5 Accounting Systems

After studying this chapter, you should be able to: After studying this chapter, you should be able to: Define an accounting system and describe its implementation. Journalize and post transactions in a manual accounting system that uses subsidiary ledgers and special journals.

After studying this chapter, you should be able to: After studying this chapter, you should be able to: Describe and give examples of additional subsidiary ledgers and modified special journals. Apply computerized accounting to the revenue and collection cycle. Describe the basic features of e-commerce.

Define an accounting system and describe its implementation. 5-1 Objective 1 Define an accounting system and describe its implementation.

Accounting Systems Growth Process 5-1 5

Determine how the system should provide this information. Three Step Process as a Business Grows and Changes 5-1 Step 1: Analysis Identify the needs of those who use the business’s financial information. Determine how the system should provide this information.

Step 2: Design Step 3: Implementation 5-1 Step 2: Design The system is designed so that it meets the users’ needs. Step 3: Implementation The system is implemented and used.

Feedback 5-1 Once a system has been implemented, feedback, or input from the users of the information can be used to analyze and improve the system.

Internal Controls 5-1 Internal controls are policies and procedures that protect assets from misuse, ensure that business information is accurate, and ensure that laws and regulations are being followed.

Processing Methods 5-1 Processing methods are the means by which the system collects, summarizes, and reports accounting information. These methods may be either manual or computerized.

5-2 Objective 2 Journalize and post transactions in a manual accounting system that uses subsidiary ledgers and special journals.

5-2 A large number of individual accounts with a common characteristic can be grouped together in a separate ledger called a subsidiary ledger.

5-2 The primary ledger, which contains all of the balance sheet and income statement accounts, is called a general ledger.

5-2 Each subsidiary ledger is represented in the general ledger by a summarizing account, called a controlling account.

5-2 The individual customers’ accounts are arranged in alphabetical order in a subsidiary ledger called the accounts receivable subsidiary ledger or customers ledger.

5-2 The individual creditors’ accounts are arranged in alphabetical order in a subsidiary ledger called the accounts payable subsidiary ledger, or creditors ledger.

5-2 General Ledger and Subsidiary Ledgers A B C D Cash 11 General Ledger and Subsidiary Ledgers 5-2 General Ledger Accounts Receivable Subsidiary Ledger A B C D Customer Accounts Cash 11 Accts. Rec. 12 Supplies 14 Accounts Payable Subsidiary Ledger A B C D Creditor Accounts Accts. Pay. 21 17

Revenue journal Cash receipts journal 5-2 5-2 Special Journals SELLING Providing services on account Revenue journal recorded in Receipt of cash from any source Cash receipts journal recorded in 18

Purchases journal Cash payments journal 5-2 BUYING 5-2 Special Journals BUYING Purchase of items on account Purchases journal recorded in Payment of cash for any purpose Cash payments journal recorded in 19

5-2 Special Journals The all-purpose two-column journal, called the general journal or simply the journal can be used for entries that do not fit into any of the special journals.

5-2 The revenue journal is used for recording fees earned on account. Cash fees earned would be recorded in the cash receipts journal.

5-2 Posting the Revenue Journal Revenue Journal 22 Page 35 1 5-2 Posting the Revenue Journal Revenue Journal Invoice Post Accts. Rec. – Debit Date No. Account Debited Ref. Fees Earned – Credit Page 35 1 2 3 4 5 6 2008 Mar. 2 615 Accessories by Claire 2 2 0 0 00 6 616 RapZone 1 7 5 0 00 18 617 Web Cantina 2 6 5 0 00 27 618 Accessories by Claire 3 0 0 0 00 22

5-2 Revenue Journal Accounts Receivable Subsidiary Ledger 23 Page 35 1 5-2 Revenue Journal Invoice Post Accts. Rec. – Debit Date No. Account Debited Ref. Fees Earned – Credit Page 35 1 2 3 4 5 6 2008 Mar. 2 615 Accessories by Claire 2 2 0 0 00 6 616 RapZone 1 7 5 0 00 18 617 Web Cantina 2 6 5 0 00 27 618 Accessories by Claire 3 0 0 0 00 Accounts Receivable Subsidiary Ledger Accessories by Claire Date Item P.R. Debit Credit Balance Mar. 2 R35 2,200 2,200 2008 23

