Chapter 5
Accounting Systems and
Internal Controls
Accounting, 21st Edition
Warren Reeve Fess
PowerPoint Presentation by Douglas Cloud
Professor Emeritus of Accounting
Pepperdine University
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of Thomson Learning. All rights reserved.
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Objectives
1. Define an accounting system and
After studying this
describe its implementation.
chapter, you should
2. List the three objectives
of
internal
be able to:
control, and define and give examples of
the five elements of internal control.
3. Journalize and post transactions in a
manual accounting system that uses
subsidiary ledgers and special journals.
Objectives
4. Describe and give examples of additional
subsidiary ledgers and modified special
journals.
5. Apply computerized accounting to the
revenue and collection cycle.
6. Describe the basic features of ecommerce.
Basic
Accounting
System
Analysis
Design
Implementation
Objectives of Internal
Control
To provide reasonable assurance that:
1. assets are safeguarded and used
for business purposes.
2. business information is accurate.
3. employees comply with laws and
regulations.
Elements of Internal Control
1.
2.
3.
4.
5.
Control environment
Risk assessment
Control procedures
Monitoring
Information and communication
Elements of Internal Control
1.
2.
3.
4.
5.
Control environment
Risk assessment
Control procedures
Monitoring
Information and communication
Management philosophy and
operating style influences the
control environment.
Elements of Internal Control
1.
2.
3.
4.
5.
Control environment
Risk assessment
Control procedures
Monitoring
Information and communication
Once risks are identified, they can be
analyzed to estimate their significance, to
assess their likelihood of occurring, and to
determine actions that will minimize them.
Elements of Internal Control
1.
2.
3.
4.
5.
Control environment
Risk assessment
Control procedures
Monitoring
Information and communication
Control Procedures




Competent Personnel
Rotating Duties
Mandatory Vacations
Separating Responsibilities for
Related Operations
 Separating Operations,
Custody of Assets, and
Accounting
 Proofs and Security Measures
Control Procedures




Competent Personnel
Rotating Duties
Mandatory Vacations
Separating Responsibilities for
Related Operations
 Separating Operations,
Custody of Assets, and
Accounting
 Proofs and Security Measures
Separating
Otherwise,
the following
Responsibilities
for
abuses
are possible:
Related
Operations
1. Orders
may be placed
on the basis of
friendship with a supplier, rather than on
price, quality, and other objective factors.
2. The quantity and quality of supplies received
may not be verified, thus causing payment
for supplies not received or poor-quality
supplies.
3. Supplies may be stolen by the employee.
4. The validity and accuracy of invoices may be
verified carelessly.
Control Procedures




