 PREPARING A VOUCHER FROM AN INVOICE Section 2: Accounts Affected Purchases, cost account  DR Vouchers Payable, liability account  CR Lists pre-printed account titles for accounts most often affected by cash pymts Enter amount of invoice in Amount columns for DR and CR Calculate total DR and CR

11. CENTURY 21 ACCOUNTING © Thomson/South-Western 11 LESSON 5-1 PREPARING A VOUCHER FROM AN INVOICE Section 3: Voucher Approval Double check  authorize people to approve voucher before it is journalized Sign name in section 3

12. CENTURY 21 ACCOUNTING © Thomson/South-Western 12 LESSON 5-1 1.Write date. 2.Record payee. 3.Write voucher number. 5.Record debit amount. 4.Enter credit amount. VOUCHER REGISTER – journal used to record vouchers (pre-numbered) pages 147 and 148 12354 August 1. Purchased merchandise on account from O’Riley Company, $3,500.00. Voucher No. 647. Special Columns: Vouchers Payable CR Purchases DR Supplies – Sales DR Supplies – Administrative DR General DR / CR

13. CENTURY 21 ACCOUNTING © Thomson/South-Western 13 LESSON 5-1 5.Record debit amount and write the title of the account to be debited. 4.Enter credit amount. VOUCHER REGISTER – General columns page 147 and 148 1234 August 2. Received invoice for sales miscellaneous expense from Glenhill Company, $40.00. Voucher No. 648. 1.Write date. 2.Record payee. 3.Write voucher number. 5

14. CENTURY 21 ACCOUNTING © Thomson/South-Western 14 LESSON 5-1 PREPARING A VOUCHER FROM AN INVOICE Section 4: Where Voucher is Recorded Person who records voucher completes section 4 Makes notation indicating voucher register page Initials space provided on voucher Easy reference to entry’s location in voucher register After journalized and notated  voucher is placed in unpaid voucher file according to pymt date Make it easy to determine date to be paid

15. CENTURY 21 ACCOUNTING © Thomson/South-Western 15 LESSON 5-1 Proving, Ruling, and Posting Separate amounts recorded in General DR/CR  posted individually often End of month  prove and rule Special amount columns

16. CENTURY 21 ACCOUNTING © Thomson/South-Western 16 LESSON 5-1 TERMS REVIEW voucher voucher system voucher register TO DO: Audit, pg 149 Work Together, 149 On your own, 149 App 5-1, pg 161 READ Chapter 5 page 149

17. CENTURY 21 ACCOUNTING © Thomson/South-Western 17 LESSON 5-1 LESSON 5-2: Voucher Check and Check Registers Voucher Check: check with space for writing details about cash pymts (amount less discount) Prepared in duplicate: Original  payee Copy  OfficeMart – source doc

18. CENTURY 21 ACCOUNTING © Thomson/South-Western 18 LESSON 5-1 6.Prepare check to payee for net amount of invoice. 3.Enter amount of invoice. 4.Enter amount of discount. 5.Enter net amount. 1.Enter voucher number. 2.Enter payee’s invoice number. PREPARING A VOUCHER CHECK: On August 8  take out vouchers to be paid on that date page 150 6 1 2 4 5 3

19. CENTURY 21 ACCOUNTING © Thomson/South-Western 19 LESSON 5-1 Section 5: Payment of Voucher Person who prepares check completes section 5 Date paid Check number Amount Manager verifies, signs check, and initializes Record info in voucher register: Write Date paid and check number in Paid column Same line as original entry Place voucher in paid vouchers file

20. CENTURY 21 ACCOUNTING © Thomson/South-Western 20 LESSON 5-1 JOURNALIZING CASH PAYMENTS Check register: journal used in voucher system to record cash pymts (replace cash pymt journal) Two bank columns: Bank Deposits/Bank Balance Journalizing Checks: Prepare voucher for each approved cash pymt Record in chronological order 3 General ledger accounts:

