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05 Accounting System and Internal Controls

This document provides an overview of accounting systems and internal controls. It discusses the internal control framework, including control environment, risk assessment, control procedures, monitoring, and information/communication. It also describes special journals used in accounting like the revenue, purchases, and cash journals. Finally, it provides examples of how transactions are recorded in these journals and how the subsidiary ledgers and general ledger are posted.

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Chapter 5 Power Notes Accounting Systems and Internal Controls Learning Objectives 1. Basic Accounting Systems 2. Internal Control 3. Manual Accounting Systems 4. Adapting Manual Accounting Systems 5. Computerized Accounting Systems C5 C5 - 1
Chapter 5 Power Notes Accounting Systems and Internal Controls Slide # Power Note Topics 3 • Internal Control Framework, Procedures 9 • Special Journals, Ledgers 17 • Revenue Journal and Ledgers 23 • Cash Receipts Journal and Ledgers 31 • Purchases Journal and Ledgers 37 • Cash Payments Journal and Ledgers Note: To select a topic type the slide # and press Enter. C5 - 2
Internal Control Framework 1. Control Environment Control Environment C5 - 3
Internal Control Framework 1. Control Environment 2. Risk Assessment Risk Assessment Control Environment C5 - 4
Internal Control Framework 1. Control Environment 2. Risk Assessment 3. Control Procedures Control Procedures Risk Assessment Control Environment C5 - 5
Internal Control Framework 1. Control Environment 2. Risk Assessment 3. Control Procedures 4. Monitoring Monitoring Control Procedures Risk Assessment Control Environment C5 - 6
Internal Control Framework 1. Control Environment 2. Risk Assessment 3. Control Procedures 4. Monitoring 5. Information and Communication Communication Monitoring Control Procedures Risk Assessment Control Environment C5 - 7
Internal Control Procedures • Competent Personnel • Rotating Duties • Assigning Responsibility • Separating Responsibilities for Related Operations • Separating Accounting and Asset Custody • Proofs and Security Measures C5 - 8
General Ledger and Subsidiary Ledgers General Ledger Cash Accts. Receivable Supplies Accts. Payable C5 - 9
General Ledger and Subsidiary Ledgers General Ledger Cash Accounts Receivable Subsidiary Ledger Accts. Receivable Customer Accounts A B C D Supplies Accts. Payable C5 - 10
General Ledger and Subsidiary Ledgers General Ledger Cash Accounts Receivable Subsidiary Ledger Accts. Receivable Customer Accounts A B C D Supplies Accounts Payable Subsidiary Ledger Accts. Payable Creditor Accounts A B C D C5 - 11
Special Journals SELLING BUYING C5 - 12
Special Journals SELLING Rendering of services on account recorded Revenue Journal in BUYING C5 - 13
Special Journals SELLING Rendering of services on account recorded Revenue Journal in Receipt of cash from any source recorded Cash Receipts Journal in BUYING C5 - 14
Special Journals SELLING Rendering of services on account recorded Revenue Journal in Receipt of cash from any source recorded Cash Receipts Journal in BUYING Purchase of items on account recorded Purchases Journal in C5 - 15
Special Journals SELLING Rendering of services on account recorded Revenue Journal in Receipt of cash from any source recorded Cash Receipts Journal in BUYING Purchase of items on account recorded Purchases Journal in Payment of cash for any purpose recorded Cash Payments Journal in C5 - 16
The Revenue Journal Revenue Journal Page 35 Invoice Post Accts. Rec. – Debit Date No. Account Debited Ref. Fees Earned – Credit 3/2 615 MyMusicClub.com 2,200 3/6 616 RapZone.com 1,750 3/18 617 Web Cantina 2,650 3/27 618 MyMusicClub.com 3,000 Totals 9,600 All sales on account are recorded in this journal. Each sales invoice is listed in numerical order. This journal is often referred to as an invoice register. C5 - 17
Posting to the Subsidiary Ledger Revenue Journal Page 35 Invoice Post Accts. Rec. – Debit Date No. Account Debited Ref. Fees Earned – Credit 3/2 615 MyMusicClub.com 2,200 3/6 616 RapZone.com 1,750 3/18 617 Web Cantina 2,650 3/27 618 MyMusicClub.com 3,000 Totals 9,600 Each debit is Accounts Receivable Subsidiary Ledger posted to the MyMusicClub.com accounts receivable Date Item P.R. Debit Credit Balance subsidiary ledger. C5 - 18
