Work4Me I Accounting Simulations 3 rd Web-Based Edition Demonstration Problem Classic Accounting Services, Incorporated Page 1
Problem 1 Demonstration Problem The Work4Me problems begin with a hands-on, demonstration exercise. Working through this first problem will help you quickly polish your skill in using the computer system to complete your work. IT IS EXTREMELY IMPORTANT, BEFORE YOU BEGIN EACH PROBLEM, THAT YOU FAMILIARIZE YOURSELF WITH THE TYPE OF BUSINESS AND THE CHART OF ACCOUNTS USED BY THAT BUSINESS TO RECORD THE FINANCIAL DATA. Below, and on the following page, you will find the Chart of Accounts for Abbey Bookkeeping Service, Inc., an explanation for some of the accounts used by the business, and stepby-step instructions on how to quickly and efficiently use the "WORK4ME" system to complete your accounting work. Work this Demonstration Problem carefully and familiarize yourself with the system that will be used throughout this course. Several accounts which require special attention are listed below: 105 Accounts Receivable maintains a record of the total amount owed to the business by clients. 121 Prepaid Rent is debited for rent payments made for more than one month in advance. Rent paid for a single month would be debited to the Rent Expense account. 122 Prepaid Insurance is debited for the purchase of all insurance policies that provide coverage for more than one accounting period. A payment for only a single period would be debited to the Insurance Expense account. 127 Office Supplies is debited for each purchase of materials used to run the office. 201 Accounts Payable is a liability account that keeps a record of the total amount owed to suppliers, vendors, and creditors by Abbey Bookkeeping Service, Incorporated. 401 Bookkeeping Fees Earned is the revenue account of the business. It keeps a record of the total amount of fees that have been earned during the period. 606 Delivery Expense is debited for the freight charges incurred to use a private courier or the postal service to deliver completed accounting work. 621 Rent Expense is debited when rent is paid on a monthly basis. Rental fees paid in advance (for several accounting periods) are debited to the Prepaid Rent account. 622 Insurance Expense is used to account for the insurance premiums of a single period. Long-term insurance payments are debited to the Prepaid Insurance account. Page 2
CHART OF ACCOUNTS ABBEY BOOKKEEPING SERVICES, INCORPORATED ASSETS 101 Cash 105 Accounts Receivable 121 Prepaid Rent 122 Prepaid Insurance 127 Office Supplies 131 Office Equipment 139 Automobiles LIABILITIES 201 Accounts Payable STOCKHOLDERS EQUITY 301 Common Stock 305 Retained Earnings REVENUE 401 Bookkeeping Fees Earned OPERATING EXPENSES 602 Office Supplies Expense 604 Vehicle Operating Expense 605 Advertising Expense 606 Delivery Expense 621 Rent Expense 622 Insurance Expense 625 Electric and Gas Expense 626 Telephone Expense 628 License Expense 635 Miscellaneous Expense Page 3
START THE PROGRAM! This demonstration exercise will guide you through the journalizing and posting process of nine sample entries. In addition, you will also be introduced to the error correction procedure used for this system. After you have completed recording the business transactions, you may quickly print a general journal, trial balance, and selected general ledger cards for review and analysis. You will immediately become aware that the computer has been used as a tool to complete the time consuming clerical functions of the accounting process. Your task now is to use the documents to answer the ten analysis questions. 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 with the beginning April 1 transaction. You will be able to access the chart of accounts during the data entry process. 1. To access the Work4Me program, click on the Work4Me log in button on the home page. 2. At the log in page, enter your User ID/Name and Password. Then click on Log In. 3. From the Menu Bar of the Data Entry page, move the pointer to Problems, then down to Problem 1, Demonstration, and click. 4. Click on OK at the message directing you to click on Daily JE (Daily Journal Entries). 5. Click OK again if there are no current 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 off the program or moving from other selection options on the Data Entry page. Page 4
NOTE: Remember to disable any Pop-up Blocker installed on your computer. Disabling Pop-up Blockers allows you to print documents in any PKL Software program without complications caused by the Pop-up Blockers. To disable Internet Explorer s Pop-up Blocker, perform the following directions: 1. Launch Internet Explorer. 2. In the Tools drop down menu, click on Internet Option. 3. Click the Privacy tab and click on the Settings button under the Pop-up Blocker section at the bottom of the window. 4. Enter http://www.pklsoftware.com in the space below Address of Web site to allow and then click the Add button. 5. Click on the Close button to close the Pop-up Blocker Settings window and Click on the OK button to close the Internet Options window. Page 5
TRANSACTIONS FOR APRIL 1-8 April 1 Began Abbey Bookkeeping Service, Incorporated, by selling 6,000 shares of Common Stock to stockholders at a price of $5.00 per share. Journalize this transaction. Student Analysis 1. At the date prompt, for April 1, enter 01 for the day. When entering any part of the transaction, you may back up and reenter the information by using the Backspace key. If you have already pressed the Tab key after entering the date and wish to change it, click in the date prompt and backspace or delete the incorrect date and enter the correct date. 2. To debit cash, at the account prompt enter 101 (the Cash account number) and press the Tab key. Type 30,000 (without the $ sign) and press the Tab key. 3. At the account prompt enter 301 (the Common Stock account number) and press the Tab key twice. In the credit amount column, enter 30,000 (without the $ sign) and press the Tab key. 4. If you enter the wrong account, click on the account entry line and a dropdown menu of the Chart of Accounts will appear. 