Veideretti Cabinets. Algorithmic Version. Student Manual

Transcription

1 Veideretti Cabinets Algorithmic Version Student Manual Page 1

2 An Introduction to Algorithmic Veideretti Cabinets Veideretti Cabinets, Incorporated, (pronounced Vi-der-etty) is a small business corporation that is a privately owned custom closet and garage cabinet components wholesalerretailer enterprise. The business also installs closet and garage cabinet components. While it is a small business corporation, it is known locally as simply Veideretti Cabinets. To test your understanding of the accounting cycle, your ability to research general ledger and subsidiary accounts, and analyze financial statements, you will be recording business transactions from June 24 through June 30, including correcting errors, auditing your work, printing and preparing the financial statements, analyzing the statements and the results of operations, identifying the components of cash flows, and closing the general ledger at the end of the second quarter, which ends on June 30. Since Veideretti Cabinets uses a computerized accounting system, this opportunity to obtain hands-on experience and test your accounting skills will be very rewarding and exciting. The first step in operating the computerized system correctly is to review the chart of accounts. A clear understanding of how certain accounts are used by Veideretti Cabinets is required before you begin the recording process. A detailed explanation of how several accounts are used in this accounting system follows on the next three pages. On pages 3, 4, and 5 the full Chart of Accounts is shown, followed by the Customer List and Vendor List, with the account numbers used to identify these individuals and businesses when entering the transactions. These lists are followed with a summary of the important business facts you must be familiar with before you begin entering the transaction data. Page 2

3 Chart of Accounts Veideretti Cabinets Chart of Accounts ASSETS 101 Cash 102 Petty Cash 105 Accounts Receivable 106 Allowance For Doubtful Accounts 107 Accounts Receivable, Credit Card Companies 109 Notes Receivable 113 Interest Receivable 115 Merchandise Inventory 121 Prepaid Insurance 123 Prepaid Rent 125 Prepaid Advertising 127` Store Supplies 128 Shop Supplies 131 Store Fixtures 132 Accumulated Depreciation, Store Fixtures 135 Shop Equipment 136 Accumulated Depreciation, Shop Equipment 139 Delivery Vehicles 140 Accumulated Depreciation, Delivery Vehicles LIABILITIES 201 Accounts Payable 203 Notes Payable 205 Sales Tax Payable 209 Salaries and Wages Payable 215 Interest Payable 218 Dividends Payable 221 Unearned Installation Revenues Page 3

4 301 Common Stock 305 Retained Earnings 310 Dividends Declared STOCKHOLDERS EQUITY REVENUE 401 Cabinet Sales 402 Sales Returns and Allowances 405 Installation Revenue 501 Cost of Goods Sold COST OF GOODS SOLD OPERATING EXPENSES 601 Salaries and Wages Expense 602 Store Supplies Expense 603 Shop Supplies Expense 604 Delivery Vehicles Expense 605 Advertising Expense 606 Delivery Expense 607 Credit Card Expense 608 Tools Expense 609 Bad Debts Expense 610 Depreciation Expense, Store Fixtures 611 Depreciation Expense, Shop Equipment 612 Depreciation Expense, Delivery Vehicles 621 Rent Expense 622 Insurance Expense 623 Professional Services Expense 624 Utilities Expense 625 Telephone Expense 627 Bank Service Charges 628 Cash Short and Over 629 Miscellaneous Expense Page 4

5 OTHER REVENUE 711 Interest Earned 810 Loss on Asset Disposal 811 Interest Expense 901 Income Summary OTHER EXPENSES INCOME SUMMARY Page 5

6 Veideretti Cabinets Customer List Customer Number Customer Alex Black Brown s Custom Cabinet Chad Hana Francis Realtors George s Home Show Room Home Improvements John s Cabinets Lakeside Homes Manor Settings Ralph Mapping Rogers of Rocklin Sunrise Homes Tri-County Cabinets Westside Constructions Customer accounts are 30-day accounts Veideretti Cabinets Vendor List Vendor Number Vendor Alfred s Machinery Bay Side Cabinets Champion Plywood Downieville Cabinets LakeWood, Inc Mortimer Tools San Juan Lumber Visgoth Finishes Westwood Supplies Vendor discounts may vary To properly enter the accounting transactions for Veideretti Cabinets, you will need to familiarize yourself with the chart of accounts for the business. The business has three revenue accounts. Cabinet Sales is used to record all transactions involving the sale of cabinet Page 6