Posting to the Subsidiary Ledger Revenue Journal Page 35 Invoice Post Accts. Rec. – Debit Date No. Account Debited Ref. Fees Earned – Credit 3/2 615 MyMusicClub.com  2,200 3/6 616 RapZone.com 1,750 3/18 617 Web Cantina 2,650 3/27 618 MyMusicClub.com 3,000 Totals 9,600 Each debit is Accounts Receivable Subsidiary Ledger posted to the MyMusicClub.com accounts receivable Date Item P.R. Debit Credit Balance subsidiary 3/2 R35 2,200 2,200 ledger. C5 - 19
Posting to the Subsidiary Ledger Revenue Journal Page 35 Invoice Post Accts. Rec. – Debit Date No. Account Debited Ref. Fees Earned – Credit 3/2 615 MyMusicClub.com  2,200 3/6 616 RapZone.com  1,750 3/18 617 Web Cantina  2,650 3/27 618 MyMusicClub.com  3,000 Totals 9,600 Each debit is Accounts Receivable Subsidiary Ledger posted to the MyMusicClub.com accounts receivable Date Item P.R. Debit Credit Balance subsidiary 3/1 R35 2,200 2,200 ledger. 3/27 R35 3,000 5,200 C5 - 20
Posting to the General Ledger Revenue Journal Page 35 Invoice Post Accts. Rec. – Debit Date No. Account Debited Ref. Fees Earned – Credit 3/2 615 MyMusicClub.com  2,200 3/6 616 RapZone.com  1,750 3/18 617 Web Cantina  2,650 3/27 618 MyMusicClub.com  3,000 Totals 9,600 The total is General Ledger posted to Account: Accounts Receivable No. 12 Accounts Receivable Date Item P.R. Debit Credit Balance AND to Fees 3/1 Bal  3,400 Earned. C5 - 21
Posting to the General Ledger Revenue Journal Page 35 Invoice Post Accts. Rec. – Debit Date No. Account Debited Ref. Fees Earned – Credit 3/2 615 MyMusicClub.com  2,200 3/6 616 RapZone.com  1,750 3/18 617 Web Cantina  2,650 3/27 618 MyMusicClub.com  3,000 Totals 9,600 (12) (41) The total is General Ledger posted to Account: Accounts Receivable No. 12 Accounts Receivable Date Item P.R. Debit Credit Balance AND to Fees 3/1 Bal  3,400 Earned. 3/31 R35 9,600 13,000 C5 - 22
The Cash Receipts Journal Cash Receipts Journal Page 14 Other Accounts Post Accounts Receivable Cash Date Account Credited Ref. Credit Credit Debit 3/1 Rent Revenue 400 400 3/19 Web Cantina 3,400 3,400 3/28 MyMusicClub.com 2,200 2,200 3/30 RapZone.com 1,750 1,750 Totals 400 7,350 7,750 All cash received from any source is recorded in this journal. The total Cash Debit column equals the total of the two credit columns. C5 - 23
Posting to the Subsidiary Ledger Cash Receipts Journal Page 14 Other Accounts Post Accounts Receivable Cash Date Account Credited Ref. Credit Credit Debit 3/1 Rent Revenue 400 400 3/19 Web Cantina 3,400 3,400 3/28 MyMusicClub.com 2,200 2,200 3/30 RapZone.com 1,750 1,750 Totals 400 7,350 7,750 Each Accounts Accounts Receivable Subsidiary Ledger Receivable credit is Web Cantina posted to the Date Item P.R. Debit Credit Balance accounts receivable 3/1 Bal  3,400 subsidiary ledger. 3/27 R35 2,650 6,050 C5 - 24
Posting to the Subsidiary Ledger Cash Receipts Journal Page 14 Other Accounts Post Accounts Receivable Cash Date Account Credited Ref. Credit Credit Debit 3/1 Rent Revenue 400 400 3/19 Web Cantina  3,400 3,400 3/28 MyMusicClub.com 2,200 2,200 3/30 RapZone.com 1,750 1,750 Totals 400 7,350 7,750 Each Accounts Accounts Receivable Subsidiary Ledger Receivable credit is Web Cantina posted to the Date Item P.R. Debit Credit Balance accounts receivable 3/1 Bal  3,400 subsidiary ledger. 3/18 R35 2,650 6,050 3/19 CR14 3,400 2,650 C5 - 25
Posting to the General Ledger Cash Receipts Journal Page 14 Other Accounts Post Accounts Receivable Cash Date Account Credited Ref. Credit Credit Debit 3/1 Rent Revenue 400 400 3/19 Web Cantina  3,400 3,400 3/28 MyMusicClub.com  2,200 2,200 3/30 RapZone.com  1,750 1,750 Totals 400 7,350 7,750 ( ) The three General Ledger highlighted Account: Accounts Receivable No. 12 items are Date Item P.R. Debit Credit Balance posted to the general ledger. 3/1 Bal  3,400 3/31 R35 9,600 13,000 C5 - 26
