Chapter 11: Accounts Payable

©The McGraw-Hill Companies, Inc., of 58 Accounts Payable Chapter 11 begins Part 3 of the book: Peachtree Complete Accounting 2003 for Merchandising Businesses. Merchandising businesses are retail stores that resell goods and services. In Chapter 11, you will set up a merchandising business called Jessica's Sales & Service. Jessica’s Sales & Service is a partnership owned by Jessica Phelps and Ellen Smith. Ms. Phelps and Ms. Smith divide their income equally.

©The McGraw-Hill Companies, Inc., of 58 Software Objectives, p. 367 Set up company information for Jessica's Sales & Service. Enter the following general ledger information: chart of accounts and account beginning balances. Enter the following accounts payable information: vendor defaults and vendor records. Enter the following inventory information: inventory defaults, inventory items and assembly records, and inventory beginning balances. Record accounts payable transactions: merchandise purchases, purchase orders, cash purchases, and purchase returns. Make four backups: two backups for Jessica's Sales & Service; one backup for Exercise 11-1; one backup for Exercise 11-2.

©The McGraw-Hill Companies, Inc., of 58 Web Objectives, p. 367 Use your Internet browser to go to the book’s website at Go to the Internet Activity link on the book’s website. Then, select WEB EXERCISES PART 3. Complete the first web exercise in Part 3, “Accounting List.” Use a word processing program to write summaries of the websites that you visited.

©The McGraw-Hill Companies, Inc., of 58 Accounts Payable Transactions, p. 368 A vendor sends Jessica's Sales & Service an invoice (bill) You enter the invoice as a purchase (Tasks/Purchases-Receive Inventory). When it is time to pay the invoice, you select the invoice(s) from the vendor you want to pay and print a check (Tasks/Payments).

©The McGraw-Hill Companies, Inc., of 58 Peachtree Tips Peachtree Tips In Chapter 11, you set up two merchandising businesses: Jessica's Sales & Service and the end- of-chapter sales and service company (Exercise on pp ) The companies that you set up in Chapter 11, continue in Chapters 12, 13 and 14. If the general ledger account (GL account column) is not displayed on the Purchases/Receive Inventory window, check the global options. In the “Hide General Ledger Accounts” section, all boxes must be unchecked (see p. 52, steps 1-4; top of page 394).

©The McGraw-Hill Companies, Inc., of 58 Peachtree Tips (continued) Peachtree Tips (continued) What if you want to use Jessica's Sales & Service, on a computer that does not have this company set up in Peachtree? What if you want to use Jessica's Sales & Service, on a computer that does not have this company set up in Peachtree? Start Peachtree. Select “Open an existing company.” If Jessica’s Sales & Service is not listed on the “Open” list, click. If the company is listed on the “Company Name” list, select it. (Remember, you may have used your first name Sales & Service.) Then, restore data from your back up file. Once you restore data, Jessica’s Sales & Service will start where you left off the last time you recorded data for this company. If Jessica’s Sales & Service is not listed either on the “Open” list or when you select, use the New Company Set Up Wizard to set up the company. On the “Company Information” screen, complete the “Company Name” field only. Then, click on Next repeatedly until you get to the Finish button. Restore your data from your back up file and you can start where you left off the last time you recorded data for this company.

©The McGraw-Hill Companies, Inc., of 58 Backing Up Chapter 11 Disk Backup Name KB Page Nos. 16 of 18 A:\Chapter 11 Begin 93 KB A:\Chapter KB A:\Exercise KB 425 A:\Exercise KB 427 TOTAL KB 390 KB.

©The McGraw-Hill Companies, Inc., of 58 Chapter 11 Topics 1. Software & web objectives, p Getting started, pp a. Using the setup checklist: general ledger, pp b. Using the setup checklist: account payable, pp c. Using the setup checklist: inventory items, pp Backing up your data, p Accounts Payable Tasks: Purchases/Receive Inventory, p. 392 a. Using the purchase journal: “Purchases/Receive Inventory” window, pp b.Additional purchases, p. 398

©The McGraw-Hill Companies, Inc., of 58 Chapter 11 Topics (continued) 5. Cash purchases: “Payments” window, pp a. Printing the check, pp Purchase returns, pp a. Paying a vendor, minus a return of merchandise, pp Paying specific vendor invoices, pp a. Editing payments, p Printing the purchase journal and cash disbursements journal, pp

©The McGraw-Hill Companies, Inc., of 58 Chapter 11 Topics (concluded) 9. Vendor ledgers, Printing the General Ledger Trial Balance, pp Backing up Chapter 11 data, pp Internet activity, p Summary and review, pp a.Going to the net, p. 416 b.True/make true questions, pp c.Exercise 11-1, pp d.Exercise 11-2, pp e.Chapter 11 index, p. 428

©The McGraw-Hill Companies, Inc., of 58 Getting Started, pp Complete steps 1 –6 on pp. 369 and 370. Then compare your screen with the one shown on p Make sure that “Sales & Service Company” is highlighted. Click on. Continue with steps 9-15 on p. 371.

