Your friend, Wendy Geiger, owns a small retail store that sells candies and nuts. Geiger acquires her goods from a few select vendors. She generally makes purchase orders by phone and on credit. Sales are primarily for cash. Geiger keeps her own manual accounting system using a general Journal and a general ledger. At the end of each business day, she records one summary entry for cash sales. Geiger recently began offering items in creative gift packages.
This has increased sales substantially, and she is now receiving orders from corporate and other clients who order large uantities and prefer to buy on credit. As a result of increased credit transactions in both purchases and sales, keeping the accounting records has become extremely time consuming. Geiger wants to continue to maintain her own manual system and calls you for advice. Required: In Microsoft Word write a memo to her advising how she might modify her current manual accounting system to accommodate the expanded business activities.
Geiger is accustomed to checking her ledger by using a trial balance. Your memo should xplain the advantages of what you propose and of any other verification techniques you recommend. Dear Wendy. I see that your business has grown significantly from where you started off and I thought that I might offer you a few suggestions regarding your record keeping. you are gaining larger clients, that it is necessary for you to not only keep a record of cash customers as a whole, but cash and credit customers individually.
This will keep you 100% protected from fraudulent charges and bank related issues as well as will eep you organized and on top of things fguratively. No matter how big or small your business is, numbers can make or break you. You need to keep track of each number as if it was your only one.Manual Accounting Modifications for Expanded Business 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 has become time consuming, but you would like to continue with your manual system.
Allow me to provide pertinent information that ill assist you in continuing your manual system in the most efficient way. The accounting information system is one that collects and processes relevant data from transactions, and organizes them into relevant reports. This system is also used to report and record the exchange of goods and/or services. It is critical for you to understand how and what transactions are occurring in your business. A small business like yours can be effective with a manual process and with the use of special Journals and subsidiary ledgers.
With the issues you mentioned in mind, most f your transactions can be categorized into the special Journals with the use of four individual Journals to complement the general Journal you are currently using. 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…