Posting to the General Ledger Cash Receipts Journal Page 14 Other Accounts Post Accounts Receivable Cash Date Account Credited Ref. Credit Credit Debit 3/1 Rent Revenue 42 400 400 3/19 Web Cantina  3,400 3,400 3/28 MyMusicClub.com  2,200 2,200 3/30 RapZone.com  1,750 1,750 Totals 400 7,350 7,750 ( ) (12) (11) The three General Ledger highlighted Account: Accounts Receivable No. 12 items are Date Item P.R. Debit Credit Balance posted to the general ledger. 3/1 Bal  3,400 3/31 R35 9,600 13,000 3/31 CR14 7,350 5,650 C5 - 27
Account: Accounts Receivable No. 12 General Ledger Date Item P.R. Debit Credit Balance Accounts 3/1 Bal.  3,400 Receivable 3/31 R35 9,600 13,000 Control Account 3/31 CR14 7,350 5,650 If the accounts receivable account in the general ledger only shows summary totals, where are the individual customer balances? C5 - 28
Account: Accounts Receivable No. 12 General Ledger Date Item P.R. Debit Credit Balance Accounts 3/1 Bal.  3,400 Receivable 3/31 R35 9,600 13,000 Control Account 3/31 CR14 7,350 5,650 MyMusicClub.com Date Item P.R. Debit Credit Balance 3/2 R35 2,200 2,200 3/27 R35 3,000 5,200 Accounts 3/28 CR14 2,200 3,000 Receivable RapZone.com Subsidiary Date Item P.R. Debit Credit Balance 3/6 R35 1,750 1,750 Ledger 3/30 CR14 1,750 0 Web Cantina Date Item P.R. Debit Credit Balance 3/1 Bal.  3,400 3/18 R35 2,650 6,050 3/19 CR14 3,400 2,650 C5 - 29
Account: Accounts Receivable No. 12 General Ledger Date Item P.R. Debit Credit Balance Accounts 3/1 Bal.  3,400 Receivable 3/31 R35 9,600 13,000 Control Account 3/31 CR14 7,350 5,650 MyMusicClub.com Date Item P.R. Debit Credit Balance 3/2 R35 2,200 2,200 3/27 R35 3,000 5,200 Accounts 3/28 CR14 2,200 3,000 Receivable RapZone.com Subsidiary Date Item P.R. Debit Credit Balance 3/6 R35 1,750 1,750 Ledger 3/30 CR14 1,750 0 Web Cantina Date Item P.R. Debit Credit Balance 3/1 Bal.  3,400 3/18 R35 2,650 6,050 3/19 CR14 3,400 2,650 C5 - 30
The Purchases Journal Purchases Journal Page 11 Accts. Other Post Payable Supplies Accounts Post Date Account Credited Ref. Credit Debit Debit Ref. Amount 3/3 Howard Supplies 600 600 3/7 Donnelly Supplies 420 420 3/12 Jewett Bus. Syst. 2,800 Office Equip. 2,800 3/19 Donnelly Supplies 1,450 1,450 3/27 Howard Supplies 960 960 Totals 6,230 3,430 2,800 All purchases on account are recorded in this journal. The total credits to Accounts Payable equals the total of the two debit columns. C5 - 31
Posting to the Subsidiary Ledger Purchases Journal Page 11 Accts. Other Post Payable Supplies Accounts Post Date Account Credited Ref. Credit Debit Debit Ref. Amount 3/3 Howard Supplies 600 600 3/7 Donnelly Supplies 420 420 3/12 Jewett Bus. Syst. 2,800 Office Equip. 2,800 3/19 Donnelly Supplies 1,450 1,450 3/27 Howard Supplies 960 960 Totals 6,230 3,430 2,800 Each credit is Accounts Payable Subsidiary Ledger posted to the Howard Supplies accounts payable Date Item P.R. Debit Credit Balance subsidiary ledger. C5 - 32
Posting to the Subsidiary Ledger Purchases Journal Page 11 Accts. Other Post Payable Supplies Accounts Post Date Account Credited Ref. Credit Debit Debit Ref. Amount 3/3 Howard Supplies  600 600 3/7 Donnelly Supplies 420 420 3/12 Jewett Bus. Syst. 2,800 Office Equip. 2,800 3/19 Donnelly Supplies 1,450 1,450 3/27 Howard Supplies 960 960 Totals 6,230 3,430 2,800 Each credit is Accounts Payable Subsidiary Ledger posted to the Howard Supplies accounts payable Date Item P.R. Debit Credit Balance subsidiary ledger. 3/3 P11 600 600 C5 - 33
Posting to the Subsidiary Ledger Purchases Journal Page 11 Accts. Other Post Payable Supplies Accounts Post Date Account Credited Ref. Credit Debit Debit Ref. Amount 3/3 Howard Supplies  600 600 3/7 Donnelly Supplies  420 420 3/12 Jewett Bus. Syst.  2,800 Office Equip. 2,800 3/19 Donnelly Supp.  1,450 1,450 3/27 Howard Supplies  960 960 Totals 6,230 3,430 2,800 Each credit is Accounts Payable Subsidiary Ledger posted to the Howard Supplies accounts payable Date Item P.R. Debit Credit Balance subsidiary ledger. 3/3 P11 600 600 3/27 P11 960 1,560 C5 - 34
Posting to the General Ledger Purchases Journal Page 11 Accts. Other Post Payable Supplies Accounts Post Date Account Credited Ref. Credit Debit Debit Ref. Amount 3/3 Howard Supplies  600 600 3/7 Donnelly Supplies  420 420 3/12 Jewett Bus. Syst.  2,800 Office Equip. 2,800 3/19 Donnelly Supp.  1,450 1,450 3/27 Howard Supplies  960 960 Totals 6,230 3,430 2,800  General Ledger The highlighted Date Item P.R. Debit Credit Balance Account: Accounts Payable No. 21 items are posted Date Item P.R. Debit Credit Balance to the general 3/1 Bal.  1,230 ledger. C5 - 35
