1. Virtual Enterprises, International 1 ACCOUNTING DEPARTMENT WORKFLOW VIRTUAL ENTERPRISES, INTERNATIONAL

2. Virtual Enterprises, International2 Source documents needed: Purchase orders Purchase invoices Sales invoices Bank statements Tax Forms

3. Virtual Enterprises, International3 Accounting Journals/Records & Forms Required Cash receipts/cash payments journal Purchases journal/accounts payable record Sales journal/accounts receivable record Inventory records Asset log Payroll register

4. Virtual Enterprises, International4 When and where are transactions recorded? Receive cash: Enter amount received in the cash receipts and payments journal. Update accounts receivable record if the cash receipt is for payment of a sale made on account.cash receipts and payments journal. accounts receivable record Pay cash: Enter the amount paid in the cash receipts and payments journal. Update the accounts payable record if the cash payment is for a purchase made on account. cash receipts and payments journal. accounts payable record Send a purchase order: Do not record this event into the accounting records. Receive an invoice: Enter the purchase in the purchases journal and update the accounts payable record. Receive what was ordered: If you receive merchandise inventory, update the inventory control record. If you receive an asset, update the asset log. inventory control record.asset log. Receive a purchase order: Prepare an invoice. Prepare (and send) an invoice: Enter the sale in the sales journal and update the accounts receivable record. sales journalaccounts receivable record. “Ship” merchandise to a customer: Update the inventory control record. inventory control record. Prepare (and pay) payroll:  Use the payroll register to determine the amount of each employee's gross and net pay. payroll register  Record the amount of net pay paid to all employees in the cash receipts and payments journal.cash receipts and payments journal.  Record the amount of payroll withholdings in the cash receipts and payments journal.cash receipts and payments journal.

5. Virtual Enterprises, International5 RECORDING A SALE You receive a PURCHASE ORDER or an ORDER FORM (through your website, mail, or fax). Details from the invoice are entered into the SALES JOURNAL/ACCOUNTS RECEIVABLE RECORD. The sales department creates an INVOICE; retains one copy and forwards a copy to accounting. Staple the PURCHASE ORDER/ORDER FORM and INVOICE together and file in a binder in numerical order by Invoice. Send the Invoice to the customer. Order INVENTORY when needed. Note: Review the Invoice binder periodically and send out overdue reminders. “Ship” the merchandise to the customer and then update the INVENTORY RECORDS.

6. Virtual Enterprises, International6 MAKING A PURCHASE Your company completes a PURCHASE ORDER (or the selling company’s order form) and sends it to the selling company (the vendor). Keep a file copy in the PURCHASES binder. Once you receive an invoice from the vendor, enter the purchase details into the PURCHASES JOURNAL/ACCOUNTS PAYABLE RECORD. Do not record the purchase until vendor sends an invoice. The invoice is forwarded to the accounting VP for approval (i.e., compare invoice to purchase order, looking for discrepancies). If the purchase was for merchandise inventory, update the INVENTORY RECORDS. If approved, forward to bank manager for payment. If not approved, contact vendor to resolve discrepancy.

7. Virtual Enterprises, International7 RECORDING CASH RECEIPTS AND PAYMENTS Each week the Bank Manager prints out current bank transactions (checking details). The Accounting Department records ALL transactions in the CASH RECEIPTS AND PAYMENTS JOURNAL. Transactions are listed twice: On the left side of the form in the cash receipt or cash payment column On the right side of the form in the column that best describes the reason for the payment or receipt of cash. If the receipt of cash is a payment for a sale made on account, retrieve the sales invoice from the binder, mark it paid, file it and update the SALES JOURNAL/ ACCOUNTS RECEIVABLE RECORD to reflect the payment. If a payment has been made for a purchase made on account, retrieve the purchase invoice from the binder, mark it paid, file it and update the PURCHASES JOURNAL/ACCOUNTS PAYABLE RECORD.

8. Virtual Enterprises, International8 PAYROLL The Payroll Associate (Human Resources?) completes the PAYROLL REGISTER for the pay period. The original is filed in a binder and a copy is given to the Bank Manager. The Payroll Associate creates and distributes pay stubs. The Bank Manager pays each employee. On the 15 th of the month, the Bank Manager submits and pays the 941 TAX FORM for the previous month. All tax forms are filed in a binder. Note: Payroll is completed twice a month. The payroll is now entered into the CASH PAYMENTS JOURNAL. The payment of the payroll tax is now entered into the CASH PAYMENTS JOURNAL.

9. Virtual Enterprises, International9 SUMMARY Sales Journal/Accounts Receivable, Purchases Journal/Accounts Payable, and Inventory Records are updated as needed. Payroll is completed twice a month. Bank Statements should be printed out at least once a week. Cash Receipts and Payments Journal should be updated each time a bank statement is printed. Tax Forms should be completed according to the calendar.  941 – monthly  Sales tax – quarterly  W2 and W3 – yearly  1040 individual tax return – yearly  1120 Corporate tax return – yearly