7 components. Sales tax of 7.0% is charged on the sales of all cabinet components. Sales Returns and Allowances is used to record the return of cabinet components. Installation Revenues account is used for fees earned in installing cabinet components. Sales tax is not charged on installation fees. The liability account, Unearned Revenues is used to record all of the cash receipts for cabinet installations paid in advance of installation. Veideretti Cabinets accepts both bank credit cards and company credit cards. When a customer purchases merchandise using a bank credit card, the sale is entered as a cash sale. The business is charged a credit card fee (1-4%) which is recorded from a bank statement received at the end of the month. If a customer uses a company credit card, such as American Express, it is recorded as a sale on account with Accounts Receivable, Credit Card Companies being debited for the charge. This process maintains a record of all the credit card charges owed to Veideretti Cabinets until payment arrives from the credit card company. The credit card expense is recorded when the cash is received from the credit card company. Several accounts which require special attention are listed below: 107 Accounts Receivable, Credit Card Companies is used to record all company credit card sales. The American Express is the credit card company used in this business simulation. 115 Merchandise Inventory is the inventory account for all cabinet components. Veideretti Cabinets maintains a perpetual inventory system. Purchases discounts earned for paying vendor accounts within the discount period are credited to this account. Returns of merchandise prior to payment to the vendor is debited to Accounts Payable (vendor) and credited to Merchandise Inventory. 121 Prepaid Insurance is debited for the purchase of all insurance policies. 123 Prepaid Rent is debited for rent payments made for more than one month in advance. 125 Prepaid Advertising is used only for adjusting entries. All advertising costs are debited directly to the Advertising Expense account. 127 Store Supplies is used only for adjusting entries. Since most store supplies are consumed during the period, the Store Supplies Expense account is debited for all store supply purchases. The value of the small amount of supplies that remain at the end of the accounting period is adjusted to the Store Supplies account. Page 7

8 128 Shop Supplies is used only for adjusting entries. Since most shop supplies are consumed during the period, the Shop Supplies Expense account is debited for all shop supply purchases. The value of the small amount of supplies that remain at the end of the accounting period is adjusted to the Shop Supplies account. 205 Sales Tax Payable is credited for the 7.0% sales tax that is charged for all cabinet component sales. Sales tax is not charged on installation fees. 221 Unearned Installation Revenues is a liability account and is credited directly for all installation fees received in advance. Sales tax is not charged on installation fees. 310 Dividends Declared is a contra equity account that is debited for all dividend declarations. At the end of each accounting period the account is closed to the Retained Earnings account as a part of the closing entry process. When the dividends declared are paid, Dividends Payable is debited and Cash is credited. 401 Cabinet Sales is a revenue account used to record all sales of cabinets and cabinet components. Cabinets and cabinet components are sold at 140% of cost. 405 Installation Revenue is credited for all cabinet installations and is billed at a rate of $ per hour. 501 Cost of Goods Sold (or Cost of Merchandise Sold) is a Cost account and is debited for the cost of each merchandise inventory item that is sold. When a product is sold at a retail price and the sale entry is recorded, it is automatically followed by a second entry to update the Merchandise Inventory and the Cost of Goods Sold accounts. 602 Store Supplies Expense is debited for all purchases of store supplies. The value of any store supplies that remain at the end of each accounting period is adjusted to the Store Supplies account. 603 Shop Supplies Expense is debited for all purchases of shop supplies. The value of any shop supplies that remain at the end of each accounting period is adjusted to the Shop Supplies account. 605 Advertising Expense is debited directly for all advertising fees incurred. 606 Delivery Expense is debited for the delivery and freight charges incurred in shipping cabinet components to Veideretti Cabinet customers. Page 8

