Chapter 9: Maintaining Accounting Records for Service Businesses Chapter 9: Maintaining Accounting Records for Service Businesses

©The McGraw-Hill Companies, Inc. 2 of 50 Service Business Records Chapter 9 begins Part 2 of the book— Peachtree Complete Accounting 2004 for Service Businesses. In this part of the book, you are the owner of an accounting practice that does the monthly record keeping for several service businesses. In Chapter 9, you will maintain the accounting records for Taylor Rinaldi, Graphic Artist. You will set up a business using one of the sample companies included in Peachtree. Then, you will complete the computer accounting cycle for the month of October.

©The McGraw-Hill Companies, Inc. 3 of 50 Software Objectives, p. 247 Set up company information for Taylor Rinaldi, Graphic Artist. Select a sample company. Edit the chart of accounts. Enter chart of accounts beginning balances. Use Windows Explorer to see the company’s file size. Record and post transactions in the cash receipts and cash disbursements journals. Complete account reconciliation. Preview the general ledger trial balance. Preview the cash account register. Print financial statements. Make four backups using two, blank formatted disks: Use one disk to back up Chapter 9 beginning data and October data. Use the second disk to back up Exercise 9-1 and Exercise 9-2.

©The McGraw-Hill Companies, Inc. 4 of 50 Web Objectives, p. 247 Use your Internet browser to go to the book’s website. Go online to Go to the Internet Activity link on the book’s website. Then, select WEB EXERCISES PART 2. Complete the first web exercise in Part 2, Starting a Business. Use a word processing program to write summaries of the websites that you visited.

©The McGraw-Hill Companies, Inc. 5 of 50 Peachtree Tips The chart of accounts beginning balances must be set for the preceding month—September 1 through 30, See text pages 263 through 267, Entering Chart of Accounts Beginning Balances. Specifically, review steps 2, 3, and 4 on pages 265 and 266. The businesses that you set up in Chapter 9 are continued in Chapter 10. Remember to use a unique name for the businesses that you set up in Chapter 9. For example, you may use your first and last name to identify these businesses. When a company is set up in Peachtree, a shortened named is assigned for that company. The hard drive location of Taylor Rinaldi, Graphic Artist is c:\Program Files\Peachtree\Company\tayringr. (If a unique name is used, the subdirectory will differ.)

©The McGraw-Hill Companies, Inc. 6 of 50 Peachtree Tips (concluded) Peachtree Tips (concluded) You can restore to an existing company—one that is previously set up—or restore to a new company, bypassing the process of setting up a new company. The Restore Wizard includes two options on the Select Company screen: An Existing Company and A New Company. If A New Company is selected, then the company will be named exactly as the backup file selected. Let’s say you want to restore a backup file for a company that is not set up in Peachtree; for example, a back up file exists but the company is not shown as a Peachtree company. If you start Peachtree and the appropriate company cannot be opened, use the Restore Wizard to select A New Company. Using the appropriate backup file, and the selection for A New Company, your can start where you left off the last they used Peachtree.

©The McGraw-Hill Companies, Inc. 7 of 50 Backing Up Chapter 9 DiskBackup NameKBPages 1 of 6A:\Chapter 9 Begin441KB A:\Chapter 9 Check Register October (optional) 449KB285 A:\Chapter 9 October452KB299 2 of 6A:\Exercise KB305 A:\Exercise KB308  Use six blank, formatted disks to back up data in Part 2 (Chapters 9, 10, and Project 1).