Posting to the General Ledger Purchases Journal Page 11 Accts. Other Post Payable Supplies Accounts Post Date Account Credited Ref. Credit Debit Debit Ref. Amount 3/3 Howard Supplies  600 600 3/7 Donnelly Supplies  420 420 3/12 Jewett Bus. Syst.  2,800 Office Equip. 18 2,800 3/19 Donnelly Supp.  1,450 1,450 3/27 Howard Supplies  960 960 Totals 6,230 3,430 2,800 ( 21) (14) ( ) General Ledger The highlighted Date Item P.R. Debit Credit Balance Account: Accounts Payable No. 21 items are posted Date Item P.R. Debit Credit Balance to the general 3/1 Bal.  1,230 ledger. 3/31 P11 6,230 7,460 C5 - 36
The Cash Payments Journal Cash Payments Journal Page 7 Other Accounts Ck. Post Accounts Payable Cash Date No. Account Debited Ref. Debit Debit Credit 3/2 150 Rent Expense 1,600 1,600 3/15 151 Grayco Supplies 1,230 1,230 3/21 152 Jewett Bus. Syst. 2,800 2,800 3/22 153 Donnelly Supp. 420 420 3/30 154 Utilities Expense 1,050 1,050 3/31 155 Howard Supplies 600 600 Totals 2,650 5,050 7,700 All cash payments are recorded in this journal. Every check is listed in numerical order. This journal is often referred to as a check register. C5 - 37
Posting to the Subsidiary Ledger Cash Payments Journal Page 7 Other Accounts Ck. Post Accounts Payable Cash Date No. Account Debited Ref. Debit Debit Credit 3/2 150 Rent Expense 1,600 1,600 3/15 151 Grayco Supplies 1,230 1,230 3/21 152 Jewett Bus. Syst. 2,800 2,800 3/22 153 Donnelly Supp. 420 420 3/30 154 Utilities Expense 1,050 1,050 3/31 155 Howard Supplies 600 600 Totals 2,650 5,050 7,700 Accounts Payable Subsidiary Ledger Each Accounts Payable debit is Grayco Supplies posted to the Date Item P.R. Debit Credit Balance accounts payable 3/1 Bal.  1,230 subsidiary ledger. C5 - 38
Posting to the Subsidiary Ledger Cash Payments Journal Page 7 Other Accounts Ck. Post Accounts Payable Cash Date No. Account Debited Ref. Debit Debit Credit 3/2 150 Rent Expense 1,600 1,600 3/15 151 Grayco Supplies  1,230 1,230 3/21 152 Jewett Bus. Syst. 2,800 2,800 3/22 153 Donnelly Supp. 420 420 3/30 154 Utilities Expense 1,050 1,050 3/31 155 Howard Supplies 600 600 Totals 2,650 5,050 7,700 Accounts Payable Subsidiary Ledger Each Accounts Payable debit is Grayco Supplies posted to the Date Item P.R. Debit Credit Balance accounts payable 3/1 Bal.  1,230 subsidiary ledger. 3/15 CP7 1,230 0 C5 - 39
Posting to the General Ledger Cash Payments Journal Page 7 Other Accounts Ck. Post Accounts Payable Cash Date No. Account Debited Ref. Debit Debit Credit 3/2 150 Rent Expense 1,600 1,600 3/15 151 Grayco Supplies  1,230 1,230 3/21 152 Jewett Bus. Syst.  2,800 2,800 3/22 153 Donnelly Supp.  420 420 3/30 154 Utilities Expense 1,050 1,050 3/31 155 Howard Supplies  600 600 Totals 2,650 5,050 7,700 ( ) General Ledger The highlighted Date Item P.R. Debit Credit Balance Account: Accounts Payable No. 21 items are posted to the general 3/1 Bal.  1,230 ledger. 3/31 P11 6,230 7,460 C5 - 40
Posting to the General Ledger Cash Payments Journal Page 7 Other Accounts Ck. Post Accounts Payable Cash Date No. Account Debited Ref. Debit Debit Credit 3/2 150 Rent Expense 52 1,600 1,600 3/15 151 Grayco Supplies  1,230 1,230 3/21 152 Jewett Bus. Syst.  2,800 2,800 3/22 153 Donnelly Supp.  420 420 3/30 154 Utilities Expense 54 1,050 1,050 3/31 155 Howard Supplies  600 600 Totals 2,650 5,050 7,700 ( ) (21) (11) General Ledger The highlighted Date Item P.R. Debit Credit Balance Account: Accounts Payable No. 21 items are posted to the general 3/1 Bal.  1,230 ledger. 3/31 P11 6,230 7,460 3/31 CP7 5,050 2,410 C5 - 41
Chapter 5 Power Notes Accounting Systems and Internal Controls This is the last slide in Chapter 5. Note: To see the topic slide, type 2 and press Enter. C5 - 42

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05 Accounting System and Internal Controls

  • 1.
    Chapter 5 Power Notes Accounting Systems and Internal Controls Learning Objectives 1. Basic Accounting Systems 2. Internal Control 3. Manual Accounting Systems 4. Adapting Manual Accounting Systems 5. Computerized Accounting Systems C5 C5 - 1
  • 2.