9 607 Credit Card Expense accounts for the bank and company credit card fees charged to Veideretti Cabinets for allowing customers to use their credit cards to purchase merchandise and services. These fees will be between 1 and 4 percent of the total amount (including sales tax) of the customer charge. Credit card charges for bank cards will be accounted for at the end of the month when received on the bank statement. Credit card charges for the use of company credit cards will be recorded when the cash is received from the credit card company. An end-of-the-period adjustment will be made at the end of each quarter to account for accrued credit card charges on credit card company receivables that will be collected during the subsequent quarter. This adjusting entry will require a debit to the Credit Card Expense and a credit to Accounts Receivable, Credit Card Companies. 608 Tools Expense is debited for all small purchases of shop tools. These items are expensed and therefore not depreciated. 609 Bad Debts Expense is used to adjust the Allowance for Doubtful Accounts at the end of each quarter. 621 Rent Expense is used for adjusting entries at the end of the quarter. Rental fees paid in advance are debited to the Prepaid Rent account. 622 Insurance Expense is used for adjusting entries at the end of the quarter. Insurance premiums are debited to the Prepaid Insurance account. 623 Professional Services Expense is used to record the cost of hiring professional help such as accountants and business consultants to complete special service work for the management of Veideretti Cabinets. 810 Loss on Asset Disposal is used to record the loss on a plant asset that occurs when the asset is sold for less than its book value or is discarded. When entering transactions in the Veideretti Cabinets accounting system, all of the accounts will be identified by account number. You will see the account title appear instantly on the screen as you enter the account number. With the pointer at the account prompt, the Chart of Accounts may be displayed on the screen by clicking on the Chart of Accounts button. You may use the scroll bar to move through the chart. Special data entry procedures, that will make your work very efficient, have been built into the new Veideretti Cabinet accounting system. These procedures will be introduced and explained in detail in the first few transactions that you enter. Page 9

10 Detailed information on customer and vendor account activity and balances will be maintained automatically in the Accounts Receivable ledger and the Accounts Payable ledger. Information will be recorded in the system by identifying each customer or vendor/creditor by number. KEY DETAILS TO REMEMBER! To properly and efficiently operate the computerized accounting system used by Veideretti Cabinets, you must be familiar with some basic business and account information and computer procedures. These procedures and details are summarized in the list below: Sales tax of 7.0% is charged on all sales and labor. Sales tax is not charged on installation fees. When calculating sales tax, round all amounts to the nearest cent ($ $4.03). Credit Card Fees of 1 to 4% will be assessed by banks and credit card companies for customer credit card charges. Bank credit card fees will be accounted for at the end of the month from information received on the bank statement. Credit Card Company fees will be recorded when the cash is received from the credit card company. Labor charges will be billed to customers at a rate of $ per hour. Veideretti Cabinets extends 30-day credit to all charge customers. All balances that are over the 30-day credit period are considered past due. Discounts offered by vendors will vary between net 30 and 2/10, net 30. Discounts earned are credited to the Merchandise Inventory account. Purchases returns and allowances are debited to Accounts Payable and credited to the Merchandise Inventory account. The sales price for cabinets and cabinet components is 140% of cost, or 71.4% of the sales price. Veideretti Cabinets uses the allowance method for recording the write-off of uncollectible accounts. When entering transactions always use proper accounting procedure and enter the debit entries first. When debits equal credits, you will have a complete transaction to verify. You may terminate a journalizing session at any time. When you return to the General Journal at a later time, the last entry recorded will be displayed on the Data Entry screen. Should you need to correct a journal entry, after logging in to your program, move the pointer to Support and from the drop-down menu select How to Correct Journal Entries. Use the browser s print function to print the document for ready reference. Page 10

11 Transactions for June And the June 30 th Bank Reconciliation Once you have: (1) carefully read the Introduction and (2) acquired thorough understanding of the accounts used by Veideretti Cabinets, and how those accounts are used, you are ready to begin the journalizing process in the Veideretti Cabinets algorithmic practice set. You are encouraged to prepare your account entry information before sitting down at the computer. This procedure will speed up your data entry time. An example of a written analysis before the data entry is shown on Page 5 with the first June 24 transaction. You may prefer to analyze each entry and record the transaction on the computer at the same time. You will be able to access the chart of accounts, customer list, vendor list, and inventory list to the screen during the data entry process. This makes the recording of transactions and related information a very quick, easy, and efficient procedure. 1. Navigate your Internet browser to 2. Click on Log In tab at the top of the web page. 3. Click on Algorithmic Veideretti Cabinets. 3. At the log in page, enter your User ID and Password and click on Log In. 4. When the Data Entry page appears on the screen, click on the Daily JE button. 5. Click OK if there are no previous journal entries. The Clear Screen button: When accessing the Data Entry page, if there are journal entries already recorded in an earlier session, the last entry recorded will appear in the data entry form. Click on the Clear Screen button to erase this entry from the screen. This feature allows you to view the last entry you made prior to logging out of the program or moving from other selection options on the Data Entry page. Read the narrative for the first June transaction that begins below. Carefully follow the instructions as you begin the data entry procedure. Page 11

