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Chapter 9: Maintaining Accounting Records for Service Businesses

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

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Chapter 9: Maintaining Accounting Records for Service Businesses

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  1. Chapter 9:Maintaining Accounting Records for Service Businesses

  2. Service Business Records • Chapter 9 begins Part 2 of the book—Peachtree Complete Accounting 2006 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 Richards, Designer. 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. Software Objectives, p. 239 • Set up company information for Matt Richards, Designer • 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: 1) back up Chapter 9 beginning data; 2) back up October data; 3) back up Exercise 9-1; 4) back up Exercise 9-2. ©The McGraw-Hill Companies, Inc.

  4. Web Objectives, p. 239 • Use your Internet browser to go to the book’s website. (Go online to www.mhhe.com/yacht2006). • 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. Peachtree Tips • The chart of accounts beginning balances must be set for the preceding month—September 1 through 30, 2006. See Entering Chart of Accounts Beginning Balances text pages 255 through 261. Specifically, review steps 2, 3, and 4 on pages 259-261. • The businesses that you set up in Chapter 9 are continued in Chapters 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; for example, the shortened company name for Matt Richards, Designer is matricde. The hard drive location of Matt Richards, Designer is C:\Program Files\Sage Software\Peachtree\ Company\matricde. (If a unique name is used, the shortened company name will differ.) • See detailed steps for Using Windows Explorer to see the file size on text pages 261 and 262. <Tips continued on next slide> ©The McGraw-Hill Companies, Inc.

  6. Peachtree Tips (concluded) • You can restore to an existing company—one that is previously set up—or restore a new company, bypassing the process of creating a new company. The Restore Wizard includes two options on the Select Company window: 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, you can start where you left off the last they used Peachtree. ©The McGraw-Hill Companies, Inc.

  7. Backing Up Chapter 9 • In this textbook, detailed steps are shown for backing up to Peachtree’s default hard drive location: C:\Program Files\Sage Software\Peachtree\Company\matricde [or, your company’s shortened name]. The chart on page 238 shows you the size of the backup files. If you want to backup to external media, such as a floppy disk, you should check the file size before backing up. A blank, formatted floppy disk holds 1,440,000 bytes of data (about 1440 KB), CD-Rs, DVD-Rs, Zip disks, and USB media have larger capacities. ©The McGraw-Hill Companies, Inc.

  8. Chapter 9 Topics • Software & web objectives, p. 239 • Getting started, New Company Setup Wizard, pp. 240-247. • Company maintenance information, pp. 247-248 • Chart of Accounts, p. 248 a. Delete accounts, pp. 248-249 b. Change accounts, pp. 250-251 c. Add accounts, p. 251-253 d. Printing the chart of accounts, pp. 253-255 5. Entering chart of accounts beginning balances, pp. 255-261 6. Using Windows Explorer to See the File Size, pp. 261-262 7. Backing up company data, pp. 262-265 • Restoring company data, pp. 266-268 • Recording entries in the cash receipts journal and cash disbursements journal, pp. 269-276 ©The McGraw-Hill Companies, Inc.

  9. Chapter 9 Topics (continued) • Account reconciliation, pp. 276-279 • Displaying the Cash Account Register, pp. 280-282 • Printing the cash receipts journal, p. 283 • Printing the cash disbursements journal, pp. 283-285 • Editing journal transactions, p. 285 • Previewing the general ledger trial balance, p. 286. ©The McGraw-Hill Companies, Inc.

  10. Chapter 9 Topics (concluded) • Printing financial statements, pp. 287-288 • Backing up Chapter 9 data, p. 289 • Internet Activity, p. 289 • Summary and Review, p. 290 a. Going to the net, p .291 b. Multiple choice questions, pp. 291- 293 c. Exercise 9-1, pp. 293-296 d. Exercise 9-2, pp. 296-299 e. Chapter 9 index, p. 300 ©The McGraw-Hill Companies, Inc.

  11. New Company Setup – Introduction, p. 240 • Start Peachtree in the usual way. From the startup window, click on Create a new company. Read the information on this window. • Click <Next>. ©The McGraw-Hill Companies, Inc.

