Ch 10 - Special and Combo Journals and Voucher Sys

Special and Combination Journals

and Voucher System

CHAPTER 10

Ma. Rona Corda-Prado, CPA

University of St. La Salle

SUBSIDIARY LEDGERS

Subsidiary ledgers are a listing of individual accounts with common characteristics.

Characteristic

Controlling

Account Subsidary Ledger

Amounts due

from customers

Accounts

Receivable

Accounts

Receivable Ledger

Amounts owed to

creditors

Accounts

Payable

Accounts Payable

Ledger

Each general ledger control account balance must equal the composite balance of the individual accounts in the related

subsidiary ledger. Prepared by: RCPrado Chapter 10- 2

1. Show in a single account transactions affecting one customer or one creditor.

2. Free the general ledger of excessive details.

3. Help locate errors in individual accounts.

4. Make possible a division of labor.

5. Applies to accounts receivable, accounts payable, inventory and PPE.

6. Subsidiary ledgers may simply be a group of accounts in a binder or it may be a file card arrangement. Order is either numerical by customer number or alphabetical by customer name.

Advantages of Subsidiary Ledgers

SUBSIDIARY LEDGERS

Prepared by: RCPrado Chapter 10- 3

All of the following are advantages of using subsidiary ledgers except they:

a) show transactions affecting one customer or one creditor in a single account.

b) free the general ledger of excessive details.

c) eliminate errors in individual accounts.

d) make possible a division of labor.

Review Question

SUBSIDIARY LEDGERS


Each of the following is a subsidiary ledger except:

a) accounts receivable ledger.

b) accounts payable ledger.

c) customer’s ledger.

d) general ledger.

Special Journals in Accounting SUBSIDIARY LEDGERS


SUBSIDIARY LEDGERS


SPECIAL JOURNALS IN ACCOUNTING

General Journal

Transactions which could not be recorded in the special

journals, including adjusting, correcting and closing entries Cash

Disbursements Journal

All cash paid (including cash

purchases)

Purchases Journal

All purchases of merchandise on

account

Cash Receipts Journal

All cash receipts (including cash

sales)

Sales Journal

All sales of merchandise on

account


Information for each

sales is obtained from a

copy of the related sales

invoice.

Amounts in the SJ are posted daily to the

subsidiary ledger on a daily basis.

PR: S & page #

Monthly posting are done to the

GL.

Prepared by: RCPrado 8

Under a perpetual inventory system, one entry at selling price in Sales Journal results in a debit to Accounts Receivable and a credit to Sales.

Another entry at cost results in a debit to Cost of Goods Sold and a credit to Merchandise Inventory.

Sales Journal SALES JOURNAL


Companies make daily postings from the sales journal to the

individual accounts receivable in the subsidiary ledger.

SALES JOURNAL


Posting to the general ledger is

done monthly.

SALES JOURNAL


One-line entry for each sales transaction saves

time.

Only totals, rather than individual entries, are

posted to the general ledger.

A division of labor results.

Advantages of Sales Journal

SALES JOURNAL


In the cash receipts journal, companies record all receipts of cash (cash sale, collection and other sources of cash).

The posting of the cash receipts journal is similar to the posting of the sale journal.

CASH RECEIPTS JOURNAL


CASH RECEIPTS JOURNAL Sourced from official

receipts (OR), cash

register tapes (CRT), cash

slips or credit memos

Total debits and credits

before posting.

Reconcile SL total

to GL at the end of

the month.

Post to GL

monthly.

Post to A/R SL

daily.


Cash sales of merchandise are recorded in the:

a) cash payments journal.

b) cash receipts journal.

c) general journal.

d) sales journal.

Review Question



Which of the following is not one of the credit columns in the cash receipts journal:

a) Other accounts.

b) Accounts payable.

c) Accounts receivable.

d) Sales.

Review Question



PURCHASES JOURNAL - PERIODIC Sourced from

receiving reports

Post to A/P

SL daily.

Total debits &

credits and post

to GL monthly


Daily postings are made from the purchases journal to the accounts

payable subsidiary ledger.

PURCHASES JOURNAL - PERPETUAL


Purchases Journal

At the end of the accounting period, the company posts totals to

the general ledger.

PURCHASES JOURNAL - PERPETUAL


In a cash payments (cash disbursements) journal, companies record all disbursements of cash.

The procedures for posting the cash payments journal are similar to those for other journals.

CASH PAYMENTS JOURNAL


Cash Disbursements Journal CASH PAYMENTS JOURNAL Sourced from

check vouchers.


Special journals substantially reduce the number of

entries that companies make in the general journal.

Only transactions that cannot be entered in a

special journal are recorded in the general journal.

Also, correcting, adjusting, and closing entries are

made in the general journal.

Effects of Special Journals on the General Journal

SPECIAL JOURNALS IN ACCOUNTING


SPECIAL JOURNALS SUMMARY

JOURNAL SPECIFIC TRANSACTIONS RECORDED POSTING

ABBREVIATION

Sales Journal Sales of merchandise on account S

Cash Receipts

Journal

Receipts of cash CR

Purchases Journal Credit purchases of merchandise and other

items

P

Cash

Disbursements

Journal

Payments of cashSales Journal

CD

General Journal Entries that do not fit in the other journals

• Merchandise Returns (Sales and

Purchases)

• Write-off of Uncollectible Accounts

• Non cash transactions (i.e.

issuance/receipt of a promissory note)

GJ


Total Dr = Total Cr in the G/L. These amounts would be used to prepare the T/B.