5. When you have completed your entry, click on the Verify Journal button. A message box will appear informing you if the journal entry is in balance (total debit amount equals the total credit amount) and all of the account numbers are from the Abbey Chart of Accounts. If the date, entry, or account numbers are not properly entered, you will be given an error message with the appropriate error details. When all of the error items have been corrected, the Post button will be actividated. 6. Post the journal entry to the General Ledger. If after verifying the entry, you realize that an account number or entry amount is not correct, click on Clear Screen from the Menu Bar and reenter, verify, and then post the corrected entry. If you discover that a transaction entered and posted into the system is incorrect, two entries are required. Reverse or back out the original error transaction and then enter the transaction correctly. A complete summary of the Error Correction Procedures is presented at the end of this problem. 7. Continue recording and posting the transactions that follow 101 Cash $30,000 301 Common Stock $30,000 Page 6
TRANSACTIONS FOR APRIL 1-8 April 1 Issued a check for $900 to Ingerson Properties as payment for the April rent of the business office. Student Analysis 1. Enter 01 for the date. Since this is the same date as the previous entry you can also enter the date by entering D for date. When the complete entry is verified, the date will be displayed. 2. Enter 621 for Rent Expense. While working on the journal entries, the full Chart of Accounts is available by clicking on the account entry line. You may also enter the debit to Rent Expense by clicking on account 621 from this pull-down chart. 3. Enter the $900 amount of the rent payment (no $ or commas required). 4. Enter 101 for Cash. Tab to the credit column and enter 900. 5. Press the Verify Journal button to verify the transaction. The date and all of the entry accounts and amounts will now be shown for your approval. When everything is correct, click on the Post button to complete the recording and posting process. Remember, if the date, entry, or account numbers are not properly entered, you will see an error message with the appropriate error details. When the error item/s has been corrected, the Post button will be activated. If after verifying an entry, and before posting, you realize that an account number or entry amount is not correct, click on the Clear All button from the Menu Bar and reenter, verify, and then post the corrected entry. ************************ How To View Your Work Move the pointer to Journal/Ledgers/Statements on the Menu Bar, move the pointer to General Journal and click. You may view the General Journal and the entries you have recorded or print the General Journal at any time. To return to recording transactions, move the pointer back to Data Entry and click. Page 7
TRANSACTIONS FOR APRIL 1-8 April 3 Issued $60 check as payment in full of a Miscellaneous Expense. Student Analysis 1. Enter 03 for the date. 2. Enter the correct debit account and the amount. 3. Enter the correct credit account and amount. 4. Post the transaction. April 3 Discovered that the previous entry that had been journalized and posted to the Miscellaneous Expense account was a charge for a newspaper ad and should have been debited to the Advertising Expense account. The entry correction procedure for the Abbey Bookkeeping Service accounting system requires that the error entry be backed out and then reentered correctly. 1. Enter the same date of the original error transaction (Enter D for Date). 2. Debit Cash and credit Miscellaneous Expense for $60. 3. Since the error entry date was 03, enter the same date for the correction entry. 4. Enter the corrected journal entry. Verify the entry and then Post to the General Ledger. This error correction procedure must be used for all corrections in this computerized accounting system. This leaves a clear and complete audit trail for all corrections. More detailed error correction instructions are found at the end of this problem. Page 8
TRANSACTIONS FOR APRIL 1-8 April 5 Purchased on account (on credit) from Boomer Office Supply, office equipment costing $610.10 and office supplies listed at $80.00. Student Analysis This is a compound entry with two debits and a single credit. 1. At the date prompt, enter 05 for the date. 2. Enter the two debit accounts and amounts. 3. Enter the credit account, tab to the credit amount column and enter the amount. 4. Verify the entry and then Post to the General Ledger. ************************ Using the procedures introduced in the previous journal entries, properly record, verify, and post the remaining transactions. April 7 Received a check for $2,400 for bookkeeping services completed for a client. April 7 Purchased on account (on credit), from Ross Business Equipment Company, a new computer and printer for the office. The invoice for this purchase totaled $1,770. Page 9
TRANSACTIONS FOR APRIL 1-8 April 8 Performed additional bookkeeping services and billed the client for $775. The client is extended 30-day credit terms. Student Analysis ************************ Now that you have completed entering the transactions for the eight days of the Demonstration Problem, it is time to check the accuracy of your work. In the Check It Out box on the following page are the correct balances of a few of the key accounts that you have been working with in this problem. The Check It Out box is NOT a Trial Balance. 1. Move the pointer to Journal/Ledgers/Statements in the Menu Bar, move down to the General Ledger selection and click. The completed Trial Balance will appear on the screen. 2. Check your balances against the totals shown in the Check It Out box on the next page. If your totals DO NOT match the check figures, proceed to the instructions below the Check It Out box. If all of your totals match the check figures, you are ready to print the Trial Balance and other documents and exit the system. Continue with instruction three that follows. 3. Move the pointer to Journal/Ledgers/Statements in the Menu Bar, then down to General Ledger and click. The Abbey Bookkeeping Service, Incorporated, Trial Balance will appear on the screen. Print the trial balance. 4. Click on the Ledger Card button. The Cash ledger card will appear on the screen. Click on the button labeled Print below Topic Review on the Menu Bar. Print the Cash ledger card. 5. Click the Ledger Card button and using the pull down screen, select account 105 (Accounts Receivable). Click on the Show Ledger Card, then click the Print button and print the Accounts Receivable ledger card. 6. Using the same selection and print routine, print the ledger cards for 201, Accounts Payable and 401, Bookkeeping Fees Earned. 7. Move the pointer to Journal/Ledgers/Statements in the Menu Bar, then down to General Journal and click. The General Journal will appear on the screen. Print the journal. Page 10
