Problem

You were hired to assist Ashton Fleming in designing an accounting system for S&S. Ash...

You were hired to assist Ashton Fleming in designing an accounting system for S&S. Ashton has developed a list of the journals, ledgers, reports, and documents that he thinks S&S needs (see Table). He asks you to complete the following tasks:

a. Specify what data you think should be collected on each of the following four documents: sales invoice, purchase order, receiving report, employee time card.


b. Design a report to manage inventory.


c. Design a report to assist in managing credit sales and cash collections.


d. Visit a local office supply store and identify what types of journals, ledgers, and blank forms for various documents (sales invoices, purchase orders, etc.) are available. Describe how easily they could be adapted to meet S&S’s needs.

TABLE Documents, Journals, and Ledgers for S&S

TITLE

PURPOSE

Documents

 

Sales Invoice

Record cash and credit sales of merchandise

Service Invoice

Record sales of repair services

Delivery Ticket

Record delivery of merchandise to customers

Monthly Statement

Inform customers of outstanding account balances

Credit Memo

Support adjustments to customer accounts for sales returns and allowances and sales discounts; also support write-off of uncollectible accounts

Purchase Order

Order merchandise from vendors

Receiving Report

Record receipt of merchandise from vendors, indicating both quantity and condition of items received

Time Card

Record time worked by employees

Specialized Journals

 

Sales

Record all credit sales

Cash Receipts

Record cash sales, payments from customers, and other cash receipts

Purchases

Record all purchases from vendors

Cash Disbursements

Record all cash disbursements

General Journal

Record infrequent, nonroutine transactions; also record adjusting and closing entries

Subsidiary Ledgers

 

Accounts Receivable

Maintain details about amounts due from customers

Accounts Payable

Maintain details about amounts due to vendors

Inventory

Maintain details about each inventory item

Fixed Assets

Maintain details about each piece of equipment and other fixed assets

General Ledger

Maintain details about all major asset, liability, equity, revenue, and expense accounts

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Solutions For Problems in Chapter 2