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

2. ©The McGraw-Hill Companies, Inc., 2004 2 of 48 Service Business Records Chapter 9 begins Part 2 of the book— Peachtree Complete Accounting 2003 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 Matt Lowe, Photography. 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.

3. ©The McGraw-Hill Companies, Inc., 2004 3 of 48 Software Objectives, p. 241 Set up company information for Matt Lowe, Photography. 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. Print financial statements. Make four backups using one, blank formatted disk: 1) back up Chapter 9 beginning data; 2) back up October data; 3) back up Exercise 9-1; 4) back up Exercise 9-2.

4. ©The McGraw-Hill Companies, Inc., 2004 4 of 48 Web Objectives, p. 241 Use your Internet browser to go to the book’s website at www.mhhe.com/yacht2003 www.mhhe.com/yacht2003 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.

5. ©The McGraw-Hill Companies, Inc., 2004 5 of 48 Peachtree Tips The chart of accounts beginning balances must be set for the preceding month—September 1 through 30, 2003. See text pages 260 through 263, “Entering Chart of Accounts Beginning Balances.” Specifically, review steps 2, 3, and 4 on pages 261 and 262. 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.

6. ©The McGraw-Hill Companies, Inc., 2004 6 of 48 Peachtree Tips (concluded) If you want to quickly set up a company on a computer that does not show Matt Lowe, Photography (or other Peachtree company that you want to use), you can use Peachtree’s New Company Set Up Wizard. From Peachtree’s startup menu, select “Set Up a New Company.” Then, click on Next. Type in the company name only, then click on Next repeatedly until you get to the “Finish” screen. Now, restore the company information from your back up disk. When you restore, the rest of the company information will be copied from your backup disk to the company you set up. When you use Peachtree’s New Company Set Up Wizard to set up a company up from scratch, Peachtree puts a subfolder on the hard drive for that company. For example, Matt Lowe, Photography resides on your hard drive at c:\peachw\matlowph. “Matlowph” is the subfolder or subdirectory on your hard drive.

7. ©The McGraw-Hill Companies, Inc., 2004 7 of 48 Backing Up Chapter 9 DiskBackup NameKBPages 15 of 18A:\Chapter 9 Begin82KB266-269 A:\Chapter 9 Check Register October (optional) 92KB284 A:\Chapter 9 October91KB295 A:\Exercise 9-178KB300 A:\Exercise 9-281KB303 TOTAL KB424KB

8. ©The McGraw-Hill Companies, Inc., 2004 8 of 48 Chapter 9 Topics 1. Software & web objectives, p. 241 2. Getting started, New Company Setup Wizard, pp. 242-250 3. Chart of Accounts, p. 250 a. Delete accounts, pp. 250-254 b. Change accounts, pp. 254-255 c. Add accounts, p. 255-257 d. Print chart of accounts, pp. 257-258 4. Entering chart of accounts beginning balances, pp. 260-265 5. Using Windows Explorer to See the File Size, pp. 265-266 6. Backing up company data to a floppy disk, pp. 266-270 7. Restoring company data from a floppy disk, pp. 270-275

9. ©The McGraw-Hill Companies, Inc., 2004 9 of 48 Chapter 9 Topics (continued) 8. Recording entries in the cash receipts journal and cash disbursements journal, pp. 275-283 9. Account reconciliation, pp. 283-286 10. Printing the cash receipts journal, p. 287 11. Printing the cash disbursements journal, p. 288 12. Editing journal transactions, p. 289 13. Previewing the general ledger trial balance, pp. 290-291

10. ©The McGraw-Hill Companies, Inc., 2004 10 of 48 Chapter 9 Topics (concluded) 14. Printing financial statements, p. 291 a. Balance sheet, p. 292 b. Income statement, p. 293 15. Backing up Chapter 9 data, p. 294 16. Internet Activity, p. 294 17. Summary and Review, p. 295 a. Going to the net, p. 296 b.Multiple choice questions, pp. 296-298 c. Exercise 9-1, pp. 298-300 d. Exercise 9-2, pp. 301-303 e. Chapter 9 index, p. 304

11. ©The McGraw-Hill Companies, Inc., 2004 11 of 48 New Company Setup – Introduction, p. 242 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 on

12. ©The McGraw-Hill Companies, Inc., 2004 12 of 48 New Company Setup – Company Information, p. 243 Check the information you typed. Make sure you use your name or other unique name. Click on

