1. Chapter 10: Completing Quarterly Activities and Closing the Fiscal Year

2. ©The McGraw-Hill Companies, Inc., 2004 2 of 36 Completing Quarterly Activities and Closing the Fiscal Year Chapters 9 and 10 work together. In Chapter 10, you will continue recording financial information for Matt Lowe, Photography. You will complete the Computer Accounting Cycle for November and December. Mr. Lowe’s checkbook registers and bank statements will be used as source documents. At the end of December, which is also the end of the fourth quarter, you will complete adjusting entries for Mr. Lowe, print financial statements, and close the fiscal year.

3. ©The McGraw-Hill Companies, Inc., 2004 3 of 36 Software Objectives, p. 305 Restore data from Chapter 9. (The “Chapter 9 October.ptb” back up was made on page 294. All activities in Chapter 9 must be completed before starting Chapter 10. Change accounting periods. Journalize and post transactions for Matt Lowe, Photography, for the months of November and December. Complete account reconciliation. Print a general ledger trial balance (unadjusted ) Journalize and post quarterly adjusting entries in the General Journal. Print financial statements. Close the fiscal year. Print a post-closing trial balance. Make six backups: four backups of Matt Lowe, Photography data; one backup of Exercise 10-1; and one backup of Exercise 10-2. (You may use the same disk to back up Chapter 10 that you used for the Chapter 9 backups.)

4. ©The McGraw-Hill Companies, Inc., 2004 4 of 36 Web Objectives, p. 305 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 second web exercise in Part 2, “Understanding Accounting Terms.” Use a word processing program to write summaries of the websites that you visited.

5. ©The McGraw-Hill Companies, Inc., 2004 5 of 36 Peachtree’s Computer Accounting Cycle, p. 306 1. Change accounting periods. 2. Journalize entries. 3. Post entries to the general ledger. 4. Account reconciliation. 5. Print the general ledger trial balance (unadjusted). 6. Journalize and post adjusting entries. 7. Print the general ledger trial balance (adjusted).

6. ©The McGraw-Hill Companies, Inc., 2004 6 of 36 Peachtree’s Computer Accounting Cycle (concluded), p. 306 8. Print depreciation report. 9. Print the financial statements: Balance Sheet, Income Statement, Statement of Retained Earnings, Statement of Cash Flow, Statement of Changes in Financial Position. 10. Close the fiscal year. 11. Interpret accounting information.

7. ©The McGraw-Hill Companies, Inc., 2004 7 of 36 Peachtree Tips Peachtree Tips You must complete Chapter 9 before starting Chapter 10. To check that you have completed Chapter 9, display Matt Lowe’s general ledger trial balance. Compare it to the one shown on page 290. This is the trial balance at the end of Chapter 9. If any of the account balances are incorrect on the general ledger trial balance, follow the steps for “Editing Journal Entries” on page 289. Then, reprint the trial balance.

8. ©The McGraw-Hill Companies, Inc., 2004 8 of 36 Peachtree Tips (continued) Peachtree Tips (continued) If you do not get the correct year-to-date amounts on your Statement of Cash Flow and Statement of Changes in Financial position (pp. 332 and 333), you may have set your chart of accounts beginning balances in Chapter 9 incorrectly. Refer to pages 260- 265, Entering Chart of Accounts Beginning Balances in Chapter 9. Matt Lowe’s beginning balance sheet is dated October 1, 2003 (p. 260). Since Peachtree posts on the last day of the month (September 30), you must set beginning balances for the preceding month— September 1 through 30, 2003, pp. 261-262, steps 1 through 4.

9. ©The McGraw-Hill Companies, Inc., 2004 9 of 36 Backing Up Chapter 10 DiskBackup NameKBPages 15 of 18A:\Chapter 10 November96 KB316 A:\Chapter 10 December UTB98 KB322-323 A:\Chapter 10 December100 KB334 A:\Chapter 10 EOY99 KB341 A:\Exercise 10-188 KB349 A:\Exercise 10-288 KB350 TOTAL KB569 KB.

