Professional Bookkeeping and Accounting 1 - Sales and Purchases part 2 | Paula Guilfoyle | Skillshare

Professional Bookkeeping and Accounting 1 - Sales and Purchases part 2

Paula Guilfoyle, CPA, Online Educators, Lifelong Learner

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10 Lessons (34m)
    • 1. Purchase Ledger Class intro

      1:31
    • 2. The Purchasing process and checking invoices

      7:40
    • 3. Activity - check purchase invoices

      1:11
    • 4. Coding purchases invoices

      2:20
    • 5. Coding Purchase invoices samples

      3:57
    • 6. Activity - Coding invoices

      0:40
    • 7. The Purchase Daybook

      6:17
    • 8. Creditor Reconciliations

      7:16
    • 9. Activity - creditors statements

      1:03
    • 10. Conclusion

      2:33

About This Class

This is a follow on class to Professional Bookkeeping and Accounting 1 - Sales and Purchase part 1

We will look at the purchasing process and the documents involved and we will also look at checking purchase invoices for approval.  After we have checked the invoices and credits we will also spend some time coding invoices for different analysis.  We will then transfer the data from the purchase transactions into the purchase and purchase returns day books. Finally, we will do some creditor reconciliations. Throughout this section you will have a number of activities using the case study presented in section 1 and these activities will give you the opportunity to:

  • Check and approve purchase invoices

  • Code purchase invoices and credits

  • Enter purchase transaction to the day books and then close the day books

  • Reconcile creditors statements

This is the Third class in the series.  the previous classes are

1. An introduction to Bookkeeping and Accounting

2. Professional Bookkeeping and Accounting 1 - Sales and Purchases part 1 

Transcripts

1. Purchase Ledger Class intro: hi and welcome to Section Tree, which is purchases in the last section. We looked at sales and we looked at sales invoices, and we looked at Sales Day. Books on many of the stuff that we covered in sales will be refreshed here when we're looking at purchases, because the concepts are more or less the same. For example, sales tax that you put on an invoice when you're selling something to your customer becomes purchase tax on an invoice that you receive when you're actually buying something. So what are we going to learn in the section? Will? By the end of the section, you will be able to understand the purchasing process on the documents on. You'll also be able to carry out the checking process. To approve the purchase invoice. You'll be able Teoh Code a purchase invoice using customer codes on also using general ledger or nominal ledger or expense analysis Coats. We're gonna look at some creditor reconciliations, and you need to be able to reconcile creditors so you don't pay for goods that you haven't received or that you've been overcharged for. And then after this, we're going to enter some invoices into our purchase Ledger daybook on our purchase returns Day book on. Then we're going to use cross starting across casting to get the totals that we would use if we were closing off these books. So the first thing we're going to look at is we're gonna look at the purchasing process, and we're going to look at the purchasing documents on the actual checking off the documents. 2. The Purchasing process and checking invoices: So let's now have a look. The purchasing process that you'd find in many organization. So the first step in the purchasing process, the buyer or the customer raises a document called a purchase order. Purchase orders have unique numbers of do invoices and goods received now. Andi, the detail the items that are to be bought and they also details price. The idea, once this is sent to the supplier supplier will send out the order along with a delivery. When the goods then were see I received by the buyer buyer's check goods against the delivery. Andres is a good received. If there's any damages or if there's any short fall, these all should be marked on the actual delivery now on. The delivery note should be signed on delivery. Notes are usually too party every notes. One part goes back to the supplier on the older parts. Dez with the purchaser. The supplier then sends out the invoice on. We looked at invoices in the sale section in the last section and the purchase invoices that you receive with sales invoice that your supplier generally, and when you receive this invoice, you need to check this invoice against the purchase order that you're raised because this contains details goods that were ordered placing on the quantity. And you also need to check this against the goods received? No, because the goods received no will detail the wanted tea that were actually received. Checking invoices is extremely important. Doesn't make sure that you're not paying for goods that you're being overcharged for. We're paying. You haven't actually received. So what we're gonna do is we're gonna look at this checking process in a little bit more detail. So here is a purchase order that Jakes Palace has raised two drinks in for some buckets of coke on bottles of wine. And we can see from this some details on the purchase order. The purchase order day purchase order number on every purchase order is going to have a unique number. There's also going to be the supplier details the supplier code. And if there's a contact person that win there too, we then have the detail off the purchase order. And a purchase order is always We've got the product cold. We've got the descriptions, got the rate, we have the quantity ordered, and we also have the date that the quiet. This then gives us a total Onda. We also pull in any trade discount to our purchase order as well. So we send this purchase, order two drinks on drinks and then dispatches the goods. And when they dispatch the goods, the next document that we raise is a good received. And here's a sample goods received. Note that Jakes Palace has four purchase order that we just looked at and you'll see that the goods received no details. Purchase order number. And it also detailed the product cold, the description on and the quantity or then details the quantity received. And we can see here that the quantity ordered a 500 isn't the same as the quantity received . 400 bottles of Coke. So there's 100 in the difference This could receive now is then held for the invoice and then also matched to the invoice along with the purchase order. So along comes the invoice from drinks in, and we can see this invoice contains much the same detail as the sales invoices that we prepared. But as we're receiving it, it's a purchase invoice for so we have the date we have the invoice number of the Jew date . We are the customer. So that's who it's too. I work. Can't code on our purchase order number. Then get into the detail off the invoice. I'm you can see that a low. We only received 400 buckets of we were actually invoiced for 500 bottles of coke. And the quantity of wine is fine because what we ordered we received what else do we need to check on this invoice? We need to check the and the right where in time the goods received note, but they wear on the purchase order. So let's check the rate. So we have bottles of Coke. 87th scent on Dwyane at 6 20 on that matches our purchase order. So are net off. 1370 on a purchase order matches their net of one tree 70 on our invoices along with the trade discount from the back. Everything much is but the problem that we have is wanted. So what would we do when we have a situation like this? Well, there's a number of resolve you would contact the supplier first fall on the supplier could decide Oh, I'm going to send us, then buckles a Coke. We were short stuff the run, the way you'll get them in two hours. In a situation like this, Wendy second order comes along. You will receive that under a