8. When all of the required documents have been printed, you have completed your computer work for the Demonstration Problem. Move the pointer to Assistance on the Menu Bar, down to Home Page and click. From the PKL software Home Page you may make another selection or exit the website by clicking on the Close button. Using your printed documents, carefully answer the questions on the Classic Account Service, Incorporated, and Problem Analysis Form. Instructions as to how and when your assignment is to be turned in will be given by your instructor. CHECK IT OUT 101 Cash $31,440.00 105 Accounts Receivable 775.00 121 Prepaid Rent 0.00 131 Office Equipment 2,380.10 201 Accounts Payable 2,460.10 401 Bookkeeping Fees Earned 3,175.00 605 Advertising Expense 60.00 635 Miscellaneous Expense 0.00 TRIAL BALANCE TOTAL $35,635.10 IF ANY OF YOUR BALANCES DO NOT MATCH THE CORRECT FIGURES, YOU HAVE ONE OR MORE ERRORS THAT MUST BE CORRECTED BEFORE YOU CAN CONTINUE. The most efficient method of locating and correcting the errors is to print a copy of the Trial Balance and a copy of the General Journal. 1. Move the pointer to Journal/Ledgers/Statements in the Menu Bar, then to General Ledger and click. Print a copy of the Abbey Bookkeeping Service, Incorporated, Trial Balance. 2. Move the pointer to the Journal/Ledgers/Statements in the Menu Bar, then to General Journal and click. Print a copy of the General Journal. 3. Check your journal entries for error/s. If you do not match the balance of a particular account, check the transaction/s that was recorded (or not recorded) for that account. Make the necessary correction/s by backing out the error entry and then journalizing the correct entry. Be sure to use the correction procedures outlined in the April 3 transaction and on the next page. 4. When your balances match the Check It Out box totals, proceed to instructions 3-8 starting on the previous page. Page 11
ERROR CORRECTION PROCEDURES For the WORK4ME Accounting System JOURNAL ENTRY CORRECTION Carefully examine all entries recorded for each period and when an error is found use the following correction procedure: 1. Back the transaction out using the date used in the error entry. 2. Enter the correct transaction using the correct date of the original entry. If, for example, you find that a bookkeeping fees transaction for cash on April 8 was entered as a debit to Accounts Receivable and a credit to Bookkeeping Fees Earned, simply back out (reverse) the error as follows: April 8 Bookkeeping Fees Earned 2,400 Accounts Receivable 2,400 When the entry has been verified, the accounts will now show the original balances in place before the error entry. Using the same April 8 date, record the correct entry. April 8 Cash 2,400 Bookkeeping Fees Earned 2,400 The error entry, the back-out entry, and the correction entry will appear in the accounting records leaving a clear, easy-to-follow audit trail. Page 12
WORK4ME I DEMONSTRATION PROBLEM NAME CLASS DAY AND TIME DATE Use the required printed documents from the Demonstration Problem and answer the following questions: 1. Do the totals on your printed Trial Balance match the figures shown in the Check It Out box? Answer only Y for Yes or N for No. 2. What was the correct balance of the Cash account at the close of business on April 3? 3. What was the balance of cash after the first check was written on April 1? 4. What is the current balance of the Cash account? 5. How much is owed by Abbey Bookkeeping Services, Inc., on April 8? 6. What was the correct total amount of revenues earned at the close of business, April 7? 7. What is the total of the operating expenses to date? 8. What is the total net income for the eight days of operations? 9. What is the total amount owed to Abbey Bookkeeping Services by clients? 10. What is the total value of the business assets reported on the Abbey Bookkeeping Services, Trial Balance? $ $ $ $ $ $ $ $ $ Page 13
Work4Me I Accounting Simulations 3 rd Web-Based Edition Problem Two Daily Journal Entries for Abbey Accounting Services, Incorporated Page 14
CHART OF ACCOUNTS ABBEY BOOKKEEPING SERVICES, INCORPORATED ASSETS 101 Cash 105 Accounts Receivable 121 Prepaid Rent 122 Prepaid Insurance 127 Office Supplies 131 Office Equipment 139 Automobiles LIABILITIES 201 Accounts Payable STOCKHOLDERS EQUITY 301 Common Stock 305 Retained Earnings REVENUE 401 Bookkeeping Fees Earned OPERATING EXPENSES 602 Office Supplies Expense 604 Vehicle Operating Expense 605 Advertising Expense 606 Delivery Expense 621 Rent Expense 622 Insurance Expense 625 Electric and Gas Expense 626 Telephone Expense 628 License Expense 635 Miscellaneous Expense Page 15