10. ©The McGraw-Hill Companies, Inc., 2004 10 of 36 Chapter 10 Topics 1. Software & web objectives, p. 305 2. Getting started, pp. 306-308 a. Restoring data from Chapter 9, pp. 306-307 b. Changing accounting periods: November 1-30, 2003, pp. 307-308 3. Checkbook register and bank statement: November 2003, p. 309 a. Journalize and post November transactions, p. 309 b.Account reconciliation, pp. 310-311 c.Printout of cash receipts journal and cash disbursements journal, p. 312

11. ©The McGraw-Hill Companies, Inc., 2004 11 of 36 Chapter 10 Topics, continued d. General ledger trial balance, p. 313 e. Balance sheet, p. 314 f. Income statement, p. 315 4. Backing up November data, p. 316 5. Data file statistics, pp. 316-317 6. Changing accounting periods, p. 317 7. Checkbook register and bank statement: December 2003, p. 318 a.Journalize and post December transactions in the cash receipts and cash disbursements journals, p. 318. b. Account reconciliation report, pp. 319-320

12. ©The McGraw-Hill Companies, Inc., 2004 12 of 36 Chapter 10 Topics, continued c. Cash receipts journal, p. 321 d. Cash disbursements journal, p. 321 e. General ledger trial balance, p. 322 7. Backing up the unadjusted trial balance, pp. 322-323 8. End-of-quarter adjusting entries, pp. 323-326 a.December 31, 2003 general journal, p. 327 b.General ledger trial balance (adjusted), p. 328 c.Balance sheet, p. 329 d. Income statement, p. 330 e.Statement of retained earnings, p. 331 f.Statement of cash flow, p. 332 g.Statement of changes in financial position, p. 333 9.Backing up December data, p. 334

13. ©The McGraw-Hill Companies, Inc., 2004 13 of 36 Chapter 10 Topics (concluded) 10. Closing the fiscal year, pp. 335-340 11. Printing the post-closing trial balance, pp. 340-341 12. Backing up year-end data, p. 341 13. Internet Activity, p. 342 14. Summary and Review, pp. 342-343 a.Going to the Net, p. 343 b.True/Make True questions, pp. 344-346 c.Exercise 10-1, pp. 346-349 d.Exercise 10-2, pp. 349-350 e.Chapter 10 index, p. 351

14. ©The McGraw-Hill Companies, Inc., 2004 14 of 36 Change accounting periods, pp. 307-308 Click on Tasks, then System. From the “System” pull-down menu. Select Change Accounting Period. Select “11-Nov 01, 2003 to Nov 30, 2003.” Click on. Click on at the screen prompt.

15. ©The McGraw-Hill Companies, Inc., 2004 15 of 36 Pages 309 through 311 Continue with the steps shown on pages 309, 310, and 311. Compare your account reconciliation report to the one shown on p. 311. Compare your cash receipts journal to the one shown on p. 312. Compare your cash disbursements journal to the one shown on p. 312. Print the general ledger trial balance, then compare it to the one shown on p. 313.

16. ©The McGraw-Hill Companies, Inc., 2004 16 of 36 Pages 314 - 315 Print the balance sheet, then compare it to the one shown on p. 314. Print the income statement, then compare it to the one shown on p. 315. Follow the steps to back up November data shown on page 316.

17. ©The McGraw-Hill Companies, Inc., 2004 17 of 36 Data File Statistics, pp. 316-317 From the menu bar, click on Help, Customer Support and Service, then select File Statistics. The File Statistics screen shows the shortened name for the company. If you used your name in the company name, your shortened name will differ. Click OK to close the Data File Statistics screen.

18. ©The McGraw-Hill Companies, Inc., 2004 18 of 36 Pages 317 - 322 Continue with the steps for changing the accounting period shown on pages 317-318. Complete entries using the December check register, p. 318 Complete account reconciliation, pages 318- 320. Compare your cash receipts journal to the one shown on p. 321. Compare your cash disbursements journal to the one shown on p. 321. Print the general ledger trial balance, then compare it to the one shown on p. 322.

19. ©The McGraw-Hill Companies, Inc., 2004 19 of 36 Backing up the Unadjusted Trial Balance, pages 322-323 Follow steps 1 – 9 on pages 322-323 to back up your unadjusted trial balance. Use Chapter 10 December UTB as the file name. (UTB is an abbreviation of unadjusted trial balance.)

20. ©The McGraw-Hill Companies, Inc., 2004 20 of 36 End-of-Quarter Adjusting Entries, p. 323 - 328 Mr. Lowe’s accounting records are adjusted at the end of December. Follow the steps on pages 323–326 to record adjusting entries. Compare your December 31, 2003 general journal to the one shown on p. 327. Compare your adjusted trial balance to the one shown on p. 328.