Competent Personnel
Rotating Duties
Mandatory Vacations
Separating Responsibilities for
Related Operations
 Separating Operations,
Custody of Assets, and
Accounting
 Proofs and Security Measures
Custody of
Assets
Independent
check
Independent
check
Operations
Accounting
Independent
check
Elements of Internal Control
1.
2.
3.
4.
5.
Control environment
Risk assessment
Control procedures
Monitoring
Information and communication
Clues to Potential Problems
Warning signs with regard to people:
1. Abrupt changes in lifestyle.
2. Close social relationships with suppliers.
3. Refusing to take a vacation.
4. Frequent borrowing from other employees.
5. Excessive use of alcohol or drugs.
Clues to Potential Problems
Warning signs from the accounting system:
1. Missing documents or gaps in
transaction numbers.
2. An unusual increase in customer
refunds.
3. Differences between daily cash receipts
and bank deposits.
4. Sudden increase in slow payments.
5. Backlog in recording transactions.
Manual Accounting
Systems
General Ledger and Subsidiary Ledgers
General Ledger
Cash
11
Accounts Receivable
Subsidiary Ledger
Accts. Rec.
12
Customer Accounts
A
B
C
Supplies
14
Accounts Payable
Subsidiary Ledger
Accts. Pay.
21
Creditor Accounts
A
B
C
D
D
Special Journals
SELLING
Providing services on account
recorded in
Revenue journal
Receipt of cash from any source
recorded in
Cash receipts journal
BUYING
Purchase of items on account
recorded in
Purchases journal
Payment of cash for any purpose
recorded in
Cash payments journal
The Revenue Journal
Page 35
Revenue Journal
Date
Invoice
No.
Account Debited
Post
Ref.
Accts. Rec. – Debit
Fees Earned – Credit
1
1
2
2
3
3
4
4
5
5
6
6
All sales on account are recorded in
this journal. Each sales invoice is
listed in numerical order.
The Revenue Journal
Page 35
Revenue Journal
Date
2006
1 Mar.
2
2
Invoice
No.
615
Account Debited
MyMusicClub.com
Post
Ref.
Accts. Rec. – Debit
Fees Earned – Credit
2 2 0 0 00 1
2
3
3
4
4
5
5
6
6
Performed services on credit to
MyMusic.com, $2,200.
The Revenue Journal
Page 35
Revenue Journal
Date
2006
1 Mar.
2
2
Invoice
No.
615
Account Debited
Post
Ref.
Accts. Rec. – Debit
Fees Earned – Credit
MyMusicClub.com
2 2 0 0 00 1
2
3
3
4
4
5
5
6
6
Notice that only one line is
required to make the entry.
Posting from the Revenue Journal
Page 35
Revenue Journal
Date
2006
1 Mar.
2
2
Invoice
No.
615
Account Debited
MyMusicClub.com
Post
Ref.
Accts. Rec. – Debit
Fees Earned – Credit
2 2 0 0 00 1
2
3
3
4
4
5
5
6
6
To update the MyMusicClub.com account,
the $2,200 debit is posted to the accounts
receivable subsidiary ledger.
Posting from the Revenue Journal
Page 35
Revenue Journal
Date
2006
1 Mar.
2
2
Invoice
No.
615
Post
Ref.
Account Debited
Accts. Rec. – Debit
Fees Earned – Credit
2 2 0 0 00 1
2
MyMusicClub.com
3
3
4
4
5
6
Accounts Receivable Subsidiary Ledger
MyMusicClub.com
Date
Item
P.R.
Debit
Credit
Balance
2006
Mar. 2
R35
2,200
2,200
5
6
Posting from the Revenue Journal
Page 35
Revenue Journal
Date
2006
1 Mar.
2
2
Invoice
No.
615
Post
Ref.
Account Debited
Accts. Rec. – Debit
Fees Earned – Credit
2 2 0 0 00 1
2
MyMusicClub.com
3
3
4
4
5
6
Accounts Receivable Subsidiary Ledger
MyMusicClub.com
Date
Item
P.R.
Debit
Credit
Balance
2006
Mar. 2
R35
2,200
2,200
This procedure is repeated for each posting
to the accounts receivable subsidiary ledger.
5
6
Posting from the Revenue Journal
Page 35
Revenue Journal
Date
Invoice
No.
2003
2006
1 Mar.
2 615
2
6 616
3
18 617
4
27 618
Account Debited
MyMusicClub.com
RapZone.com
Web Cantina
MyMusicClub.com
Post
Ref.
Accts. Rec. – Debit
Fees Earned – Credit
2 2 0 0 00 1
1 7 5 0 00 2
2 6 5 0 00 3
3 0 0 0 00 4
5
5
6
6
Assume that similar entries were
journalized and posted during the
month of March.
