2. Internal Control and the Voucher System
Chapter 26
Internal Control and the Voucher System
Section 2: Using the
Voucher System
Section Objectives
In section 2 of chapter 26 we are going to learn how to use a voucher system in a merchandising company.
Prepare vouchers.
Record vouchers in a voucher register.
Record payment of approved vouchers.
Record transactions that require special treatment in a voucher system.

3. Objective 3. Prepare Vouchers.
The voucher system’s primary role is the control of company expenditures. The voucher record is the key to making the system work properly.

4. Prepare and Approve a Voucher
The verified invoice is the basis for preparing a voucher.
After preparing the voucher, the verified invoice should be attached to the voucher.
After comparing the invoice and the voucher, it is approved for payment.
Every expenditure must be authorized by the preparation of a voucher. An invoice must be verified before a voucher for payment is prepared. The invoice should be verified to ensure that quantities received, prices charged and totals are correct. After preparing the voucher, the verified invoice should be attached to the voucher. After comparing the invoice and the voucher, it is approved for payment.

5. Steps in the Voucher System
Verify receipt of merchandise.
Verify prices.
Verify computations.
Prepare and approve voucher.
Record and file the unpaid voucher according to due date.
Pay the voucher.
File the paid voucher.
These are the necessary steps in a voucher system:
Step 1 Verify receipt of the merchandise
Step 2 Verify prices
Step 3 Verify computations
Step 4 Prepare and Approve a Voucher
Remember, the verified invoice received from the seller is the basis for preparing a voucher. The DISTRIBUTION box on the voucher is used to make the accounting entry.
Step 5 Record and File the Unpaid Voucher.
Vouchers are filed according to due date. Sometimes the unpaid voucher file is called the “tickler file”.
Step 6 Pay a Voucher
Step 7 File a Paid Voucher
Once a voucher is paid it is stamped “PAID”.

6. Objective 4. Record Vouchers in a Voucher Register.
In a voucher system, a voucher register takes the place of a purchases journal for recording the liabilities of the business.

7. What is a voucher register?
QUESTION:
A voucher register is a journal used to record liabilities arising from business transactions.
ANSWER:
The voucher register functions as a special journal where entries are recorded and posted just as they are in the other types of special journals.

8. A voucher register is a customized journal providing for accounts used frequently.
Each voucher entered is a credit to Accounts Payable.
All entries in the Other Accounts section are posted individually.
The voucher register has specialized columns that are used frequently by the business. The Accounts Payable Credit column is used in conjunction with other columns.

9. Voucher Register with Purchases and Store Supplies Columns
PAID ACCTS STORE
VOU CK. PAYABLE PURCH SUP.
DATE NO. PAYABLE TO DATE NO. CREDIT DEBIT DEBIT
May.
Gulf Shores Clothiers 5/
Southern Paper Co /
Blue Jean Clothing / , ,500.00
Cotton Inc / , ,675.00
This voucher register has columns for the date and the voucher number. Vouchers are prenumbered and are usually entered in order. Within the center of the voucher register, there are Date and Ck. No. columns. These supply an internal control in helping to identify when payments have been made. When a voucher is entered into the register, Accounts Payable is a credited. In this company, since merchandise purchases and store supplies are purchased quite often, two separate columns have been created for these two types of transactions.

10. Voucher Register with Payroll Transactions
PAID ACCTS SOC. SEC. MEDICARE EMP. INC.
VOU CK. PAYABLE TAX PAY TAX PAY TAX. PAY.
DATE NO PAYABLE TO DATE NO CREDIT CREDIT CREDIT CREDIT
May Nadia Queen /
Joy Bible /
Robert Ramirez /
In this voucher register, the company has decided to make special columns for payroll related transactions.

11. Objective 5. Record Payment of Approved Vendors.
In a voucher system, a tickler file (unpaid vouchers file) contains vouchers payable that are due to be paid on specific dates. The tickler file serves as a form of calendar to remind accounting employees when a voucher is to be paid.

12. Issuing Checks for Vouchers
Record entry in the check register, debiting Accounts Payable and crediting Cash.
Make notation in the voucher register showing date paid and check number.
The voucher register is always used in conjunction with a check register. The check register used by a business compares closely to a personal check register. A business’ check register is more formal and requires more information, but it provides the same type of record of a check written.
A Check register replaces a Cash Payments Journal so entries are recorded and posted just as they are in the other types of special journals.
When recording an entry in the check register, Accounts Payable is debited and Cash is credited. Let’s take a look at a check register. . .
In a voucher system, the check register replaces the cash payments journal.