RUN THE PROGRAM! Problem 2 Daily Journal Entries Abbey Bookkeeping Services, Incorporated After you have completed the Demonstration Problem, you are prepared to being work on Problem 2, the first full accounting problem. Problem Two will guide you through the journalizing, posting, and statement preparation for a full month of business activity. When you have completed your entries, you may print a trial balance, general journal and several general ledger cards for review. After checking your documents for accuracy with the Check It Out box, you will be asked to answer a series of analysis questions using your business documents. Be sure to use the special options introduced in the Demonstration Exercise as you work Problem 2. You can use the D for Date option and the Pull Down menu for account entry. These data entry features will assist in increasing your efficiency and speed of data entry and data correction. The mouse will only be needed post the completed journal entry. You may prepare your account entry information before sitting down at the computer. You will find that this will speed up your data entry time. You may prefer to analyze each entry and record the transaction on the computer at the same time. 1. Go to www.pklsoftware.com. 2. To access the Work4Me program, click on Work4Me on the home page. 3. At the log in page, enter your User ID/Name and Password. Then click on Log In. 4. From the Menu Bar of the Data Entry page, move the pointer to Problems, then down to Problem 2, Daily Journal Entries, and click. 5. Click on OK, at the message directing you to click on Daily JE. Click OK again if there are no current 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 off the program or moving from other selection options on the Data Entry page. Page 16
TRANSACTIONS FOR APRIL 1-30 April 1 Began Abbey Bookkeeping Service, Inc., by selling 10,000 shares of common stock at a price of $4.00 per share. Student Analysis 1. At the date prompt, for April 1, enter 01 for the day. When entering any part of the transaction, you may back up and reenter the information by using the backspace key. If you have already pressed the Tab key after entering the date, and wish to change it, move the pointer to the date prompt and enter the correct date. 2. To debit cash, at the account prompt enter 101 (the Cash account number) and press the Tab key. Type 40,000 (without the $ sign) and press the Tab key. 3. At the account prompt enter 301 (the Common Stock account number) and press the Tab key twice. In the credit amount column, enter 40,000 (without the $ sign) and press the Tab key. 4. If you enter the wrong account, click on the account entry line and a dropdown menu of the Chart of Accounts will appear. 5. When you have completed your entry, Click on the Verify Journal button. If the entry is in balance, a message box will appear informing you if the journal entry is in balance (total debit amount equals the total credit amount) and all of the account numbers are from the Abbey Chart of Accounts. If the date, entry, or account numbers are not properly entered, you will be given an error message with the appropriate error details. When all of the error items have been corrected, the Post button will be activated. 6. Post the journal entry to the General Ledger. If after verifying the entry, but before posting, you realize that an account number or entry amount is not correct, click on Clear Screen from the Menu Bar and reenter, verify, and then post the corrected entry. If you discover that a transaction entered and posted into the system is incorrect, two entries are required. Reverse or back out the original error transaction and then enter the transaction correctly. 7. Continue recording and posting the transactions that follow. Page 17
TRANSACTIONS FOR APRIL 1-30 April 1 Issued a check for $900 to Jacobson Property Management as payment for the April rent of the business office. Student Analysis 1. Enter 01 for the date (Enter D for Date). 2. Enter 621 for Rent Expense. While working on the journal entries, the full Chart of Accounts is available by clicking on the account entry line. You may also enter the debit to Rent Expense by clicking on account 621 from this pull-down chart. 3. Enter amount of the rent payment (no $ or commas required). 4. Enter the credit to Cash (101) and the amount of the credit. 5. Verify the transaction, correct any problems, and when ready, click on the Post button to complete the journalizing and posting process. Remember, if the date, entry, or account numbers are not properly entered, you will see an error message with the appropriate error details. When the error item/s has been corrected, the Post button will be activated. If after verifying the entry, but before posting, you realize that an account number or entry amount is not correct, click on the Clear All button from the Menu Bar and reenter, verify, and then post the corrected entry. ************************ How To View Your Work Move the pointer to Journal/Ledgers/Statements on the Menu Bar, then move the pointer down to General Journal and click. You may view the General Journal and the entries you recorded or print the General Journal at any time. To return to recording transactions, move the pointer back to Data Entry and click. Page 18
TRANSACTIONS FOR APRIL 1-8 April 1 Purchased business insurance coverage for the month of April for $250 cash. (Remember to enter D to repeat the date.) Student Analysis 1. Enter 01 for the date. 2. Enter the correct debit account and the amount. 3. Enter the correct credit account and amount. 4. Verify the transaction and then Post to the General Ledger. Continue entering the April transactions. If you discover that a transaction entered into the system at an earlier time needs correction, simply reverse or back out the error transaction and then enter and post the transaction correctly. April 3 Issued a check for $130 and purchased a business license. April 3 Purchased office equipment for $3,250 cash. April 3 Purchased office equipment costing $2,150.00 and office supplies listed at $180.50 on account (20-day credit) from Roper Office Equipment and Supply. This is a compound entry with two debits and a single credit. Page 19
TRANSACTIONS FOR APRIL 1-30 April 5 Received a check for $1,975 for bookkeeping services completed for a client. Student Analysis April 7 Issued a $460 check for April advertising. April 8 Performed additional bookkeeping services and billed the client for $775. The client is extended 15-day credit terms. April 10 Purchased for $7,700 cash, a used car to be used for business operations. April 12 Purchased a new computer costing $3,200 on credit from Computer Express of Granite Bay. April 13 Purchased office supplies for $99.90 on account from Zikmeister Office Supply. The company offers 10-day credit terms. ************************ Now that you have completed entering the first 12 transactions, it is time to check the accuracy of your work. The Check It Out box on the following page has the correct balances of Page 20