5-2 Revenue Journal Accounts Receivable Subsidiary Ledger 24 Page 35 1 5-2 Revenue Journal Invoice Post Accts. Rec. – Debit Date No. Account Debited Ref. Fees Earned – Credit Page 35 1 2 3 4 5 6 2008 Mar. 2 615 Accessories by Claire 2 2 0 0 00 6 616 RapZone 1 7 5 0 00 18 617 Web Cantina 2 6 5 0 00 27 618 Accessories by Claire 3 0 0 0 00 Accounts Receivable Subsidiary Ledger Accessories by Claire Date Item P.R. Debit Credit Balance Mar. 2 R35 2,200 2,200 2008 24

5-2 Revenue Journal Invoice Post Accts. Rec. – Debit Date No. Account Debited Ref. Fees Earned – Credit Page 35 1 2 3 4 5 6 2008 Mar. 2 615 Accessories by Claire 2 2 0 0 00 6 616 RapZone 1 7 5 0 00 18 617 Web Cantina 2 6 5 0 00 27 618 Accessories by Claire 3 0 0 0 00 25

5-2 Exhibit 2 Revenue Journal Revenue Journal 26 Page 35 1 Exhibit 2 Revenue Journal 5-2 Revenue Journal Invoice Post Accts. Rec. – Debit Date No. Account Debited Ref. Fees Earned – Credit Page 35 1 2 3 4 5 6 2008 Mar. 2 615 Accessories by Claire 2 2 0 0 00 6 616 RapZone 1 7 5 0 00 18 617 Web Cantina 2 6 5 0 00 27 618 Accessories by Claire 3 0 0 0 00 31 9 6 0 0 00 26

5-2 The debit total is posted from the revenue journal to Accounts Receivable in the general ledger. ACCOUNT Accounts Receivable Account No. 12 Post. Ref. Balance Date Item Dr. Cr. Dr. Cr. 2008 Mar. 1 Balance 3 400 00 31 R35 9 600 00 13 000 00 Revenue Journal, page 35 27

5-2 Revenue Journal Invoice Post Accts. Rec. – Debit Date No. Account Debited Ref. Fees Earned – Credit Page 35 1 2 3 4 5 6 2008 Mar. 2 615 Accessories by Claire 2 2 0 0 00 6 616 RapZone 1 7 5 0 00 18 617 Web Cantina 2 6 5 0 00 27 618 Accessories by Claire 3 0 0 0 00 31 9 6 0 0 00 (12) Indicates a debit posting of $9,600 to Accounts Receivable (General Ledger Account 12) 28

5-2 The credit total is posted from the revenue journal to Fees Earned in the general ledger. ACCOUNT Fees Earned Account No. 41 Post. Ref. Balance Date Item Dr. Cr. Dr. Cr. 2008 Mar. 31 R35 9 600 00 9 600 00 Revenue Journal, page 35 29

5-2 Revenue Journal Invoice Post Accts. Rec. – Debit Date No. Account Debited Ref. Fees Earned – Credit Page 35 1 2 3 4 5 6 2008 Mar. 2 615 Accessories by Claire 2 2 0 0 00 6 616 RapZone 1 7 5 0 00 18 617 Web Cantina 2 6 5 0 00 27 618 Accessories by Claire 3 0 0 0 00 31 9 6 0 0 00 (12) (41) Indicates a credit posting of $9,600 to Fees Earned (General Ledger Account 41) 30

The following revenue transactions occurred during December: 5-2 Example Exercise 5-1 The following revenue transactions occurred during December: Dec. 5 Invoice No. 302 to Butler Company for services provided on account, $5,000. Dec. 9 Invoice No. 303 to JoJo Enterprises for services provided on account, $2,100. Dec. 15 Invoice No. 304 to Double D, Inc. for services provided on account, $3,250. Record these transactions in a revenue journal as illustrated in Exhibit 2. 31