    Chapter 5 Power Notes Accounting Systems and Internal Controls Slide # Power Note Topics 3 • Internal Control Framework, Procedures 9 • Special Journals, Ledgers 17 • Revenue Journal and Ledgers 23 • Cash Receipts Journal and Ledgers 31 • Purchases Journal and Ledgers 37 • Cash Payments Journal and Ledgers Note: To select a topic type the slide # and press Enter. C5 - 2
  • 3.
    Internal Control Framework 1.Control Environment Control Environment C5 - 3
  • 4.
    Internal Control Framework 1.Control Environment 2. Risk Assessment Risk Assessment Control Environment C5 - 4
  • 5.
    Internal Control Framework 1.Control Environment 2. Risk Assessment 3. Control Procedures Control Procedures Risk Assessment Control Environment C5 - 5
  • 6.
    Internal Control Framework 1.Control Environment 2. Risk Assessment 3. Control Procedures 4. Monitoring Monitoring Control Procedures Risk Assessment Control Environment C5 - 6
  • 7.
    Internal Control Framework 1.Control Environment 2. Risk Assessment 3. Control Procedures 4. Monitoring 5. Information and Communication Communication Monitoring Control Procedures Risk Assessment Control Environment C5 - 7
  • 8.
    Internal Control Procedures •Competent Personnel • Rotating Duties • Assigning Responsibility • Separating Responsibilities for Related Operations • Separating Accounting and Asset Custody • Proofs and Security Measures C5 - 8
  • 9.
    General Ledger andSubsidiary Ledgers General Ledger Cash Accts. Receivable Supplies Accts. Payable C5 - 9
  • 10.
    General Ledger andSubsidiary Ledgers General Ledger Cash Accounts Receivable Subsidiary Ledger Accts. Receivable Customer Accounts A B C D Supplies Accts. Payable C5 - 10
  • 11.
    General Ledger andSubsidiary Ledgers General Ledger Cash Accounts Receivable Subsidiary Ledger Accts. Receivable Customer Accounts A B C D Supplies Accounts Payable Subsidiary Ledger Accts. Payable Creditor Accounts A B C D C5 - 11
  • 12.
  • 13.
    Special Journals SELLING Rendering ofservices on account recorded Revenue Journal in BUYING C5 - 13
  • 14.
    Special Journals SELLING Rendering ofservices on account recorded Revenue Journal in Receipt of cash from any source recorded Cash Receipts Journal in BUYING C5 - 14
  • 15.
    Special Journals SELLING Rendering ofservices on account recorded Revenue Journal in Receipt of cash from any source recorded Cash Receipts Journal in BUYING Purchase of items on account recorded Purchases Journal in C5 - 15
  • 16.
    Special Journals SELLING Rendering ofservices on account recorded Revenue Journal in Receipt of cash from any source recorded Cash Receipts Journal in BUYING Purchase of items on account recorded Purchases Journal in Payment of cash for any purpose recorded Cash Payments Journal in C5 - 16
  • 17.
    The Revenue Journal Revenue Journal Page 35 Invoice Post Accts. Rec. – Debit Date No. Account Debited Ref. Fees Earned – Credit 3/2 615 MyMusicClub.com 2,200 3/6 616 RapZone.com 1,750 3/18 617 Web Cantina 2,650 3/27 618 MyMusicClub.com 3,000 Totals 9,600 All sales on account are recorded in this journal. Each sales invoice is listed in numerical order. This journal is often referred to as an invoice register. C5 - 17
  • 18.
    Posting to theSubsidiary Ledger Revenue Journal Page 35 Invoice Post Accts. Rec. – Debit Date No. Account Debited Ref. Fees Earned – Credit 3/2 615 MyMusicClub.com 2,200 3/6 616 RapZone.com 1,750 3/18 617 Web Cantina 2,650 3/27 618 MyMusicClub.com 3,000 Totals 9,600 Each debit is Accounts Receivable Subsidiary Ledger posted to the MyMusicClub.com accounts receivable Date Item P.R. Debit Credit Balance subsidiary ledger. C5 - 18
  • 19.
    Posting to theSubsidiary Ledger Revenue Journal Page 35 Invoice Post Accts. Rec. – Debit Date No. Account Debited Ref. Fees Earned – Credit 3/2 615 MyMusicClub.com  2,200 3/6 616 RapZone.com 1,750 3/18 617 Web Cantina 2,650 3/27 618 MyMusicClub.com 3,000 Totals 9,600 Each debit is Accounts Receivable Subsidiary Ledger posted to the MyMusicClub.com accounts receivable Date Item P.R. Debit Credit Balance subsidiary 3/2 R35 2,200 2,200 ledger. C5 - 19
  • 20.