Posting from the Revenue Journal
Page 35
Revenue Journal
Date
Invoice
No.
2006
1 Mar.
2 615
2
6 616
3
18 617
4
27 618
5
31
Account Debited
MyMusicClub.com
RapZone.com
Web Cantina
MyMusicClub.com
Post
Ref.
Accts. Rec. – Debit
Fees Earned – Credit
2 2 0 0 00 1
1 7 5 0 00 2
2 6 5 0 00 3
3 0 0 0 00 4
9 6 0 0 00
6
5
6
On March 31, the revenue journal is
totaled and ruled.
Posting the Revenue Journal Total
Page 35
Revenue Journal
Date
Invoice
No.
2006
1 Mar.
2 615
2
6 616
3
18 617
4
27 618
5
31
Account Debited
MyMusicClub.com
RapZone.com
Web Cantina
MyMusicClub.com
Post
Ref.
Accts. Rec. – Debit
Fees Earned – Credit
2 2 0 0 00 1
1 7 5 0 00 2
2 6 5 0 00 3
3 0 0 0 00 4
9 6 0 0 00
6
5
6
Next, the revenue journal’s total
($9,600) is posted to the general ledger.
Posting the Revenue Journal Total
GENERAL LEDGER
ACCOUNT
Date
Accounts Receivable
Item
Post.
Ref.
Account No. 12
Balance
Dr.
Cr.
Dr.
2006
Mar.
1
31
Balance
3 400 00
R35
9 600 00
Revenue Journal, page 35
13 000 00
Cr.
Posting the Revenue Journal Total
Page 35
Revenue Journal
Date
2006
1 Mar.
2
2
6
3
18
4
5
6
27
31
Invoice
No.
Account Debited
615
MyMusicClub.com
616
RapZone.com
617
Web Cantina
618
MyMusicClub.com
Post
Ref.
Accts. Rec. – Debit
Fees Earned – Credit
2 2 0 0 00 1
1 7 5 0 00 2
2 6 5 0 00 3
3 0 0 0 00 4
9 6 0 0 00
(12)(41)
By placing the account number here, we
indicate that $9,600 has been debited to
Accounts Receivable in the general ledger.
5
6
Posting the Revenue Journal Total
GENERAL LEDGER
ACCOUNT
Date
2006
Mar. 31
Fees Earned
Item
Post.
Ref.
R35
Account No. 41
Balance
Dr.
Cr.
9 600 00
Dr.
Cr.
9 600 00
Posting the Revenue Journal Total
Page 35
Revenue Journal
Date
2006
1 Mar.
2
2
6
3
18
4
5
6
27
31
Invoice
No.
Account Debited
615
MyMusicClub.com
616
RapZone.com
617
Web Cantina
618
MyMusicClub.com
Post
Ref.
Accts. Rec. – Debit
Fees Earned – Credit
2 2 0 0 00 1
1 7 5 0 00 2
2 6 5 0 00 3
3 0 0 0 00 4
9 6 0 0 00
(12)(41)
Placing “41” here indicates that $9,600 has
been posted to the credit side of Fees
Earned in the general ledger.
5
6
The Cash Receipts Journal
The Cash Receipts Journal
All transactions that involve
the receipt of cash are
recorded in the cash receipts
journal.
The Cash Receipts Journal
CASH RECEIPTS JOURNAL
Date
2006
Account Credited
Mar. 1 Rent Revenue
Post
Ref.
Page 14
Other
Accounts
Cr.
Accounts
Receivable
Cr.
400
NetSolutions received $400 cash
on March 1 for the month’s rent.
Cash
Dr.
400
The Cash Receipts Journal
CASH RECEIPTS JOURNAL
Date
2006
Account Credited
Mar. 1
19
28
30
Rent Revenue
Web Cantina
MyMusicClub.com
RapZone.com
Post
Ref.
Page 14
Other
Accounts
Cr.
Accounts
Receivable
Cr.
400
3,400
2,200
1,750
Cash
Dr.
400
3,400
2,200
1,750
During March, NetSolutions collected
cash from three customers.
Posting the Cash Receipts Journal
CASH RECEIPTS JOURNAL
Date
2006
Mar. 1
19
28
30
Account Credited
Rent Revenue
Web Cantina
MyMusicClub.com
RapZone.com
Post
Ref.
Page 14
Other
Accounts
Cr.
Accounts
Receivable
Cr.
400
3,400
2,200
1,750
Cash
Dr.
400
3,400
2,200
1,750
Each account under “Accounts
Receivable Cr.” is posted to the accounts
receivable subsidiary ledger.
Posting the Cash Receipts Journal
CASH RECEIPTS JOURNAL
Date
2006
Mar. 1
19
28
30
Account Credited
Page 14
Post
Ref.
Rent Revenue
Web Cantina
MyMusicClub.com
RapZone.com
Other
Accounts
Cr.
Accounts
Receivable
Cr.
Cash
Dr.
400
400
3,400
2,200
1,750
3,400
2,200
1,750
Accounts Receivable Subsidiary Ledger
Web Cantina
Date
Item
P.R.
Debit
Credit
Balance
2006
Mar. 1 Bal.
18
19
R35
2,650
3,400
3,400
6,050
2,650
Posting the Cash Receipts Journal
CASH RECEIPTS JOURNAL
Date
2006
Mar. 1
19
28
30
Account Credited
Page 14
Post
Ref.
Rent Revenue
Web Cantina
MyMusicClub.com
RapZone.com
Other
Accounts
Cr.
Accounts
Receivable
Cr.
Cash
Dr.
400