  12. New Company Setup – Company Information, p. 241 • Check the information you typed. Make sure you use your first and last name so that your name will appear on all printouts. • Click on <Next.> ©The McGraw-Hill Companies, Inc.

  13. New Company Setup – Chart of Accounts, p. 242 • Accept the default for Set up a new Retail, Service, Construction, Manufacturing or Distribution company using a simplified chart of accounts is selected. • Click on <Next.> ©The McGraw-Hill Companies, Inc.

  14. New Company Setup – Chart of Accounts, p. 242 • The Available Charts of Accounts list shows five business types. Click on Service Company to highlight it. • Click on <Next.> ©The McGraw-Hill Companies, Inc.

  15. New Company Setup –Accounting Method, p. 243 • Accept the default for Accrual. • Click on <Next.> ©The McGraw-Hill Companies, Inc.

  16. New Company Setup –Posting Method, p. 243 • Accept the default for Real Time posting. • Click on <Next.> ©The McGraw-Hill Companies, Inc.

  17. New Company Setup –Accounting Periods, p. 244 • Accept the default for 12 monthly accounting periods. • Click on <Next.> ©The McGraw-Hill Companies, Inc.

  18. New Company Setup – Accounting Periods, pp. 244- 245 • Complete step 14 on page 244. Make sure that your window matches the one shown after step 14 on page 245. The information cannot be changed later. • Click on <Next.>. ©The McGraw-Hill Companies, Inc.

  19. Defaults window, step 16, p. 245 • When the Defaults window appears, click on <Next>. Complete steps 16 and 17 on page 245. Then, the Congratulations window appears. ©The McGraw-Hill Companies, Inc.

  20. New Company Setup – Finish, p. 246 • Read the information on the Congratulations window. • Click <Finish>. ©The McGraw-Hill Companies, Inc.

  21. New Company Setup – Finish, p. 246 • The Peachtree Today-Setup Guide window and menu bar for Matt Richards, Designer (or, your first and last name) appears. • In the Peachtree Today list, select . • Click on the field next to Display Peachtree Today each time this company is opened to uncheck the field. • Click , then click on Peachtree Today’s title bar to close the window. The menu bar for Matt Richards, Designer appears. ©The McGraw-Hill Companies, Inc.

  22. Subfolder for Matt Richards Designer, p. 247 • A subfolder is set up on your hard drive for Matt Richards, Designer— C:\Program Files\Sage Software\Peachtree\ Company\matricde. ©The McGraw-Hill Companies, Inc.

  23. Company Maintenance Information, pp. 247-248 • From the menu bar, select Maintain; Company Information. • Compare these fields to the company information set up on text page 241. They should agree. Notice that the Directory field shows you the directory where the currently opened company is stored. Make any needed corrections. • Click OK to return to the menu bar. • Continue with the Chart of Accounts section on page 248. ©The McGraw-Hill Companies, Inc.

  24. Chart of Accounts, p. 248 • Click on Maintain; Chart of Accounts. In the Account ID field, click on the magnifying-glass icon. Double-click on Account No. 1150 Allowance for Doubtful Account. • Click on the Delete icon. Then, select <Yes>. Complete the steps on pages 248 through 253 to delete, change, and add accounts. Compare your chart of accounts to the one shown on text page 254. ©The McGraw-Hill Companies, Inc.

  25. Entering Chart of Accounting Beginning Balances, pages 255-259 • Follow steps 1-3 on pp. 256 and 257 to select the beginning balance period. (The Select Period window is shown below step 3 on p. 257). • Make sure you have selected From 9/1/06 through 9/30/06. You cannot change this later. Then, click on <OK>. ©The McGraw-Hill Companies, Inc.

  26. Chart of Accounts Beginning Balances window, p. 258 • Make sure that your beginning balances are as of September 30, 2006. 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 259. ©The McGraw-Hill Companies, Inc.

  27. Balance Sheet, p. 260 • The balance sheet shown on page 260 represents the beginning balances for Matt Richards, Designer. • Compare your balance sheet amounts to those shown on page 260. ©The McGraw-Hill Companies, Inc.