For Practice: PE 5-1A, PE 5-1B 5-2 Follow My Example 5-1 Revenue Journal Invoice Post Accts. Rec. – Debit Date No. Account Debited Ref. Fees Earned – Credit Page 1 2 3 4 5 6 Dec. 5 302 Butler Company 5 0 0 0 00 9 303 JoJo Enterprises 2 1 0 0 00 15 304 Double D Inc. 3 2 5 0 00 For Practice: PE 5-1A, PE 5-1B 32

Cash Receipts Journal 5-2 All transactions that involve the receipt of cash are recorded in a cash receipts journal. Every entry recorded in the cash receipts journal will involve a debit to the “Cash Dr.” column.

5-2 GENERAL LEDGER Cash Receipts Journal and Postings 42 34 Cash Receipts Journal and Postings 5-2 Mar. 1 Rent Revenue 400 400 CASH RECEIPTS JOURNAL Other Accounts Post Accounts Receivable Cash Date Account Credited Ref. Cr. Cr. Dr. Page 14 2008 19 Web Cantina 3,400 3,400 28 Accessories by Claire 2,200 2,200 30 RapZone 1,750 1,750 42 GENERAL LEDGER ACCOUNT Rent Revenue Acct. No. 42 Date Item P.R. Debit Credit Cr. Bal. Mar. 1 400 400 2008 CR14 34

5-2 42 Accounts Receivable Subsidiary Ledger 35 CASH RECEIPTS JOURNAL 5-2 CASH RECEIPTS JOURNAL Page 14 Other Accounts Post Accounts Receivable Cash Date Account Credited Ref. Cr. Cr. Dr. 2008 42 Mar. 1 Rent Revenue 400 400 19 Web Cantina 3,400 3,400 28 Accessories by Claire 2,200 2,200 30 RapZone 1,750 1,750 Accounts Receivable Subsidiary Ledger Web Cantina Date Item P.R. Debit Credit Balance Mar. 1 Bal. 3,400 18 R35 2,650 6,050 2008 35 19 CR14 3,400 2,650

5-2 After all journalizing and posting for the month to individual accounts is complete, the columns are totaled.

5-2 Posted Cash Receipts Journal 42 ( ) (12) (11) 37 Posted Cash Receipts Journal 5-2 CASH RECEIPTS JOURNAL Page 14 Other Accounts Post Accounts Receivable Cash Date Account Credited Ref. Cr. Cr. Dr. 2008 42 Mar. 1 Rent Revenue 400 400 19 Web Cantina 3,400 3,400 28 Accessories by Claire 2,200 2,200 30 RapZone 1,750 1,750 400 7,350 7,750 ( ) (12) (11) A checkmark indicates that the items in this column are posted individually. 37

5-2 After posting, the total amount of the accounts in the accounts receivable subsidiary ledger should match the balance in the general ledger’s Accounts Receivable account.

Total debits (from revenue journal) 9,600 5-2 Accounts Receivable—(Controlling) Balance, March 1, 2008 $3,400 Total debits (from revenue journal) 9,600 Total credits (from cash receipts journal) (7,350) Balance, March 31, 2008 $5,650 NetSolutions Customer Balance Summary Report, March 31, 2008 Accessories By Claire $3,000 RapZone 0 Web Cantina 2,650 Total accounts receivable $5,650 39

Describe each transaction and the source of each posting. 5-2 Example Exercise 5-2 The debits and credits from two transactions are presented in the following customer account: NAME Sweet Tooth Confections ADDRESS 1212 Lombard St. Date Item P.R. Dr. Cr. Balance July 1 Bal. 625 7 Inv. 35 R12 86 711 31 Inv. 31 CR4 122 589 Describe each transaction and the source of each posting. 40

For Practice: PE 5-2A, PE 5-2B 5-2 Follow My Example 5-2 July 7 Provided $86 services on account to Sweet Tooth Confections, itemized on invoice 35. Amount posted from page 12 of the revenue journal. July 31 Cash of $122 was collected from Sweet Tooth Confections (invoice 31). Amount posted from page 4 of the cash receipts journal. For Practice: PE 5-2A, PE 5-2B 41

5-2 The purchases journal is designed for recording all purchases on account.