400
3,400
2,200
1,750
3,400
2,200
1,750
Accounts Receivable Subsidiary Ledger
Web Cantina
Date
Item
P.R.
Debit
Credit
Balance
2006
Mar. 1 Bal.
18
R35
19
CR14
2,650
3,400
3,400
6,050
2,650
The Cash Receipts Journal
After all journalizing and
posting to the accounts
receivable subsidiary ledger for
the month is complete, the
columns are totaled.
The Cash Receipts Journal
CASH RECEIPTS JOURNAL
Date
2006
Mar. 1
19
28
30
31
Account Credited
Rent Revenue
Web Cantina
MyMusicClub.com
RapZone.com
Page 14
Post
Ref.
Other
Accounts
Cr.
Accounts
Receivable
Cr.
400



400
3,400
2,200
1,750
7,350
Cash
Dr.
400
3,400
2,200
1,750
7,750
The total “Cash Dr.” column
equals the total of the two
credit columns.
Posting the Cash Receipts Journal
CASH RECEIPTS JOURNAL
Date
2006
Mar. 1
19
28
30
31
Account Credited
Rent Revenue
Web Cantina
MyMusicClub.com
RapZone.com
Page 14
Post
Ref.
Other
Accounts
Cr.
Accounts
Receivable
Cr.
400



400
3,400
2,200
1,750
7,350
Cash
Dr.
400
3,400
2,200
1,750
7,750
GENERAL LEDGER
Account: Accounts Receivable
No. 12
The three
circled
are Balance
Date Item
P.R. items
Debit Credit
Mar.
Bal general

posted
to1 the
ledger. 3,400
R35 9,600
Let’s post 31Accounts
Receivable.13,000
2006
Posting the Cash Receipts Journal
CASH RECEIPTS JOURNAL
Date
2006
Mar. 1
19
28
30
31
Account Credited
Rent Revenue
Web Cantina
MyMusicClub.com
RapZone.com
Page 14
Post
Ref.
Other
Accounts
Cr.
Accounts
Receivable
Cr.
400



400
3,400
2,200
1,750
7,350
Cash
Dr.
400
3,400
2,200
1,750
7,750
GENERAL LEDGER
Account: Accounts Receivable
Date Item P.R.
Debit Credit
2006
Mar. 1 Bal

31
R35 9,600
31
CR14
7,350
No. 12
Balance
3,400
13,000
5,650
Posting the Cash Receipts Journal
CASH RECEIPTS JOURNAL
Date
2006
Mar. 1
19
28
30
31
Account Credited
Rent Revenue
Web Cantina
MyMusicClub.com
RapZone.com
Page 14
Post
Ref.
Other
Accounts
Cr.
Accounts
Receivable
Cr.
400



