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SAP Assignment 2

Grades for this assignment come from the quiz: falseClick here to go to the quizThis assignment is linked to the discussion, false. Grading will be based on posts in the topic.Click here to go to the discussion Solution to Part 1: You can use this file as starting point for Part 2, or just use it as guide to correct your own file. Please be sure that you start with all corrections made before starting part two. —>>> Assignment_1_Solution.xls
Assignment 2 check figures for Trial Balance Debits/Credits:Beginning Balance: $630,827Transactions: $1,269,860Ending Balance: $1,023,325Adjustments: $12,514 **There are NINE Adjusting Entries.**Adjusted Balance: $1,028,185EOM Closing Entries: $290,100Ending Balance: $790,201 To submit for Assignment Two: – You do NOT need to turn in Part one of the assignment, as the problem states. – EXCEL: General Journal, General Ledger, and Trial Balance for the complete accounting cycle, January 2007. – SAP: Print-screen of (1) Balance Sheet, and print-screen of (2) Retained Earnings.

>General Journal

– Financial

ing Review Practice Set – Part 1

/ SAP University Alliances

1/2/07 2

Cash 7,200

1/3/07 4 1001 Cash

12,620

1/3/07

2001 Accounts Payable 92,000
1/3/07 6

Prepaid Advertising

2001 Accounts Payable 6,000

7 1101 Accounts Receivable

Event Merchandise Sales 19,820

1202 Event Merchandise Inventory 12,584
1001 Cash

9 2001 Accounts Payable

,050

1001 Cash

1/5/07 10

1001 Cash 428

13 1101 Accounts Receivable

5002

6008 Shipping Expense

4002 Event Merchandise Sales 126,000
1202 Event Merchandise Inventory 80,600
1001 Cash 685
1/8/07

1001 Cash

1101 Accounts Receivable 28,400

2099 Other Accrued Expenses Payable

1001 Cash 2,110
1/9/07 16 1001 Cash

,000

6008 Shipping Expense

10,440

2001 Accounts Payable 112
1/9/07 17 1101 Accounts Receivable

5001 Cost of Goods Sold – Resale Merchandise

5002 Cost of Goods Sold – Event Merchandise Sales

6008 Shipping Expense

4001 Resale Merchandise Sales

4002 Event Merchandise Sales

,140

1201 Resale Merchandise Inventory 51,264
1202 Event Merchandise Inventory 11,513
1001 Cash 1,502

18 1201 Resale Merchandise Inventory

2001 Accounts Payable 76,000

22 2001 Accounts Payable 362

1001 Cash 362
1/12/07

2001 Accounts Payable 6,000

1001 Cash 6,000
1/12/07 24 2001 Accounts Payable 92,000
1001 Cash

1101 Accounts Receivable 3,500

																													Module	1	Account
©SAP AG 2 Save Time On Research and Writing Hire a Pro to Write You a 100% Plagiarism-Free Paper. Get My Paper																											0	9
General Journal – Part 1
	1/2/0							7					2002					Accrued Wages Payable		20,		4
							10																Cash		20,400
to record wages paid
1				3						Prepaid Advertising				7,200
												1001
to record payment of prepaid advertising to start March 2007
			1/3/07								13					Office Supplies		3			6
												2001											Accounts Payable			362
to record purchase of office supplies
			12,620
									1101										Accounts Receivable
to record receipt of payment from customer
			5								1202								Event Merchandise Inventory					92,000
to record receipt of event merchandise from Rodeo Outfitters
				1304								6,000
to record receipt of advertising catalogs
1/4/07				19,820
						5002	Cost of Goods Sold –						Event Merchandise Sales				12,584
							6008								Shipping Expense									17
						4002
	170
to record shipment of order to LJ FFA
	1/5/07									16
				16,050
to record payment of accounts payable
					2099						Other Accrued Expenses Payable				428
to record payment of telephone bill
	1/8/07				126,000
				Cost of Goods Sold – Event Merchandise Sales				80,600
			685
to record shipment to Dust Bowl Rodeo in Kansas
		14				28,400
to record receipt of customer payments
		1/9/07			15				2,110
to record payment of PG&E bill
				18
					5001						Cost of Goods Sold – Resale Merchandise				10,440
			112
					4001						Resale Merchandise Sales		18,000
						1201							Resale Merchandise Inventory
to record sale of resale merchandise to Del Norte
102,			24
			51,264
			11,513
			1,502
	80,100
			22
to record shipment to Alamo Conference Center
1/10/07						76,000
to record receipt of inventory from Lazy J
		1/12/07
to record payment of Office Max invoice
			23
to record payment for printed catalogs
	90,160
				4100					Purchase Discounts						1,840
to record payment of Rodeo Outfitters vendor invoice
1/15/07			25					1111					Allowance for doubtful accounts						3,500
to recognize write off of Fly-by-Knight receivable