5-2 Journalizing in the Purchases Journal 43 PURCHASES JOURNAL Page 11 Journalizing in the Purchases Journal 5-2 PURCHASES JOURNAL Page 11 Accts. Other Post Payable Supplies Accounts Post Date Account Credited Ref. Cr. Dr. Dr. Ref. Amount 2008 Mar. 3 Howard Supplies 600 600 7 Donnelly Supplies 420 420 12 Jewett Business Sys. 2,800 Off. Equip. 2,800 19 Donnelly Supplies 1,450 1,450 27 Howard Supplies 960 960 43

5-2 Note that the March 12 purchase of office equipment for $2,800 is recorded as a debit in the “Other Accounts Dr.” column. Also note that the account title is written in for proper posting.

5-2 45 PURCHASES JOURNAL Page 11 Accts. Other 5-2 PURCHASES JOURNAL Page 11 Accts. Other Post Payable Supplies Accounts Post Date Account Credited Ref. Cr. Dr. Dr. Ref. Amount 2008 Mar. 3 Howard Supplies 600 600 7 Donnelly Supplies 420 420 12 Jewett Business Sys. 2,800 Off. Equip. 2,800 19 Donnelly Supplies 1,450 1,450 27 Howard Supplies 960 960 45

5-2 Posting the Purchases Journal Accounts Payable Subsidiary Ledger Posting the Purchases Journal 5-2 PURCHASES JOURNAL Page 11 Accts. Other Post Payable Supplies Accounts Post Date Account Credited Ref. Cr. Dr. Dr. Ref. Amount 2008 Mar. 3 Howard Supplies 600 600 7 Donnelly Supplies 420 420 12 Jewett Business Sys. 2,800 Off. Equip. 2,800 19 Donnelly Supplies 1,450 1,450 27 Howard Supplies 960 960 Accounts Payable Subsidiary Ledger Howard Supplies Date Item P.R. Dr. Cr. Balance Mar 3 600 600 2008 P11 46

5-2 PURCHASES JOURNAL Page 11 Accts. Other Post Payable Supplies Accounts Post Date Account Credited Ref. Cr. Dr. Dr. Ref. Amount 2008 Mar. 3 Howard Supplies 600 600 7 Donnelly Supplies 420 420 12 Jewett Business Sys. 2,800 Off. Equip. 18 2,800 19 Donnelly Supplies 1,450 1,450 27 Howard Supplies 960 960 Office Equipment (Account 18 in the general ledger) is debited for $2,800. 47

5-2 At the end of March, all columns are totaled and equality of debits and credits is verified. Then the total amount in the “Accounts Payable Cr.” and “Supplies Dr.” columns are posted. Because Office Equipment was posted earlier, the $2,800 total is not posted.

5-2 GENERAL LEDGER ACCOUNT Accounts Payable No. 21 49 Mar. 1 Bal 1,230 5-2 Accts. Other Post Payable Supplies Accounts Post Date Account Credited Ref. Cr. Dr. Dr. Ref. Amount PURCHASES JOURNAL Page 11 2008 Mar. 3 Howard Supplies 600 600 7 Donnelly Supplies 420 420 12 Jewett Business Sys. 2,800 Off. Equip. 18 2,800 19 Donnelly Supplies 1,450 1,450 27 Howard Supplies 960 960 31 6,230 3,430 2,800 ( ) ( ) ( ) 21 GENERAL LEDGER ACCOUNT Accounts Payable No. 21 Date Item P.R. Debit Credit Balance 2008 49 Mar. 1 Bal 1,230 31 P11 6,230 7,460