several of the accounts that you have been working with so far this period. 1. Move the pointer to Journal/Ledgers/Statements in the Menu Bar, move down to the General Ledger selection and click. The completed Trial Balance will appear on the screen. 2. Check your balances against the totals shown in the Check It Out box on the next page. IF ALL OF YOUR TOTALS MATCH THE CHECK FIGURES, you are ready to continue entering the remaining transactions for April. If you do not match the check figures, proceed to the instructions below the Check It Out box. CHECK IT OUT 101 Cash $29,285.00 105 Accounts Receivable 775.00 127 Office Supplies 280.40 131 Office Equipment 8,600.00 139 Automobile 7,700.00 201 Accounts Payable 5,630.40 401 Bookkeeping Fees Earned 2,750.00 605 Advertising Expense 460.00 621 Rent Expense 900.00 622 Insurance Expense 250.00 628 License Expense 130.00 TRIAL BALANCE TOTAL $48,380.40 IF ANY OF YOUR BALANCES DO NOT MATCH THE CORRECT FIGURES LISTED, YOU HAVE ONE OR MORE ERRORS THAT MUST BE CORRECTED BEFORE YOU CAN CONTINUE. THE MOST EFFICIENT METHOD OF LOCATION AND CORRECTING THE ERROR/S IS TO PRINT A COPY OF THE TRIAL BALANCE AND A COPY OF THE GENERAL JOURNAL. 1. Move the pointer to Journal/Ledgers/Statements in the Menu Bar, then down to General Ledger and click. Print a copy of the Abbey Bookkeeping Service, Inc., Trial Balance. 2. Move the pointer to Journal/Ledgers/Statements in the Menu Bar, then down to General Journal and click. Print a copy of the General Journal. 3. From the accounts on the Trial Balance that do not match the check figures, check you journal entries for errors. Make the necessary corrections by backing out each Page 21
error entry and then reentering it correctly. Page 22
4. When your balances match the Check It Out box figures, you are ready to continue entering the remaining transactions for this problem. TRANSACTIONS FOR APRIL 1-30 April 14 Received a check for $3,200 for bookkeeping services completed today for a client. Student Analysis April 15 Performed bookkeeping services and billed the client for $675. The client is extended 15-days credit terms. April 17 Paid $66.50 to Bart s Chevron Services for gas and a tire repair. April 20 Purchased $28 worth of postage stamps (office supplies) for the office. April 22 Paid $15 to the Gold Run Courier Services to deliver completed documents to a client. April 23 Received a $775 check from a client as payment in full on their account balance that is due today. Page 23
TRANSACTIONS FOR APRIL 1-30 April 23 Issued a check for $99.90 as payment in full on the Zikmeister Office Supply account that is now due. Student Analysis April 23 Issued a check for $65 to the Dozier Printing Services for color copies of an advertising brochure. April 23 Issued a check for $2,330.50 as payment in full of the accounts payable balance owed to Roper Office Equipment and Supply Company. April 25 Completed $650 worth of bookkeeping services for a client and the client paid in full with a company check. April 27 Purchased for $1,800 cash, a blanket business insurance policy for the months of May, June and July. April 29 Issued a check for $235.40 in payment of the Newcastle Phone Company telephone bill. April 30 Received a check for $675 as payment in full on account from a charge customer. Page 24
TRANSACTIONS FOR APRIL 1-30 April 30 Issued a check for $3,300 as a prepayment of the rent for May, June and July. Student Analysis ************************ Now that you have completed entering all of the April transactions for Abbey Bookkeeping Services, Incorporated, it is time to check the accuracy of your work. In the Check It Out box on the following page are the correct balances of key accounts that you have been working with this period. Remember that the Check It Out box is NOT a trial balance, and only key account balances are listed. 1. Move the pointer to Journal/Ledgers/Statements on the Menu Bar, then down to the General Ledger selection and click. The completed Trial Balance will appear on the screen. 2. Check your balances against the totals shown in the Check It Out box on the next page. If your totals DO NOT match the check figures, proceed to the instructions below the Check It Out box. If all of your totals match the check figures, you are ready to print the Trial Balance and other documents and then exit the system. Continue with instruction three that follows. 3. Move the pointer to Journal/Ledgers/Statements in the Menu Bar, then down to General Ledger and click. The Abbey Bookkeeping Service, Incorporated, Trial Balance will appear on the screen. Print the trial balance. 4. Click on the Ledger Card button. The Cash ledger card will appear on the screen. Print the Cash ledger card. 5. Click the Ledger Card button and using the pull down screen, select account 105 Accounts Receivable. Click on Show Ledger Card and print the Accounts Receivable ledger card. 6. Using the same selection and print routine, print the ledger cards for 201, Accounts Payable and 401, Bookkeeping Fees Earned. 7. Move the pointer to Journal/Ledgers/Statements in the Menu Bar, then down to General Journal and click. The General Journal will appear on the screen. Print the journal. Page 25