different goods received note. There will also be a separate delivery note for this. We would then only have one invoice, which is this invoice here for two goods received no on one purchase order. But if the supplier is not going to re dispatch the goods and you actually need a credit note, the supplier will then raise a credit note for the thunder, of course, along with the trade discount that you didn't receive. And here's the credit note that we actually received from Drinks Inc. And we can see that we have all the same details on a credit note that you would expect to see we then in her detail, have a product cold. Our description, our race. So we need to check this credit note again. So is our rate correct? While on a purchase order, our rate was 0.57 for the coat. Is it the same work that we were invoiced for Yes, 0.57 it is. So that's the first check that we need to do. The second check that we need to do is the quantity check. And have we being credited for the right quantity? Well, we know from our goods received note that we ordered 500 but we only got 400 so we should be credited for 100. Now, some counting systems some computerized accounting systems will allow you put a purchase invoice on hold for payment are on hold for waiting, depending a credit note so it doesn't allow you to actually pay the employees onto the any problems have actually being resolved. And this is a very good and useful feature. Off came just If you're accounting manually, you need to put a no arm your on your invoice to say that that's being held for crab on. Then when the credit comes in and then process this into your actual day books. But before you process that the Engineer Day books, you also need to code purchase invoices, purchase credit, and that's what we're gonna look at it in the next left 3. Activity - check purchase invoices: 4. Coding purchases invoices: we briefly talked about coding in both off the introduction section two this course and also when we were looking at sales on coding off purchasing voices is of particular importance because they're going to need to break down the coast into different expense headings. So when you're coding a purchase invoice, the first thing you're going to do it, you're going to need to give the invoice echoed toe. Identify the supplier. Next, you're going to need to look at what you up ordered, and you're gonna need to code each item on. You'll need a list of colds used by it, your business to actually identify the correct code. And as I mentioned before, these lists of cold are unique to each business. So, first of all, for the supplier cold, you need to look for the name of the business that the invoice or credit note has actually come from then from the items purchased or returned. If it's a credit, you need to look for a cold that matches the actual description on when you found the correct code, your then go to right thumb on the actual documents. Now what you'll find in many organizations is that they actually have a stump template that they provide for you to stamp the invoice to write the supplier account a numbered account codes on them on It's very important that you make sure that you know how to cold invoices and credit notes correctly. You're gonna have to be able to do this when you're working in an accounts department, and coding is gonna help you post transactions quickly and accurately to make sure that you have been paid on time. On that also helps you find documents quickly at a later stage. When you're filing the so we are going to put a supplier code on the invoice on. We are also going to put a nominal code on the invoice that in addition to this, we're going to put our own internal sequential number on the invoice. For example, P I 001 for the very first invoice in numerical and build this up. But if we file our invoices by this particular number, we be able to locate them at any stage. So they're the tree codes that we're going to use now to put onto some purchasing voices, and we're gonna coats, um, purchasing voices on. Then I'm gonna leave you two coats, um, invoices on your own 5. Coding Purchase invoices samples: Let's look at coding this invoice that we received from Drinks Inc. So the first thing that we need to do is we need to put a supplier cold on the invoice on DWI will get this from our list off supplier. So we go to our supplier colds, and we can go down true. And we can look for Drinks, Inc. And we can see our supplier code is D 006 So on our invoice, we're going to inter stamp put supplier D 006 Now, we need to analyze out the items that we bought and we've bought bottles of coke on bottles of wine. So we need to go true rgl colds. And we need Teoh match as closely as possible Our code for thieves purchases. So we have utilities, mobile phones, Internet broadband agency staff, cleaning agency staff, waiting staff, our supplies, drinks, bar supply food. And I think we have are supplied drinks. So what we can dio honoring invoice is we can use the code 1-01 tree. So inner stump we would put in for a nominal code 1-01 tree. I'm late around when we're entering these into our particular day book, you'll see the relevance off putting this arm. We also have to put on a unique number to our purchase invoice so it can be easily identified from our own invoice listing. And this goes in on this field just here on her stump. Let's have a look at holding another purchase invoice, and we're going to look at this invoice I envy 5478 on This is from clean galore. Again, it's to us. We've made sure, and we've gone Truth E checking process off this invoice in your activity. So we know that from our description we have 30 hours agency staff cleaning. We also know that our supplier is clean galore. So we put on our stump, we give it our sequential invoice internal invoice number, and we will then go to our supplier codes and look for clean galore. Andi Kleen Galore is C 001 So, honor stamp, we would put in c 001 I'm next is our nominal description or G l r General Ledger description, and we can see here from her description. It's 30 hours of agency staff cleaning so Let's go to rgl colds and let's see if we can find a cold for this. So we have utilities, mobile phone, Internet and broadband agency staff cleaning agency staff waiting so we can see that we need to use agency staff cleaning, which is nominal cold 1001 so we can put that onto our envoys. In the stamp, we will put a nominal code 1-00 one for your activity. What I want