Purchasing

Processing of Payment (Purchase Requisition)

Once billing invoice or statement of account is received from the supplier, the department staff will prepare Request
for Payment. The RFP includes the PO and PR numbers as well as the suppliers name and the details of the items.
Attached to RFP are the supporting documents (RR, PR, PO, SI and DR), and this is being checked and signed by the
Department Head Officer. The department staff forwards the RFP to the signatories for approval of the CFO/CEO.
After ensuring the required signatures, the staff forwards the approved RFP to the accounting department.

After the accounting staff has received the RFP, the accounting staff re-performs three-way matching of the invoice,
receiving receipt and purchase order to validate the transaction before entering into the system. After that, the
accounting staff prepares related vouchers such as payable voucher or petty cash voucher then records the
transaction by setting up a liability.

The entry recorded for recording of Accounts payable voucher would be:
Particulars Dr Cr
Expense/Asset XX
Input Tax XX
Deferred Input Tax XX
Accounts Payable XX
Withholding Tax XX

After that, the accounting staff will prepare check in the amounts above (Amount) or reimbursement through petty
cash fund for the amounts (Amount) and below. The accounting staff keeps a track list of specimen in order to check
if the RFP is properly signed. After checking and if the amount exceeds (Amount) the accounting staff prepares a
check subject to approval of any of the two of the following:
 CEO
 CFO
 Controller

The accounting manager also reviews the details of the check including the purpose, and if the amount is properly
supported with documents and properly signed. After the approval of check, the accounting staff will prepare check
voucher, payment voucher and petty cash voucher in case of amounts below (Amount) then records the transaction.
These entries are being reviewed by the accounting manager and once there were error in the entries noted this will
be corrected by the accounting manager before posting.
The entries recorded for payment using check:

The entry recorded for recording of payment voucher would be:

Particulars Dr Cr
 Accounts Payable XX
Cash in Bank XX

Note that the documents are stamped as paid when the liability is settled and is dated the same time as the
payment voucher.

In the case where there are only small amounts, it will be rendered through petty cash fund. Petty cash fund are
accounted through the use of fluctuating petty cash system which means that petty cash will move as there are
recordings of purchases within the threshold. The accounting staff will prepare petty cash voucher and the
transaction will be recorded by crediting petty cash fund as expenses are paid then a subsequent replenishment by
crediting cash in bank.

The entry recorded for payment through petty cash voucher would be:

Particulars Dr Cr
Expense/Asset XX
Input Tax XX
Petty Cash XX

Particulars Dr Cr
Petty Cash XX
Cash in bank XX

The accounting staff forwards the check to the signatories. After approval, the check will be personally delivered by
the accounting staff to the department staff. The department staff signs and indicates the date on when the check is
received on the check voucher. The released checks are for pick-up by the suppliers which will be given by the
departmental staff.

Sales

Preparation of statement of accounts

The accounting department will prepare the SOAs on the 15th day of the month for deliveries that occurred in the 1st-
15th day of the month and on the 30th day month for the deliveries in the 16th - 30th day. If the 15th or 30th day
falls on a Friday, the preparation of the SOA will be on Monday, on the following week. Soft copy of the SOA shall be
sent through email to the dealer as heads-up. Hard copy will be sent via courier few days after.
The preparation of SOA signifies that the sale shall be recorded as accounts receivable and the Company has a
receivable from the dealer. Commented [DJDB1]: If applicable.

Entry to sales journal

The Company maintains a sales journal manually through an excel file. This file summarizes the monthly sales of the
Company. The entry to the sales journal regarding the sale is done upon the preparation of the journal vouchers. The
Journal Vouchers (JV) is prepared by the accounting staff simultaneously with the SOAs.

Upon the preparation of the SOA and its JV, the accounting staff shall prepare the subsidiary ledger for sales by this
pro forma entry:

Accounts Receivable/Cash xx
Sales – xx
Output VAT xx
To record sales