8. When all of the required documents have been printed, you have completed your computer work for Problem Two. Move the pointer to Support on the Menu Bar, down to Home Page and click. From the PKL software Home Page you may select another problem or exit the website by clicking on the Close button. Using your printed documents, carefully answer the questions on the Classic Account Service, Incorporated, Problem Two Analysis Form. Instructions as to how and when your assignment is to be turned in will be given by your instructor. CHECK IT OUT 101 Cash $26,644.70 105 Accounts Receivable 0.00 121 Prepaid Rent 3,300.00 127 Office Supplies 308.40 131 Office Equipment 8,600.00 201 Accounts Payable 3,200.00 401 Bookkeeping Fees Earned 7,275.00 604 Vehicle Operating Expense 66.50 605 Advertising Expense 525.00 621 Rent Expense 900.00 622 Insurance Expense 250.00 635 Miscellaneous Expense 0.00 TRIAL BALANCE TOTAL $50,475.00 IF ANY OF YOUR BALANCES DO NOT MATCH THE CORRECT FIGURES, YOU HAVE ONE OR MORE ERRORS THAT MUST BE CORRECTED BEFORE YOU CAN CONTINUE. The most efficient method of locating and correcting the errors is to print a copy of the Trial Balance and a copy of the General Journal. 1. Move the pointer to Journal/Ledgers/Statements in the Menu Bar, then to General Ledger and click. Print a copy of the Abbey Bookkeeping Service, Incorporated, Trial Balance. 2. Move the pointer to the Journal/Ledgers/Statements in the Menu Bar, then to General Journal and click. Print a copy of the General Journal. Page 26
3. Check your journal entries for error/s. If you do not match the balance of a particular account, check the transaction/s that was recorded (or not recorded) for that account. Make the necessary correction/s by backing out the error entry and then journalizing the correct entry. 4. When your balances match the Check It Out box totals, proceed to instructions 3-8 starting on the previous page. Page 27
WORK4ME I - PROBLEM TWO DAILY JOURNAL ENTRIES NAME CLASS DAY AND TIME DATE 1. Do the totals on your Trial Balance match the figures shown in the Check It Out box? Answer only Y for Yes or N for No. 2. If no errors have been made, what should be the correct balance of the Cash account at the close of business on April 3? 3. At the close of business on April 13, what total amount has been debited to the Cash account so far this month? 4. Has the correct balance of the Cash account fallen below $20,000 at any time during April? Answer only Y for Yes or N for No. 5. What is the total amount owed to Abbey Bookkeeping Services by clients? (list dollars and cents in your answer) 6. What is the reason for your answer to question number five? A. customers are not allowed to charge B. all accounts receivable balances have been paid in full C. there have been no charges by customers this month 7. How much was owed by Abbey Bookkeeping Services, Incorporated, on April 15? List dollars and cents in your answer. 8. How many individual vendor accounts are still outstanding at the end of April and must be paid in May? A. Four B. Three C. Two D. One 9. What are the total revenues earned through the close of business April 15? $ $ $ $ $ 10. What are the total revenues for the month of April? $ 11. What is the total of the April expenses? $ 12. What is the total net income for the month of April? $ 13. The net income is what percent of the total revenues? Always round your answer to two decimal places:.323457 = 32.35%. On the computer examination DO NOT write % Page 28
percent or use the percent sign in your answer. Page 29
14. If a balance sheet was prepared at the end of April, what would be the total for business assets? 15. The beginning Retained Earnings balance for this new business was $0.00. If a Retained Earnings Statement is prepared at the end of April, what will be the new balance of this account? $ $ Page 30
Work4Me I Accounting Simulations 3 rd Web-Based Edition Problem Three Adjusting Entries for Classic Accounting Services, Incorporated Page 31
Problem Three Classic Accounting Services, Inc. Trial Balance For The Quarter Ended, June 30 Debit Credit Cash 10,550.00 Accounts Receivable 12,145.00 Prepaid Rent 9,000.00 Prepaid Insurance 3,450.00 Office Supplies 724.00 Office Equipment 12,460.00 Accumulated Deprec. Office Equip. 2,450.00 Automobile 15,500.00 Accumulated Deprec. - Automobile 2,000.00 Building 124,000.00 Accumulated Deprec. - Building 36,000.00 Land 100,000.00 Accounts Payable 9,245.00 Short-term Notes Payable 5,000.00 Unearned Consulting Fees 4,800.00 Long-term Notes Payable 16,000.00 Mortgage Payable 60,000.00 Common Stock 100,000.00 Retained Earnings 28,664.00 Cash Dividends 1,000.00 Accounting Fees Earned 25,370.00 Consulting Fees Earned 13,435.00 Salaries and Wages Expense 8,560.00 Vehicle Operating Expense 750.00 Advertising Expense 1,250.00 Delivery Expense 388.00 Electric and Gas Expense 890.00 Telephone Expense 577.00 License Expense 125.00 Miscellaneous Expense 45.00 Interest Expense 1,550.00 ---------- ---------- Total 302,964.00 302,964.00 ========== ========== Page 32
CHART OF ACCOUNTS Classic Accounting Services, Incorporated Problem Three ASSETS REVENUE 101 Cash 401 Accounting Fees Earned 105 Accounts Receivable 405 Consulting Fees Earned 109 Notes Receivable 121 Prepaid Rent 122 Prepaid Insurance EXPENSES 125 Prepaid Advertising 127 Office Supplies 601 Salaries and Wages Expense 131 Office Equipment 602 Office Supplies Expense 132 Accum. Depreciation, Office Equip. 604 Vehicle Operating Expense 139 Automobiles 605 Advertising Expense 140 Accum. Depreciation, Automobiles 606 Delivery Expense 150 Building 610 Depreciation Exp., Office Equip. 151 Accum. Depreciation, Building 612 Depreciation Exp., Automobiles 160 Land 615 Depreciation Exp., Building 621 Rent Expense 622 Insurance Expense LIABILITIES 624 Property Tax Expense 625 Electric and Gas Expense 201 Accounts Payable 626 Telephone Expense 203 Short-Term Notes Payable 628 License Expense 209 Salaries & Wages Payable 635 Miscellaneous Expense 211 Property Taxes Payable 651 Interest Expense 213 Dividends Payable 215 Interest Payable 220 Unearned Consulting Fees 231 Long-Term Notes Payable 241 Mortgage Payable STOCKHOLDERS EQUITY 301 Common Stock 305 Retained Earnings 310 Cash Dividends Declared Page 33