400
3,400
2,200
1,750
7,350
( )
(12)
Cash
Dr.
400
3,400
2,200
1,750
7,750
Posting the Cash Receipts Journal
The $7,750 total in the Cash
Debit column is posted to
Cash in a similar manner.
Posting the Cash Receipts Journal
The $400 credit to Rent Revenue
could have been posted earlier, but
posting it at the same time as other
general ledger accounts is proper.
Posting the Cash Receipts Journal
A completely posted cash
receipts journal is shown in
the next slide.
Posted Cash Receipts Journal
CASH RECEIPTS JOURNAL
Date
2006
Mar. 1
19
28
30
31
Account Credited
Rent Revenue
Web Cantina
MyMusicClub.com
RapZone.com
Page 14
Post
Ref.
42
Other
Accounts
Cr.
Accounts
Receivable
Cr.
400
Cash
Dr.
400
3,400
2,200
1,750
7,350
400
3,400
2,200
1,750
7,750
( )
(12)
(11)



Accounts
Receivable
Control
Account
GENERAL LEDGER
ACCOUNT Accounts Receivable
Date Item P.R.
Debit Credit
Mar. 1 Bal

31
R35 9,600
31
CR14
7,350
No. 12
Balance
3,400
13,000
5,650
If the accounts receivable
account in the general ledger
only shows summary totals,
where are the individual
customer balances?
Accounts
Receivable
Control
Account
GENERAL LEDGER
ACCOUNT Accounts Receivable
Date Item P.R.
Debit Credit
Mar. 1 Bal

