Problem:
Ehlert & Ramos is a wholesaler of small appliances and parts. Ehlert & Ramos is operated by two owners, Bill Ehlert and Denise Ramos. In addition, the company has one employee, a repair specialist, who is on a fixed salary. Revenues are earned through the sale of appliances to retailers (approximately 75% of total revenues), appliance parts to do-it-yourselfers (10%), and the repair of appliances brought to the store (15%). Appliance sales are made on both a credit and cash basis. Customers are billed on pre-numbered sales invoices. Credit terms are always net/30 days. All parts sales and repair works are cash only.
Merchandise is purchased on account from the manufacturers of both the appliances and the parts. Practically all suppliers offer cash discounts for prompt payments, and it is company policy to take all discounts. Most cash payments are made by check. Checks are most frequently issued to suppliers, to trucking companies for freight on merchandise purchases, and to newspapers, radio, and TV stations for advertising. All advertising bills are paid as received.
Bill and Denise each make a monthly drawing in cash for personal living expenses.
The salaried repairman is paid twice monthly. Ehlert & Ramos currently has a manual accounting system.
Instructions:
(Q1) Identify the special journals that Ehlert & Ramos should have in its manual system. List the column headings appropriate for each of the special journals.
(Q2) What control and subsidiary accounts should be included in Ehlert & Ramos's manual system? Why?