21. CENTURY 21 ACCOUNTING © Thomson/South-Western 21 LESSON 5-1 6.Write credit amount(s). 3.Write check number. 4.Record voucher number. 5.Enter debit amount. 1.Write date. 2.Record payee. 7.Calculate and record new balance. JOURNALIZING CASH PAYMENTS page 151 12 3 4567

22. CENTURY 21 ACCOUNTING © Thomson/South-Western 22 LESSON 5-1 PROVING, RULING, AND POSTING A CHECK REGISTER page 152 End of month  total special amount columns and post No separate amounts to be posted individually Write account number in parentheses Do not total or rule bank columns Prove cash by comparing Balance column w/General Ledger Cash

23. CENTURY 21 ACCOUNTING © Thomson/South-Western 23 LESSON 5-1 STARTING A NEW PAGE OF A CHECK REGISTER page 152 Totals of Special columns to be brought forward No Bank Deposit Balance is brought forward

24. CENTURY 21 ACCOUNTING © Thomson/South-Western 24 LESSON 5-1 TERMS REVIEW voucher check check register TO DO: Audit, 153 Work Together, 153 On your own, 154 App 5-2, pg 161 page 153

25. CENTURY 21 ACCOUNTING © Thomson/South-Western LESSON 5-3 Selected Transactions in a Voucher System

26. CENTURY 21 ACCOUNTING © Thomson/South-Western 26 LESSON 5-1 PURCHASES RETURNS AND ALLOWANCES page 155 August 12. Issued Debit Memorandum No. 98 to Ramsey, Inc. for return of merchandise purchased, $85.00. Cancel Voucher No. 652 ($180.00). Voucher No. 655. 1.Cancel the original voucher. Write Canceled in Section 5 2.Prepare a new voucher. Place canceled voucher and DM inside 3.In the voucher register, reference the new voucher number. See Vchr.655 4.Record the new voucher. 5.File the new voucher by its payment date in the unpaid vouchers file.

27. CENTURY 21 ACCOUNTING © Thomson/South-Western 27 LESSON 5-1 PURCHASES RETURNS AND ALLOWANCES

28. CENTURY 21 ACCOUNTING © Thomson/South-Western 28 LESSON 5-1 Recording Replenishment of Petty Cash

29. CENTURY 21 ACCOUNTING © Thomson/South-Western 29 LESSON 5-1 RECORDING PAYROLL IN A VOUCHER REGISTER OfficeMart –semi-monthly pay period Prepare payroll register A PAYROLL VOUCHER: Info summarized on inside Outside  same as other vouchers When payroll taxes due  One voucher for total taxes owed to fed gov One for total for state gov page 156

30. CENTURY 21 ACCOUNTING © Thomson/South-Western 30 LESSON 5-1 RECORDING PAYROLL IN A VOUCHER REGISTER – Transaction – pg 156 Need art for payroll register on page 156. pages 156 and 157

31. CENTURY 21 ACCOUNTING © Thomson/South-Western 31 LESSON 5-1 ADVANTAGES OF A VOUCHER SYSTEM 1. 1.Only a few people can authorize and approve all cash payments. 2. 2.A voucher jacket provides a convenient way to file invoices and related business papers for future reference. 3. 3.Unpaid vouchers are filed by their payment dates to help ensure payment of invoices within the discount periods. 4. 4.An unpaid vouchers file and a paid vouchers file eliminate posting to an accounts payable ledger. page 158

32. CENTURY 21 ACCOUNTING © Thomson/South-Western 32 LESSON 5-1 Advantages: 5. 5.A paid vouchers file provides three different and easy ways to find information about a paid voucher. If only the voucher number is known, look in voucher register for that number and find payee’s name on the same line Voucher will be in the paid vouchers file under name of payee If only the check number is used to pay the voucher is known, look in the check register for the check number. payee’s name is on same line  voucher will be in paid vouchers file under name of payee If only the name of the payee is known, look in paid vouchers file where vouchers are filed under the name of the payee

33. CENTURY 21 ACCOUNTING © Thomson/South-Western 33 LESSON 5-1 TO DO: Audit, pg 159 Work Together, 159 On your own, 159 App 5-3, 5-4, pg 162