12 IMPORTANT: You must disable your Internet browser s pop-up blocker. Disabling pop-up blockers will allow you to print required documents without complications. This procedure will not disable your pop-up blocker for any other webpage that you visit. Disabling third-party pop-up blocking software installed on your computer may be necessary to allow successful printing. Consult the web browser on how to temporarily disable the pop-up blocker.. Additional help in disabling pop-up blockers can be found on the PKL Software home page by clicking on the Customer Support link. Required Printouts 1. Move the pointer to Journal/Ledgers/Statements and from the drop-down menu select Chart of Accounts. Click on Print and print the Chart of Accounts. 2. Move the pointer to Journal/Ledgers/Statements and from the drop-down menu select General Ledger. Click on Print and print the beginning June 23 Trial Balance. 3. Move the pointer to Journal/Ledgers/Statements and from the drop-down menu select Subsidiary Ledgers. 4. From the context menu select Accounts Receivable Ledger and print the Schedule of Accounts Receivable. 5. Move the pointer to Journal/Ledgers/Statements and from the drop-down menu select Subsidiary Ledgers. 6. From the context menu select Accounts Payable Ledger and print the Schedule of Accounts Payable. You will be using the balances shown in the various printouts to determine the correct amounts to debit and credit when recording some of the transactions for June 24 to June 30. Page 12

13 BEGIN RECORDING TRANSACTIONS Select Data Entry from the Menu bar. Click on the Daily Entries button, and Click on OK. The last recorded journal entry will appear in the data entry format. Click on the Clear Screen button. You are now ready to record the transactions for the remainder of the month. Transaction Number 1: June 24: Paying an expense A $ check was issued to Amalgamated Delivery Service for delivery of cabinet components to a customer. Check Number: Invoice Number: AD602 Student analysis: Delivery Expense Cash It is suggested that you use the Student analysis space, as in the example above, to pencil in the entry before recording it in the Data Entry format. Refer to the printed Chart of Accounts to identify the account numbers and titles in the General Ledger that you will use to record the transaction. 1) Enter 24 at the date at the Date prompt. 2) Enter 606 at the Account Numbers and Titles row. Note that the account number and title appears in the Account Numbers and Titles row. 3) Tab to the Debit column. 4) Enter and Tab. Whole dollar amounts can be entered with or without the decimal and 00. 5) Enter 101 at the Account Numbers and Titles row, then Tab to the Credit column. 6) Enter ) Click on Verify Journal. 8) At the Check Number prompt enter ) At the Invoice Number prompt enter AD602. Document numbers can be entered with either lower or upper case letters. 10) Click on Verify Documents. 11) Click on Post Entry. Should you need more assistance on journalizing the transactions, move the pointer to Support and from the drop-down menu select How to Journalize. Page 13

14 Transaction Number 2: June 24: Collecting an account receivable A check was received from Brown s Custom Cabinet for payment of a June 4 invoice. Invoice Number: V6033. Customer Number: Click on Journals/Ledgers/Statements and from the drop-down menu select Subsidiary Ledgers and select Accounts Receivable. Click on Customer from the drop-down menu and select account and then click on Show AR Ledger. Examine the account to determine the amount of the invoice V6033 for June 4. Return to Daily Entries and record the receipt of the check. 1) Enter 24 at the date at the Date prompt. 2) Enter 101 at the Account Numbers and Titles row, then tab to the Debit column. 3) Enter the amount of the invoice and Tab. 4) Enter 105 at the Account Numbers and Titles row, then tab to the Credit column. 5) Enter the amount of the invoice and Tab. 6) Click on Verify Journal. 7) At the Invoice Number prompt enter V ) At the Customer Number prompt enter ) Click on Verify Documents. 10) Click on Post Entry Clicking on the Post Entry button will record the entry in the General Journal and post it to the General Ledger. You can also enter the account title and number by clicking on the down arrow button at the end of Account Numbers and Titles row. This will provide a dropdown list box from which you can select the account to be shown in the Account Numbers and Titles row. Transaction Number 3: June 25: Collection from credit-card companies A check was received from the credit card company (American Credit Card Company) for invoice V6043, dated June 17, minus a 4% collection fee. Click on Journal/Ledgers/Statements, select General Ledger, and click on Ledger Card. Click on the down arrow button to view the dropdown list of accounts. Select the Accounts Receivable Credit Card Companies account, and click on Show Ledger Card. Examine the account to determine the balance of invoice V6043 for June 17. Return to the Data Entry screen. Recall this line from the Introduction module: The credit card expense is recorded when the cash is received from the credit card company. Be sure to round all amounts to the nearest one cent. Page 14