Problem 3 Adjusting Entries Classic Accounting Services, Incorporated Adjusting Entries for the Quarter 1. Go to www.pklsoftware.com. 2. To access the Work4Me program, click on the Work4Me log in on the home page. 3. At the log in page, enter your User ID/Name and Password. Then click on Log In. 4. From the Menu Bar of the Data Entry page, move the pointer to Problems, then down to Problem 3, Adjusting Entries, and click. 5. Click on OK, at the message directing you to select adjusting entries. 6. Move the pointer to Adjusting JE and click. No daily entries will be recorded in this problem. Corrections to adjusting entries must also be entered using the Adjusting JE data entry format. Using the copy of the June 30 unadjusted trial balance for Classic Accounting Services, Incorporated, the Chart of Accounts for Classic Accounting Services, Incorporated, on page 2, and the following adjusting entry financial data below, record the appropriate adjusting entries for the quarter ended June 30. If necessary, round all of your calculated amounts to the nearest cent. Remember that all adjustments are being made for June 30, the end of the second quarter of the year. A. The June 30 inventory of office supplies total $260. B. The expired insurance for the quarter totals $440 for policy one, $625 for policy two, and $400 for policy three. C. A total of $1,250 worth of advertising copy was paid for and correctly charged to the Advertising Expense account during the quarter. An examination of the account shows that $400 of radio ads for the business will be aired during the first week of July which is the beginning of the third quarter of operations. Page 34
D. Accrued property taxes for the quarter total $275. E. Wages are accrued for 15 hours worked at a rate of $11.50 per hour. F. Depreciation of Office Equipment for the quarter totals $475. G. Depreciation of the automobile has been calculated to be $1,800 per year and is calculated on straight-line basis. H. The building owned by the company was purchased at an historical cost of $124,000 and is being depreciated at a rate of $600 per month. I. Rent on the other property used by the business was prepaid for six months in advance. On April 1, the full $9,000 payment was charged to the Prepaid Rent account. J. It is determined that an additional $250 worth of accounting services have been completed for a client but have not yet been billed. All consulting services for clients have been billed for the quarter. K. Total accrued interest on the short-term note payable, the long-term note payable, and the mortgage payable is $445.70. L. An examination of the Unearned Consulting Fees account determines that $1,470 of this account balance has been earned as of June 30. Now that you have completed entering the adjusting entries for Classic Bookkeeping Service, Incorporated, it is time to check the accuracy of your work. In the Check It Out box that follows are the correct balances of key accounts that you have been working with this period. Remember that the Check It Out box is NOT a trial balance, and only key account balances are listed. 1. Move the pointer to Journal/Ledgers/Statements in the Menu Bar, move down to the General Ledger selection and click. The completed Adjusted Trial Balance will appear on the screen. Page 35
2. Check your balances against the totals shown in the Check It Out box on page 7. Page 36
If your totals DO NOT match the check figures, proceed to the instructions below the Check It Out box. If all of your totals match the check figures, you are ready to print the Adjusted Trial Balance and other documents, answer the problem question, and exit the system. Continue with instruction three that follows. 3. Print the Adjusted Trial Balance for Classic Accounting Service, Incorporated. 4. Click on the Ledger Card button. The Cash ledger card will appear on the screen. Scroll down to account number 150, Building and click. Click on the Show Ledger Card button. Print the Building ledger card. 5. Using the pull-down screen, select, and print each of the following additional ledger cards. Account number: 151 Accumulated Depreciation, Building Account number: 615 Depreciation Expense, Building 6. Move the pointer to Journal/Ledgers/Statements in the Menu Bar, then down to General Journal and click. The General Journal will appear on the screen. Print the journal. 7. Move the pointer to Journal/Ledgers/Statements in the Menu Bar, then down to Financial Statements and select Income Statement. Print the document. Note: For this problem, Interest Expense will be considered an operating expense. 8. When all of the required documents have been printed, you have completed your computer work for Problem 3. Move the pointer to Assistance on the Menu Bar, down to Home Page and click. From the PKL software Home Page you may make another selection or click on File and exit the website. Using your printed documents, carefully answer the questions on the Classic Account Service, Incorporated, Problem 3 Analysis Form. Instructions as to how and when your assignment is to be turned in will be given by your instructor. Page 37
CHECK IT OUT 101 Cash $10,550.00 105 Accounts Receivable 12,395.00 121 Prepaid Rent 4,500.00 127 Office Supplies 260.00 131 Office Equipment 12,460.00 132 Accumulated Depreciation, Office Equip. 2,925.00 151 Accumulated Depreciation, Building 37,800.00 209 Salaries & Wages Payable 172.50 211 Property Taxes Payable 275.00 220 Unearned Consulting Fees 3,330.00 605 Advertising Expense 850.00 610 Depreciation Expense, Office Equipment 475.00 622 Insurance Expense 1,465.00 651 Interest Expense 1,995.70 TRIAL BALANCE TOTAL $306,832.20 IF ANY OF YOUR BALANCES DO NOT MATCH THE CORRECT FIGURES, YOU HAVE ONE OR MORE ERRORS THAT MUST BE CORRECTED BEFORE YOU CAN CONTINUE. The most efficient method of locating and correcting the errors is to print a copy of the Trial Balance and a copy of the general Journal. 1. Move the pointer to Journal/Ledgers/Statements in the Menu Bar, then to General Ledger and click. Print a copy of the Classic Account Service, Incorporated, Trial Balance. 2. Move the pointer to the Journal/Ledgers/Statements in the Menu Bar, then to General Journal and click. Print a copy of the General Journal. 3. Check your journal entries for error/s. If you do not match the balance of a particular account, check the transaction/s that was recorded (or not recorded) for that account. Make the necessary correction/s by backing out the error entry and then journalizing the correct entry. When your balances match the Check It Out box totals, proceed to instruction 3-8 on page 6. Page 38