you to do next is I want you to go along, and I want you to code all off the rest of the invoices that are available. So there's 12 tree and voices on also the two credit notes that are available. So I want you to cold all of the's because you're gonna need these codes in the next stage . When we were we are entering these items into our day books 6. Activity - Coding invoices: 7. The Purchase Daybook: What we're gonna look at now is entering the coded invoices into our day books and closing off her day books. But before we do, I want to quickly refresh cross starting. So I'm sure you're familiar with this from in our sales section and to cross taught or to cross cast is to balance across all of the totals. So what we would do is when we're closing off the books, is we would get the summer off the net. We would also get with some off the sales we would then go across and we would get the summer off the Net. Andi, the sales tax together to give us the gross on. We would do this for each item on then the summer off. The grosses should be equal to the sum off the Net, plus the some off the sales tax. So let's hop into our day books on Let's put some entries into our actual day books. So here we are now in our purchase Returns Day book. What we're gonna do is we're going to enter the credits that we haven't that we coded early Iran. One of these credits, I coded on another you coded in the activity. So the first thing that we have is the deed on. This is the date that we're going to find on the credit note this the 10th of January 2000 and 16. The next is our internal transaction number, and we have This is 001 pc for purchase credit 001 Our customer name was drinks. I think on a credit note number was John on all of these details you're taking directly from your credit note. Now we put a supplier code on the invoice that we looked up, which was D 006 Now the net amount I'm This credit note was 55 86 on the sales tax, a name from this credit note with 11 17. And if we cross taught or quarrels, cast our sales tax Internet. We should get the total that is honor invoice, and we can see that 67 Otri and we can actually see that on our credit Note. 67 Old tree as our net amount. Now let's go back to our purchase returns Day book on Let's enter in our next credit note on her next credit note came in on the 30th of January 2000 and 16 on We've called this PC 002 and this has come in from Clean Galore. On our credit note number is 157 and we're taking these details directly from the credit note now. We also had put in our supplier cold when we were coding it on a code is C 001 and then let's put in our values well, our net amount. What's purty our sales tax amount with six and cross casting. These would give us 36. Let's close off this day book as it is. So what we do when we're closing off? If we sum up our total some of our sales tax on this sum up our next and these are the figures that are transferred by double entry bookkeeping, which we will look at in a different course. Now, we also have an analysis side to this andan analysis side gives us some headings and these headings all equate to different nominal codes are drinks eight. If we were to break this down, is bar supplies drink, So that would be the net amend, which is 55 86 Clean Galore is our cleaning staff, So we would put in 30 here. Now, when we're closing off to cross cast this, what we would do is we with some across our headings, giving the total net for this particular invoice being 55 86 we will fill that down. And we also have a toe before our net off our second credit note credit No. 157 to be 30 which equals that charity. So we now have cross started built in our analysis, Andi, in our total's I'm these values match. But we need to make sure that the totals also match the total net. So what we would do is we Would some all of our utilities, we would. Some all of our mobile phones all offer headings the quarrels on instead. Then one more entering these figures into our Kemps instead of just entering and net figure . This figure is further subdivided in her double entry bookkeeping by our different heading . So it's categorized by a nominal code under Never meant over here will always equal to our net are total amount In our analysis column on our sales tax then is accounted for in a separate nominal on our double entry on the other side, then will be our total. So don't forget your sales tax on your neck is always going to equal your total on your net amount here will always equal the total amount on your analysis column. And if they don't, you need to go back. There must be a data entry error somewhere and you need to go back and you need to locate that guy for entry error and updated. So what I want you to do now is with all of the other documents that you have Cold ID I now want you to go to the purchase daybook on. I want you to make sure and he confined details of this activity In the next lesson. I want you to update this purchase daybook. 8. Creditor Reconciliations : Before you pay a supplier, you must make sure that the statement that they've sent you actually matches the record of financial documents that you have, such as invoice, credit notes and payments. This means that you're gonna have an account for each supplier in your records where you can check the supplier statement against the actual transaction. Posting not quite all from your statement is going to differ while mature actual transaction listing. And there's a number of reasons for this you may have misplaced in invoice that you have not recorded. You may be waiting on credit for a particular room. Bush. You may have sent the payment to the supplies that they have not yet put off their statement. So if you have a query with a statement you need to contact the supplier on, you need to talk it through with you need to talk a true Witten. But before you do this, you need to actually be able to reconcile a creditor state. What we're going to do now is we're gonna have a look at a creditor reconciliation and make sure that you can understand the actual concept on the workings off this reconciliation because you're gonna have to balance is you're gonna have your balance, Perry, Your transaction listing on you're gonna have a balance pair of the statement and you need to see why these are different and be able to identify exactly the differences between these two pictures. So what we have here is the supplier statement from drinks to us here. Jake's Palace. We