beginning_bal

1001 Cash

1101 Accounts Receivable

1111 Allowance for doubtful accounts 0

1201 Resale Merchandise Inventory

1202 Event Merchandise Inventory

Office Supplies

1304 Prepaid Advertising 0 0

0 0

2001 Accounts Payable 0 16,050
2002 Accrued Wages Payable 0 20,400

0 0

2099 Other Accrued Expenses Payable 0

4001 Resale Merchandise Sales 0 0
4002

0 0

4100 Purchase Discounts 0 0
5001 Cost of Goods Sold – Resale Merchandise 0 0
5002

0 0

6008 Shipping Expense 0 0

0 0

630,827 0

	Module 1 – Financial Accounting Review Practice Set
		©SAP AG 2009 / SAP University Alliances
Acct #	Account Name	Debit	Balance	Credit Balance
		135,982
		54,500
		5,321
		109,821
		158,122
			1301			602
			1302				Prepaid Insurance	4,800
			1303				Prepaid Rent	5,000
			1310				Deposits
			1401				Warehouse and Office Equipment	162,000
			1411				Accumulated depreciation – Equipment	21,600
			1501				Buildings
			1511				Accumulated depreciation – Buildings
			1601				Land
			2003				Accrued Payroll Taxes Payable
			2004				Accrued Sales Tax Payable	4,178
			2005				Accrued Interest Payable
			2010				Other Payable
			2020				Dividends Payable
			2030				Current Maturities of Long-Term Debt	11,206
					2,538
			2100				Notes Payables	59,334
			3000				Common Stock – (no par)	200,000
			3100				Retained Earnings	290,200
Events Merchandise Sales
			4099				Miscellaneous Revenue
Cost of Goods Sold – Events Merchandise
			6001				Advertising Expense
			6002				Depreciation Expense
			6003				Insurance Expense
			6004				Interest Expense
			6005				Office Supplies Expense
			6006				Rent Expense
			6007				Salaries/Wages Expense
			6009				Utilities Expense
			6010				Computer Expense
			6011				Bad Debt Expense
			6012				Maintenance & Repairs
			6099				Miscellaneous Expense
			630,827

General Ledger

©SAP AG 2009 / SAP University Alliances

1001 Cash 1101 Accounts Receivable 1111 Allowance for doubtful accounts

1201 Resale Merchandise Inventory

135,982 54,500 5,321 109,821

20,400 1 12,620 4 3,500 25 10,440 16
7,200 2 19,820 7 51,264 17
12,620 4 126,000 13 76,000 18
170 7 28,400 14
16,050 9

428 10 3,500 25
685 13
28,400 14
2,110 15
18,000 16
1,502 17
362 22
6,000 23
90,160 24

3,500 0 76,000

0 0

1202 Event Merchandise Inventory 1301 Office Supplies 1302 Prepaid Insurance

1303 Prepaid Rent
Beg.Bal. 158,122 602 4,800 5,000
92,000 5 362 3
12,584 7
80,600 13
11,513 17
92,000

362 0 0 0 0 0

104,697

0 4,800 0 5,000 0

1304 Prepaid Advertising 1310 Deposits 1401 Warehouse and Office Equipment

1411 Accumulated depreciation – Equipment
Beg.Bal. 0 0 162,000 21,600
7,200 2
6,000 6

0 0 0 0 0 0 0 13,200 0

13,200 0 0 0 162,000 0 0 21,600
1501 Buildings 1511 Accumulated depreciation – Buildings