15 Transaction Number 4: June 25: Installation revenues earned Cabinets delivered on June 13 to customer Chad Hana were installed today. The installation fee is $ Record the installation fees charged to Mr. Hana s account. Invoice number: V6049. Customer Number: Transaction Number 5: June 25: Return of merchandise purchased on credit Cabinet components that were received by Veideretti Cabinets on June 20 from Downieville Cabinets were returned due to damage during shipment. The cost of the returned components was $ See Pages 7 and 10 of Introduction. Invoice Number: DC360. Debit Memo Number: DM006. Vendor Number: Transaction Number 6: June 25: Payment of an account payable A check was issued to Bay Side Cabinets for payment of a May 25 invoice. Click on Journals/Ledgers/Statements, select Subsidiary Ledgers, and select Accounts Payable. Click on Vendor, from the textbox select account and then click on Show AP Ledger. Examine the account to determine the amount of the invoice. Record the check. Check Number: Invoice Number: BS110. Vendor Number: Transaction Number 7: June 25: Credit purchase of merchandise inventory Purchased, on credit, $12, of precut and unassembled, cabinet components from Downieville Cabinets. Purchased cabinet components are recorded as merchandise inventory. Invoice Number: DC520. Vendor Number: Student analysis: Transaction Number 8: June 25: Declared a cash dividend The board of directors of Veideretti Cabinets declared a cash dividend of $5, to be paid on June 30. Invoice Number: DIVDC (for dividend declared). Page 15

16 Transaction Number 9: June 26: Sale of outdated equipment Veideretti sold shop equipment that is no longer used. The details of the equipment sale are presented below: Old Shop Equipment Original Cost $8,000 Accumulated Depreciation $5,000 Net Book Value $3,000 Sales Price $2,000 When an asset is sold, the asset and the accumulated depreciation for the asset must be removed from the general ledger. Note that the sales price of the shop equipment is less than its net book value, thus there is a loss on the disposal of this asset. Record a debit to Cash, a debit to the Loss on Asset Disposal, and a debit to Accumulated Depreciation Shop Equipment. Credit the Shop Equipment account. Invoice Number: ASALE (for asset sale) Transactions Number 10, 11: June 26: Sale of merchandise for cash Record the cash sale of cabinet components with a total list price of $3,600.00, plus 7% sales tax. Invoice Number: V6050. After you have recorded a sale, the program will automatically record and post a debit to the Cost of Goods Sold and a credit to the Merchandise Inventory for the cost of the cabinet or cabinet components. Click on Journal/Ledgers/Statements and from the drop-down menu select General Journal. Scroll down through the journal entries and note the last entry of June 26 and the secondary entry debiting Cost of Goods Sold and crediting Merchandise Inventory for the cost price of the cabinet components. Page 16

17 Transaction Number 12: June 26: Collection of an account receivable A check was received from Lakeside Homes as payment in full of sales invoice V6030. Click on Journal/Ledgers/Statements, select Subsidiary Ledgers, select Accounts Receivable, and click on Customer. Use the dropdown arrow key and select account 11375, Lakeside Homes, and click on Show AR Ledger. Examine the account to determine the amount owed to Veideretti Cabinets for invoice number V6030, dated May 31. Return to Daily Entries and record the receipt of the check from customer Lakeside Homes. Invoice Number: V6030. Customer Number: Transactions Number 13, 14: June 26: Sale of merchandise and installation service on credit Record the sale and installation of cabinet components to customer Chad Hana. The cabinet components have a list price of $4,200.00, plus sales tax, and the installation charges are 4 hours at $100 per hour. Sales tax is not charged on installation fees. Invoice Number: V6051. Customer Number: Transactions Number 15, 16: June 26: Sale of merchandise with a company credit card A customer purchased $1, of cabinet components, plus sales tax, using an American Credit Card Company credit card. Invoice Number: V6052. This concludes the transactions for June 24 to June 26. 1) Move the pointer to Check Figures. 2) Print a copy of the Check Figures. 3) Move the pointer to Journal/Ledgers/Statements and from the drop-down menu select General Ledger. 4) Print a copy of the June 26 Trial Balance. 5) Compare the Trail Balance total with the Check Figures totals. If there are no errors, continue on to Transactions for June If there are errors in account totals, move the pointer to Support and from the drop-down menu select How to Correct Journal Entries, and print the correction procedures. Page 17

