Accounting Beyond the Numbers; manual accounting system
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Your friend, Wendy Geiger, owns a small retail store that sells canies 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 quantities 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. 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 explain the advantages of what you propose and of any other verification techniques you recommend.
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Solution Summary
The solution provides a detailed example of a sample memo to Wendy Geiger regarding the manual accounting system she wants to keep and how to structure such a system to meet all of her business needs.
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Here is what I would say:
To: Wendy Geiger
From: My Name Here
Re: Requested Information regarding ....
Dear Wendy,
You can continue to use the manual accounting system that you have been using, with a few adjustments. By modifying the system, you will be able to continue using it, but it will be modified to provide a greater breakdown by the use of ledgers, which will keep the information segregated where needed, and will also be easy to use. I understand that you need a system that does not ...
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