don't that statements in the narrative. Your section on the clearly identifies that it's a statement on the statement. It also gives us our account code. This account code is for the supplier to be able to identify us. It's not the account code that we have for the supplier. We also looked at the details before. So we said that an invoice goes on the debit side. Often it off a statement and a credit goes on the credit side. On the total is then the running total off. What's actually old On our statement for drinks, Eke said that we brought forward the balance of 175. We then have this invoice invoice number 236 of 161 12 We had a credit note. We had another two invoices on We had a payment, and that's how the supplier have received these details. If we have a look at our transaction listing for this particular supplier or what we have in our system, well, what we have is a balance carried down off 175 and you'll see that in our system. That 175 is a credit balance because we owe this money out, as opposed to a supplier that is old this morning. And you'll learn more about this in double entry in another, more advanced course. So when you're reconcile ing two statements, the idea of reconcile ing a statement against your transaction listing is to find out where the differences, if any, differences where they actually are. And you would do this by ticking the two statements against each other. I'm preparing a reconciliation. That's what we're going to do now is we're gonna do a reconciliation off our transaction listing against the statement that we got when we concede that the total balance that drinks and say that we owe them is treat 1008 150 to 49 whereas our system is only saying 550 37. So there's obviously a substantial difference there. So let's go down. True. The items on Let's tick the items off one other time. So we have a debit balance, uh, 175 to a credit balance of 175. So they match identity. We've got an invoice off 16 when 1 12 on both. So they match identity. We have a credit that matches identically. We have another invoice that matches identically. We then have another invoice from the supplier, but that doesn't appear to be on our transaction listing. Okay. And we have a payment here that we also have on our transaction list. So what have we got left? Will the items that we haven't ticked are known as weapon silent items on. What we need to do is we need to get both balances to match by including these reconcile ing items. So where would we start? But we would start with putting down the balance pair supplier and the balance that we have here the supplier is 3582 49. Now the balance pair the supplier where saying isn't correct because we have this check that they have not received. So there's a payment in transit transit. Maybe it was written on the very last day of the month for 1611 12 and we would be took that from the Amazing that the supplier statement has so the adjusted supplier balance coming in a 1971 per t seven. But this still doesn't equate with the balance that we have 550 37. So let's put in our reconcile ing items to our balance. So balance. So our problems is 550 37. What differences are there on the statement where we're missing an invoice we're missing in invoice. What we would have to do is we would have to call the supplier, and we would have to ask the supplier for a copy off that invoice on the value off that invoice is one 4 to 1. And if we add the two of them together we get 1971 37. The balance the adjusted balance paired the supplier plus are adjusted balance I now equal to each other on were in a position where we're confident that the balances air correct on the payment that we owe to the supplier is 1971 37 not the statement. Balance off treat hasn't 500 in 82 enough. The transaction visting balance off 550 37 Now, before you can make any payment, you do need to have your transaction listing correct the only. To get a copy of this missing invoice, you'll need to match it to the purchase order. You'll need to match it to the goods received, and you'll need to make sure everything is correct and followed the post and ensure that everything is correct before you can actually post the invoice. 9. Activity - creditors statements: 10. Conclusion: So you have now finished this course professional bookkeeping and accounting warning. I'd like to thank you very, very much for selecting this court. You should now have a good understanding and be able to calculate sales tax. You should also be able to understand and use holding. In addition to this, we have look sales ledger in great detail. We have looked at invoices. I don't know this can. We've also looked at statements. We've looked at credit control on what the credit control department will do. Most important, we looked at entering details into the prime entry and using cross casting or cross talking , get close up after we look sales. We then look purchases. We looked at the documents involved in the we looked at checking purchase invoices for approval before they can actually be paid. We looked holding invoices and all of this. You had an opportunity to actually try true the He's in the court, and then we finally looked up, transferring the purchasing voices that you coded into the day. I now have available for you a set off final day books that we have prepared. And what I've done is I've taken leave sample day books that I've given you. And I've also carried out all of the activities of cold in the invoices statements and I've updated the actual day So you can now have a look at the day books that you have prepared for both sales on the purchases and any of the activities that you have prepared. See if they match daybook that I have prepared If they don't match and you can to understand where they don't matter, please do not hesitate and asking me a question. Next, we have a quiz fear which is a bank off. Questions that will help ensure that you understand on have retained a lot off the information that I have given you this question Bank is a great tool for you. If you are currently studying for final exams in either think or came If you are studying for professional exams in either for accounting, why don't you drop a comment on the discussion board? Let us know which exams you're studying for when your exams are on. If you've already completed your exam, how this course is actually helped get on with them Exam. Thanks again for selecting this course. My name is Polar Guilfoyle by name