1. Accounts Payable Indianapolis, Indiana April 2008

2. Introductions

3. Ground Rules: PLEASE ask questions – I dont mind being interrupted. NO question is stupid. Please keep questions relevant to the group as a whole. Can it be done versus Should it be done? MY way isnt the ONLY way.

4. Quick Tips & Tricks

5. Reopening Receivers If you do it – have to reopen the first & only receiver on the PO OR It throws out your AP/GL Reconciliation Reopening Purchase Orders

6. Menu 12.1.7 or 14.5

7. Multiple Ports

8. Turn on Scroll Bar

9. Vouchering

10. AP Flowchart

11. Menu 35.7

12. Menu 35.8

13. Paying Expenses

14. Menu 13.20.1/2

15. Menu 13.20.1

16. Demonstration – 13.20.1 PAID

17. Paying Merchandise

18. Menu 13.20.1/2

19. 13.20.2 Benefits… Accurate reflection of Gross Profit by month Accurate reflection of Gross Profit by part Accurate reflection of Net Income No large inventory adjustments at year end Better handle on inventory value and turns Average Cost reflects true cost

20. 13.20.2 Benefits… Lessen likelihood of double paying bills Easy reconciliation of PO to vendor bill PAPERLESS AP!!!

21. Menu 13.20.2

23. Menu 13.20.1

24. Demonstration – 13.20.2

25. Paying Corp

26. 13.20.14 / 13.20.15

27. Menu 13.20.3

29. Demonstration – 13.20.3

30. Enter vouchers in 13.20.1/2/3 Update 13.20.5 Handcheck register if applicable 13.20.6 Voucher Update

31. Recurring Vouchers

32. Enter vouchers in 13.20.8 Listing 13.20.9 (Monthly) Update 13.20.10 (Monthly) Recurring Vouchers

33. Cash Disbursements

34. 1.13.2.3 or 13.2.4 2.Review printout, approve items for printing 3.13.2.6 or 13.2.6a 4.13.2.7 (Rolls from 13.2.6/6a) Check Run Process

35. Check Reversal

36. 1.13.2.11 2.13.2.7 3.13.20.6 (if applicable) 4.Must also delete voucher if you dont want it paid on future check runs (13.20.18) unless it is a hand check Check Reversal

39. Demonstration – Check Reversal

40. Menu 13.5 WE LOVE THIS MENU!

41. Menu 13.5

42. Bank Reconciliation

43. Reports Activity Report – Summary of Deposits, Disbursements, Adjustments and Journal Entries Reconciliation Entry – Input of Checks cleared on last bank statement. Enter as a range or individually. Reconciliation Listing – Itemization of checks entered in 13.20.9 as well as outstanding checks and outstanding checks greater than 90 days.

44. Prompt for bank first and not limit input by company. Starting balance for the report will be based on the cash account balance from the last general ledger close. Stores that do not use the general ledger component of the system will need to have DST hardcode their January 1 balance each year and the report will populate from there. Bank Reconciliation

47. Bank Reconciliation - Excel OPERATING ACCOUNT BANK RECONCILIATION BANK BALANCE less O/S Checks plus American Express in Transit plus Mastercard/Visa in Transit plus Daily Deposit in Transit ADJUSTED BANK BALANCE $ - BOOK BALANCE - BEGINNING OF THE MONTH Cash Sales Cash Disbursements 401K Cash Over/Short American Express Fees Bank Analysis Charge LOC Activity UNADJUSTED G/L BALANCE $ - RECONCILING ENTRIES Pending Credit Card Fees Pending Bank Analysis $ - Difference $ -

48. Warranty

49. Warranty Claims Part Rtnd Review Warranty items Create Claims Customer brings Part back to the store. Credit Memo is issued in m1.2 Use Warranty reason code to issue credit Assign a Sequence # Warranty Items need to be consolidated and turned into a claim. Run m15.1 to review items by vendor Review vendors warranty policies Determine viable warranty claims Issue Claim/Paperwork to Vendor. Use m15.3 to create the claims by vendor &/or by company Send paperwork and parts (if applicable) to vendor Process to Create a Warranty Claim is simple… Monitor Aging Monitor the pending warranty credits. Use the Warranty Aging Report in m15.8 to make calls to vendors to get credit issued

50. Warranty Accounts 12.1.7

51. 15.9 – Should mostly be used as a research tool Warranty

54. Receive Part – close claim with 15.10 Receive Credit – close claim with 15.11 Warranty Credits/Replacements

55. Demonstration – 15.10

56. Demonstration – 15.11

57. What to do with warranty claims you never collect on?

58. Sales Tax

59. EOM Sales Tax Report Will reflect AR adjustments (m4.1.2) or AR write-offs (m4.1.1) Will report under the applicable Tax Jurisdiction. An additional report will also follow your EOM AR adjustment report which will list adjustments and write-offs that were made that impact Sales Tax. This report will tie out to the line item on the Composite Sales Tax Report.