31
R35 9,600
31
CR14
7,350
No. 12
Balance
3,400
13,000
5,650
MyMusicClub.com
Date
Accounts
Receivable
Subsidiary
Ledger
Item
3/2
3/27
3/28
P.R.
Debit
Credit Balance
R35 2,200
R35 3,000
CR14
2,200
5,200
3,000
2,200
RapZone.com
Date
Item
3/6
3/30
P.R.
Debit
Credit Balance
R35 1,750
CR14
1,750
--
1,750
Web Cantina
Date
Item
P.R.
Debit
Credit Balance
3/1 Bal. 
3/18
R35 2,650
3/19
CR14
3,400
6,050
2,650
3,400
The purchases journal is
designed for recording all
purchases on account.
Journalizing in the Purchases Journal
Date
2006
Page 11
PURCHASES JOURNAL
Accts.
Other
Post Payable Supplies Accounts Post
Account Credited Ref.
Cr.
Dr.
Dr.
Ref. Amount
Mar. 3 Howard Supplies
600
600
On March 3, 2003, NetSolutions
purchased supplies from Howard
Supplies, $600.
Posting the Purchases Journal
Date
Page 11
PURCHASES JOURNAL
Accts.
Other
Post Payable Supplies Accounts Post
Account Credited Ref.
Cr.
Dr.
Dr.
Ref. Amount
2006
Mar. 3 Howard Supplies
600
600
Accounts Payable Subsidiary Ledger
Howard Supplies
Date
2006
Item
P.R.
Dr.
Cr.
Balance
Mar 3 the accounts payable
600
600
To keep
subsidiary ledger current, this entry
is posted on March 3.
Posting the Purchases Journal
Date
2006
Page 11
PURCHASES JOURNAL
Accts.
Other
Post Payable Supplies Accounts Post
Account Credited Ref.
Cr.
Dr.
Dr.
Ref. Amount
Mar. 3 Howard Supplies
600
600
Accounts Payable and Supplies will
be posted as totals.
Journalizing in the Purchases Journal
Date
2006
Page 11
PURCHASES JOURNAL
Accts.
Other
Post Payable Supplies Accounts Post
Account Credited Ref.
Cr.
Dr.
Dr.
Ref. Amount
Mar. 3 Howard Supplies
7 Donnelly Supplies
600
420
600
420
On March 7, NetSolutions
purchased supplies from Donnelly
Supplies, $420.
Journalizing in the Purchases Journal
Date
2006
Page 11
PURCHASES JOURNAL
Accts.
Other
Post Payable Supplies Accounts Post
Account Credited Ref.
Cr.
Dr.
Dr.
Ref. Amount
Mar. 3 Howard Supplies
7 Donnelly Supplies
600
420
600
420
Journalizing in the Purchases Journal
Date
2006
Page 11
PURCHASES JOURNAL
Accts.
Other
Post Payable Supplies Accounts Post
Account Credited Ref.
Cr.
Dr.
Dr.
Ref. Amount
Mar. 3 Howard Supplies
7 Donnelly Supplies
12 Jewett Bus. Sys.
600
420
2,800
600
420
Off. Equip.
Because
On March
there
12, isn’t
NetSolutions
a special purchased
column for
office
Office
equipment
Equipment,
from
thisJewett
purchase
Business
was
recorded under
Systems,
“Other
$2,800.
Accounts Dr.”
2,800
Journalizing in the Purchases Journal
Date
2006
Mar. 3
7
12
19
27
Page 11
PURCHASES JOURNAL
Accts.
Other
Post Payable Supplies Accounts Post
Account Credited Ref.
Cr.
Dr.
Dr.
Ref. Amount
Howard Supplies
Donnelly Supplies
Jewett Bus. Sys.
Donnelly Supplies
Howard Supplies
600
420
2,800
1,450
960
600
420
Off. Equip.
2,800
1,450
960
Now, let’s look at the rest of March’s entries
(assume that all postings to the accounts payable
subsidiary ledger have been made).
Totaling the Purchases Journal
Page 11
PURCHASES JOURNAL
Accts.
Other
Post Payable Supplies Accounts Post
Account Credited Ref.
Cr.
Dr.
Dr.
Ref. Amount
Date
2006
Mar. 3
7
12
19
27
31
Howard Supplies
Donnelly Supplies
Jewett Bus. Sys.
Donnelly Supplies
Howard Supplies
600
420
2,800
1,450
960
6,230
600
420
Off. Equip.
1,450
960
3,430
At the end of March, all columns are totaled
$6,230
=
$3,430
+
$
2,800
and equality of debits and credits is verified.
2,800
2,800
Posting the Purchases Journal
Date
2006
Mar. 3
7
12
19
27
31
Page 11
PURCHASES JOURNAL
Accts.
Other
Post Payable Supplies Accounts Post
Account Credited Ref.
Cr.
Dr.
Dr.
Ref. Amount
Howard Supplies
Donnelly Supplies
Jewett Bus. Sys.
Donnelly Supplies
Howard Supplies
600
420
2,800
1,450
960
6,230
600
420
Off. Equip.
1,450
960
3,430
The next step is to post to the
general journal.
2,800
2,800
Date
2006
Mar. 3
7
12
19
27
31
Page 11
PURCHASES JOURNAL
Accts.
Other
Post Payable Supplies Accounts Post
Account Credited Ref.
Cr.
Dr.
Dr.
Ref. Amount
Howard Supplies
Donnelly Supplies
Jewett Bus. Sys.
Donnelly Supplies
Howard Supplies
600
420
2,800
1,450
960
6,230
600
420
Off. Equip.
1,450
960
3,430
2,800
GENERAL LEDGER
ACCOUNT Accounts Payable
Date Item P.R.
Mar. 1 Bal
31
P11
Debit Credit
6,230
2,800
No. 21
Balance
1,230
7,460
Date
2003
Mar. 3
7
12
19
27
31
Page 11
PURCHASES JOURNAL
Accts.
Other
Post Payable Supplies Accounts Post
Account Credited Ref.
Cr.
Dr.
Dr.
Ref. Amount
Howard Supplies
Donnelly Supplies
Jewett Bus. Sys.
Donnelly Supplies
Howard Supplies
600
420
2,800
1,450
960
6,230
(21)
600
420
Off. Equip.
1,450
960
3,430
2,800
GENERAL LEDGER
ACCOUNT Accounts Payable
Date Item P.R.
Mar. 1 Bal
31
P11
Debit Credit
6,230
2,800
No. 21
Balance
1,230
7,460
Date
2003
Mar. 3
7
12
19
27
31
Page 11
PURCHASES JOURNAL
Accts.
Other
Post Payable Supplies Accounts Post
Account Credited Ref.
Cr.
Dr.
Dr.
Ref. Amount
Howard Supplies
Donnelly Supplies
Jewett Bus. Sys.
Donnelly Supplies
Howard Supplies
600
420
2,800
1,450
960
6,230
(21)
600
420
Off. Equip. 18
1,450
960
3,430
(14)
Supplies is posted as a total of $3,430
to general ledger account 21. Office
Equipment is posted individually.
2,800
2,800
Date
2006
Mar. 3
7
12
19
27
31
Page 11
PURCHASES JOURNAL
Accts.
Other
Post Payable Supplies Accounts Post
Account Credited Ref.
Cr.
Dr.
Dr.
Ref. Amount
Howard Supplies
Donnelly Supplies
Jewett Bus. Sys.
Donnelly Supplies
Howard Supplies
600
420
2,800
1,450
960
6,230
(21)
600
420
Off. Equip. 18
1,450
960
3,430
(14)
NetSolutions had only one entry in the
“Other Accounts Dr.” column. If there were
others, they would be posted individually.
Therefore, the total is not posted. A check
mark indicates that the total was not posted.
2,800
2,800
( )
The Cash Payments
Journal
All payments are
recorded in the cash
payments journal.
NetSolutions makes all
payments by check.
Let’s make all of the
cash payment journal
entries for March.
CASH PAYMENTS JOURNAL
Date
Ck.
No.
Account Debited
Other Accounts
Post Accounts Payable
Ref.
Dr.
Dr.
PAGE 7
Cash
Cr
2006
Mar. 2
150
Rent Expense
1,600
On March 2, NetSolutions paid
the rent for March by issuing
Check No. 150 for $1,600.
1,600
CASH PAYMENTS JOURNAL
Date
Ck.
No.
Account Debited
PAGE 7
Other Accounts
Post Accounts Payable
Ref.
Dr.
Dr.
Cash
Cr
2006
Mar. 2
15
150
151
Rent Expense
Grayco Supplies
1,600
1,230
On March 15, issued Check No. 151 to
Grayco Supplies on account, $1,230.
1,600
1,230
CASH PAYMENTS JOURNAL
Date
Ck.
No.
Account Debited
PAGE 7
Other Accounts
Post Accounts Payable
Ref.
Dr.
Dr.
Cash
Cr
2006
Mar. 2
15
150
151
Rent Expense
Grayco Supplies
1,600