1601 Land
Beg.Bal. 0 0

0
0
0

0 0 0 0 0 0 0 0
0 0 0 0 0 0
2001 Accounts Payable 2002 Accrued Wages Payable 2003 Accrued Payroll Taxes Payable

2004 Accrued Sales Tax Payable
Beg.Bal. 16,050 20,400 0 4,178
362 3 20,400 1
92,000 5
6,000 6
16,050 9
112 16
76,000 18
362 22
6,000 23
92,000 24

20,400 0 0 0 0 0

174,474

0 0 0 0 0 4,178

2005 Accrued Interest Payable 2010 Other Payable 2020 Dividends Payable

2030 Current Maturities of Long-Term Debt
Beg.Bal. 0 0 0 11,206
0 0 0 0 0 0 0 0 0 0
0 0 0 0 0 0 0 11,206
2099 Other Accrued Expenses Payable 2100 Notes Payables 3000 Common Stock – (no par)

3100 Retained Earnings
Beg.Bal. 2,538 59,334 200,000 290,200
428 10
2,110 15
2,538 0 0 0 0 0 0 0 2,538 0
0 0 0 59,334 0 200,000 0 290,200
4001 Resale Merchandise Sales 4002 Event Merchandise Sales 4099 Miscellaneous Revenue

4100 Purchase Discounts
Beg.Bal.

0 0 0
18,000 16 19,820 7 1,840 23
80,100 17 126,000 13

0 0 0 1,840 0

98,100 167,960 0 1,840
5001 Cost of Goods Sold – Resale Merchandise 5002 Cost of Goods Sold – Event Merchandise Sales 6001 Advertising Expense

6002 Depreciation Expense
Beg.Bal. 0 0 0 0
10,440 16 12,584 7
51,264 17 80,600 13
11,513 17
61,704 0 104,697 0 0 0 0 0

61,704 104,697 0 0
6003 Insurance Expense 6004 Interest Expense 6005 Office Supplies Expense

6006 Rent Expense

Beg.Bal. 0 0 0 0
0 0 0 0 0 0 0 0 0 0
0 0 0 0

6007 Salaries/Wages Expense 6008 Shipping Expense 6009 Utilities Expense

6010 Computer Expense

Beg.Bal. 0 0 0 0

170 7
685 13
112 16
1,502 17
0 0

0 0 0 0 0 2,469 0

0 2,469 0 0
6011 Bad Debt Expense 6012 Maintenance & Repairs

6099 Miscellaneous Expense
Beg.Bal. 0 0

0 0 0 0 0 0 0 0
0 0 0

Beg.Bal.

798,362

	Module 1 – Financial Accounting Review Practice Set – Part 1
General Ledger Accounts – Part 1
								Beg.Bal.	check figures
102,240
	59,020	145,067		248,060		44,520			61,704	386,580	251,291
	49,935	258,040		1,821		124,117
					104,697	92,362
	145,425	964
			13,200
	114,412		174,474	134,812
	76,112
22,140
		98,100				167,960	267,900
166,401
			2,469
		798,362

Trial Balance

Module 1 – Financial Accounting Review Practice Set – Part 1
©SAP AG 2009 / SAP University Alliances