13. Check Register
CHECK REGISTER
ACCOUNTS PURCHASES
CK. VOU. PAYABLE DISCOUNTS CASH
DATE NO PAYABLE TO NO. DEBIT CREDIT CREDIT
20--
May Soloft Rentals , ,200.00
Joy Bible
Nadia Queen
Gulf Shores Clothiers
Steve Youngblood , ,000.00
Jackie Chow
Nadia Queen
18, ,456.75
In this check register, there is an Accounts Payable Debit column and two credit columns—one for Purchases Discounts Credit and the other is for Cash Credit. Recall that the Purchases Discount account, which reduces net purchases is a contra purchase account, and it has a normal credit balance.
Since the check register replaces the special cash payments journal, the columns are totaled at the end of the month and posted to the general ledger accounts.
Column totals are posted at the end of the month just like any other special journal.

14. Schedule of Vouchers Payable
At the end of the month, a list of all unpaid vouchers is prepared.
Compare the list to the entries in the voucher register.
Ensure that the total of the schedule equals the balance of Accounts Payable.
In a voucher system, a schedule of vouchers payable is prepared to inform managers of current debts.

15. Schedule of Vouchers Payable
Number Payable to Amount
Cotton Inc. $3,000.00
Southern Paper Company
P&S Office Products
Hank Hills, Attorney
Charles Alexander, CPAs
Big Insurance Company
Paper Box Company
Northside Utilities
Southern Gas
Gulf Shores Clothiers ,800.00
ST & T Company
Truth in Publishing Company
On-Time Delivery
Total $14,189.00
CLASSIC CLOTHES, INC. Schedule of Vouchers Payable May 31, 2007
Should match balance in Accounts Payable account.
The schedule of vouchers payable is a list of all unpaid vouchers in the vouchers register. The total shown is the amount of the business’s short-term debt at the end of the accounting period and should match the balance in the Accounts Payable account in the general ledger.

16. Objective 6.
Record Transactions That Require Special Treatment In A Voucher System.
A voucher system can handle the recording of almost all payable related transactions, however there are a few transactions that may be awkward to record:

17. Transactions Requiring Special Treatment
Partial payments.
Notes payable.
Purchases returns and allowances.
Purchases discounts lost.
Here are four transactions that require special treatment when a voucher system is involved.
Partial Payments
Notes Payable
Purchases Returns and Allowances

18. Partial Payment of Previously Recorded Voucher
Cancel the original voucher.
Issue new vouchers for partial payments.
Partial Payments
To record the partial payment of a voucher--Cancel the original voucher; issue two new vouchers; record entries in the check register in the usual way.

19. Payment of Notes Payable
If a business issues a note payable for an unpaid invoice, debit Accounts Payable and credit Notes Payable—Trade.
In the voucher register, enter the date of the note and enter the words “By note” in the Check Number column.
Notes Payable
If a note payable is issued to a supplier for an unpaid invoice, the note number is written in the voucher register Ck. No. column and a general journal entry is made to debit Accounts Payable and credit Notes Payable—Trade.

20. Recording Purchases Returns and Allowances
Method 1: Issue a new voucher and cancel the original voucher.
Method 2: Make a notation for the allowance.
Purchases Returns and Allowances
There are two methods to record a purchase return or an allowance.
Here is an overview of the two methods:
Method 1—Cancel original voucher and issue new voucher.
Method 2—Make a notation on the original voucher for the allowance granted.

21. Recording Cash Discounts Lost
Record purchase invoices in the voucher register net of discount.
If an invoice is paid after the discount period, the difference is recorded in the check register by debiting Discounts Lost.
Purchases Discounts Lost
Vouchers payable can be recorded at the net of discount amount.
If a voucher is paid beyond the discount period, then a debit is made to the Discounts Lost account in the check register.
Discounts Lost appears on the income statement as an addition to Purchases.

22. Complete the following sentences:
SECTION R E V I W
Complete the following sentences:
A ______________ is a journal used to record liabilities arising from business transactions.
voucher register
Because vouchers are used to record business liabilities, most vouchers are credited to ________________.
Accounts Payable
Let’ review this section. . .
In a voucher system, the check register replaces the _____________ journal.
cash payments

23. Complete the following sentences:R E V I W
SECTION
Complete the following sentences:
Unpaid vouchers should be filed according to ________.
due date
The balance of ________________ should equal the total of the schedule of vouchers payable.
Accounts Payable
Record purchase invoices _____________ to identify “lost” discounts.
net of discount

24. College Accounting, 11th Edition
Thank You
for using
College Accounting, 11th Edition
Price • Haddock • Brock