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

Exercise 6

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 (also used in question 9) 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 vendor master file by the payments made by CSI. This requirement is presented in more detail in parts a through d. CSI uses a batch posting process.
The following vendor master file shows the current balances owed to each vendor. This file is stored in order of vendor number. The total of the invoice amounts in the open invoice file in problem 9 equals the total of the current balances owed to vendors.
Data for Problem 10
Vendor Master File

a. Sort the cash disbursements transaction file by vendor number. Sorting the records in the same order as the records in the vendor master file speeds up the posting process. Illustrate this activity by creating a sorted cash disbursements transaction file. Because the vendor number is stored in file 1, only this part of the file needs to be sorted. However, in your solution, re-create file 2 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 vendor master file is updated by posting the sorted cash disbursements file to the vendor master file. Illustrate this activity by using the data in the cash disbursements transaction file to change records in the vendor master file.
c. Under what circumstances would you purge records from the vendor master file?
d. Does the total amount still owed equal the difference between the total dollar amount of the current balances before posting, minus the total cash disbursements? Show your reconciliation of these amounts.