1,230
1,600
1,230
Accounts Payable Subsidiary Ledger
Supplies
Let’s postGrayco
to the
accounts payable
Date
Item P.R.
Dr.
Cr.
Balance
subsidiary Mar.
ledger
at this time to keep1,230
3 Bal.
15
CP7 1,230
--the creditor’s
account
current.
CASH PAYMENTS JOURNAL
Date
Ck.
No.
Account Debited
PAGE 7
Other Accounts
Post Accounts Payable
Ref.
Dr.
Dr.
Cash
Cr
2006
Mar. 2
15
21
150
151
152
Rent Expense
Grayco Supplies

Jewett Business Sys.
1,600
1,230
2,800
On March 21, issued Check No.
152 as payment on account to
Jewett Business Systems, $2,800.
1,600
1,230
2,800
CASH PAYMENTS JOURNAL
Date
Ck.
No.
Account Debited
PAGE 7
Other Accounts
Post Accounts Payable
Ref.
Dr.
Dr.
Cash
Cr
2006
Mar. 2
15
21
22
150
151
152
153
Rent Expense
Grayco Supplies

Jewett Business Sys. 
Donnelly Supplies.
1,600
1,230
2,800
420
On March 22, issued Check No.
153 as payment on account to
Donnelly Supplies, $420.
1,600
1,230
2,800
420
CASH PAYMENTS JOURNAL
Date
Ck.
No.
Account Debited
PAGE 7
Other Accounts
Post Accounts Payable
Ref.
Dr.
Dr.
Cash
Cr
2006
Mar. 2
15
21
22
30
150
151
152
153
154
Rent Expense
Grayco Supplies