18 It is recommended that you backup your data files at the end of each data entry session. This is common practice for all accounting and tax work. To backup your data files, do the following: From the Support drop-down menu, select How to Backup and Restore and print the document titled How to Backup and Restore Data Files. Follow the instructions to backup your data files. Transactions Number 17, 18: June 27: Sale of merchandise with a bank credit card Cabinet components listed at $4, were sold to a customer who used her Bank Credit Card to pay the invoice. Record the sale, plus sales tax. Invoice Number: V6053 Transaction Number 19: June 27: Purchased shop supplies on credit Veideretti Cabinets purchased a supply of varnishes, on credit, from Visgoth Finishes. The invoice totaled $ and will be debited to Shop Supplies Expense. Invoice Number: V2800. Vendor Number: *********************************************************** Transaction Number 20: June 27: Sales return of merchandise Customer Lakeside Homes returned $1, of cabinet components that were incorrectly measured and cannot be installed. Be sure to debit the appropriate amount of sales tax and credit the customer for the amount of the return plus sales tax, when recording sales returns. The original invoice is dated June 11. Invoice Number: V6040. Credit Memo Number: CM624. Customer Number: Go to the General Journal and view how the program made the debit to Merchandise Inventory and the credit to Cost of Goods Sold for the return of merchandise. Transaction Number 21: June 28: Collection of a note receivable A check was received as payment in full for a $1,000, 6%, for 90 day, short-term note receivable. No interest has been accrued to date on this note. Use the 360-day Banker s Rule for calculating interest. Invoice Number: NTREC (for Note Receivable) Page 18

19 Transaction Number 22: June 28: Payment of an account payable after the discount period has expired Veideretti Cabinets issued a check to pay the account of Champion Plywood for an invoice dated June 8. The discount period has elapsed. Find the amount of the invoice and record the late payment. Check Number: Invoice Number: CH752. Vendor Number: Transaction Number 23: June 29: Payment of a note payable Veideretti Cabinets issued a check for payment of one of the notes payable. The $16,000.00, 9%, 60-day note is dated April 30. Check Number: Invoice Number: NTPAY (for Note Payable). Transaction Number 24: June 30: Write off an uncollectible account Veideretti received notice that Francis Realtors is no longer in business. Repeated notices to Francis Realtors of the overdue account have gone unanswered. Examine the Accounts Receivable Subsidiary Ledger to find the sales invoice number and the balance of the account. Record the write off of the account against the Allowance for Doubtful Accounts. Invoice Number: WROFF (for Write-off.). Customer Number: Transaction Number 25: June 30: Payment of the declared cash dividend Record the payment of the cash dividend declared on June 25. Check Number: Invoice Number: DIVPD (for Dividend Paid). Page 19

20 Transaction Number 26: June 30: Discard of outdated, obsolete equipment Veideretti Cabinets discontinued use of one its delivery vehicles and discarded it, receiving no salvage value. Original Cost $4,000 Accumulated Depreciation $3,800 Net Book Value $200 Note: Veideretti Cabinets is discarding an asset with a net book value of $200; thus there is a loss on this disposal (discard) of $200. Record the discard of the delivery vehicle. Invoice Number: DSVEH (for Discarded Vehicle). Transaction Number 27: June 30: Payment of vendor invoice within the discount period A check was written to Downieville Cabinets for the invoice on June 20, less the return of merchandise on June 25. Downieville Cabinets offers credit terms of 2/10, n/30. Remember, discounts earned for prompt payment are credited to the Merchandise Inventory account. Check Number: Invoice Number: DC630. Vendor Number: Transaction Number 28: June 30: Replenish the Petty Cash Fund The Petty Cash account balance is maintained at $ At the end of June, the bookkeeper submitted the following details about issued petty cash vouchers and the cash on hand in the petty cash container: Shop Supplies Expense $30.00 Miscellaneous Expense Cash on hand Record the replenishment of the petty cash, keeping in mind that Veideretti maintains a Cash Short/Over account (628). Check Number: Invoice Number: PC006 Page 20

21 Transaction Number 29: June 30: Recovery of a previously written off account receivable Today, an agent from George s Home Showroom remitted a check for the account which was previously written off on June 20. Examine the subsidiary ledger for accounts receivable to find the sales invoice number and the amount of the write off. Two entries are required: 1) Reestablish the account of George s Home Showroom account. 2) Record the receipt of the check. Invoice Number: RECOV (for recovery). Customer Number: Transaction Number 30, 31, 32, 33: June 30: Paying expenses with cash Record the issuance of each of the following checks, separately: Transaction Number Check Number Account Title Invoice Number Invoice Amount Telephone Expense AT408 $ Utilities Expense 6940X $ Professional Services Expense PS680 $ Salaries and Wages Expense PAYRL $1, Verify your work: 1) Move the pointer to Check Figures. 2) Print a copy of the Check Figures. 3) Move the pointer to Journal/Ledgers/Statements and from the drop-down menu select General Ledger. 4) Print a copy of the June 30 Trial Balance. 5) Compare the trial balance totals with the Check Figures totals. Page 21