13. ©The McGraw-Hill Companies, Inc., 2004 13 of 48 New Company Setup – Chart of Accounts, p. 244 Accept the default for “Set up a new company based on one of the several sample companies.” Click on

14. ©The McGraw-Hill Companies, Inc., 2004 14 of 48 New Company Setup – Chart of Accounts, p. 245 Scroll down the list of Charts of Accounts. Click on “Photographer” to highlight it. Click on

15. ©The McGraw-Hill Companies, Inc., 2004 15 of 48 New Company Setup –Accounting Method, p. 245 Accept the default for “Accrual.” Click on

16. ©The McGraw-Hill Companies, Inc., 2004 16 of 48 New Company Setup –Posting Method, p. 246 Accept the default for “Real Time” posting. Click on

17. ©The McGraw-Hill Companies, Inc., 2004 17 of 48 New Company Setup –Accounting Periods, p. 246 Accept the default for “12 monthly accounting periods.” Click on

18. ©The McGraw-Hill Companies, Inc., 2004 18 of 48 New Company Setup – Accounting Periods, p. 247 Complete steps 14 and 15 on page 247. Make sure that your screen matches the one shown below step 15 on page 247. The information cannot be changed later. Click on.

19. ©The McGraw-Hill Companies, Inc., 2004 19 of 48 “Defaults” screen When the “Defaults” screen appears, click on. Complete steps 17 and 18 on pages 247 and 248. Then, the “Congratulations” screen appears.

20. ©The McGraw-Hill Companies, Inc., 2004 20 of 48 New Company Setup – Finish, p. 248 Read the information on the “Congratulations” screen. Then, select “No, I do not need the Setup Checklist.” Click on. Select.

21. ©The McGraw-Hill Companies, Inc., 2004 21 of 48 New Company Setup – Finish, p. 248 The “Welcome to Peachtree Today!” screen and menu bar for Matt Lowe, Photography appears.

22. ©The McGraw-Hill Companies, Inc., 2004 22 of 48 Close Peachtree Today, p. 249 On the left side of the “Peachtree Today” screen, select “Preferences.” In the “Start Up” area, click on the field next to “Display Peachtree Today each time this company is opened” to uncheck it. Click on the on “Peachtree Today’s” title bar to close the screen. The menu bar for Matt Lowe, Photography appears.

23. ©The McGraw-Hill Companies, Inc., 2004 23 of 48 Subfolder for Matt Lowe, Photography, p. 250 A subfolder is set up on your hard drive for Matt Lowe, Photography—c:\peachw\matlowph

24. ©The McGraw-Hill Companies, Inc., 2004 24 of 48 Maintain Chart of Accounts, p. 251 Click on Maintain, then Chart of Accounts. In the “Account ID” box, click on the “magnifying-glass” icon. Double-click on Account No. 10000, Petty Cash. Click on on the “Delete” icon. Then, select. Complete the steps on pages 252 through 259.

25. ©The McGraw-Hill Companies, Inc., 2004 25 of 48 Entering Chart of Accounting Beginning Balances, pages 260-262 Follow steps 1-3 on pp. 261 and 262 to select the beginning balance period. (This screen illustration is below step 3 on p. 262). Make sure you have selected From 9/1/03 through 9/30/03. You cannot change this later. Then, click on.

26. ©The McGraw-Hill Companies, Inc., 2004 26 of 48 “Chart of Accounts Beginning Balances” window, p. 263 Make sure that your beginning balances are as of September 30, 2003. 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 263.

27. ©The McGraw-Hill Companies, Inc., 2004 27 of 48 Balance Sheet, p. 264 The balance sheet shown on page 264 represents the beginning balances for Matt Lowe, Photography. Compare these balance sheet amounts to page 260.

28. ©The McGraw-Hill Companies, Inc., 2004 28 of 48 Using Windows Explorer to See the File Size, pp. 265-266 Go to Windows Explorer. Double-click on the C:\Peachw folder. Right-click on the subfolder for “matlowph.” Left-click on Properties. This screen is shown on p. 265.

29. ©The McGraw-Hill Companies, Inc., 2004 29 of 48 Backing up company data to a floppy disk, p. 266 After you set up your company and modify the chart of accounts, you should back up your data. Read the information on pages 266 and 267. Then, follow the steps on pages 267-269 to back up your Chapter 9 beginning data.

30. ©The McGraw-Hill Companies, Inc., 2004 30 of 48 Restoring company data from a floppy disk, p. 270 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 feature. Read the information on pages 270 and 271 about restoring data. Then, complete the steps on pages 271 through 274 to restore data.

