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Memorandum

To:       Wendy Geiger                                                                            Case Study Assignment Help

From:   XYZ

Date:   June 21, 2016

Sub.:    Modification in current manual accounting system

Accounting system

This business memo assignment help is to suggest you the modifications, which you should do in your current manual accounting system to reduce the complexities of the expanded business activities. The accounting system is helpful to collect and process relevant data from transactions and then organize them in relevant reports. The current manual accounting system is not working properly due to increase in business transactions and credit sales from large corporations. You are currently using only general journal, general ledger and summary cash book, but these are not effective in the current expanding business situations. It is because due to increase in business, the current accounting system is quite time consuming.

In concern of this issue and your current business situation, most of the business transactions could be categorize in the special journals and subsidiary ledgers. It will enable to journalize the transactions in the labelled columns and then post the column total in the related ledger. It will be helpful to save lot of time and by continuing with manual accounting system. The special journal is used to record and post the similar types of transaction (Gilbertson & Lehman, 2011). The special journals will also complement the general journal, which is currently used in your business. On the other hand, use of subsidiary ledgers will help to get the timely information about customer and their credit balances (Weygandt, Kieso, Kimmel & DeFranco, 2008). Along with this assignment help general journal, the following four special journals should be included in the firm’s accounting system, which will increase the information efficiency and will save lot of time to record and post the transactions:

Sales journal: This journal is used to record the credit sales. Through the use of this journal, all the credit sales could be record in this journal that will help to determine the credits for each customer effectively (Kieso, Weygandt & Kimmel, 2008). It does not include the cash sales, which will help you to determine the credit sales and control them effectively.

Cash receipt journal: This journal will be used to record all the cash receipts, whether it is from sales of products or from any other item. It will also include the collection of account receivables, which will also enable to determine the total receipts from accounts (Gilbertson & Lehman, 2011).

Purchase journal: This journal is used to record the purchase made on credit. The retail business as most of the purchase on credit, so use of this journal will facilitate an effective record of all credit purchases (Weygandt, Kieso, Kimmel & DeFranco, 2008). It will enable you to determine the credit you have to pay for ensuring a better relationship with suppliers.

Cash disbursement journal: This journal will facilitate you to record all the cash payments to the creditors or lenders. An entry in this will reduce the balance in purchase journal. It will be beneficial for you to determine the payment you have made to creditors and also the remaining amount required to be made (Eisen, 2007).

Along with the above four journals, the general journal will help you to record the transactions, which are not in special journal. It will reduce the complexity of a single journal and will also reduce your time in accounting of business transaction (Gilbertson & Lehman, 2011).

Besides the above specific journals, subsidiary ledgers could also be maintained, which includes the detailed information for a specific account in the general ledger (Weygandt, Kimmel & Kieso, 2010). There are several subsidiary ledgers, which an organization could use, but for this retail firm, following two will be the most important and beneficial:

Accounts receivable ledger: This ledger includes the transaction of each customer account from general ledger. In the general ledger, this account is termed as the account receivables. This will be helpful for you to determine the charge each customer owns and make relevant strategies and policies to collect credits from them. The customer accounts are maintained in alphabetical orders in the accounts receivable ledger, which will also enhance the accessibility and timely information for customers (McQuaig & Bille, 2007). It can also be used for verify the accounts as the balance of this account should be equal to the total of accounts receivable in general ledger.

Accounts payable ledger: In this ledger the list of accounts payable is included in the alphabetical order. Through the use of this ledger, you will be able to determine the total credit and the total payment you have made to your suppliers. It could be verified from the total of accounts payable in the general ledger as the balance of this account will be equal to the total of accounts payable in the general ledger (Warren, Reeve & Duchac, 2011). It will also be effective to track the order, cost and other data to improve the business operations’ significance.

The use of specific journals and two special ledgers will also be beneficial for you to check the accuracy of accounts as all are based on double entry system through which you can match the balance and total in less time, which will increase your business performance (Gilbertson & Lehman, 2008).

 

 

References

Eisen. (2007). Accounting (5th ed.). USA: Barron’s Educational Series.

Gilbertson, C.B. & Lehman, M.W. (2008). Fundamentals of Accounting: Course 1 (9th ed.). USA: Cengage Learning.

Gilbertson, C.B. & Lehman, M.W. (2011). Century 21 Accounting: General Journal (9th ed.). USA: Cengage Learning.

Kieso, D.E., Weygandt, J.J. & Kimmel, P.D. (2008). Accounting: tools for business decision making (3rd ed.). USA: John Wiley & Sons.

McQuaig, D.J. & Bille, P.A. (2007). College Accounting Chapters 1 – 26 (9th ed.). USA: Cengage Learning.

Warren, C.S., Reeve, J.M. & Duchac, J.E. (2011). Accounting (24th ed.). USA: Cengage Learning.

Weygandt, J.J. Kimmel, P.D. & Kieso, D.E., (2010). Accounting Principles, Peachtree Complete Accounting Workbook (9th ed.). USA: John Wiley & Sons.

Weygandt, J.J., Kieso, D.E., Kimmel, P.D. & DeFranco, A.L. (2008). Hospitality Financial Accounting (2nd ed.). USA: John Wiley and Sons.

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