©The McGraw-Hill Companies, Inc. 8 of 50 Chapter 9 Topics 1. Software & web objectives, p Getting started, New Company Setup Wizard, pp Company maintenance information, pp Chart of Accounts, p. 256 a. Delete accounts, pp b. Change accounts, pp c. Add accounts, p d. Printing the chart of accounts, pp Entering chart of accounts beginning balances, pp Using Windows Explorer to See the File Size, pp Backing up company data to a floppy disk, pp Restoring company data from a floppy disk, pp

©The McGraw-Hill Companies, Inc. 9 of 50 Chapter 9 Topics (continued) 8. Recording entries in the cash receipts journal and cash disbursements journal, pp Account reconciliation, pp Displaying the Cash Account Register, pp Printing the cash receipts journal, p Printing the cash disbursements journal, pp Editing journal transactions, p Previewing the general ledger trial balance, pp

©The McGraw-Hill Companies, Inc. 10 of 50 Chapter 9 Topics (concluded) 14. Printing financial statements, pp Backing up Chapter 9 data, p Internet Activity, p Summary and Review, p. 300 a. Going to the net, p. 301 b.Multiple choice questions, pp c. Exercise 9-1, pp d. Exercise 9-2, pp e. Chapter 9 index, p. 309

©The McGraw-Hill Companies, Inc. 11 of 50 New Company Setup – Introduction, p. 248 Start Windows and Peachtree in the usual way. From the startup screen, click on Set up a new company. Read the information on this screen. Click.

©The McGraw-Hill Companies, Inc. 12 of 50 New Company Setup – Company Information, p. 249 Check the information you typed. Make sure you use first and last name so that your name will appear on all printouts. Click on

©The McGraw-Hill Companies, Inc. 13 of 50 New Company Setup – Chart of Accounts, p. 250 Accept the default for Set up a new Retail, Service, Construction, Manufacturing or Distribution company using a simple chart of accounts is selected. Click on

©The McGraw-Hill Companies, Inc. 14 of 50 New Company Setup – Chart of Accounts, p. 250 The Available Charts of Accounts list shows five business types. Click on Service Company to highlight it. Click on

©The McGraw-Hill Companies, Inc. 15 of 50 New Company Setup –Accounting Method, p. 251 Accept the default for Accrual. Click on

©The McGraw-Hill Companies, Inc. 16 of 50 New Company Setup –Posting Method, p. 251 Accept the default for Real Time posting. Click on

©The McGraw-Hill Companies, Inc. 17 of 50 New Company Setup –Accounting Periods, p. 252 Accept the default for 12 monthly accounting periods. Click on

©The McGraw-Hill Companies, Inc. 18 of 50 New Company Setup – Accounting Periods, p. 253 Complete steps 13 and 14 on page 252. Make sure that your screen matches the one shown below step 14 on page 253. The information cannot be changed later. Click on.

©The McGraw-Hill Companies, Inc. 19 of 50 Defaults screen, step 16, p. 253 When the Defaults screen appears, click on. Complete steps 16 and 17 on page 253. Then, the Congratulations screen appears.

©The McGraw-Hill Companies, Inc. 20 of 50 New Company Setup – Finish, p. 253 Read the information on the Congratulations screen. Click.

©The McGraw-Hill Companies, Inc. 21 of 50 New Company Setup – Finish, p. 254 The Welcome to Peachtree Today! screen and menu bar for Taylor Rinaldi (or, your first and last name), Graphic Artist appears. On the left side of the Peachtree Today screen, select Scroll down the screen to the Start Up area. Click on the field next to Display Peachtree Today each time this company is opened to uncheck the field. Click on Peachtree Today’s title bar to close the screen. The menu bar for Taylor Rinaldi, Graphic Artist appears.

©The McGraw-Hill Companies, Inc. 22 of 50 Subfolder for Taylor Rinaldi, Graphic Artist, p. 255 A subfolder is set up on your hard drive for Taylor Rinaldi, Graphic Artist—c:\Program Files\Peachtree\Company\tayringr

©The McGraw-Hill Companies, Inc. 23 of 50 Company Maintenance Information, p. 255 From the menu bar, select Maintain; Company Information. This screen shows information about your company, including the Directory where the company data is stored on the hard drive.