Jewett Business Sys. 
Donnelly Supplies. 
Utilities Expense
1,600
1,230
2,800
420
1,050
On March 30, issued Check No. 154 as
payment for utility bill, $1,050.
1,600
1,230
2,800
420
1,050
CASH PAYMENTS JOURNAL
Date
Ck.
No.
Account Debited
PAGE 7
Other Accounts
Post Accounts Payable
Ref.
Dr.
Dr.
Cash
Cr
2006
Mar. 2
15
21
22
30
31
150
151
152
153
154
155
Rent Expense
Grayco Supplies

Jewett Business Sys. 
Donnelly Supplies. 
Utilities Expense
Howard Supplies
1,600
1,230
2,800
420
1,050
600
On March 31, issued Check
No. 155 on account to Howard
Supplies, $600
1,600
1,230
2,800
420
1,050
600
CASH PAYMENTS JOURNAL
Date
Ck.
No.
Account Debited
PAGE 7
Other Accounts
Post Accounts Payable
Ref.
Dr.
Dr.
Cash
Cr
2006
Mar. 2
15
21
22
30
31
31
150
151
152
153
154
155
Rent Expense
Grayco Supplies
Jewett Business Sys.
Donnelly Supplies.
Utilities Expense
Howard Supplies
1,600




1,230
2,800
420
1,050
2,650
600
5,050
The journal is ruled, summed, and
verified for equality of debits and
the “Cash Cr.” column.
1,600
1,230
2,800
420
1,050
600
7,700
CASH PAYMENTS JOURNAL
Date
Ck.
No.
Account Debited
PAGE 7
Other Accounts
Post Accounts Payable
Ref.
Dr.
Dr.
Cash
Cr
2006
Mar. 2
15
21
22
30
31
31
150
151
152
153
154
155
Rent Expense
Grayco Supplies
Jewett Business Sys.
Donnelly Supplies.
Utilities Expense
Howard Supplies
52



54

1,600
600
5,050
1,600
1,230
2,800
420
1,050
600
7,700
(21)
(11)
1,230
2,800
420
1,050
2,650
( )
Individual items in the “Other Accounts Dr.”
column are posted. Then the totals for “Accounts
Payable Dr.” and “Cash Cr.” are posted.
Accounts Payable
Control
Accounts Payable
GENERAL LEDGER
Accounts Payable
(Controlling)
ACCOUNT Accounts Payable
Date Item P.R.
Mar. 1 Bal
31
31
No. 12
Debit Credit
P11
CP7 5,050
6,230
Balance
1,230
7,460
2,410
Donnelly Supplies
Date
Accounts
Jewett Business
Payable
SystemsSubsidiary
also has
a zero balance,
so
Ledger
that account was
omitted for space
reasons.
Item
Mar 2
19
22
P.R.
P11
P11
CP7
Debit
Credit
420
1,450
420
Balance
420
1,870
1,450
Grayco Supplies
Date
Item
P.R.
Mar 1 Bal.
15  CP7
-Howard Supplies
Date
Mar 3
27
31
Item
P.R.
P11
P11
CP7
Debit
Credit
1,230
0
1,230
Debit
Credit
600
960
600
Balance
Balance
600
1,560
960
Advantages of a Computerized
Accounting System Over a
Manual Accounting System
1. Computerized systems simplify the recordkeeping process.
2. Computerized systems are generally more
accurate.
3. Computerized systems provide management
current account balance information to
support decision making.
The Revenue and Collection
Cycle in QuickBooks
From Exhibit 10, page 203 of textbook
Mail invoice to
customer
The Revenue and Collection
Cycle in QuickBooks Continued
From Exhibit 10, page 203 of textbook
The Revenue and Collection
Cycle in QuickBooks Continued
From Exhibit 10, page 203 of textbook
Advanced Areas Where the
Internet is Being Used for
Business Purposes
Supply chain management (SCM)
Customer relationship management (CRM)
Product life-cycle management (PLM)
Chapter 5
The End