©The McGraw-Hill Companies, Inc., of 58 Monthly accounting periods, p. 371 Complete step 15 on p Select “2003” as the year. Check this screen carefully. You cannot change it later. Continue with steps 16, 17, and 18 on page 372.

©The McGraw-Hill Companies, Inc., of 58 Setup Checklist, p. 372 The Setup Checklist is shown on page 372.

©The McGraw-Hill Companies, Inc., of 58 Pages Read the instructions on pages 373 – 376. Then, complete the steps shown.

©The McGraw-Hill Companies, Inc., of 58 Select Period, p. 376 Select “From 12/01/02 through 12/31/02” as your Chart of Accounts Beginning Balance period so that your journals will start on January 1, Peachtree posts on the last day of the month. Check this screen carefully. You cannot change the period for entering beginning balances later. Click on.

©The McGraw-Hill Companies, Inc., of 58 Continue on pp After recording the chart of accounts beginning balances, complete steps 7 and 8 on page 378. Read the “Using the Setup Checklist: Accounts Payable” instructions on page 378.

©The McGraw-Hill Companies, Inc., of 58 Vendor Defaults, pp After completing steps 1- 5 on p. 378, the “Vendor Defaults” window appears. Continue reading the instructions on p Then, complete the steps shown on pp

©The McGraw-Hill Companies, Inc., of 58 “Maintain Vendors” pp To add a vendor, complete the steps on page 380. The “Maintain Vendors” window is shown on page 381. Click on the “Purchase Defaults” tab. Then, continue with step 8a on page 381.

©The McGraw-Hill Companies, Inc., of 58 Purchase defaults tab, p. 381 After completing step 8a on page 381, this screen appears. Click on the “Save” icon. Then, continue with the steps shown on pages 382 and 383.

©The McGraw-Hill Companies, Inc., of 58 Setting up Inventory Items, pp Complete steps 1 – 4 on p Continue with steps 5 – 6o on pp

©The McGraw-Hill Companies, Inc., of 58 Maintain Inventory Items, pp After completing step 6o on p. 386, the “Maintain Inventory Items” window appears. Continue with the steps shown on pages 387, 388, and 389.

©The McGraw-Hill Companies, Inc., of 58 Inventory Beginning Balances, pp After completing step 8e on p. 389, the “Inventory Beginning Balances” screen appears. Continue with the steps shown on pages 389 and 390.

©The McGraw-Hill Companies, Inc., of 58 Setup Checklist, p. 390 This screen illustration is shown on page 390.

©The McGraw-Hill Companies, Inc., of 58 Backing Up Your Data, pp Complete steps 1-9 on pages to back up your data. The back up name is Chapter 11 Begin.

©The McGraw-Hill Companies, Inc., of 58 Accounts Payable Tasks: Purchases/Receive Inventory, p. 392 Read page 392. Complete the steps shown on page 393.

©The McGraw-Hill Companies, Inc., of 58 Purchases/Receive Inventory, pp After completing the steps on pp. 394 and 395 the “Purchases/Receive Inventory” window appears. Click on the “Journal” icon to see the Purchase Journal.

©The McGraw-Hill Companies, Inc., of 58 Accounting Behind the Screens, p. 396 The Purchase Journal screen, p Complete the steps shown on pages 396 and 397. Record the “Additional Purchases” transactions on p. 398.

©The McGraw-Hill Companies, Inc., of 58 Cash Purchases: “Payments” Window, pp Read the information about Cash Purchases: “Payments” Window on page 398. Complete steps 1 – 9 on pages 398–399.

©The McGraw-Hill Companies, Inc., of 58 Payments, p. 400 After completing step 9 on page 399, the “Payments” window appears.

©The McGraw-Hill Companies, Inc., of 58 Printing the Check, pp Follow steps 1 – 3 on pp Click on. Complete step 5 on p. 401.

©The McGraw-Hill Companies, Inc., of 58 Print Checks, p. 402 In the First check number box, type Peachtree automatically sequences check numbers after the first one is entered. Click on the “Print” icon. The textbook illustration shows a preprinted check form; your check will print on plain paper.

©The McGraw-Hill Companies, Inc., of 58 Select payment, pp Click on the “Abc Open” icon to see if you have issued Check Nos through The “Select Payment” window is shown on p Complete steps 9 and 10 on p. 404.

©The McGraw-Hill Companies, Inc., of 58 Purchase Returns, pp. 404 and 405 Complete steps 1 – 8 on pp The “Purchase/Receive Inventory” window appears. Click on the “Save” icon to post, then “Close.”

©The McGraw-Hill Companies, Inc., of 58 Paying a Vendor, Minus a Return of Merchandise, p. 406 Complete steps 1–4 on p. 406.