©The McGraw-Hill Companies, Inc. 24 of 50 Chart of Accounts, p. 256 Click on Maintain; Chart of Accounts. In the Account ID field, click on the magnifying-glass icon. Double-click on Account No Allowance for Doubtful Account. Click on the Delete icon. Then, select. Complete the steps on pages 256 through 262 to delete, change, and add accounts. Compare your chart of accounts to the one shown on p. 262.

©The McGraw-Hill Companies, Inc. 25 of 50 Entering Chart of Accounting Beginning Balances, pages Follow steps 1-3 on pp. 261 and 262 to select the beginning balance period. (This screen illustration is below step 3 on p. 265). Make sure you have selected From 9/1/04 through 9/30/04. You cannot change this later. Then, click on.

©The McGraw-Hill Companies, Inc. 26 of 50 Chart of Accounts Beginning Balances window, p. 266 Make sure that your beginning balances are as of September 30, If you enter your balances for the wrong month (period), your financial statements will not show the current month and year-to-date amounts correctly. Complete steps 7 and 8 on page 267.

©The McGraw-Hill Companies, Inc. 27 of 50 Balance Sheet, p. 268 The balance sheet shown on page 268 represents the beginning balances for Taylor Rinaldi, Graphic Artist. Compare these balance sheet amounts to page 264.

©The McGraw-Hill Companies, Inc. 28 of 50 Using Windows Explorer to See the File Size, pp Go to Windows Explorer. Double-click on the folder for Peachtree. The default program and data path is c:\Program Files\ Peachtree \Company. Right-click on the subfolder for tayringr. Left-click on Properties. This screen is shown on p. 269.

©The McGraw-Hill Companies, Inc. 29 of 50 Backing up company data to a floppy disk, p. 270 After you set up your company and modify the chart of accounts, you should back up your data. Read the information on pages 270 and 271. Then, follow the steps on pages to back up your Chapter 9 beginning data.

©The McGraw-Hill Companies, Inc. 30 of 50 Restoring company data from a floppy disk, p. 274 After completing new company setup and editing the chart of accounts, you backed up (saved) company information. In order to start where you left off the last time you backed up, you use the Restore Wizard. Read the information on pages 274 and 275 about restoring data. Then, complete the steps on pages 274 through 277 to restore data.

©The McGraw-Hill Companies, Inc. 31 of 50 Maintain Global Options, p. 278 Click on Options, Global. Make sure the box next to Recalculate cash balance automatically in Receipts, Payments, and Payroll Entry has a check mark next to it. Click on. When you use the Receipts, Write Checks, and Payments tasks, you will see that your check register’s balance agrees with the cash balance on these screens.

©The McGraw-Hill Companies, Inc. 32 of 50 Select a Cash Account, p. 278 Click on Tasks, then Receipts. Click on the down arrow, then select Checking Account from the drop-down list. Click. The Receipts window appears.

©The McGraw-Hill Companies, Inc. 33 of 50 Steps 3 – 14, pp Complete steps 3 through 13 on pages Then compare your screen to the to shown after instruction 13 on page 280. This is also the next slide.

©The McGraw-Hill Companies, Inc. 34 of 50 Receipts window, p. 280 After completing steps 3-13 on pp , your screen should look like the one below. Click Save to post. Read steps 14 and 15 on page 280.

©The McGraw-Hill Companies, Inc. 35 of 50 Select a Cash Account, p. 281 Click on Tasks, then Write Checks. Make sure that the Regular Checking Account is shown on the Select a Cash Account window. If not, select it. Click. The Write Checks screen appears. Complete steps 3 through 11 on pages

©The McGraw-Hill Companies, Inc. 36 of 50 Write Checks screen, p. 282 After completing steps 1 – 8 on pages 281 and 282, the completed Write Checks screen appears. Click Save to post. Read steps 9, 10, and the Comment on page 282. Then, continue with the work on pages 283, 284, and 285.

©The McGraw-Hill Companies, Inc. 37 of 50 Account Reconciliation, pp After following steps 1- 5 on page 287, account reconciliation is completed. (This screen illustration is shown on p. 288.) Click OK when you are finished.

