TO: Wendy Geiger
DATE: June 19, 2011
SUBJECT: Manual Accounting Modifications for Expanded Business
M E M O R A N D U M
This memo is to advise you of the best possible ways for you to modify your current manual accounting system to accommodate the expanded business activities for your retail store. Pursuant to our conversation, you generally obtain your goods on credit using purchase orders, and your sales are primarily cash. You currently keep your manual accounting system using a general journal and a general ledger, and you make one summary entry for cash sales at the end of each business day. Due to increased demand for your products and higher sales volume, including credit sales, maintaining the accounting records …show more content…
Special journals are used to record and post transactions, and are uniquely designed for each business, but for most merchandising companies, the journals used are sales journals, for recording sales on credit; cash receipts journals, to record sales made by cash; purchases journals, for recording goods obtained on credit; and cash disbursements journals, for recording payments made by cash. You are also able to use this format for your …show more content…
You are already summarizing each cash sales at the end of each business day, but my advice would be for you to continue recording the daily sales and purchases because it is necessary for you to balance your subsidiary ledger with your general ledger. Daily reconciliation will enable you to track any and all discrepancies more easily. Total your sales journal accounts at the end of each month and this amount should be the amount in the debit column in the Accounts Receivable. Regarding the last column, you will find more consistency in your inventory system if you follow this procedure.
I cannot stress the importance of proving the account balances in the general ledger and subsidiary ledgers periodically for accuracy after posting. You will first prepare a trial balance of the general ledger and confirm that all your debits are in balance with your credits. Additionally, Prepare a schedule of individual accounts and amounts. This is referred to as testing the subsidiary ledger. Generate a schedule of your customers' accounts to show the balance owed. If everything balances, the accounts are assumed