BYE BYE MASTERSPORT, HELLO OFFICEMART, INC. Please open to the new chart of accounts – page 143 OfficeMart is not departmentalized, so accounts are not divided into departments (one income summary) The liabilities section reflects the fact that OfficeMart uses a voucher system for controlling cash payments The operating expenses section is divided into selling and administrative expenses: Selling Expenses are incurred directly and indirectly in making sales. They include salespeople's salaries, sales office costs, commissions, advertising, warehousing and shipping…the expenses of order taking and order fulfilling Administrative Expenses are not directly associated with the sale of goods…commonly considered "overhead" expenses, and include rent, utilities, telephone, travel and supplies.

VOUCHER SYSTEM Lesson 5-1, page 144 Cash, above all other assets needs to be controlled and protected -most misused asset because ownership is easily transferable -cash payments should be approved before being paid to ensure that the goods or services were ordered, have been received, and the amounts due are correct -depending on the size of the business, 1 to many people may be authorized to approve cash payments -Voucher – a business form used to show an authorized person’s approval for a cash payment -Voucher system – a set of procedures for controlling cash payments by preparing and approving vouchers before payments are made – No payments without

1 - Receive Invoice 3 - Record in Register 4 - Prepare Voucher Check 5 - Track Checks / Cash 2 - Prepare Voucher Returns/Payroll

VERIFYING AN INVOICE Lesson 5-1, page 146 When OfficeMart receives invoices, various clerks verify: -that the items were received in the correct quantities -that the terms and prices are correct -that the calculations on the invoice are correct Each clerk is responsible for their part in verification

INVOICE TO VOUCHER Lesson 5-1, page 146 After invoice verification, a voucher is prepared for each invoice – this is the source document for cash payments (OE) “Vouchers Payable” is used instead of “Accounts Payable” “Payable” means LIABILITY (- +) No accounts payable ledger is kept – an unpaid vouchers file is kept in its place – shows all amounts owed and to whom they are owed Vouchers are pre-numbered so all can be accounted for

Information about the payee Information about the accounts affected (Debits / Credits) Approval of the voucher Where the voucher is recorded (after approval & recording) Information about payment of the voucher (after payment) PREPARING A VOUCHER Lesson 5-1, page 147

VOUCHER FOLDERS

VOUCHER REGISTER (after approval) Lesson 5-1, page Write date Record payee. 3 3.Write voucher number. 5 5.Record debit amount…if it’s not a special column, use the general columns (All other payments – rent, utilities, etc.) 4.Enter credit amount. 4 ***replaces PURCHASES journal **The voucher is then placed in the unpaid vouchers file -according to payment date – optimizes discounts** Invoice date July 31st Terms 2/10 Due 8/10 – We pay on 8/8

Monday, 12/6 Tuesday, 12/7 Wednesday, 12/8 Thursday, 12/9 Friday, 12/10 Monday, 12/13 ABC Company Buddy’s Burger Barn Downs & Downs, Inc. Omni Imports Palikow Suppliers XYZ Company FILING VOUCHER REGISTERS Unpaid Voucher File System Organized by date to be paid Paid Voucher File System Organized by Vendor Name

Work Together 5-1 (p150, wb ) & On Your Own 5-1 (p150, wb ) Work Together 5-1 (p150, wb ) & On Your Own 5-1 (p150, wb )

WT-1/3 October 1. Purchased Merchandise on account from Dickens Company, Irving Street, Minneapolis, MN 55411, terms 2/10, n/30, $ V152 10/11/-- 10/1/-- 10/09/-- After you record it  ++++

WT-3/ PROOF Dr = Cr: = 2275

OYO-1/2 8/11/-- 8/09/-- 8/1/--

OYO-2/2

PREPARING A VOUCHER CHECK – check with a space for writing details – prepared in duplicate (copy as OE) Lesson 5-2, page Prepare check for net amount of invoice. 6 3.Enter amount of invoice. 3 4.Enter amount of discount. 4 5.Enter net amount. 5 1.Enter voucher number. 1 2.Enter payee’s invoice number. 2 **vouchers then filed in the paid vouchers file according to the name of the vendor**

JOURNALIZING CASH PAYMENTS Lesson 5-2, page Write check number. 3 4.Record voucher number. 4 5.Enter debit amount ( total from voucher ). 5 1.Write date. 1 2.Record payee. 2 Check Register – journal used to record cash payments in a voucher system replaces cash payments journal Maintains the checking account balance the only 3 accounts affected by a cash payment – if the discount is taken, all 3 will be affected 7.Calculate and record new balance. 7 6.Write credit amount(s). 6