5-2 GENERAL LEDGER ACCOUNT Supplies No. 14 50 Mar. 1 Bal 2,500 31 P11 5-2 PURCHASES JOURNAL Page 11 2008 Mar. 3 Howard Supplies 600 600 Accts. Other Post Payable Supplies Accounts Post Date Account Credited Ref. Cr. Dr. Dr. Ref. Amount 7 Donnelly Supplies 420 420 12 Jewett Business Sys. 2,800 Off. Equip. 18 2,800 19 Donnelly Supplies 1,450 1,450 27 Howard Supplies 960 960 31 6,230 3,430 2,800 ( ) ( ) ( ) 21 14 GENERAL LEDGER ACCOUNT Supplies No. 14 Date Item P.R. Debit Credit Balance 50 2008 Mar. 1 Bal 2,500 31 P11 3,430 5,930

19 Purchased cleaning supplies for $110, on 5-2 Example Exercise 5-3 The following purchase transactions occurred during October for Helping Hand Cleaners: Oct. 11 Purchased cleaning supplies for $235, on account, from General Supplies. 19 Purchased cleaning supplies for $110, on account, from Hubble Supplies. 24 Purchased office equipment for $850, on account, from Office Warehouse. Record these transactions in a purchases journal as illustrated at the top of Exhibit 5. 51

For Practice: PE 5-3A, PE 5-3B 5-2 Follow My Example 5-3 PURCHASES JOURNAL Accts. Other Post Payable Supplies Accounts Post Date Account Credited Ref. Cr. Dr. Dr. Ref. Amount Oct. 11 General Supplies 235 235 19 Hubble Supplies 110 110 24 Office Warehouse 850 Off. Equip. 18 850 For Practice: PE 5-3A, PE 5-3B 52

Cash Payments Journal 5-2 All transactions involving a credit to Cash are recorded in the cash payments journal.

On March 2, issued Check 150 for rent of $1,600. 5-2 CASH PAYMENTS JOURNAL Other Accounts Ck. Post Accounts Payable Cash Date No. Account Debited Ref. Dr. Dr. Cr PAGE 7 2008 Mar. 2 150 Rent Expense 1,600 1,600 On March 2, issued Check 150 for rent of $1,600. 54

On March 15, issued Check 151 to Grayco Supplies on account, $1,230. 5-2 CASH PAYMENTS JOURNAL Other Accounts Ck. Post Accounts Payable Cash Date No. Account Debited Ref. Dr. Dr. Cr PAGE 7 2008 Mar. 2 150 Rent Expense 1,600 1,600 15 151 Grayco Supplies 1,230 1,230 On March 15, issued Check 151 to Grayco Supplies on account, $1,230. 55

5-2 Let’s post to the accounts payable subsidiary ledger at this time to keep the creditors’ account current.

5-2 CASH PAYMENTS JOURNAL Mar. 2 150 Rent Expense 1,600 1,600  5-2 CASH PAYMENTS JOURNAL PAGE 7 Other Accounts Ck. Post Accounts Payable Cash Date No. Account Debited Ref. Dr. Dr. Cr 2008 Mar. 2 150 Rent Expense 1,600 1,600 15 151 Grayco Supplies 1,230 1,230  Accounts Payable Subsidiary Ledger Grayco Supplies Mar. 3 Bal. 1,230 Date Item P.R. Dr. Cr. Balance 2008 15 CP7 1,230 --- 57

Journalize the remainder of March’s cash disbursements. 5-2 CASH PAYMENTS JOURNAL Other Accounts Ck. Post Accounts Payable Cash Date No. Account Debited Ref. Dr. Dr. Cr PAGE 7 2008 Mar. 2 150 Rent Expense 1,600 1,600 15 151 Grayco Supplies 1,230 1,230  21 152 Jewett Business Sys. 2,800 2,800 22 153 Donnelly Supplies 420 420 30 154 Utilities Expense 1,050 1,050 31 155 Howard Supplies 600 600 Journalize the remainder of March’s cash disbursements. 58