31. ©The McGraw-Hill Companies, Inc., 2004 31 of 48 Maintain Global Options, p. 275 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” screen or “Payments” screen, you will see that your check register’s balance agrees with the cash balance on these screens.

32. ©The McGraw-Hill Companies, Inc., 2004 32 of 48 Select a Cash Account, p. 276 Click on Tasks, then Receipts. Click on the down arrow, then select “Regular Checking Account” from the drop- down list. Click on. The “Receipts” window appears.

33. ©The McGraw-Hill Companies, Inc., 2004 33 of 48 Steps 3 – 14, pp. 276-277 Complete steps 3 through 14 on pages 276-277. Then compare your screen to the one shown after instruction 14 on page 278. This is also the next slide.

34. ©The McGraw-Hill Companies, Inc., 2004 34 of 48 “Receipts” window, p. 278 After completing steps 3-14 on pp. 276 - 277, your screen should look like the one below. Click on Save to post. Read steps 15 and 16 on page 278.

35. ©The McGraw-Hill Companies, Inc., 2004 35 of 48 Select a Cash Account, p. 279 Click on Tasks, then Payments. Make sure that the “Regular Checking Account” is shown on the “Select a Cash Account” window. If not, select it. Click on. The “Payments” window appears. Complete steps 3 through 11 on pages 279-280.

36. ©The McGraw-Hill Companies, Inc., 2004 36 of 48 “Payments” window, p. 280 After completing steps 1 – 11 on pages 279 and 280, the completed “Payments” window appears. Click on Save to post. Read steps 12 and 13 on p. 280, then continue with the work described on pages 281, 282, and 283.

37. ©The McGraw-Hill Companies, Inc., 2004 37 of 48 Account Reconciliation, pp. 283-286 After following steps 1- 5 on page 285, account reconciliation is completed. (This screen illustration is shown on p. 286.) Click on the “OK” icon when you are finished.

38. ©The McGraw-Hill Companies, Inc., 2004 38 of 48 Printing the Cash Receipts Journal, p. 287 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 287.

39. ©The McGraw-Hill Companies, Inc., 2004 39 of 48 Printing the Cash Disbursements Journal, p. 288 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 288.

40. ©The McGraw-Hill Companies, Inc., 2004 40 of 48 “ Select Receipt,” window p. 289 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.

41. ©The McGraw-Hill Companies, Inc., 2004 41 of 48 Previewing a General Ledger Trial Balance, p. 290 Follow the steps on page 290 to preview the general ledger trial balance. Compare your screen display with the general ledger trial balance shown on page 290.

42. ©The McGraw-Hill Companies, Inc., 2004 42 of 48 Printing Financial Statements, p. 291 Follow the steps on page 291 to print the balance sheet and income statement. Compare your printouts with the balance sheet shown on p. 292 and the income statement shown on page 293. To print an income statement without zero balances, uncheck the “Show Zero Amounts” box on the “ Income Statement Options” window.

43. ©The McGraw-Hill Companies, Inc., 2004 43 of 48 Glossary of Terms Chapter 9

44. ©The McGraw-Hill Companies, Inc., 2004 44 of 48 Source Documents, p. 242 Source documents are used to show written evidence of a business transaction. For Matt Lowe, Photography, the source documents used are his checkbook register and bank statement.

45. ©The McGraw-Hill Companies, Inc., 2004 45 of 48 Printout of Chart of Accounts, p. 258 The chart of accounts is a list of General Ledger accounts, which are used to classify transaction information for reporting purposes. Peachtree includes more than 70 sample charts of accounts. For Matt Lowe, Photography, you select “graphic artist” from Peachtree’s sample list.

46. ©The McGraw-Hill Companies, Inc., 2004 46 of 48 Bank reconciliation, p. 286 Peachtree’s “Account Reconciliation” feature allows you to adjust Mr. Lowe’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.

47. ©The McGraw-Hill Companies, Inc., 2004 47 of 48 Internet Activity, p. 294 1 Go to the book’s website at www.mhhe.com/yacht2003www.mhhe.com/yacht2003 2 In the “Student Center” 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 1-7. 5 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).

48. ©The McGraw-Hill Companies, Inc., 2004 48 of 48 Going to the Net, p. 296 Access the chart of accounts website at www.allianceonline.org www.allianceonline.org In the “site search” box, 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?