    Posting to theSubsidiary Ledger Revenue Journal Page 35 Invoice Post Accts. Rec. – Debit Date No. Account Debited Ref. Fees Earned – Credit 3/2 615 MyMusicClub.com  2,200 3/6 616 RapZone.com  1,750 3/18 617 Web Cantina  2,650 3/27 618 MyMusicClub.com  3,000 Totals 9,600 Each debit is Accounts Receivable Subsidiary Ledger posted to the MyMusicClub.com accounts receivable Date Item P.R. Debit Credit Balance subsidiary 3/1 R35 2,200 2,200 ledger. 3/27 R35 3,000 5,200 C5 - 20
  • 21.
    Posting to theGeneral Ledger Revenue Journal Page 35 Invoice Post Accts. Rec. – Debit Date No. Account Debited Ref. Fees Earned – Credit 3/2 615 MyMusicClub.com  2,200 3/6 616 RapZone.com  1,750 3/18 617 Web Cantina  2,650 3/27 618 MyMusicClub.com  3,000 Totals 9,600 The total is General Ledger posted to Account: Accounts Receivable No. 12 Accounts Receivable Date Item P.R. Debit Credit Balance AND to Fees 3/1 Bal  3,400 Earned. C5 - 21
  • 22.
    Posting to theGeneral Ledger Revenue Journal Page 35 Invoice Post Accts. Rec. – Debit Date No. Account Debited Ref. Fees Earned – Credit 3/2 615 MyMusicClub.com  2,200 3/6 616 RapZone.com  1,750 3/18 617 Web Cantina  2,650 3/27 618 MyMusicClub.com  3,000 Totals 9,600 (12) (41) The total is General Ledger posted to Account: Accounts Receivable No. 12 Accounts Receivable Date Item P.R. Debit Credit Balance AND to Fees 3/1 Bal  3,400 Earned. 3/31 R35 9,600 13,000 C5 - 22
  • 23.
    The Cash ReceiptsJournal Cash Receipts Journal Page 14 Other Accounts Post Accounts Receivable Cash Date Account Credited Ref. Credit Credit Debit 3/1 Rent Revenue 400 400 3/19 Web Cantina 3,400 3,400 3/28 MyMusicClub.com 2,200 2,200 3/30 RapZone.com 1,750 1,750 Totals 400 7,350 7,750 All cash received from any source is recorded in this journal. The total Cash Debit column equals the total of the two credit columns. C5 - 23
  • 24.
    Posting to theSubsidiary Ledger Cash Receipts Journal Page 14 Other Accounts Post Accounts Receivable Cash Date Account Credited Ref. Credit Credit Debit 3/1 Rent Revenue 400 400 3/19 Web Cantina 3,400 3,400 3/28 MyMusicClub.com 2,200 2,200 3/30 RapZone.com 1,750 1,750 Totals 400 7,350 7,750 Each Accounts Accounts Receivable Subsidiary Ledger Receivable credit is Web Cantina posted to the Date Item P.R. Debit Credit Balance accounts receivable 3/1 Bal  3,400 subsidiary ledger. 3/27 R35 2,650 6,050 C5 - 24
  • 25.
    Posting to theSubsidiary Ledger Cash Receipts Journal Page 14 Other Accounts Post Accounts Receivable Cash Date Account Credited Ref. Credit Credit Debit 3/1 Rent Revenue 400 400 3/19 Web Cantina  3,400 3,400 3/28 MyMusicClub.com 2,200 2,200 3/30 RapZone.com 1,750 1,750 Totals 400 7,350 7,750 Each Accounts Accounts Receivable Subsidiary Ledger Receivable credit is Web Cantina posted to the Date Item P.R. Debit Credit Balance accounts receivable 3/1 Bal  3,400 subsidiary ledger. 3/18 R35 2,650 6,050 3/19 CR14 3,400 2,650 C5 - 25
  • 26.
    Posting to theGeneral Ledger Cash Receipts Journal Page 14 Other Accounts Post Accounts Receivable Cash Date Account Credited Ref. Credit Credit Debit 3/1 Rent Revenue 400 400 3/19 Web Cantina  3,400 3,400 3/28 MyMusicClub.com  2,200 2,200 3/30 RapZone.com  1,750 1,750 Totals 400 7,350 7,750 ( ) The three General Ledger highlighted Account: Accounts Receivable No. 12 items are Date Item P.R. Debit Credit Balance posted to the general ledger. 3/1 Bal  3,400 3/31 R35 9,600 13,000 C5 - 26
  • 27.
    Posting to theGeneral Ledger Cash Receipts Journal Page 14 Other Accounts Post Accounts Receivable Cash Date Account Credited Ref. Credit Credit Debit 3/1 Rent Revenue 42 400 400 3/19 Web Cantina  3,400 3,400 3/28 MyMusicClub.com  2,200 2,200 3/30 RapZone.com  1,750 1,750 Totals 400 7,350 7,750 ( ) (12) (11) The three General Ledger highlighted Account: Accounts Receivable No. 12 items are Date Item P.R. Debit Credit Balance posted to the general ledger. 3/1 Bal  3,400 3/31 R35 9,600 13,000 3/31 CR14 7,350 5,650 C5 - 27
  • 28.
    Account: Accounts Receivable No. 12 General Ledger Date Item P.R. Debit Credit Balance Accounts 3/1 Bal.  3,400 Receivable 3/31 R35 9,600 13,000 Control Account 3/31 CR14 7,350 5,650 If the accounts receivable account in the general ledger only shows summary totals, where are the individual customer balances? C5 - 28
  • 29.