Journalized the remainder of March’s cash disbursements. 5-2 CASH PAYMENTS JOURNAL Other Accounts Ck. Post Accounts Payable Cash Date No. Account Debited Ref. Dr. Dr. Cr PAGE 7 CASH PAYMENTS JOURNAL Other Accounts Ck. Post Accounts Payable Cash Date No. Account Debited Ref. Dr. Dr. Cr PAGE 7 2008 Mar. 2 150 Rent Expense 1,600 1,600 2008 Mar. 2 150 Rent Expense 1,600 1,600 15 151 Grayco Supplies 1,230 1,230 15 151 Grayco Supplies 1,230 1,230   21 152 Jewett Business Sys. 2,800 2,800 22 153 Donnelly Supplies 420 420 30 154 Utilities Expense 1,050 1,050 31 155 Howard Supplies 600 600 21 152 Jewett Business Sys. 2,800 2,800 22 153 Donnelly Supplies 420 420 30 154 Utilities Expense 1,050 1,050 31 155 Howard Supplies 600 600  Journalized the remainder of March’s cash disbursements. Post to individual creditor’s accounts. 59 21

5-2 CASH PAYMENTS JOURNAL Other Accounts Ck. Post Accounts Payable Cash Date No. Account Debited Ref. Dr. Dr. Cr PAGE 7 CASH PAYMENTS JOURNAL Other Accounts Ck. Post Accounts Payable Cash Date No. Account Debited Ref. Dr. Dr. Cr PAGE 7 2008 Mar. 2 150 Rent Expense 1,600 1,600 2008 Mar. 2 150 Rent Expense 1,600 1,600 15 151 Grayco Supplies 1,230 1,230 15 151 Grayco Supplies 1,230 1,230  21 152 Jewett Business Sys. 2,800 2,800 22 153 Donnelly Supplies 420 420 30 154 Utilities Expense 1,050 1,050 31 155 Howard Supplies 600 600 21 152 Jewett Business Sys. 2,800 2,800 22 153 Donnelly Supplies 420 420 30 154 Utilities Expense 1,050 1,050 31 155 Howard Supplies 600 600 31 2,650 5,050 7,700 The journal is ruled, summed, and verified for equality of debits and the “Cash Cr.” column. 60

5-2 CASH PAYMENTS JOURNAL Other Accounts Ck. Post Accounts Payable Cash Date No. Account Debited Ref. Dr. Dr. Cr PAGE 7 CASH PAYMENTS JOURNAL Other Accounts Ck. Post Accounts Payable Cash Date No. Account Debited Ref. Dr. Dr. Cr PAGE 7 2008 Mar. 2 150 Rent Expense 1,600 1,600 2008 Mar. 2 150 Rent Expense 1,600 1,600 52 15 151 Grayco Supplies 1,230 1,230 15 151 Grayco Supplies 1,230 1,230  21 152 Jewett Business Sys. 2,800 2,800 22 153 Donnelly Supplies 420 420 30 154 Utilities Expense 1,050 1,050 31 155 Howard Supplies 600 600 21 152 Jewett Business Sys. 2,800 2,800 22 153 Donnelly Supplies 420 420 30 154 Utilities Expense 1,050 1,050 31 155 Howard Supplies 600 600 54 Items in the “Other Accounts Dr.” column are posted. Then the totals for “Accounts Payable Dr.” and “Cash Cr.” are posted. 31 2,650 5,050 7,700 ( )   (21) (11) 61

5-2 Accounts Payable Control and Subsidiary Ledger Accounts Payable Control and Subsidiary Ledger 5-2 Accounts Payable— (Control) Balance, March 1, 2008 $1,230 Total credits (from purchases journal) 6,230 Total debits (from cash payments journal) (5,050) Balance, March 31, 2008 $2,410 NetSolutions Supplier Balance Summary Report March 31, 2008 Donnelly Supplies $1,450 Grayco Supplies 0 Howard Supplies 960 Jewett Business Systems 0 Total $2,410 62

Describe each transaction and the source of each posting. 5-2 Example Exercise 5-4 The debits and credits from two transactions are presented in the following creditor’s (supplier’s) account: NAME Lassiter Services, Inc. ADDRESS 301 St. Bonaventure Ave. Date Item P.R. Dr. Cr. Balance Aug. 1 Bal. 320 12 Bill 101 CP36 200 120 22 Bill 106 P16 140 260 Describe each transaction and the source of each posting. 63

For Practice: PE 5-4A, PE 5-4B 5-2 Follow My Example 5-4 Aug. 12 Paid $200 to Lassiter Services, Inc. on account (Bill 101). Amount posted from page CP36 of the cash payments journal. Aug. 22 Purchased $140 of services on account from Lassiter Services, Inc. itemized on Bill 106. Amount posted from page P16 of the purchases journal. For Practice: PE 5-4A, PE 5-4B 64

5-3 Objective 3 Describe and give examples of additional subsidiary ledgers and modified special journals.

