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CENTURY 21 ACCOUNTING © Thomson/South-Western LESSON 5-1

PART II: PART II: ACCOUNTING ADJUSTMENTS ACCOUNTING ADJUSTMENTS AND VALUATIONAND 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

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CENTURY 21 ACCOUNTING © Thomson/South-Western LESSON 5-1

OfficeMart: sells office furniture and suppliesOfficeMart: 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

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CENTURY 21 ACCOUNTING © Thomson/South-Western LESSON 5-1

CHAPTER 5: A VOUCHER SYSTEMCHAPTER 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

CENTURY 21 ACCOUNTING © Thomson/South-Western

LESSON 5-1LESSON 5-1

Vouchers and Voucher Registers

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CENTURY 21 ACCOUNTING © Thomson/South-Western LESSON 5-1

Accounting systems MUST include Accounting systems MUST include Procedures for: 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

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CENTURY 21 ACCOUNTING © Thomson/South-Western LESSON 5-1

VERIFYING AN INVOICEVERIFYING AN INVOICE page 145

1. Stamp

2. Quantities

3. Items and prices

4. Calculations

5. Initials

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CENTURY 21 ACCOUNTING © Thomson/South-Western LESSON 5-1

A VOUCHER – source doc for cash paymentA 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

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CENTURY 21 ACCOUNTING © Thomson/South-Western LESSON 5-1

PREPARING A VOUCHER PREPARING A VOUCHER FROM AN INVOICEFROM AN INVOICE page 146

Section 1—Payee InformationSection 1—Payee Information

Section 2—Accounts AffectedSection 2—Accounts Affected

Section 3—Voucher ApprovalSection 3—Voucher Approval

Section 4—Information about where the voucher is recordedSection 4—Information about where the voucher is recorded

Section 5—Information about the payment of the voucherSection 5—Information about the payment of the voucher

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CENTURY 21 ACCOUNTING © Thomson/South-Western LESSON 5-1

PREPARING A VOUCHER PREPARING A VOUCHER FROM AN INVOICEFROM 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

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CENTURY 21 ACCOUNTING © Thomson/South-Western LESSON 5-1

PREPARING A VOUCHER PREPARING A VOUCHER FROM AN INVOICEFROM 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

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CENTURY 21 ACCOUNTING © Thomson/South-Western LESSON 5-1

PREPARING A VOUCHER PREPARING A VOUCHER FROM AN INVOICEFROM AN INVOICE

Section 3: Voucher Approval Double check authorize people to

approve voucher before it is journalized Sign name in section 3

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CENTURY 21 ACCOUNTING © Thomson/South-Western 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 VOUCHER REGISTER – journal used to record vouchers (pre-numbered)record vouchers (pre-numbered) pages 147 and 148

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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

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CENTURY 21 ACCOUNTING © Thomson/South-Western LESSON 5-1

5. Record debit amount and write the title of the account to be debited.

4. Enter credit amount.

VOUCHER REGISTER – General columnsVOUCHER REGISTER – General columnspage 147 and 148

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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.

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CENTURY 21 ACCOUNTING © Thomson/South-Western LESSON 5-1

PREPARING A VOUCHER PREPARING A VOUCHER FROM AN INVOICEFROM 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

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CENTURY 21 ACCOUNTING © Thomson/South-Western LESSON 5-1

Proving, Ruling, and PostingProving, Ruling, and Posting

Separate amounts recorded in General DR/CR posted individually often

End of month prove and rule Special amount columns

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CENTURY 21 ACCOUNTING © Thomson/South-Western LESSON 5-1

TERMS REVIEWTERMS 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

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CENTURY 21 ACCOUNTING © Thomson/South-Western LESSON 5-1

LESSON 5-2: Voucher Check and Check RegistersLESSON 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

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CENTURY 21 ACCOUNTING © Thomson/South-Western 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: PREPARING A VOUCHER CHECK: On August 8 On August 8 take out vouchers to be paid on that take out vouchers to be paid on that datedate page 150

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CENTURY 21 ACCOUNTING © Thomson/South-Western 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

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CENTURY 21 ACCOUNTING © Thomson/South-Western LESSON 5-1

JOURNALIZING CASH PAYMENTSJOURNALIZING 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:

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CENTURY 21 ACCOUNTING © Thomson/South-Western 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 PAYMENTSJOURNALIZING CASH PAYMENTS page 151

11 2233

44 55 66 77

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CENTURY 21 ACCOUNTING © Thomson/South-Western LESSON 5-1

PROVING, RULING, AND PROVING, RULING, AND POSTING A CHECK REGISTERPOSTING 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

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CENTURY 21 ACCOUNTING © Thomson/South-Western LESSON 5-1

STARTING A NEW PAGE OF STARTING A NEW PAGE OF A CHECK REGISTERA CHECK REGISTER page 152

•Totals of Special columns to be brought forward

•No Bank Deposit Balance is brought forward

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CENTURY 21 ACCOUNTING © Thomson/South-Western LESSON 5-1

TERMS REVIEWTERMS REVIEW

voucher check check register

TO DO: Audit, 153 Work Together, 153 On your own, 154 App 5-2, pg 161

page 153

CENTURY 21 ACCOUNTING © Thomson/South-Western

LESSON 5-3LESSON 5-3

Selected Transactions in a Voucher System

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CENTURY 21 ACCOUNTING © Thomson/South-Western LESSON 5-1

PURCHASES RETURNS AND PURCHASES RETURNS AND ALLOWANCESALLOWANCES 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

inside3. In the voucher register, reference the

new voucher number. See Vchr.6554. Record the new voucher.5. File the new voucher by its payment

date in the unpaid vouchers file.

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CENTURY 21 ACCOUNTING © Thomson/South-Western LESSON 5-1

PURCHASES RETURNS AND PURCHASES RETURNS AND ALLOWANCESALLOWANCES

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CENTURY 21 ACCOUNTING © Thomson/South-Western LESSON 5-1

Recording Replenishment of Petty CashRecording Replenishment of Petty Cash

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CENTURY 21 ACCOUNTING © Thomson/South-Western LESSON 5-1

RECORDING PAYROLL IN A RECORDING PAYROLL IN A VOUCHER REGISTERVOUCHER 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

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CENTURY 21 ACCOUNTING © Thomson/South-Western LESSON 5-1

RECORDING PAYROLL IN A RECORDING PAYROLL IN A VOUCHER REGISTER – Transaction – pg 156VOUCHER REGISTER – Transaction – pg 156

Need art for payroll register on page 156.

pages 156 and 157

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CENTURY 21 ACCOUNTING © Thomson/South-Western LESSON 5-1

ADVANTAGES OF A VOUCHER SYSTEMADVANTAGES 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

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CENTURY 21 ACCOUNTING © Thomson/South-Western LESSON 5-1

Advantages: 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

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CENTURY 21 ACCOUNTING © Thomson/South-Western LESSON 5-1

TO DO: Audit, pg 159 Work Together, 159 On your own, 159 App 5-3, 5-4, pg 162