    Account: Accounts Receivable No. 12 General Ledger Date Item P.R. Debit Credit Balance Accounts 3/1 Bal.  3,400 Receivable 3/31 R35 9,600 13,000 Control Account 3/31 CR14 7,350 5,650 MyMusicClub.com Date Item P.R. Debit Credit Balance 3/2 R35 2,200 2,200 3/27 R35 3,000 5,200 Accounts 3/28 CR14 2,200 3,000 Receivable RapZone.com Subsidiary Date Item P.R. Debit Credit Balance 3/6 R35 1,750 1,750 Ledger 3/30 CR14 1,750 0 Web Cantina Date Item P.R. Debit Credit Balance 3/1 Bal.  3,400 3/18 R35 2,650 6,050 3/19 CR14 3,400 2,650 C5 - 29
  • 30.
    Account: Accounts Receivable No. 12 General Ledger Date Item P.R. Debit Credit Balance Accounts 3/1 Bal.  3,400 Receivable 3/31 R35 9,600 13,000 Control Account 3/31 CR14 7,350 5,650 MyMusicClub.com Date Item P.R. Debit Credit Balance 3/2 R35 2,200 2,200 3/27 R35 3,000 5,200 Accounts 3/28 CR14 2,200 3,000 Receivable RapZone.com Subsidiary Date Item P.R. Debit Credit Balance 3/6 R35 1,750 1,750 Ledger 3/30 CR14 1,750 0 Web Cantina Date Item P.R. Debit Credit Balance 3/1 Bal.  3,400 3/18 R35 2,650 6,050 3/19 CR14 3,400 2,650 C5 - 30
  • 31.
    The Purchases Journal Purchases Journal Page 11 Accts. Other Post Payable Supplies Accounts Post Date Account Credited Ref. Credit Debit Debit Ref. Amount 3/3 Howard Supplies 600 600 3/7 Donnelly Supplies 420 420 3/12 Jewett Bus. Syst. 2,800 Office Equip. 2,800 3/19 Donnelly Supplies 1,450 1,450 3/27 Howard Supplies 960 960 Totals 6,230 3,430 2,800 All purchases on account are recorded in this journal. The total credits to Accounts Payable equals the total of the two debit columns. C5 - 31
  • 32.
    Posting to theSubsidiary Ledger Purchases Journal Page 11 Accts. Other Post Payable Supplies Accounts Post Date Account Credited Ref. Credit Debit Debit Ref. Amount 3/3 Howard Supplies 600 600 3/7 Donnelly Supplies 420 420 3/12 Jewett Bus. Syst. 2,800 Office Equip. 2,800 3/19 Donnelly Supplies 1,450 1,450 3/27 Howard Supplies 960 960 Totals 6,230 3,430 2,800 Each credit is Accounts Payable Subsidiary Ledger posted to the Howard Supplies accounts payable Date Item P.R. Debit Credit Balance subsidiary ledger. C5 - 32
  • 33.
    Posting to theSubsidiary Ledger Purchases Journal Page 11 Accts. Other Post Payable Supplies Accounts Post Date Account Credited Ref. Credit Debit Debit Ref. Amount 3/3 Howard Supplies  600 600 3/7 Donnelly Supplies 420 420 3/12 Jewett Bus. Syst. 2,800 Office Equip. 2,800 3/19 Donnelly Supplies 1,450 1,450 3/27 Howard Supplies 960 960 Totals 6,230 3,430 2,800 Each credit is Accounts Payable Subsidiary Ledger posted to the Howard Supplies accounts payable Date Item P.R. Debit Credit Balance subsidiary ledger. 3/3 P11 600 600 C5 - 33
  • 34.
    Posting to theSubsidiary Ledger Purchases Journal Page 11 Accts. Other Post Payable Supplies Accounts Post Date Account Credited Ref. Credit Debit Debit Ref. Amount 3/3 Howard Supplies  600 600 3/7 Donnelly Supplies  420 420 3/12 Jewett Bus. Syst.  2,800 Office Equip. 2,800 3/19 Donnelly Supp.  1,450 1,450 3/27 Howard Supplies  960 960 Totals 6,230 3,430 2,800 Each credit is Accounts Payable Subsidiary Ledger posted to the Howard Supplies accounts payable Date Item P.R. Debit Credit Balance subsidiary ledger. 3/3 P11 600 600 3/27 P11 960 1,560 C5 - 34
  • 35.
    Posting to theGeneral Ledger Purchases Journal Page 11 Accts. Other Post Payable Supplies Accounts Post Date Account Credited Ref. Credit Debit Debit Ref. Amount 3/3 Howard Supplies  600 600 3/7 Donnelly Supplies  420 420 3/12 Jewett Bus. Syst.  2,800 Office Equip. 2,800 3/19 Donnelly Supp.  1,450 1,450 3/27 Howard Supplies  960 960 Totals 6,230 3,430 2,800  General Ledger The highlighted Date Item P.R. Debit Credit Balance Account: Accounts Payable No. 21 items are posted Date Item P.R. Debit Credit Balance to the general 3/1 Bal.  1,230 ledger. C5 - 35
  • 36.
