ACCT 2302 Chapter 23

Handling Transactions in a Voucher System

•Jones Supply Company's voucher system elements include: -Vouchers -Voucher register -Unpaid voucher file -Check register -Paid voucher file

Special debit columns

-Debit columns set up based on how often they are used

Date of payment and Check number column

-Filled in at the time of payment

Situation 2

-Partial payments planned after voucher prepared for full payment a. Original voucher is canceled. b. A new voucher is prepared for each installment. c. Check number column indicates which new vouchers are replacing the canceled voucher.

The sundry column

-Records amounts that do not have special columns set up

The posting rules

-The same for special journals

Voucher Register

-a special journal replacing the purchases journal; it records prenumbered vouchers at the time the liabilities are incurred. -The vouchers are entered in the voucher register in numerical order at the time the liability is incurred. a. The vouchers are entered in the voucher register in numerical order at the time the liability is incurred. b. The vouchers payable credit column records the amount due on each voucher (before any discounts) for purchases of merchandise, services, or other assets. c. Special debit columns are set up based on how often they are used. d. The sundry column, as in other special journals, records amounts that do not have special columns. e. Date of payment and check number are not filled in until time of payment. f. Accounts payable is used instead of vouchers payable when preparing the balance sheet.

check register

-a special journal that replaces the cash payments journal in recording payments of vouchers. •Posting of the check register follows the same rules as other special journals. a. The columns of the check register record the i. Date ii. Check number iii. Payable to iv. Voucher number v. Vouchers payable - this column is debited in recording the transaction. vi. Purchase discount - this column, if used, is credited in recording the transaction. vii. Cash in bank - this column is credited in recording the transaction. viii. Bank deposits column ix. Bank balance column b. Posting of the check register follows the same rules as other special journals. c. Once the voucher has been paid, it should be marked paid to avoid duplication.

Voucher

-a written authorization form that is used for every cash payment the company makes. •It contains all the details of the transaction in question along with the signatures of appropriate employees as authorization. •Compare the invoice with: -Purchase requisition -Purchase order -Receiving report -Match the specific requirements. -Match the prices of the order

Voucher System

-an internal control system designed to control a company's cash payments. -the accounts payable ledger is not used. -The unpaid file is its subsidiary ledger for the controlling account Vouchers Payable in the general ledger. -A schedule of vouchers payable is prepared at the end of the month. -made up of the following elements: Vouchers, voucher register, unpaid voucher file, check register and paid voucher file.

Situation 1

-chase returns and allowances after the voucher has been recorded There are two ways to handle this type of transaction a. Method 1: i. Cancel the original order. ii. Prepare a new voucher. b. Method 2: i. Modify the original voucher, ii. Make a correcting entry in the general journal.

paid voucher file

-holds paid vouchers filed either in sequential order by voucher number or alphabetically by creditor's name. -(Jones keeps all paid vouchers for six years. This amount of time will vary from company to company.)

How Does a Voucher System Work

1. The company prepares a purchase requisition and gets it authorized. 2. The company prepares a purchase order, which specifies details such as company, number of items, etc., and gets it authorized. 3. The vendor receives the purchase order and prepares a sales invoice specifying the number, type of goods, and price. 4. The company receives the goods and inspects the shipment, checks it against the purchase order and the sales invoice, and completes a receiving report. 5. The accounting department verifies the numbers (checking the purchase order, the invoice, and the receiving report to make sure the numbers are in agreement and no steps are left out). Then issues a voucher for payment, which is authorized. 6. Issue payment in the form of a check

Recording purchases at gross amount

a. Assume the discount will NOT be taken, and record the purchases at the full amount. b. Example: Mill company buys merchandise on account for $8,000 with terms 2/10, n/30. The gross method: Dr. Purchases 8,000 Cr. Vouchers Payable 8,000 Payment with discount taken: Dr. Vouchers Payable 8,000 Dr. Purchase Discounts 160 Cr. Cash 7,840 If the discount is missed: Dr. Vouchers Payable 8,000 Cr. Cash 8,000

Recording purchases at net amount

a. Assume the discount will be taken and record the purchases at the amount net of the discount. b. A discount missed is called discount lost and shown as a debit in the check register. c. Example: Mill company buys merchandise on account for $8,000 with terms 2/10, n/30. The net method (8,000 less a 2 % discount or 98% of the full price) Dr. Purchases ($8,000 x .98) 7,840 Cr. Vouchers Payable 7,840 If the discount is taken on time: Dr. Vouchers Payable 7,840 Cr. Cash 7,840 If discount is missed: Dr. Vouchers Payable 7,840 Dr. Discount Lost 160 Cr. Cash 8,000

Unpaid voucher file (tickler file)

contains unpaid vouchers arranged by due dates to take advantage of cash discounts.

Vouchers Payable

credit column records the amount due on each voucher (before any discounts) for purchases of merchandise, services, or other assets

Cross-referencing and cross-checking occurs when

every document is numbered and transactions are recorded in different places by different people and backed up by reference to numbers of other documents.

The voucher format

i. The front contains the voucher number, invoice number and date, purchase order number and verification steps. ii. The back contains the account distribution, space to complete the payment summary, and final approvals.

Internal controls

rules and procedures formulated for employees to impose order.

backbone of a voucher system

the rule that no purchases are made without an approved voucher backed up by documentation.

separation of duties

where no one person in a company is in control of all transactions or of everything to do with one transaction.