21. ©The McGraw-Hill Companies, Inc., 2004 21 of 36 Financial Statements, pp. 329-333 Compare your balance sheet to the one shown on p. 329. Compare your income statement to the one shown on p. 330. Compare your statement of retained earnings to the one shown on p. 331. Compare your statement of cash flow to the one shown on p. 332. Compare your statement of changes in financial position to the one shown on p. 333.

22. ©The McGraw-Hill Companies, Inc., 2004 22 of 36 Backing up December data, p. 334 Follow the steps on p. 334 to back up December data. Use Chapter 10 December as the back up name.

23. ©The McGraw-Hill Companies, Inc., 2004 23 of 36 Closing the Fiscal Year, p. 335 From the menu bar, select Tasks, System, Year-End Wizard. Click on.

24. ©The McGraw-Hill Companies, Inc., 2004 24 of 36 Closing the fiscal year, continued, p. 335 The “Year-End Wizard – Welcome” window appears. Click on.

25. ©The McGraw-Hill Companies, Inc., 2004 25 of 36 Closing the fiscal year, continued, p. 336 The “Close Options” screen appears. Read the information on this screen. Click on.

26. ©The McGraw-Hill Companies, Inc., 2004 26 of 36 Closing the fiscal year, continued, p. 336 Read the information on the “Print Fiscal Year-End Reports” screen. Makes sure the boxes are unchecked. Click on.

27. ©The McGraw-Hill Companies, Inc., 2004 27 of 36 Closing the fiscal year, continued, p. 337 The “Back Up ‘Company Data” window appears. You already made a back up of your data but you may want to make another one. Read the information on this screen. Click on “Back Up.” The “Back Up Company window appears. Observe that the box next to Include company name in the backup file name” is checked. Click on the Back Up Now button. Complete steps 10-13 on page 337.

28. ©The McGraw-Hill Companies, Inc., 2004 28 of 36 Closing the fiscal year, continued, p. 338 The “New Open Fiscal Years” screen appears. Read the information on this screen.. Accept the default for “Next Fiscal Year” by clicking on.

29. ©The McGraw-Hill Companies, Inc., 2004 29 of 36 Closing the fiscal year, continued, p. 338 The “Important – Confirm Year-End Close” screen appears. Read the information on this screen. Click on.

30. ©The McGraw-Hill Companies, Inc., 2004 30 of 36 Closing the fiscal year, continued p. 339 The “Begin Close-Year Process” screen appears. Read the information on this screen. Click on.

31. ©The McGraw-Hill Companies, Inc., 2004 31 of 36 Closing the fiscal year, concluded, p. 339 The “Congratulations!” screen appears. Read the information on this screen. Click on.

32. ©The McGraw-Hill Companies, Inc., 2004 32 of 36 Printing the Post-Closing Trial Balance, p. 340 After the fiscal year is closed, a post-closing trial balance is printed. Only permanent accounts appear on the post-closing trial balance. All temporary accounts (revenues and expenses) have been closed. This completes the computer accounting cycle. Follow steps 1 and 2 on page 340 to print the post-closing trial balance. Compare your post-closing trial balance to the one shown on page 340.

33. ©The McGraw-Hill Companies, Inc., 2004 33 of 36 Backing Up Year-End Data, page 341 Follow steps 1 through 9 on page 341 to back up year-end data. The back up name is Chapter 10 EOY.

34. ©The McGraw-Hill Companies, Inc., 2004 34 of 36 Glossary of Terms Chapter 10

35. ©The McGraw-Hill Companies, Inc., 2004 35 of 36 Unearned revenue, p. 326 Unearned revenue is a liability account used to report advance collections from customers or clients.

36. ©The McGraw-Hill Companies, Inc., 2004 36 of 36 Internet Activity, p. 342 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 “UNDERSTANDING ACCOUNTING TERMS – Chapter 10.” Read steps 1-5. 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 of each summary: 75 words; minimum length, 50 words.

37. ©The McGraw-Hill Companies, Inc., 2004 37 of 36 Going to the Net, p. 343 Access the depreciation calculator at www.fixedassetinfo.com/calculator.htm www.fixedassetinfo.com/calculator.htm This takes you to the Fixed AssetsInfo.com depreciation calculator. Complete steps 1 - 5 on page 343.