    Posting to theGeneral Ledger Purchases Journal Page 11 Accts. Other Post Payable Supplies Accounts Post Date Account Credited Ref. Credit Debit Debit Ref. Amount 3/3 Howard Supplies  600 600 3/7 Donnelly Supplies  420 420 3/12 Jewett Bus. Syst.  2,800 Office Equip. 18 2,800 3/19 Donnelly Supp.  1,450 1,450 3/27 Howard Supplies  960 960 Totals 6,230 3,430 2,800 ( 21) (14) ( ) General Ledger The highlighted Date Item P.R. Debit Credit Balance Account: Accounts Payable No. 21 items are posted Date Item P.R. Debit Credit Balance to the general 3/1 Bal.  1,230 ledger. 3/31 P11 6,230 7,460 C5 - 36
  • 37.
    The Cash PaymentsJournal Cash Payments Journal Page 7 Other Accounts Ck. Post Accounts Payable Cash Date No. Account Debited Ref. Debit Debit Credit 3/2 150 Rent Expense 1,600 1,600 3/15 151 Grayco Supplies 1,230 1,230 3/21 152 Jewett Bus. Syst. 2,800 2,800 3/22 153 Donnelly Supp. 420 420 3/30 154 Utilities Expense 1,050 1,050 3/31 155 Howard Supplies 600 600 Totals 2,650 5,050 7,700 All cash payments are recorded in this journal. Every check is listed in numerical order. This journal is often referred to as a check register. C5 - 37
  • 38.
    Posting to theSubsidiary Ledger Cash Payments Journal Page 7 Other Accounts Ck. Post Accounts Payable Cash Date No. Account Debited Ref. Debit Debit Credit 3/2 150 Rent Expense 1,600 1,600 3/15 151 Grayco Supplies 1,230 1,230 3/21 152 Jewett Bus. Syst. 2,800 2,800 3/22 153 Donnelly Supp. 420 420 3/30 154 Utilities Expense 1,050 1,050 3/31 155 Howard Supplies 600 600 Totals 2,650 5,050 7,700 Accounts Payable Subsidiary Ledger Each Accounts Payable debit is Grayco Supplies posted to the Date Item P.R. Debit Credit Balance accounts payable 3/1 Bal.  1,230 subsidiary ledger. C5 - 38
  • 39.
    Posting to theSubsidiary Ledger Cash Payments Journal Page 7 Other Accounts Ck. Post Accounts Payable Cash Date No. Account Debited Ref. Debit Debit Credit 3/2 150 Rent Expense 1,600 1,600 3/15 151 Grayco Supplies  1,230 1,230 3/21 152 Jewett Bus. Syst. 2,800 2,800 3/22 153 Donnelly Supp. 420 420 3/30 154 Utilities Expense 1,050 1,050 3/31 155 Howard Supplies 600 600 Totals 2,650 5,050 7,700 Accounts Payable Subsidiary Ledger Each Accounts Payable debit is Grayco Supplies posted to the Date Item P.R. Debit Credit Balance accounts payable 3/1 Bal.  1,230 subsidiary ledger. 3/15 CP7 1,230 0 C5 - 39
  • 40.
    Posting to theGeneral Ledger Cash Payments Journal Page 7 Other Accounts Ck. Post Accounts Payable Cash Date No. Account Debited Ref. Debit Debit Credit 3/2 150 Rent Expense 1,600 1,600 3/15 151 Grayco Supplies  1,230 1,230 3/21 152 Jewett Bus. Syst.  2,800 2,800 3/22 153 Donnelly Supp.  420 420 3/30 154 Utilities Expense 1,050 1,050 3/31 155 Howard Supplies  600 600 Totals 2,650 5,050 7,700 ( ) General Ledger The highlighted Date Item P.R. Debit Credit Balance Account: Accounts Payable No. 21 items are posted to the general 3/1 Bal.  1,230 ledger. 3/31 P11 6,230 7,460 C5 - 40
  • 41.
    Posting to theGeneral Ledger Cash Payments Journal Page 7 Other Accounts Ck. Post Accounts Payable Cash Date No. Account Debited Ref. Debit Debit Credit 3/2 150 Rent Expense 52 1,600 1,600 3/15 151 Grayco Supplies  1,230 1,230 3/21 152 Jewett Bus. Syst.  2,800 2,800 3/22 153 Donnelly Supp.  420 420 3/30 154 Utilities Expense 54 1,050 1,050 3/31 155 Howard Supplies  600 600 Totals 2,650 5,050 7,700 ( ) (21) (11) General Ledger The highlighted Date Item P.R. Debit Credit Balance Account: Accounts Payable No. 21 items are posted to the general 3/1 Bal.  1,230 ledger. 3/31 P11 6,230 7,460 3/31 CP7 5,050 2,410 C5 - 41
  • 42.
    Chapter 5 Power Notes Accounting Systems and Internal Controls This is the last slide in Chapter 5. Note: To see the topic slide, type 2 and press Enter. C5 - 42