WORK4ME I - PROBLEM THREE NAME ADJUSTING ENTRIES CLASS DAY AND TIME DATE 1. Do the totals on your printed Adjusted Trial Balance match the figures shown in the Check It Out box? Answer only Y for Yes or N for No. 2. What is the current asset value for Prepaid Rent? $ 3. What is the current book value of Office Equipment? $ 4. As of June 30, what has been the total depreciation on the Building? $ 5. What was the historical cost of the Automobile? $ 6. If in error, the adjusting entry for the property taxes had not been recorded, would the net income for the business have been? A. overstated B. understated C. unchanged 7. If in error, the adjusting entry for the consulting fees had not been recorded, would the net income for the business have been? A. overstated B. understated C. unchanged 8. What is the Income from Operations for this period? (Note: For this question, Interest Expense is considered an Operating Expense.) 9. If a Retained Earnings Statement is prepared at the end of June what will be the new balance of this account? 10. If only $126 of office supplies had been used during the period, what would have been the ending balance of the Office Supplies account? $ $ $ Page 39
Work4Me I Accounting Simulations 3 rd Web-Based Edition Problem Four Daily and Adjusting Entries for Classic Accounting Services, Incorporated Page 40
Problem Four Classic Accounting Services, Inc. Trial Balance June 16 Debit Credit Cash 14,500.00 Accounts Receivable 13,650.00 Prepaid Rent 6,600.00 Prepaid Insurance 1,850.00 Office Supplies 724.00 Office Equipment 13,000.00 Accumulated Deprec. Office Equip. 2,550.00 Automobile 18,500.00 Accumulated Deprec. - Automobile 3,240.00 Building 138,000.00 Accumulated Deprec. - Building 29,000.00 Land 150,000.00 Accounts Payable 10,400.00 Short-term Notes Payable 5,000.00 Unearned Consulting Fees 3,000.00 Long-term Notes Payable 16,000.00 Mortgage Payable 60,000.00 Common Stock 100,000.00 Retained Earnings 91,676.00 Accounting Fees Earned 35,200.00 Consulting Fees Earned 14,755.00 Salaries and Wages Expense 8,612.00 Vehicle Operating Expense 750.00 Advertising Expense 825.00 Delivery Expense 425.00 Electric and Gas Expense 990.00 Telephone Expense 675.00 License Expense 125.00 Miscellaneous Expense 45.00 Interest Expense 1,550.00 ---------- ---------- Total 370,821.00 370,821.00 ========== ========== Page 41
CHART OF ACCOUNTS Classic Accounting Services, Incorporated Problem Four ASSETS REVENUE 101 Cash 401 Accounting Fees Earned 105 Accounts Receivable 405 Consulting Fees Earned 109 Notes Receivable 121 Prepaid Rent 122 Prepaid Insurance EXPENSES 125 Prepaid Advertising 127 Office Supplies 601 Salaries and Wages Expense 131 Office Equipment 602 Office Supplies Expense 132 Accum. Depreciation, Office Equip. 604 Vehicle Operating Expense 139 Automobiles 605 Advertising Expense 140 Accum. Depreciation, Automobiles 606 Delivery Expense 150 Building 610 Depreciation Exp., Office Equip. 151 Accum. Depreciation, Building 612 Depreciation Exp., Automobiles 160 Land 615 Depreciation Exp., Building 621 Rent Expense 622 Insurance Expense LIABILITIES 624 Property Tax Expense 625 Electric and Gas Expense 201 Accounts Payable 626 Telephone Expense 203 Short-Term Notes Payable 628 License Expense 209 Salaries & Wages Payable 635 Miscellaneous Expense 211 Property Taxes Payable 651 Interest Expense 215 Interest Payable 220 Unearned Consulting Fees 231 Long-Term Notes Payable 241 Mortgage Payable STOCKHOLDERS EQUITY 301 Common Stock 305 Retained Earnings 310 Cash Dividends Page 42
Problem 4 Journalizing Daily and Adjusting Entries Classic Accounting Services, Incorporated Problem Four, has been completed for you through the June 16 daily entries, and the balances of the accounts to this date are shown in the Trial Balance on page 2. Using the Chart of Accounts found on page 3, your first job is to complete the daily entries for the final two weeks of the month. After proving the accuracy of your June 30 Trial Balance, your second job is to complete the required adjusting entries and prepare an Adjusted Trial Balance. When the Adjusted Trial Balance totals match the Check It Out balances, your final responsibility will be to print the selected documents and use them to answer the analysis questions. 1. Go to www.pklsoftware.com, select Work4Me, and log in. 2. From the Menu Bar of the Data Entry page, select Problem 4, Daily and Adjusting Entries, and click. 3. Click on OK, at the message directing you to select Daily or Adjusting entries. 4. Move the pointer to Daily JE and click. You will be recording daily entries for last two weeks of June. When your June 30 trial balance matches the check figures, you will proceed to the adjusting entries for the period. You must record and correct all daily entries using the Daily JE data entry format. You must also remember to record and correct all adjusting entries only in the Adjusting JE data entry format. ************************ TRANSACTIONS FOR JUNE 17-30 Student Analysis June 17 Purchased office equipment costing $3,550 and office supplies listed at $90 on account (30-day credit) from Acme Supply. At the document prompt, enter invoice number B4444 for this purchase. June 17 Received a check for $865 for accounting services completed today and listed on invoice number C4666. Page 43
TRANSACTIONS FOR JUNE 17-30 June 19 Issued check number 00456 for $725 for June advertising listed on invoice number W5555 that was received today. Student Analysis June 19 Performed $900 worth of additional accounting services for a client. The client paid $300 in cash and asked to be billed for the remaining balance owed (invoice number C4667). The client is allowed 30-day credit terms. June 21 Received $2,000 cash as a retainer fee for consulting work to be performed for a client. At the document prompt enter RTFEE for retainer fee. June 22 Paid $90.50 to Ali s Shell Service for gas and automobile repairs. Check number 00457 paid in full invoice number 47777 that was received today. June 23 Purchased $66 worth of postage stamps, envelopes, and business folders (office supplies) for the office issuing check 00458 in payment of invoice 00777. June 23 Paid $24 to the Ortega Courier Service for delivery of documents to a client (check 00459 and delivery invoice number 22222). Page 44