Modified Special Journals 5-3 A business may modify its special journals by adding one or more columns for recording transactions that occur frequently.

5-3 On November 2, NetSolutions issued Invoice No. 842 to Litten Company for $4,770, which included sales taxes of $270.

5-3 Modified Revenue Journal Revenue Journal 68 Page 40 Modified Revenue Journal 5-3 Revenue Journal Page 40 Nov. 2 842 Litten Co. 4 770 00 4 500 00 270 00 2008 Invoice Accts. Rec. Fees Earned Sales Tax. Pay Date No. Account Debited PR Dr. Cr. Cr. 68

5-3 Revenue Journal Page 40 Invoice Accts. Rec. Fees Earned Sales Tax. Pay Date No. Account Debited PR Dr. Cr. Cr. Nov. 2 842 Litten Co. 4 770 00 4 500 00 270 00 2008 $4,770 is debited to Litten Co. in the accounts payable subsidiary ledger 69

A checkmark indicates that the amount has been posted. 5-3 Revenue Journal Page 40 Invoice Accts. Rec. Fees Earned Sales Tax. Pay Date No. Account Debited PR Dr. Cr. Cr. Nov. 2 842 Litten Co. 4 770 00 4 500 00 270 00 2008 A checkmark indicates that the amount has been posted. 70

5-3 On November 3, issued Invoice No. 843 to Kaufman Supply Company for $1,166, which included sales taxes of $66.

5-3 Revenue Journal Page 40 Invoice Accts. Rec. Fees Earned Sales Tax. Pay Date No. Account Debited PR Dr. Cr. Cr. Nov. 2 842 Litten Co. 4 770 00 4 500 00 270 00 2008 3 843 Kaufmann Supply 1 166 00 1 100 00 66 00 72

19 Issued Invoice No. 59 to K-Jam Enterprises for 5-3 Example Exercise 5-5 The state of Tennessee has a 7% sales tax. Volunteer Services, Inc., a Tennessee company, had two revenue transactions as follows: Aug. 3 Issued Invoice No. 58 to Helena Company for services provided on account, $1,400, plus sales tax. 19 Issued Invoice No. 59 to K-Jam Enterprises for services provided on account, $900, plus sales tax. Record these transactions in a revenue journal as illustrated in the previous section. 73

For Practice: PE 5-5A, PE 5-5B 5-3 Follow My Example 5-5 Revenue Journal Invoice Accts. Rec. Fees Earned Sales Tax. Pay Date No. Account Debited PR Dr. Cr. Cr. Aug. 3 58 Helena Company 1 498 00 1 400 00 98 00 19 59 K-Jam Enterprises 963 00 900 00 63 00 For Practice: PE 5-5A, PE 5-5B 74

Apply computerized accounting to the revenue and collection cycle. 5-4 Objective 4 Apply computerized accounting to the revenue and collection cycle.

Database 5-4 A database collects, stores, and organizes information in a retrievable format.

5-4 77

At any time, managers may request reports from the software. 5-4 At any time, managers may request reports from the software. The customer balance summary. The fees earned by customer detail. The cash receipts.

Describe the basic features of e-commerce. 5-5 Objective 5 Describe the basic features of e-commerce.

e-Commerce 5-5 Using the Internet to perform business transactions is termed e-commerce.

B2C 5-5 When transactions are between a company and a consumer, it is termed B2C (business-to-consumer) e-commerce.

Supply chain management (SCM) Consumer relationship management (CRM) 5-5 Three more advanced areas where the Internet is being used for business purposes are: Supply chain management (SCM) Consumer relationship management (CRM) Product life-cycle management (PLM)