60. EOM Sales Tax Report

61. Inventory *See handouts

62. NO easy solution, but you can balance with: Time Effort Attention to detail

63. Potential Problems: 1) Product has been received but not yet vouchered into the Accounts Payable system - Inventory value is updated at receiving time (i.e. as soon as the on-hand increases due to a PO receipt). However, the G/L Inventory is not updated until the vendor invoice has been vouchered and the Inventory G/L account debited for the amount of the merchandise received. 2) Inventory adjustments have not been properly entered into the General Ledger via a Journal Entry - The Daily Inventory Transaction Audit Report that runs with each Day End lists all inventory adjustments that have been made for the day. These adjustments directly affect the product on-hand quantity and consequently the inventory value. A journal entry must be made to the Inventory G/L account for all inventory adjustments made throughout the month to properly reflect these changes in the General Ledger inventory value.

64. Potential Problems (contd): 3) The difference between the PO receipt cost and the vendor-invoiced cost does not agree - It is necessary to properly record any differences between the product cost at PO receiving time and the actual cost invoiced from the vendor. 4) Incorrect use of the Warranty System…vendor credits do not match credits issued through the warranty claim - When closing warranty claims, vouchers should be expensed only to the Warranty A/R account. Also, when issuing vendor credits, the actual credit amount from the vendor should be used. 5) Incorrect or non-posting of the Inventory Buyback. The Buybacks (rotational or annual) reduces on-hand (and subsequently inventory value). It is therefore necessary to make a journal entry to reflect this change in the G/L inventory value.

65. Potential Problems (contd): 6) Incorrect or non-posting of the Physical Inventory variance - The Physical Inventory process updates on-hand (and subsequently inventory value) at the time the inventory is updated. It is therefore necessary to make a journal entry to reflect this change in the G/L inventory value. 7) PO Receipts posting of items not carried as inventory - Products such as C99 and Z95 items should have then Inventory Bypass flag set to Yes to avoid updating their on-hand (and subsequently inventory) values. Also, these items should not be received, as their on-hand value should always remain at zero.

66. Potential Problems (contd): 8) Failure to utilize 13.20.2 Purchase Order Receipts Update to A/P to record vendor invoices and cost changes - 13.20.2 is the only supported process by which stores, whose desire is to balance Inventory Value to General Inventory, can ensure that what is being entered into the inventory system via PO receipts posting matches that which is entered into the A/P system and subsequently the General Ledger. Care must be taken to match all PO receipts to vendor invoices, with reconciliation and cost discrepancies entered through the Purchase Order Receipts Update to A/P process (13.20.2).

67. Potential Problems (contd): 9) Reopening POs – this has negative repercussions on average cost – especially when there are multiplier receivers for a purchase order. 10) Manually updating inventory average cost incorrectly – this is a privilege that only a select few should have access to. And only if they are well versed on the math calculation that determines average cost. 11) Omitting or incorrectly preparing journal entry for store transfers – if this is a manual entry than extra care should be taken to make sure that the debits/credit are handled correctly and from/to the right stores. 12) Making journal entries or AP postings to inventory that you shouldnt – rebates, freight, etc. 13) Not accounting for Drop ships correctly – both sides of the transaction have to be dropships (DIN and DPO)

68. End of Year Procedures *See handouts

69. End of Year Procedures 1.AR Month-end close rolls into Year End *Confirm with DST 2.Close 12 th month AP 3.Close year AP *MUST happen before entries for new year 4.Close 12 th month GL *Manually Rollover NI (if Separate from Retained Earnings) 5.Close year GL *NO 13 th month

70. Back-up Tapes!

71. Questions

72. Class Evaluations

73. Thank YOU!