©The McGraw-Hill Companies, Inc., of 58 Completed “Payments” window, p. 407 After completing step 5 on p. 407, the completed “Payments” window appears. Complete steps 6 – 10 on pages 407 and 408.

©The McGraw-Hill Companies, Inc., of 58 Journal entry for payment to a specific vendor, p. 408 Account Name DebitCredit Accounts Payable/Rene Burton Fabrics Merchandise Inventory 2.40 San Diego Bank

©The McGraw-Hill Companies, Inc., of 58 How the purchases and payments tasks work together with payments, p. 409

©The McGraw-Hill Companies, Inc., of 58 Pay vendor invoice 201, pp. 409 and 410 Complete steps 1 – 6 on pages 409 and 410. Remember to click on Save to post when you are finished.

©The McGraw-Hill Companies, Inc., of 58 Editing Payments, p. 410 Display the “Payments” window. Select the “Abc Open” icon. If necessary, highlight one of the vendors or payments. Then click on. Complete steps 4 and 5 on p. 410.

©The McGraw-Hill Companies, Inc., of 58 Printing the Purchase Journal, p. 411 Complete steps 1 – 4 on p. 411 to print the purchase journal. Compare your Purchase Journal printout to the one shown on p. 411.

©The McGraw-Hill Companies, Inc., of 58 Printing the Cash Disbursements Journal, p. 412 Complete step 5 on p. 412 to print the cash disbursements journal. Compare your Cash Disbursements Journal printout to the one shown on p. 412.

©The McGraw-Hill Companies, Inc., of 58 Printing the Vendor Ledgers, p. 413 Complete steps 1 and 2 on p. 413 to print the vendor ledgers. Compare your Vendor Ledgers printout to the one shown on p. 413.

©The McGraw-Hill Companies, Inc., of 58 Printing the General Ledger Trial Balance, pp Complete steps 1 and 2 on p. 413 to print the general ledger trial balance. Compare your General Ledger Trial Balance printout to the one shown on p. 414.

©The McGraw-Hill Companies, Inc., of 58 Backing Up Chapter 11 Data, pp. 414 and 415 Complete steps 1 – 9 on pages 414 and 415 to back up Chapter 11 data. Use Chapter 11 as the back up name. Remember, Chapters 11, 12, 13, and 14 work together. The data saved in Chapter 11 will be used to complete Chapter 12.

©The McGraw-Hill Companies, Inc., of 58 Glossary of Terms Chapter 11

©The McGraw-Hill Companies, Inc., of 58 Vendors, p. 368 Merchandising businesses purchase the merchandise they sell from suppliers known as vendors.

©The McGraw-Hill Companies, Inc., of 58 Accounts payable transactions, p. 368 Purchases of merchandise for resale, assets, or expenses incurred on credit from vendors. When Jessica's Sales & Service makes purchases on account from vendors, the transactions are known as accounts payable transactions.

©The McGraw-Hill Companies, Inc., of 58 Accounts payable, p. 368 The money a company owes to a supplier or vendor.

©The McGraw-Hill Companies, Inc., of 58 Accounts payable ledger, p. 392 Shows the account activity for each vendor. Same as vendor ledger.

©The McGraw-Hill Companies, Inc., of 58 Vendor ledger, p. 392 Shows the account activity for each vendor. Same as accounts payable ledger.

©The McGraw-Hill Companies, Inc., of 58 Purchase Journal, p. 392 In Peachtree, the Purchases/Receive Inventory task is the purchase journal. In the Purchase Journal, or “Purchases/Receive Inventory” window, you can enter invoices from vendors or enter and print purchase orders.

©The McGraw-Hill Companies, Inc., of 58 Average cost, p. 397 A method of computing inventory. See weighted-average method on the next slide.

©The McGraw-Hill Companies, Inc., of 58 Weighted-average method, p. 397 This method of inventory pricing divides the cost of the inventory purchased by the quantity of merchandise purchased. This unit cost is multiplied by the ending inventory

©The McGraw-Hill Companies, Inc., of 58 Cash disbursements journal, p. 398 All payments of cash are recorded in the cash disbursements journal. In Peachtree, the Payments task is the cash disbursements journal.

©The McGraw-Hill Companies, Inc., of 58 Audit trail, p. 409 The path from the source document to the accounts.

©The McGraw-Hill Companies, Inc., of 58 Internet Activity, p Go to the book’s website at In the “Student Center” list, link to Internet Activities. 3 Link to WEB EXERCISES PART 3. 4 Complete the “ACCOUNTING LIST – Chapter 11” exercise. Read steps Follow the steps shown on the book’s website to complete this Internet activity. 6 Using a word processing program, write a brief summary of what you find. Include all appropriate website addresses.

©The McGraw-Hill Companies, Inc., of 58 Going to the Net, p. 416 Access Peachtree’s NetSource at File=news_nov00.htm File=news_nov00.htm File=news_nov00.htm 1. When is real-time posting the preferred method? 2. When is batch posting the preferred method? 3. How do you change posting methods?