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Design of accounting systems For the past few years, your client, Omni Care, has operated a small medical practice. Omni Care’s current annual revenues are 5945,000. Because the accountant has been spending more time each month recording all transactions in a two-column journal and preparing the financial statements, Omni Care is considering improving the accounting system by adding special journals and subsidiary ledgers. Omni Care has asked you to help with this project and has compiled the following information: Type of Transaction Estimated Frequency per Month Fees earned on account 240 Purchase of medical supplies on account 190 Cash receipts from patients on account 175 Cash payments on account 160 Cash receipts from patients at time services are provided 120 Purchase of office supplies on account 35 Purchase of magazine subscriptions on account 5 Purchase of medical equipment on account 4 Cash payments for office salaries 3 Cash payments for utilities expense 3 1. Briefly discuss the circumstances under which special journals would be used in place of a two-column (all-purpose) journal. Include in your answer your recommendations for Omni Care’s medical practice. 2. Assume that Omni Care has decided to use a revenue journal and a purchases journal. Design the format for each journal, giving special consideration to the needs of the medical practice. 3. Which subsidiary ledgers would you recommend for the medical practice?

BuyFind

Accounting (Text Only)

26th Edition
Carl Warren + 2 others
Publisher: Cengage Learning
ISBN: 9781285743615
BuyFind

Accounting (Text Only)

26th Edition
Carl Warren + 2 others
Publisher: Cengage Learning
ISBN: 9781285743615

Solutions

Chapter
Section
Chapter 5, Problem 5.4CP
Textbook Problem

Design of accounting systems

For the past few years, your client, Omni Care, has operated a small medical practice. Omni Care’s current annual revenues are 5945,000. Because the accountant has been spending more time each month recording all transactions in a two-column journal and preparing the financial statements, Omni Care is considering improving the accounting system by adding special journals and subsidiary ledgers. Omni Care has asked you to help with this project and has compiled the following information:

Type of Transaction Estimated Frequency per Month
Fees earned on account 240
Purchase of medical supplies on account 190
Cash receipts from patients on account 175
Cash payments on account 160
Cash receipts from patients at time services are provided 120
Purchase of office supplies on account 35
Purchase of magazine subscriptions on account 5
Purchase of medical equipment on account 4
Cash payments for office salaries 3
Cash payments for utilities expense 3

1.    Briefly discuss the circumstances under which special journals would be used in place of a two-column (all-purpose) journal. Include in your answer your recommendations for Omni Care’s medical practice.

2.    Assume that Omni Care has decided to use a revenue journal and a purchases journal. Design the format for each journal, giving special consideration to the needs of the medical practice.

3.    Which subsidiary ledgers would you recommend for the medical practice?

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Chapter 5 Solutions

Accounting (Text Only)
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Ch. 5 - Revenue journal The following revenue transactions...Ch. 5 - Revenue journal The following revenue transactions...Ch. 5 - Accounts receivable subsidiary ledger The debits...Ch. 5 - Accounts receivable subsidiary ledger The debits...Ch. 5 - Purchases journal The following purchase...Ch. 5 - Purchases journal The following purchase...Ch. 5 - Accounts payable subsidiary ledger The debits and...Ch. 5 - Accounts payable subsidiary ledger The debits and...Ch. 5 - Segment analysis McHale Company does business in...Ch. 5 - Segment analysis Back Country Life, Inc., does...Ch. 5 - Identify postings from revenue journal Using the...Ch. 5 - Accounts receivable ledger Based on the data...Ch. 5 - Identify journals Assuming the use of a two-column...Ch. 5 - Identify journals Assuming the use of a two-column...Ch. 5 - Identify transactions in accounts receivable...Ch. 5 - Prepare journal entries in a revenue journal...Ch. 5 - Posting a revenue journal The revenue journal for...Ch. 5 - Accounts receivable subsidiary ledger The revenue...Ch. 5 - Revenue and cash receipts journals Transactions...Ch. 5 - Revenue and cash receipts journals Lasting Summer...Ch. 5 - Identify postings from purchases journal Using the...Ch. 5 - Identify postings from cash payments journal Using...Ch. 5 - Identify transactions in accounts payable...Ch. 5 - Prepare journal entries in a purchases journal...Ch. 5 - Posting a purchases journal The purchases journal...Ch. 5 - Accounts payable subsidiary ledger The cash...Ch. 5 - Purchases and cash payments journals Transactions...Ch. 5 - Purchases and cash payments journals Happy Tails...Ch. 5 - Error in accounts payable subsidiary ledger After...Ch. 5 - Identify postings from special journals Pinnacle...Ch. 5 - Cash receipts journal The following cash receipts...Ch. 5 - Computerized accounting systems Most computerized...Ch. 5 - Computerized accounting systems and e-commerce...Ch. 5 - E-commerce For each of the following companies,...Ch. 5 - Segment revenue horizontal analysis Starbucks...Ch. 5 - Segment revenue vertical analysis News Corporation...Ch. 5 - Segment revenue horizontal and vertical analyses...Ch. 5 - Revenue journal; accounts receivable subsidiary...Ch. 5 - Revenue and cash receipts journals; accounts...Ch. 5 - Purchases, accounts payable subsidiary account,...Ch. 5 - Purchases and cash payments journals; accounts...Ch. 5 - All journals and general ledger; trial balance The...Ch. 5 - Problems: Series B Revenue journal; accounts...Ch. 5 - Revenue and cash receipts journals; accounts...Ch. 5 - Purchases, accounts payable account, and accounts...Ch. 5 - Purchases and cash payments journals; accounts...Ch. 5 - All journals and general ledger; trial balance The...Ch. 5 - Ethics in Action Netbooks Inc. provides accounting...Ch. 5 - Manual vs. computerized accounting systems The...Ch. 5 - Accounts receivable and accounts payable A...Ch. 5 - Design of accounting systems For the past few...Ch. 5 - Communication Internet-based accounting software...

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