Advanced Accounting Chapter 5: A Voucher System

An accounting system includes procedures for recording and reporting accurate and up-to-date financial info Should also include procedures to assist management in controlling daily operations Cash is the asset most likely to be misused because its ownership is easily transferred Ways to control cash: store in a safe place, make deposits regularly, approve all cash payments Voucher: a business form used to show an authorized persons approval for a cash payment Voucher system: a set of procedures for controlling cash payments by preparing and approving vouchers before payments are made In a voucher system, NO check can be issued without a properly authorized voucher

Section 1: Vouchers and Voucher Registers

When receive an invoice, a verification form is stamped on the invoice this verification form is then filled in as the steps are completed Each person doing a part of the work places a check mark next to the item verified and initials the verification form to show responsibility for that part After an invoice is checked for accuracy, a voucher is prepared for each invoice received from a vendor When a voucher system is used, the source document for an approved cash payment is the voucher Instead of Accounts Payable use Vouchers Payable. Also do not use an Accounts Payable ledger instead use an unpaid vouchers file In a voucher system, Vouchers Payable is used to record ALL amounts to be paid by check not just amounts of items bought on account The normal balance is on the credit side of Vouchers Payable Unpaid vouchers file shows all amounts owed and to whom they are owed A form is printed on the outside of a voucher to summarize the contents and provide space for approving payments After the invoice is summarized on the voucher, the voucher is folded so that related documents can be placed inside sometimes called a voucher packet Prenumbered vouchers serve as an additional control within the voucher system

Five areas to record info: Payee Info Accounts affected info Voucher approval Info about where voucher is recorded Payment info Sections 1-3 are completed at the time the voucher is prepared Section 1 Payee Information o Use verified invoice to enter info, discount due date is calculated using the date the invoice is dated. o Most checks received within 2 days so payment date is 2 days before the discount due date. o After section 1 completed the voucher number is recorded on the invoices verification stamp Section 2 Accounts Affected: o Section 2 lists preprinted account titles for accounts most often affected by cash payments o Only the amount of the invoice needs to be entered in Section 2 o Total debits and credits must be calculated and entered Section 3 Voucher Approval o As a double check, certain people are authorized to approve vouchers before they are journalized o Approve it be signing name in this section After a voucher has been approved, it is recorded in the voucher register similar to and replaced the Purchases journal A missing voucher number shows that a voucher has not been recorded Voucher registers have special columns: Vouchers Payable credit, Purchases debit, Supplies debits for the different types of supplies, everything else is recorded in the general columns with the name of the account listed Section 4 When the Voucher is Recorded o Person who record the voucher in the register also does this section o Person indicates what page the info is recorded in the voucher register o Person also initials the space on the voucher After voucher journalized and noted in section 4, the voucher is filed in the unpaid vouchers file. Placed in file in order of payment due date Separate accounts recorded in the General Debit and Credit columns of a voucher register are posted individually during the month

1. 2. 3. 4. 5.

Totals of the special columns in the voucher register are posted to the general ledger accounts.

Section 2: Voucher Check and Check Registers

Businesses pay each voucher by check Check and voucher are presented to a person authorized to approve payment Voucher check: a check with space for writing details about a cash payment Prepare checks in duplicate original to the payee and other kept as the source document for the transaction Recording the details of on a voucher check: record voucher #, payees invoice number, amount of invoice, amount of discount, net amount that check is written for Payee keeps the detachable portion of the voucher check for their records Section 5 Payment of a Voucher o Person who prepares the check also completes this part of voucher o Notes the date paid, the check number, and the amount o After verification of correct info, sign the check and initials this section Person who prepares the check also usually records the info needed into the voucher register Date voucher paid and check number are written in the Paid columns of the voucher register on the same line as the original entry for the voucher Check is sent to the payee and the voucher is filed in the paid vouchers file according to the name of the vendor Check register: a journal used in a voucher system to record cash payments Check register is similar to and replaces a cash payments journal Use a check register to maintain the checking account balance Two bank columns in the check register one to keep a running balance and the other is to indicate deposits made Only three general ledger accounts are impacted by a cash payment: Vouchers Payable debit, Purchases Discount credit, and Cash credit. Each check recorded as a debit to VP and credit to Cash. Only will use the Purchases Discount if there was a discount taken At the end of the month the special columns are totaled and posted. NO separate amounts are posted because no general debit or credit columns Two Bank columns are NOT totaled, ruled, or posted Cash is proved if the last amount in the Balance column of the check register equals the balance in the general ledger cash account Starting a New Page in a Check Register:

During the month totals of VP, PD, Cash, and the Bank Balance are brought forward. No amount is brought forward for Bank Deposits At the beginning of the month only the Bank Balance is brought forward because special amount totals have already been posted

Section 3: Selected Transactions in a Voucher System

A purchases returns and allowances transaction reduces the total amount owed for an invoice Changing the Original Amount of a Voucher because of a Purchase Return 1. 2. 3. 4. Remove the original voucher from the unpaid vouchers file. Write Canceled across the Section 5 Prepare a new voucher Place the canceled voucher and the debit memorandum (which indicates the PRA) inside the new voucher 5. In the voucher register, on the same line as the original voucher, write See Vchr # (of the new voucher) in the Paid columns. 6. Record the new voucher on the next available line of the voucher register 1. Enter the new voucher amount in the Vouchers Payable credit column 2. Write the title Vouchers Payable in the General account title column on the same line as the new voucher and debit it in the General Debit column for the amount of the canceled voucher 3. On the next line below Vouchers Payable in the General account title column, write Purchases Returns and Allowances and credit it for the amount of the discount in the General Credit column 7. File the new voucher by its payment date in the unpaid vouchers file. The payment date is based on the terms of the original invoice so the new voucher has the same due date as the canceled voucher

Recording Payroll in a Voucher Register o Information from a payroll register is used in preparing a voucher for payroll o A payroll register is needed for several purposes, so it can NOT be placed inside a voucher for payroll. Instead, it is summarized on the inside of the voucher

The inside allows additional space so that more detailed info about the transaction can be noted o Outside of the voucher is completed as normal o On the left side of the Voucher Register write the date of the payroll and the word Payroll under the Payee column, then enter the amount of the check to be written for the payroll in Vouchers Payable credit o On the right side of the Voucher Register write the Salary Expense for each department (debits), and all of the Taxes that are credited An entry also has to be made to the General Journal to record the employers payroll taxes just like from Chapter 3 Later when the payroll taxes are due, vouchers are prepared, approved and paid. One is prepared for state and one for federal taxes Advantages of the voucher system o Only a few people can authorize and approve payments. Helps protect and control cash o A voucher jacket provides a convenient way to file invoices and related business papers for future reference o Unpaid vouchers are filed by their payment dates to help ensure prompt payment o An unpaid vouchers file and a paid vouchers file eliminate posting to an accounts payable ledger o A paid vouchers file provides three different and easy ways to find info about a paid voucher If know voucher #, look in the voucher register If know check #, look in the check register If know the payee name, look in the paid vouchers file under the payee name
o