Account

Balance

CR DB CR DB CR DB CR DB DB DB CR

1001 Cash 135,982 0 59,020 145,067 49,935 0
1101 Accounts Receivable 54,500 0 248,060 44,520 258,040 0
1111 Allowance for doubtful accounts 0 5,321 3,500 0 0 1,821
1201 Resale Merchandise Inventory 109,821 0 76,000 61,704 124,117 0
1202 Event Merchandise Inventory 158,122 0 92,000 104,697 145,425 0
1301 Office Supplies 602 0 362 0 964 0
1302 Prepaid Insurance 4,800 0 0 0 4,800 0
1303 Prepaid Rent 5,000 0 0 0 5,000 0
1304 Prepaid Advertising 0 0 13,200 0 13,200 0
1310 Deposits 0 0 0 0 0 0
1401 Warehouse and Office Equipment 162,000 0 0 0 162,000 0
1411 Accumulated depreciation – Equipment 0 21,600 0 0 0 21,600
1501 Buildings 0 0 0 0 0 0
1511 Accumulated depreciation – Buildings 0 0 0 0 0 0
1601 Land 0 0 0 0 0 0
2001 Accounts Payable 0 16,050 114,412 174,474 0 76,112
2002 Accrued Wages Payable 0 20,400 20,400 0 0 0
2003 Accrued Payroll Taxes Payable 0 0 0 0 0 0
2004 Accrued Sales Tax Payable 0 4,178 0 0 0 4,178
2005 Accrued Interest Payable 0 0 0 0 0 0
2010 Other Payable 0 0 0 0 0 0
2020 Dividends Payable 0 0 0 0 0 0
2030 Current Maturities of Long-Term Debt 0 11,206 0 0 0 11,206
2099 Other Accrued Expenses Payable 0 2,538 2,538 0 0 0
2100 Notes Payables 0 59,334 0 0 0 59,334
3000 Common Stock – (no par) 0 200,000 0 0 0 200,000
3100 Retained Earnings 0 290,200 0 0 0 290,200
4001 Resale Merchandise Sales 0 0 0 98,100 0 98,100
4002 Event Merchandise Sales 0 0 0 167,960 0 167,960
4099 Miscellaneous Revenue 0 0 0 0 0 0
4100 Purchase Discounts 0 0 0 1,840 0 1,840
5001 Cost of Goods Sold – Resale Merchandise 0 0 61,704 0 61,704 0
5002 Cost of Goods Sold – Event Merchandise Sales 0 0 104,697 0 104,697 0
6001 Advertising Expense 0 0 0 0 0 0
6002 Depreciation Expense 0 0 0 0 0 0
6003 Insurance Expense 0 0 0 0 0 0
6004 Interest Expense 0 0 0 0 0 0
6005 Office Supplies Expense 0 0 0 0 0 0
6006 Rent Expense 0 0 0 0 0 0
6007 Salaries/Wages Expense 0 0 0 0 0 0
6008 Shipping Expense 0 0 2,469 0 2,469 0
6009 Utilities Expense 0 0 0 0 0 0
6010 Computer Expense 0 0 0 0 0 0
6011 Bad Debt Expense 0 0 0 0 0 0
6012 Maintenance & Repairs 0 0 0 0 0 0
6099 Miscellaneous Expense 0 0 0 0 0 0
630,827 630,827 798,362 798,362

932,351

1 0

2
3
4
5
6

Beginning Balance

Transactions

Ending Balance

Adjustments

Adjusted Balance

EOM Closing Entries

932,351

4.6

COA

Module 1 – Financial Accounting Review Practice Set

1001 Cash
1101 Accounts Receivable
1111 Allowance for doubtful accounts

1201 Resale Merchandise Inventory

1202 Event Merchandise Inventory
1301 Office Supplies
1302 Prepaid Insurance

1303 Prepaid Rent

1304 Prepaid Advertising
1310 Deposits
1401 Warehouse and Office Equipment

1411 Accumulated depreciation – Equipment

1501 Buildings
1511 Accumulated depreciation – Buildings

1601 Land

2001 Accounts Payable
2002 Accrued Wages Payable
2003 Accrued Payroll Taxes Payable

2004 Accrued Sales Tax Payable

2005 Accrued Interest Payable
2010 Other Payable
2020 Dividends Payable

2030 Current Maturities of Long-Term Debt

2099 Other Accrued Expenses Payable
2100 Notes Payables
3000 Common Stock – (no par)

3100 Retained Earnings

4001 Resale Merchandise Sales
4002 Event Merchandise Sales
4099 Miscellaneous Revenue

4100 Purchase Discounts

5001 Cost of Goods Sold – Resale Merchandise
5002 Cost of Goods Sold – Event Merchandise Sales
6001 Advertising Expense

6002 Depreciation Expense

6003 Insurance Expense
6004 Interest Expense
6005 Office Supplies Expense

6006 Rent Expense

6007 Salaries/Wages Expense
6008 Shipping Expense
6009 Utilities Expense

6010 Computer Expense

6011 Bad Debt Expense
6012 Maintenance & Repairs

6099 Miscellaneous Expense

©SAP AG 2007 / SAP University Alliances

Assignment Learning Objectives:

Primary Learning Objectives:

· Review the concepts of the beginning financial accounting course

· Review the accounting cycle

· Work with a manual accounting information system

· Begin using a computerized accounting information system

Secondary Learning Objective:

· Begin work with the SAP ERP system

INTRODUCTION:

This is part 2 of the assignment that continues where part 1 left off. There are additional journal entries that you need to make, adjusting journal entries for month end and closing entries. You will again show the impact of the transactions on t-accounts and create a trial balance. For the last part of the assignment you will explore how your journal entries might be created in an automated system by entering your “manual” journal entries into the SAP/R3 system. In a true ERP or integrated accounting system, these transactions would flow through to the general ledger via other functions within the system. For example, sales transactions would be created in a sales order module. When the sale is processed by someone outside of the accounting department, the appropriate journal entries would be automatically created in the general ledger by our accounting system. However, it is also possible to post transactions directly to the general ledger as we have done in our manual system and as we will do in this assignment. We will then use the SAP system to produce a set of financial statements (balance sheet and income statement).

DETAILED REQUIREMENTS:

Refer to Cottonwood’s company information and chart of accounts from the first assignment and the following transactions and additional detail to complete steps 1 and 2. If you had any errors in your t-accounts, and trial balances from part 1 of the assignment, you will want to make appropriate corrections before starting part 2.

1. Correct all of the errors in part 1 of the assignment.

2. Using the journals, t-accounts, and trial balances you developed in assignment 1, record Cottonwood’s daily transactions for the last half of the month (January 16 –

, 2007) if appropriate, (some transactions may not involve journal entries), as general journal entries into Excel. Also, post these journal entries into t-accounts and then calculate account balances using cell formulas in Excel. Again, enter the t-account balances into your Excel document and then transfer the balances into the trial balance. Use your linked worksheets to expedite the process and minimize data entry errors.

3. The next step is to record the adjusting entries into the general journal and then post them into the t-accounts and trial balance.

4. Record closing entries in your trial balance
as if this were a year-end close
.

5. Now use the SAP ERP system to make all above entries using the general ledger system in SAP. This should be done in a series of steps:

· Examine the A

1 chart of accounts.

· Record beginning account balances in the SAP general ledger. This should be done as one composite journal entry (the first journal entry). Use January 1, 2007 as the journal entry date for the beginning account balances.

· Record the daily transactions for the first half of January in the SAP general ledger (do each journal entry as a separate entry, not as one giant composite entry, be sure use appropriate dates).

· Display the trial balance (you should compare this to your manual entries).

· Repeat the previous two steps for the journal entries for the second half of January.

· Record the adjusting entries.

· Simulate closing the books as of

January 31, 2007

using the SAP utility. (Do not enter closing entries into the general ledger. These entries would be done automatically through the SAP month-end closing function.)

Instructions for using the SAP ERP system start on page 7 of this document.

When submitting the assignment you must also submit the graded part 1 of this assignment that was returned to you.
This will be used to verify that you made all of the corrections.

Use the following transaction information to complete steps 1 and 2:

DESCRIPTION OF EVENTS OCCURRING January 16 –31, 2007

Date
Description of Event

January 16, 2007

BCC (see January 11 & 12) sent payment of $6,000 to Cottonwood via electronic funds transfer, (EFT). Cottonwood’s warehouse picked and packed BCC’s order and shipped it to Bozeman via CWX. Freight costs of $4

were paid by Cottonwood at the time of shipment.

Cottonwood paid $21,000 to employees for wages earned during the first half of January.

The industrial shelving was delivered and installed in Cottonwood’s warehouse (see January 11th). The vendor’s invoice, which matched Cottonwood’s purchase order, was hand-delivered to accounts payable. Cottonwood paid the shipping of $320. The vendor’s contractor completed installation that day.

Cottonwood paid UPS for the shipment to Del Norte County Rodeo on January 9th.

January 17, 2007

Cottonwood received customer checks totaling $9,980 for payment on outstanding accounts.

