Accounting 1 Instructor Notes

Transcription

1 Accounting 1 Instructor Notes CHAPTER 5 ACCOUNTING SYSTEMS SPECIAL JOURNALS AND SUBSIDIARY LEDGERS You interact with accounting systems, maybe even everyday. You write a check, you use your debit or credit cards, you make a deposit into your checking or savings accounts. These are a types of business transaction, taking pace between you and your bank. You record deposits in your check registrar as additions, you subtract out when you use your debit card. Now imagine how compicated this type of daiy transactions can become for a arge business? Think about how ong it took you to post each transaction in the chapter 2 probems? This is where Specia Journas come into the picture. They can be used to tota and summarize a group of transactions to be posted, instead of posting each transaction individua to the edger accounts. There is aso programs (for exampe, Quicken or Quickbooks) that can hande easiy arge amounts of transactions. We wi aso be taking about subsidiary edgers. A company ists one baance for Accounts Receivabe on the baance sheet, but how do they keep track of how much is owed and by whom? Subsidiary edgers can provide that information.

2 Introduction A. Subsidiary edgers (detaied in next section) are used to provide information on the amounts due from various customers (AR) and amounts owed to various creditors (AP). Remember Genera Ledgers sti keep a tota baance of a subsidiary edgers (exampe a that is owed in AR or AP). B. Specia Journas for certain transactions that occur frequenty can eiminate some needess writing. 1. Revenue or Saes Journa (abbreviated by R or S) -- Sae of merchandise on account. Therefore it must be Dr.-- AR Cr.-- Fees Earned or Saes 2. Cash Receipts Journa (CR) -- Receipt of cash from any source. Therefore it must be Dr. -- Cash Cr. -- can be Fees Earned, Saes, Capita, Cash refund, AR payment, etc. 3. Purchases Journa (P) -- Purchase of merchandise or other items on account. Therefore it must be Cr. -- AP Dr. -- can be Merchandise Inventory, Equipment, Suppies, anything that is bought on Account. 4. Cash Payments Journa (CP) -- Payment of cash for any purpose. Therefore it must be Cr. -- Cash Dr. -- can be Merchandise Inventory, Equipment, Suppies, Drawing, payment on AP, Expenses, etc. 5. Genera Journa (G) -- same od journa you are used to. Used for anything ese that does not fit in any of the above journas such as returns and aowances. Adjusting and cosing entries woud aso be in the Genera Journa. A transaction wi go to one journa or another journa, not more than one journa!!!!

3 SUBSIDIARY LEDGERS There shoud aso be forms fied out for what we ca subsidiary edgers. This is to keep track of the individua companies that we buy from (AP), and se to (AR). That way we know exacty which company owes us how much and vise versa. A way to hep you out woud be to ook at the foowing: For an Accounts Receivabe customer: A. Look at the Saes/Revenue journa for saes on account to be recorded to customer's individua subsidiary edger. B. Look at the Cash Receipts journa and record any cash received from the customer aso record on their subsidiary edger. C. Look at the Genera Journa incase there is a credit for the customer that needs to be recorded on the subsidiary edger. For Accounts Receivabe, fees that we earned on account, woud be a debit (or the eft side of a T-Account). When we receive payment from a customer on account that woud be a credit (or the right side of a T-account). The T-Accounts for a customer woud be increase on the eft, decrease on the right, just ike the AR account itsef. Invoiced ABC Company for fees earned on Account $2,000. You woud debit the account.: ABC Company 2,000 As we receive payment from the customer, you woud credit the account. A Customer Baance Summary (AR Subsidiary): This is just isting a customers and how much they owe us (baance in account). We tota it, then put it as a debit to AR. For exampe, suppose we have ABC Company baance and two other companies that owe us for fees earned on account: ABC Company $2,000 EFT Company $1,000 TTT Company $3,000 Tota AR $6,000

4 The $6,000 tota is then posted as a debit to AR account. Accounts 6,000 Receivabe For an Accounts Payabe: A. Look at the Purchases Journa for purchases on account to be recorded to the individua subsidiary edger of the company from which the purchase was made. B. Look at the Cash Payments Journa and record any cash payments we made to the company we purchased from aso to be recorded on the subsidiary edger. C. Look at the Genera Journa incase there is a credit given to us that needs to be recorded on the subsidiary edger. SAMPLE PROBLEMS: Look at this sampe probem with sampe transaction that identifies which of the five specia journas the entry woud be written in. Specia Journas Probem May 1 Owner invested $20,000 cash - CR May 2 Cash sae of $1,000 - CR May 3 Credit sae of $2,000 to Sooner Enterprises - R May 4 Credit sae of $2,000 to Baker Corp. - R May 5 Purchase Merchandise on Credit for $3,000 from Bigger Corporation - P May 6 Purchased equipment for cash of $5,000 - CP May 7 Received $500 on account from Sooner Enterprise - CR May 8 Made a $500 payment on account to Bigger Corporation - CP May 9 Gave $300 credit to Baker Corp. for merchandised returned - G May 10 Purchased $500 worth or suppies with cash - CP May 11 Received cash of $100 for suppies we returned - CR May 12 Made payment to Bigger of $500 - CP

5 Subsidiary Ledgers Probem 1. Accounts Payabe Based on the transaction above, those items that were purchased on account woud go in an accounts payabe subsidiary edger. If we made any payments on our account or received any credit, that woud aso go in the AP subsidiary. Here is how it woud ook as a t-account and in a subsidiary edger for Bigger, the ony company we purchased from on account. Accounts Payabe T-account and Subsidiary Ledger. What is the amount we owe to: - Bigger + May 5 $3,000 May 8 $500 May 12 $500 Baance $2,000 Bigger DATE Debit (to AP - payment) Credit (to AP - purchase) Baance May 5 3,000 3,000 May ,500 May , Accounts Receivabe Based on the transaction above, fees earned or saes on account woud go in an accounts receivabe subsidiary edger. If we received any payments on our customers on their account or issued any credit, that woud aso go in the AR subsidiary. Here is how it woud ook as a t-account and in a subsidiary edger for Sooner and Baker, the two companies we earned fees from on account. Accounts Receivabe T-account and Subsidiary Ledgers. The foowing companies owe us:

6 + Sooner - + Baker -_ May 3 $3,000 May 4 $2,000 May 7 $500 May 9 $300 Baance $2,500 Baance $1,700 Sooner DATE Debit (to AR - purchase) Credit (to AR - Payment) Baance May 3 3,000 3,000 May ,500 Baker DATE Debit Credit Baance May 4 2,000 2,000 May ,700 TEST NUMBER 2 You are now ready for Test #2. You wi be tested over: Worksheet Adjusting Entries Cosing Entries Financia Statements Specia Journas Identification (which journa an entry woud be recorded) Subsidiary Ledgers Again, your homework and chapter notes are exceent study toos. Especiay Probem 4-3A, Ex 5-2, 5-3, and 5-4.