©The McGraw-Hill Companies, Inc. 38 of 50 Displaying the Cash Account Register, p. 289 After following steps 1 and 2 on page 289, The Account Register appears showing all your entries. The Account Register lists payments and receipts similarly to the check register on pages Read a., b., and c. on pages 289 and 290 to use drill-down.

©The McGraw-Hill Companies, Inc. 39 of 50 Cash Account Register, p. 291 After completing the steps shown on pages 290 and 291, the Cash Account Register is shown. Read the information and follow the steps on pages

©The McGraw-Hill Companies, Inc. 40 of 50 Printing the Cash Receipts Journal, p. 292 Click on Reports, the select Accounts Receivable. Highlight Cash Receipts Journal. Click on the Print icon. Make the selections to print. Compare your printout to the Cash Receipts Journal shown on page 292.

©The McGraw-Hill Companies, Inc. 41 of 50 Printing the Cash Disbursements Journal, pp The Select a Report window should be displayed. In the Report Area, highlight Accounts Payable. Scroll down the Report List. Click on Cash Disbursements Journal to highlight it. Click on the Print icon. Make the selections to print. Compare your printout to the Cash Disbursements Journal shown on page 293.

©The McGraw-Hill Companies, Inc. 42 of 50 Editing Journal Transactions, p. 294 Click on Tasks, then Receipts. Click on the Abc Open icon. Highlight the journal entry that you want to edit. Highlight the journal entry that you want to edit, then click on OK. Make any necessary changes, then click on Save to post.

©The McGraw-Hill Companies, Inc. 43 of 50 Previewing a General Ledger Trial Balance, p. 295 Follow the steps on page 295 to preview the general ledger trial balance. Compare your screen display with the general ledger trial balance shown on page 294.

©The McGraw-Hill Companies, Inc. 44 of 50 Printing Financial Statements, p. 296 Follow the steps on page 296 to print the balance sheet and income statement. Compare your printouts with the balance sheet shown on p. 297 and the income statement shown on page 298. To print an income statement without zero balances, uncheck the Show Zero Amounts box on the Income Statement Options window. Follow steps 1-9 on page 299 to back up Chapter 9 data. The suggested filename is Chapter 9 October.

©The McGraw-Hill Companies, Inc. 45 of 50 Glossary of Terms Chapter 9

©The McGraw-Hill Companies, Inc. 46 of 50 Source Documents, p. 248 Source documents are used to show written evidence of a business transaction. For Taylor Rinaldi, Graphic Artist, the source documents used are his checkbook register and bank statement.

©The McGraw-Hill Companies, Inc. 47 of 50 Printout of Chart of Accounts, p. 262 The chart of accounts is a list of General Ledger accounts, which are used to classify transaction information for reporting purposes. Peachtree includes numerous sample charts of accounts.

©The McGraw-Hill Companies, Inc. 48 of 50 Bank reconciliation, p. 288 Peachtree’s Account Reconciliation feature allows you to adjust Mr. Rinaldi’s bank statement. Bank reconciliation is the process of bringing the balance of the bank statement and the balance of the cash account into agreement.

©The McGraw-Hill Companies, Inc. 49 of 50 Internet Activity, p Go to the book’s website at 2 In the Student Edition list, link to Internet Activities. 3 Link to WEB EXERCISES PART 2. 4 Scroll down the screen to STARTING A BUSINESS – Chapter 9. Read steps Follow the steps shown on the book’s website to complete this Internet activity. 6 Use a word processing program to write a summary for each website visited (maximum length: 75 words).

©The McGraw-Hill Companies, Inc. 50 of 50 Going to the Net, p. 301 Access the chart of accounts website at In the site search field, type chart of accounts, then press. Link to What Should Our Chart of Accounts Include?, then link to What are the Features of a Simple Chart of Accounts? 1. List the standard order that accounts are presented on the balance sheet and income statement. 2. How are account numbers organized? Why are they organized that way?