22 If there are account-total errors, move the pointer to Support and from the drop-down menu select How to Correct Journal Entries, and print the correction procedures.. If any of your account balances do not agree with the check figures, apply the necessary audit procedures used in this accounting system and make the necessary correction/s. One of the most efficient ways to locate errors is to print a copy of the General Journal and the Trial Balance. If there are no errors, complete the bank reconciliation: 1) Move the pointer to Support and from the drop-down menu select Bank Reconciliation Information and print the document. 2) Move the pointer to Journal/Ledgers/Statements. From the drop-down menu select General Ledger, click on Ledger Card and Print the Cash Account card. 3) Complete the Bank Reconciliation Form on the following page. Page 22

23 BANK RECONCILIATION VEIDERETTI CABINENTS JUNE 30 Bank Balance: Add: Deposit in transit $ $ Total $ Deduct: Check No. $ Check No. Check No. $ Reconciled Bank Balance $ ============== Book Balance: Add: Interest Earned $ Total $ Deduct: Bank Service Charges $ Credit Card Fees $ Reconciled Book Balance $ ============== Page 23

24 Use the Daily Entries option and journalize the required transactions resulting from the bank reconciliation. Since some entries are updating the balance of the cash account and no check is being issued, when the system asks for a check number, enter BKR06 (for bank reconciliation, sixth month) as the check number. When an invoice number for any bank reconciliation entry (such as NSF check, credit card expense, bank service charges, or interest earned) is requested, enter BKR06 as the invoice number. The bank reconciliation entries may be entered individually or as a compound entry or entries. Because of these options, no Transaction Numbers are given for the bank reconciliation. **************** Verify your work: 1) Move the pointer to Check Figures. 2) Print a copy of the Check Figures. 3) Move the pointer to Journal/Ledgers/Statements and from the drop-down menu select General Ledger. 4) Print a copy of the June 30 Trial Balance. 5) Compare the trial balance totals with the Check Figures totals. The Trial Balance will be used as a reference to end-of-quarter account balances when recording the adjusting entries for the quarter ended June 30. Page 24

25 Adjusting Entries and Closing Entries for the Quarter Ended June 30 Using a copy of the June 30 Trial Balance (printed after the bank reconciliation entries), and the information and financial data shown below, record the adjusting entries for Veideretti Cabinets, Incorporated. Be sure to click on the Adjusting Entries button on the tool bar. Adjusting entries must NOT be entered using the Daily Entries procedure. Any corrections to adjusting entries must also be entered using the Adjusting Entries option. Adjusting entries will not require documentation entries, such as check numbers or vendor or customer numbers. All calculations should be rounded to the nearest one cent. All adjusting entries must be recoded as of June 30, the end of the second quarter. A. Transaction Number 34: Credit Card Expense of 3% on the Accounts Receivable, Credit Card Companies balance has accrued but has not been recorded. This entry will decrease the Accounts Receivable, Credit Card Companies account. Round the expense to the nearest one cent. B. Transaction Number 35: The expired insurance for the quarter totals $1, C. Transaction Number 36: Rent on the Veideretti showroom ($15, for six months) was prepaid on April 1 of this year. The rent on a small storage facility ($1, for three months) was prepaid on June 3 for a three-month rental (June, July, and August). Record a single summarizing entry for the rent expense adjustment for the quarter on the showroom and the storage facility. D. Transaction Number 37: The ending balance of store supplies inventory is $1, E. Transaction Number 38: The ending balance of shop supplies inventory is $ F. Transaction Number 39: A total of $ worth of media advertising, paid for and correctly charged to the Advertising Expense account, will be received or used in the first two weeks of July (the first month of the next quarter). G. Transaction Number 40: $1, of the Unearned Installation Revenues account balance has been earned (cabinets have been installed). This account is debited when the unearned installations are completed. H. Transaction Number 41: Wages accrued for June 30 for assembly work totals 5.00 hours worked at $25.60 per hour. Page 25