The owners of Cottonwood were talking to the owner of the warehouses that they lease. They are good friends. The conversation centered around wise investment of the excess cash that Cottonwood presently has. The owner of the warehouses stated that he wishes to diversify his investments, especially with the flat real estate market. He suggested that Cottonwood purchase the warehouses. He said that he would give Cottonwood a good deal. Cottonwood decided to buy only one of the warehouses and continue to lease the other one. The price is to be $

0,000 with a down payment of 20%. The original owner will carry a mortgage for the remainder with an interest rate of 7.5%. Title is to transfer on March 15, 2007. Today Cottonwood sent earnest money of $10,000 to the owner of the warehouse.

January 18, 2007

Cottonwood placed a purchase order with the Buckaroo Outfitters for $52,000 in resale merchandise. Payment terms to Buckaroo are net 30.

January 19, 2007

The Red Bluff Rodeo called in an order for $4,800 in event merchandise. The order information was given to the warehouse, where the merchandise was picked and set on the delivery dock for RB Rodeo to pick up. Cost of the merchandise was $2,

6. Terms of the sale were cash on delivery, (COD).

Later in the day, Red Bluff Rodeo picked up and paid for their order, (including sales tax).

January 22, 2007

Cottonwood received payment from Dust Bowl Rodeo for their order from January 8th.

The FFA Rodeo in LaJunta Colorado (January 4th) returned $4,000 in event merchandise as excess merchandise. The merchandise was inspected and restocked. FFA is given a credit to their account for the returned merchandise. The credit is for the $4,000 minus a 10% restocking fee. The cost of the goods is $2,085. FFA LaJunta paid the return shipping of $62.

Cottonwood applied for credit with a new supplier, Howdy Partner U.S.A. A credit application was faxed to HP’s headquarters in San Antonio, TX. Cottonwood is anticipating an order with HP for $12,000 in resale merchandise.

January 23, 2007

Cottonwood’s bank notified them that an EFT in the amount of $102,2

from Alamo Conference Center had been deposited into their account.

Cottonwood received their order from Buckaroo Outfitters from January 18th. Buckaroo Outfitters paid the shipping charge of $105. The inventory was counted and placed on the shelves. Proof of receipt and the vendor’s invoice was sent to accounting.

January 24, 2007

The Boise Stampede called in an order for $98,726 in merchandise. $57,224 is for resale merchandise and $

,502 is for event merchandise. The cost of the resale merchandise is $36,623 and the cost of the event merchandise is $21,580. Boise Stampede has not yet established credit with Cottonwood. They are told that they must either supply the needed information to establish credit or pay cash before the goods can be delivered.

January 25, 2007

Cottonwood placed a purchase order with Rocking-5R Ranch Supplies for $38,000 in events merchandise. Cottonwood’s payment terms are 2% 10 net 30.

Cottonwood received a check from BCC (see January 12th) for $15,000.

January 29, 2007

Cottonwood has made arrangements with their two primary suppliers, Rodeo Outfitters and Lazy J for them to drop ship orders in the future. That means that the orders will be placed with the supplier and shipped directly from them. This reduces Cottonwood’s inventory carrying cost by reducing the need for inventory and frees up some cash for other purposes. The primary concern about this arrangement was that Cottonwood prides itself on almost always shipping the goods the same day as the order. Both suppliers have assured Cottonwood that they can also do same day shipment.

January 31, 2007

Cottonwood paid rent of $5,000 for the coming month’s lease of the warehouses.

Cottonwood pays sales tax once a year in January for the preceding 12 months. They do not make any sales tax deposits during the year. Cottonwood paid sales tax of $4,178 for 2006 sales taxes collected.

Cottonwood purchased their warehouse and office equipment on December 1, 2004 for $162,000. At the time they signed a seven-year note payable from the bank for $90,000. Over the seven years, payments of $1,589, which includes both principle and interest, are to be made at the end of each month. The annual interest rate on the loan is 12% calculated on the outstanding balance. The calculation of interest is based on each month having 30 days. Cottonwood transferred funds in the amount of $1,589 from their checking account to pay the loan amount due. (Hint: It is probably best to create an amortization schedule to handle this entry.)

Cottonwood paid the full amount due on the industrial shelving (see January 11th & 16th).

The employees submitted their time statements for January 16th through 31st. The calculated payroll is $21,600.

