BuyFindarrow_forward

Accounting (Text Only)

26th Edition
Carl Warren + 2 others
ISBN: 9781285743615

Solutions

Chapter
Section
BuyFindarrow_forward

Accounting (Text Only)

26th Edition
Carl Warren + 2 others
ISBN: 9781285743615
Textbook Problem
168 views

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?

1.

To determine

Special journal:

Special journal refers to the journal that is used to record a single kind of transaction which occurs frequently. It is one of the methods in a manual system that is used to processing the financial transactions more efficiently.

To discuss: The circumstances under which special journals would be used in place of a two-column journal.

Explanation

Usually, a special journal is created when a specific type of transaction occurs frequently so, that the special journals reduce the processing time and expense to record the transitions...

2.

To determine

To prepare: The format for a revenue journal, and a purchase journal.

3.

To determine

To recommend: The subsidiary ledger which is suitable for the medical practice.

Still sussing out bartleby?

Check out a sample textbook solution.

See a sample solution

The Solution to Your Study Problems

Bartleby provides explanations to thousands of textbook problems written by our experts, many with advanced degrees!

Get Started

Additional Business Solutions

Find more solutions based on key concepts

Show solutions add

Why do economists make assumptions?

Principles of Macroeconomics (MindTap Course List)

What is collusion?

Accounting Information Systems

CURRENT RATIO The Petry Company has 1312,500 in current assets and 525,000 in current liabilities. Its initial ...

Fundamentals of Financial Management, Concise Edition (with Thomson ONE - Business School Edition, 1 term (6 months) Printed Access Card) (MindTap Course List)