JOURNALIZING DEPOSITS Lesson 5-2, page 153 **The deposits column does not need to be totaled and posted because each cash receipt is recorded in the cash receipts journal and posted from that journal **The final bank balance is compared to the cash balance in the GL …cash is proved if they are the same

PROVING, RULING AND POSTING A CHECK REGISTER Lesson 5-2, page 153 At month end, the special amount columns are proved, ruled and posted -same procedures as for previous special journals, but no separate amounts are posted individually -the 2 bank columns are used to summarize the status of the bank account only – NOT RULED OR POSTED (2105) (5110) (1105)

STARTING A NEW CHECK REGISTER PAGE Lesson 5-2, page 153 When a new page is needed because you ran out of room: Bring balances forward (no deposit amount) When a new page is needed because it’s the beginning of a new month: Bring ONLY the bank balance forward The other amounts were posted at the end of last month (2105) (5110) (1105) Sept 1

Work Together 5-2 (p154, wb187) & On Your Own 5-2 (p154, wb189) Work Together 5-2 (p154, wb187) & On Your Own 5-2 (p154, wb189)

WT On WB Page 180 PROOF: 2250=

OYO

PURCHASES RETURNS AND ALLOWANCES – p155-7 Lesson 5-3, page 155 cancels the old amount (originally credited VP) the amount of what we are actually keeping, $95 (what is STILL payable) amount returned, $85

PURCHASES RETURNS AND ALLOWANCES – p155-7 Lesson 5-3, page 155 We must reduce the amount owed for the invoice: 1.Cancel the original voucher write “Canceled” across section 5 Put canceled voucher and Debit Memo in the new voucher jacket 2.Change the original voucher record See page 156 line 6 (see vchr #) 3.Create a new voucher See page 156 lines 9 & 10 See voucher on page 155 AND VR on pages 156,157 Debit Vouchers Payable for the full amount, $180 (cancel the old amount) Credit Vouchers Payable for the amount of what we are actually keeping, $95 Credit Purchases Returns and Allowances (contra cost account – normal credit balance) for the amount returned, $85 File new voucher by its payment date in the unpaid vouchers file The new voucher has the same due date as the canceled voucher

3, , , , (calculate) , SOCIAL SECURITY TAX PAY. MEDICARE TAX PAY. 7/15/-- 7/15/--7/15/-- Payroll RECORDING PAYROLL ON A VOUCHER JACKET Details written on the inside of the voucher jacket Accounting summary on the outside of the voucher jacket Lesson 5-3, page 156-7

RECORDING PAYROLL IN A VOUCHER REGISTER Lesson 5-3, page 156-7

ADVANTAGES OF A VOUCHER SYSTEM Lesson 5-3, page Only a few people can authorize and approve payments – helps protect & control cash. 2.A voucher jacket provides a convenient way to file invoices and related business papers for future reference. 3.Unpaid vouchers are filed by their payment dates to help ensure payment of invoices within the discount periods. 4.An unpaid vouchers file and a paid vouchers file eliminate posting to an accounts payable ledger. 5.A paid vouchers file provides three different and easy ways to find information about a paid voucher. oIf know voucher #, look in the voucher register oIf know check #, look in the check register oIf know the payee name, look in the paid vouchers file under the payee name

Work Together 5-3 (p158, wb192,193) & On Your Own 5-3 (p158, wb196,197) Work Together 5-3 (p158, wb192,193) & On Your Own 5-3 (p158, wb196,197)

WT

OYO

APPLICATIONSAPPLICATIONS 1 – Preparing a voucher and journalizing vouchers in a voucher register 2 – Journalizing cash payments and deposits in a check register *Balance brought forward is 19, *As you write checks, go back and update 5-1 with check #s and payment dates Final Cash balance should be = 16, – Journalizing purchases returns and allowances in a voucher register *Cancel the original voucher (“see vchr #” in Date column) *Record the 2-line entry *Credit “VP” for the amount you are keeping **Debit “VP” for the full amount of the cancelled voucher **Credit Purchases Ret. & Allow” for amount returned 4 – Preparing and journalizing a voucher for payroll *All dates are 5/15 *See payroll slides for examples on completing pages 209  – Journalizing transactions in a voucher system Final Cash balance should be = 8,910.00