The owners and managers of Cottonwood choose a vendor from several responses to the RFP sent out in early December to supply them with their new shrink-wrap equipment. The supplier will make some minor adjustments to their standard equipment to meet Cottonwood’s needs. Cottonwood owners sign the contract, which specifies a total equipment cost of $239,000 including customization, installation, initial training, and a two-year warranty. Delivery and installation is tentatively scheduled for May 1, 2007. A down-payment of $59,750 is due February 28th.

After you develop the journal entries for the above transactions, you should post the entries to t-accounts and calculate the account balances, (using cell formulas in Excel). Don’t forget to include transactions from part 1 of the assignment (the first half of the month), in calculating your balances. Using these account balances and additional adjustment information below, record adjusting journal entries. Note: It is possible that not all adjusting entries are given in the following list.

Adjustment information as of January 31, 2007 not already given in the original transaction(s):

1. Rodeo supply sales is a relatively new industry, so bad debt average has not yet been established for the industry. Based on prior experience, Cottonwood estimates that approximately 1/2% of the net credit sales (gross credit sales minus returns of credit sales) for the month will become bad debt. Cottonwood writes off bad debts as they occur and recognizes bad debt expense based on anticipated bad debts as an adjusting entry each month.

2. As a control measure, physical inventories are taken on a periodic basis alternating between the resale merchandise inventory and the event merchandise inventory. Physical inventory of the event merchandise inventory was taken at the end of January. It was determined that the cost of the event merchandise on hand was $144,860.

3. Cottonwood counted the supplies on hand after the close of business on the last day of the month and determined the cost of the unused supplies to be $450.

4. Warehouse and office equipment was placed in service on January 1, 2005 and is expected to last 15 years and has no salvage value. The industrial shelving is expected to have a life of 10 years and a salvage value of $5,000. Cottonwood depreciates fixed assets on a straight-line basis and those assets acquired in the first half of the month for the entire month, while fixed assets placed in service during the last half of the month are not depreciated until the second month. Depreciation is rounded to the nearest dollar and assets are depreciated on a monthly basis (i.e. number of days in the month is not of consequence).

5. On February 2, Cottonwood received a $2,251 bill from PG&E for utilities consumed during January and the January AT&T bill in the amount of $412.

6. Liability insurance for the 2007 fiscal year was paid at the end of November 2006. Liability insurance is assumed to be utilized uniformly monthly over the one-year policy period.

7. 500 product catalogs were sent out in the month of January.

Following are the instructions for entering the accounting data into the SAP system:

Your instructor will tell you the SAP server (instance) and the client you will be using.

Your login is USER-XX (where the XX is your assigned number – this number will be supplied to you by your instructor).

Your initial password is “SAP4US” (note that these are capital letters). You will be asked to change the password when you first log on. Change it and be sure to remember this new password. That will be the password you will use on your subsequent logons for this assignment and other SAP assignments.

Your
company code is 80XX
(where the XX is your assigned number). Do not use any company code other than the one assigned to you.

If you are unfamiliar with SAP, there are remedial videos that you can watch that show you how to navigate around in the system.

The first thing that you should do is to examine the chart of accounts. You will find that this is the same as the chart of accounts that was presented in part 1 of the assignment.

To Look at the Chart of Accounts

Accounting à Financial accounting à General ledger ( Information system ( General ledger reports ( Master Data ( Chart of Accounts ( Chart of Accounts

· Chart of accounts A321

· Execute

The next step is to enter the beginning balances and the transactional journal entries. In SAP this is called general ledger accounting because as you enter the journal entries into the system they are immediately posted to the general ledger accounts.

To enter transactions in General Ledger

Accounting à Financial accounting à General ledger à Document entry à Enter G/L Account Document

On GL account posting screen enter:

· Doc. Date = the transaction date

· Posting date = same as doc. date (this may generate a warning, just ignore it)

· Currency = USD (defaulted)

Note: Make sure the company code is your assigned company code.

Don’t Forget to Enter Your Beginning Balances!

1st Line:

· G/L account = the account number for posting (debit) the transaction

· D/C = Debit

· Amount in Doc. Currency = the amount of the transaction

2nd Line:

· G/L account = the account number for posting (credit) the transaction

· D/C = Credit

· Doc. Currency amount = the amount of the transaction

… and so on for compound journal entries

· Click on Enter (white check mark on green circle at top left)

· Ignore any message by clicking on Enter.