26 1. Transaction Number 42: Depreciation on store fixtures is $3, for the quarter. J. Transaction Number 43: Depreciation on shop equipment is $1, per year. K. Transaction Number 44: The company vehicles are depreciated on a per-mile basis of 22.5 cents per mile. Total mileage for the quarter on all of the vehicles is 5,400 miles. L. Transaction Number 45: The balance of the Notes Payable account represents a $5,000.00, 6% 90-day interest bearing note dated May 1. Interest expense has not been accrued on this note. Use a 360-day banker's year and the exact number of days in the interest formula to calculate the accrued interest for this note for May and June. M. Transaction Number 46: After an examination of the customer accounts using an Aging of Accounts Receivable program, it is determined that the Allowance for Doubtful Accounts should have a balance of $2, Examine the June 30 Trial Balance for the current balance of the Allowance for Doubtful Accounts. For the next section of instructions, and depending on your printer configuration, you will be printing 20 or more pages. Be sure to check the paper supply in your printer. When all of the adjusting entries have been correctly entered, do the following: 6) Move the pointer to Check Figures and Print the Check Figures. 7) Move the pointer to Journal/Ledgers/Statements and from the drop-down menu select General Ledger and Print a copy of the June 30 Trial Balance. 8) Compare the Trial Balance total with the Check Figures Totals. If you match this check figure you may proceed to the financial statements. If you do not match this balance, you must locate your adjusting entry error/errors and make the necessary correction/corrections. If there are no errors, print all of the documents in the printing instructions that follow. You will need these documents to complete and answer the questions in the Final Evaluation. 1. From the Journals/Ledgers/Statements drop-down menu select Financial Statements and select and print a copy of the Income Statement, Retained Earnings Statement, and the Balance Sheet. 2. From the Journals/Ledgers/Statements drop-down menu select Subsidiary Ledgers and print the Schedule of Accounts Receivable. Page 26

27 3. Click on the All Customers button and print the Accounts Receivable Subsidiary Ledger. 4. From the Journals/Ledgers/Statements drop-down menu select Subsidiary Ledgers and print the Schedule of Accounts Payable. 5. Click on the All Vendors button and print the Accounts Payable Subsidiary Ledger. RECORD THE CLOSING ENTRIES FOR VEIDERETTI CABINETS Before closing the books for Veideretti Cabinets, be sure that you have printed all of the documents listed in instructions 1-5 above. The financial statements cannot be printed after the closing entries have been recorded. 6. Click on Data Entry, move the pointer to the Closing Entries button on the Menu bar and click. The temporary accounts will be closed and balance of the Retained Earnings account will be updated for the total of net income or loss minus the amount of the dividends paid. 7. From the Journals/Ledgers/Statements drop-down menu select General Ledger. Print a copy of the Post-Closing Trial Balance. There are no Check Figures for the Post- Closing balances. 8. From the General Ledger option, click on Ledger Card, select account 101 Cash, click on Show Ledger Card, and print the account. Use the same procedure, starting with Ledger Card, and print the following general ledger accounts: 1) 105 Accounts Receivable 2) 115 Merchandise Inventory 3) 201 Accounts Payable 4) 901 Income Summary 9. From the Journals/Ledgers/Statements drop-down menu select General Journal. From the General Journal drop-down menu, select Closing Entries, click on Show Portion and Print the Closing Entries. Page 27

28 Correcting Errors after the Ledger is Closed If, after closing the general ledger, you discover an error or wish to print of any of the documents, move the pointer to Support and from drop-down menu select Restore to Adjusted Balances. Click on Journal/Ledger/Statements and from the drop-down menu select General Ledger and print the Adjusted Trial Balance. Make the required correction entries using the Adjusting Entries data entry mode. Print the required corrected documents, close the books, and print a new Post-Closing Trial Balance. The Final Evaluation Using all of your printed documents, carefully answer the Final Evaluation questions. You will be required to answer questions related to the financial condition and financial success of Veideretti Cabinets, Incorporated. When a question refers to one of the following analysis ratios, use the formula for the ratio as presented below: Ratio Current Ratio Working Capital Accounts Receivable Turnover Inventory Turnover Debt Ratio Equity Ratio Profit Margin Ratio Gross Margin Ratio Return on Total Assets Formula Current Assets / Current Liabilities Current Assets Current Liabilities Net Sales / Average Accounts Receivable Cost of Goods Sold / Average Inventory Total Liabilities / Total Assets Total Equity / Total Assets Net Income / Net Sales (Net Sales Cost of Goods Sold) / Net Sales or Gross Profit From Sales / Net Sales Net Income / Average Total Assets Page 28