Accounting Information Systems 7th Edition by Cynthia Heagy,Constance Lehmann

Exercise 5

Use the following cash disbursements file for problem. This file records the disbursements made to vendors. The file is stored in order of check number. The company (Clark Service Industries) wants to match payments to specific invoices. One way to do this and have a clear trail of events is to separate the cash disbursements file into the following two files.
Data for Problem
Cash Disbursements Transaction File
(File 1)

Data for Problem
Cash Disbursements Transaction File
(File 2)

The cash disbursements transaction file is used to update the open vendor invoice file and the vendor master file in an accounting system that uses batch posting. In this problem, you are required to update the open vendor invoice file with the cash disbursements file.
The following open vendor invoice file stores the invoices that Clark Service Industries (CSI) owes its vendors. Note that CSI assigns a sequential voucher number to each vendor's invoice to uniquely identify each record in the file. The company cannot use the vendors' invoice numbers as identifiers because those numbers would not be in sequential order and may not be unique. Also, please be aware that the company wants to be able to match its payments to specific invoices. Occasionally, one check may be in payment of more than one invoice, and one invoice may be paid by more than one check. One way to maintain a dear trail of events is to separate this open invoice file into the following two files.
Data for Problem 9
Open Vendor Invoice File (File 1)


Data for Problem 9
Open Vendor Invoice File (File 2)

Required:
Update the open invoice file by the payments made by CSI and purge the invoices that have been paid in full. This requirement is presented in more detail in parts a through d. CSI uses a batch posting process.
a. In an accounting system that uses a batch posting process, the cash disbursements transaction file is sorted in voucher number order before being posted to the open invoice file. Sorting the records in the same order as the records in the open invoice file speeds up the posting process. Illustrate this activity by creating a sorted cash disbursements transaction file. Because the voucher number is stored in file 2, only this part of the file needs to be sorted. However, in your solution, recreate file 1 as it is so you will have the entire cash disbursements transaction file together and can use it for the next step in the posting process.
b. The open invoice file is updated by posting the sorted cash disbursements file to the open invoice file. Illustrate this activity by using the data in the cash disbursements transaction file to create new records in file 2 of the open invoice file. File 1 does not need to be changed, but recreate it as it is in this question so you will have the entire open invoice file for the next step.
c. The records in the open invoice file where the invoice amount in file 1 equals the amount paid in file 2 can be purged. Illustrate this activity by modifying the open invoice files (1 and 2) to eliminate the invoices that have been paid in full.
d. Does the total amount still owed equal the difference between the total dollar amount of invoices before posting, minus the total cash disbursements? Show your reconciliation of these amounts.