· Look at the total debits and total credit fields. Debits should be equal to credits and a green light should be lit.

· Click on Simulate button.

· This is the accounting transaction which you are posting in your company for period 1.

(January is period 1 for our company)

· SAVE the document icon. Do Not Park your document by mistake.

Write down the document numbers as you enter each transaction.

If you parked your documents by mistake, then here is the procedure you use to release these documents:

Accounting ( Financial Accounting ( General Ledger ( Document ( Parked Documents ( Post/Delete (FBV0)

Enter Company code: 80XX

Fiscal Year: 2007

Click on Document list on the application tool bar

On the “List of parked documents”, enter the above information

Execute.

A list of parked documents will appear.

Select all the documents by Edit ( Select all on the menu bar

Click on Create Batch input session button on the application tool bar

A log will be displayed.

Go and Save.

When you click on save, the documents will be posted.

As you make the entries into the system, you should check to be sure that they were entered correctly. I would suggest that you first enter the beginning balances and then check them by viewing the journal entries using one of the two reports below. If an entry states that it is parked, that means you made a mistake and must unpark the document (see above for the unparking procedure). After you check the correctness of the beginning entries, then you can enter the journal entries for the first half of the month (part 1) and compare the results to your first half trial balance in Excel. If the results don’t match, then resolve the issue before proceeding to post the second half journal entries and the adjusting entries. Remember that you cannot correct erroneous entries in SAP. You have to reverse the entry and then enter the correct entry. After each posting compare your results to the trial balance in Excel.

Viewing Journal Entries

If you wish to view the journal entries that you have made, following are three different ways in which you can display the entries:

1. Document Journal

Information System ( General Report Selection ( Financial Accounting ( General Ledger Reports ( Document ( General ( Compact Document Journal ( Compact Document Journal

Enter:

· Company code 80XX

· Fiscal Year 2007

· Execute

2. Drill down to the source document

Accounting ( Financial Accounting ( General Ledger ( Account ( Display/change line items

Enter:

· Company code 80XX

· Select All items

· Execute

A list of clear and open accounting documents is displayed

Select any box

Click on Display document (glasses) icon on the application tool bar to display line items

Click on Call up Document overview (mountain-like) button to display the source document.

3. Document Journal

Information System ( General Report Selection ( Financial Accounting ( General Ledger Reports ( Document ( General ( Line Item Journal ( Line Item Journal

Enter:
· Company code 80XX
· Fiscal Year 2007
· Execute

To Look at the Balance Sheet and Profit and Loss Statement

Accounting à Financial accounting à General ledger ( Information system ( General ledger reports ( Balance sheet/ profit and loss statement/cash flow ( General ( Actual/actual comparison ( Balance sheet/profit and loss statement

· Chart of accounts A321

· Company code 80XX (your assigned code)

· Financial statement version A321 Language EN

· Reporting year 2007

· Reporting periods 1 to 16

· Comparison year 2006

· Comparison periods 1 to 16

Execute.

You may even want to print your financial statements if you have access to a printer for SAP.

We will simulate year-end close by doing the following.

Simulating the Closing of the Profit and Loss accounts

For a manual accounting system at the end of an accounting period, it is necessary to make a journal entry that zeroes out the nominal accounts and eventually closes them to the retained earnings account. However, in a computerized system the system can essentially do this by the push of a button. In this section you will simulate this process. In SAP the closing is done by executing the following transaction:

Accounting à Financial accounting à General ledger ( Periodic Processing ( Closing ( Carry Forward ( Balance Carryforward (New)

· Ledger 0L

· Company code 80XX

· Carry forward fiscal Year 2008

· Test Run Select

· Output list of results Select

·
Execute.

Click on the Balance sheet accounts and Retained earnings accounts.

If the run is successful, print out the screens for both the balance sheet and the retained earnings. Do not do the actual closing.

End of Assignment

Accounting Information Systems

Module 1 – Assignment: Part 2

Financial Accounting Review Practice Set

Last revised 12/27/2007

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