Month End Closing Procedures As you can
see, closing out the month in The General Store is basically a 4 step process. Here is a summary of the 4 steps:
Now for the Detail: Month End Closing Procedures in A/P As part of your monthly closing procedure (discussed in chapter 4), you must first close accounts payable each month. Closing posts all monthly entries to the
general ledger system. Upon pressing "F6" from the Accounts Payable Systems Menu, you are prompted to enter the month and year you are closing. Upon doing so, the system goes directly into the closing process. There are
two month end closing reports produced by selecting this function. They are the Accounts Payable Journal and the Cash Disbursements Journal. The Cash Disbursements Journal The Cash Disbursements Journal list all checks,
in check number order, paid during the month. It posts total checks written as a credit entry to the Cash Disbursements account, as defined in the default general ledger posting accounts (usually 100-010, see chapters 3 and 4). The
offset entry posts as a debit to the general ledger account defined as Accounts Payable (usually 300-010). Therefore, if you wrote $10,000 in checks for a given month, the journal entry created would appear as follows: 300-010
Accounts Payable....................10,000100-010 Cash Disbursements..................10,000 The journal entries created by this journal post to the J/E voucher CD**. The Accounts Payable Journal The Accounts Payable
Distribution Journal posts all invoices entered during the current month. This listing is by ledger posting account number. Totals are produced for each general ledger account and a single journal entry is created. The offsetting
entry posts to the Accounts Payable general ledger account (usually 300-010). This entry represents the increase in payables for the accounting month. For example, let's say you entered invoices for $5,000 worth of inventory, $400
worth of cleaning expenses, and $300 worth of freight for the month of July. The journal entry created upon closing would appear as follows: 120-010 Inventory...................5,000700-050 Cleaning Expense..............400700-070
Freight Expense...............300300-010 Accounts Payable............5,700 This entry would be grouped in the J/E voucher AP**. The Next Step, Posting to the General Ledger The Accounts Payable Journal and the Cash
Disbursements Journal provide necessary sub-journal audit trail for the general ledger system. The next step in closing a month in The General Store involves posting the newly created journal entries to the general ledger and
producing financial statements.
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