AR Control (GL) Account = ∑ of Individual Customer Accounts in the SL

AP Control (GL) Account = ∑ of Individual Vendor/Creditor Accounts in the SL

At the end of the period, after all postings have been made, equality should exist between the following:

PROVING THE LEDGERS


INTERNAL

CONTROL AND

THE VOUCHER SYSTEM

Section Objectives

1. Prepare vouchers.

2. Record vouchers in a voucher register.

3. Record payment of approved vouchers.

4. Record transactions that require special

treatment in a voucher system.

Method of controlling liabilities and cash payments.

The voucher system is most appropriate for medium- and large-sized companies.

All liabilities are authorized.

Checks may be drawn only upon a written authorization in the form of a voucher approved by responsible officials.

Payments, except for small petty cash items, are made by check.

Checks are issued based on properly approved vouchers.

VOUCHER SYSTEM


Vouchers are used to set up and replenish cash funds.

Vouchers are used to cover bills and invoices received from outside parties.

Consists of vouchers, vouchers register, unpaid voucher file, check register and paid voucher file

VOUCHER SYSTEM


STEPS IN THE VOUCHER SYSTEM

1. Compare purchase requisition, purchase order, invoice, and receiving report for agreement of quantities, prices, types of goods and terms.

2. Verify receipt of merchandise.

3. Verify prices.

4. Verify computations.

5. Prepare and approve voucher.

6. Record and file the unpaid voucher according to due date.

7. Pay the voucher.

8. File the paid voucher. Prepared by: RCPrado Chapter 10- 28

PAYMENT VOUCHER

Form used to authorize payments

Focal point in an effective internal control system.

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.


VOUCHER REGISTER

A voucher register is a customized journal providing for accounts used frequently.

Takes the place of the purchase journal and provides a record of all authorized check payments

Vouchers Payable account maybe used in place of Accounts Payable (but still recorded in the SFP as A/P)

All expenditures are recorded first in a voucher register

Approved vouchers are entered in the register in numerical sequence (Exhibit 10-5 pp 460)


UNPAID VOUCHER FILE

After vouchers have been entered in the voucher register, they are filed in the order of required date of payment >>> to ensure timely payments and availment of discounts

The absence of entries in the payment date and check number columns of the voucher register indicate that the voucher is unpaid.


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.

In a voucher system, the check register replaces the cash payments journal. (Exhibit 10-5 pp 460)


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.

In a voucher system, the check register replaces the cash payments journal . (Exhibit 10-6 pp 460)


PAID VOUCHER FILE

The paid voucher along with its supporting documents are filed in numerical sequence in a paid voucher file

File is used for examination by internal or external auditors requiring information about a specific expenditure


SCHEDULE OF VOUCHERS PAYABLE

At the end of the month, a list of all unpaid vouchers is prepared.

Compare the list to the unpaid vouchers in the voucher register and the unpaid voucher file.

Ensure that the totals of the unpaid vouchers in the voucher register and the unpaid voucher file equals the balance of Accounts Payable.


Voucher

Number Payable to Amount

4-29 Cotton Inc. $3,000.00

5-05 Southern Paper Company 225.00

5-06 P&S Office Products 75.00

5-07 Hank Hills, Attorney 500.00

5-08 Charles Alexander, CPAs 450.00

5-13 Big Insurance Company 500.00

5-17 Paper Box Company 195.00

5-18 Northside Utilities 35.00

5-19 Southern Gas 155.00

5-20 Gulf Shores Clothiers 7,800.00

5-21 ST & T Company 125.00

5-22 Truth in Publishing Company 950.00

5-23 On-Time Delivery 179.00

Total $14,189.00

CLASSIC CLOTHES, INC.

Schedule of Vouchers Payable

May 31, 2007

Should match

balance in Accounts

Payable account.

SCHEDULE OF VOUCHERS PAYABLE

Partial payments.

Notes payable.

Purchases returns and allowances.

Purchases discounts lost.

TRANSACTIONS REQUIRING SPECIAL

TREATMENT


1. Cancel the original voucher.

2. Issue new vouchers for partial payments.

PARTIAL PAYMENT OF PREVIOUSLY

RECORDED VOUCHER


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.

PAYMENT OF NOTES PAYABLE


Method 1: Issue a new voucher and cancel the original voucher. A notation about the new voucher is made in the date paid column of the voucher register beside the entry for the original voucher. (Preferred – see Exhibit 10-7 pp 460)

Method 2: Make a notation for the allowance.

PURCHASE RETURNS AND

ALLOWANCES


If purchase invoices are recorded in the voucher register net of discount and an invoice is paid after the discount period, the difference is recorded in the check register by debiting Discounts Lost.

If Discounts Lost column is not available in the check register, then lost discounts would be recorded in the general journal.

RECORDING CASH DISCOUNTS

LOST


Documents

Ch 10 - Special and Combo Journals and Voucher Sys