  28. Using Windows Explorer to See the File Size, pp. 261-262 • Go to Windows Explorer. Double-click on the folder for Peachtree. The default program and data path is C:\Program Files\Sage Software\Peachtree\ Company. • Right-click on the subfolder for matricde. Left-click on Properties. This window is shown on p. 261. ©The McGraw-Hill Companies, Inc.

  29. Backing up company data, p. 262-265 • After you set up your company and modified the chart of accounts, you should back up your data. • Read the information on pages 262 and 263. Then, follow the steps on pages 263-265 to back up your Chapter 9 beginning data. • The suggested file name for backing up is Chapter 9 Begin. This is shown on page 264, step 4. ©The McGraw-Hill Companies, Inc.

  30. Restoring company data, p. 266 • 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 page 266 about restoring data. Then, complete the steps on pages 266 through 268 to restore data. ©The McGraw-Hill Companies, Inc.

  31. Maintain Global Options, p. 269 • 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 <Ok>. 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 windows. ©The McGraw-Hill Companies, Inc.

  32. Select a Cash Account, p. 270 • Click on Tasks, then Receipts. Click on the down arrow, then select Checking Account from the drop-down list. • Click <OK>. The Receipts window appears. ©The McGraw-Hill Companies, Inc.

  33. Steps 3 – 13, pp. 270-271 • Complete steps 3 through 13 on pages 270-271. • Then compare your window to the one shown after instruction 13 on page 271. This is also the next slide. ©The McGraw-Hill Companies, Inc.

  34. Receipts window, p. 271 • After completing steps 3-13 on pp. 270 and 271, your window should look like the one below. • Click Save to post. Read steps 14 and 15 on page 272. ©The McGraw-Hill Companies, Inc.

  35. Select a Cash Account, p. 272 • 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 <OK>. The Write Checks window appears. Complete steps 3 through 10 on pages 272-274. ©The McGraw-Hill Companies, Inc.

  36. Write Checks window, p. 273 • After completing steps 1 – 8 on pages 272 and 273 the completed Write Checks window appears. • Click Save to post. Read steps 9, 10, and the Comment on page 274. Then, continue with the work on pages 275 and 276. ©The McGraw-Hill Companies, Inc.

  37. Account Reconciliation, pp. 276-279 • After following steps 1- 6 on page 278, account reconciliation is completed. (The Account Reconciliation window is shown on p. 279.) • Click OK when you are finished. ©The McGraw-Hill Companies, Inc.

  38. Displaying the Cash Account Register, pp. 280-282 • After following steps 1 and 2 on pages 280, the Account Register appears showing all your entries. • The Account Register lists payments and receipts similarly to the check register on pages 275 and 276. Read a., b., and c. on pages 280 and 281 to use drill-down. ©The McGraw-Hill Companies, Inc.

  39. Cash Account Register, p. 282 • After completing the steps shown on pages 280 and 281, the Cash Account Register is shown. • Read the information and follow the steps on page 282. ©The McGraw-Hill Companies, Inc.

  40. Printing the Cash Receipts Journal, p. 283 • 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 283. ©The McGraw-Hill Companies, Inc.

  41. Printing the Cash Disbursements Journal, pp. 283-285 • 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 284. ©The McGraw-Hill Companies, Inc.

  42. Editing Journal Transactions, p. 285 • 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. Previewing the General Ledger Trial Balance, p. 286 • Follow the steps on page 286 to preview the general ledger trial balance. • Compare your display with the general ledger trial balance shown on page 286. ©The McGraw-Hill Companies, Inc.

  44. Printing Financial Statements, p. 287 • Follow the steps on page 287 to print the balance sheet and income statement. • Compare your printouts with the balance sheet shown on p. 287 and the income statement shown on page 288. • To print an income statement without zero balances, uncheck the Show Zero Amounts box on the <Standard> Income Statement Options window. • Follow steps 1-6 on page 289 to back up Chapter 9 data. The suggested filename is Chapter 9 October. ©The McGraw-Hill Companies, Inc.

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

  46. Source Documents, p. 240 • Source documents are used to show written evidence of a business transaction. For Matt Richards, Designer, the source documents used are his checkbook register and bank statement. ©The McGraw-Hill Companies, Inc.

  47. Printout of Chart of Accounts, p. 254 • 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. Bank reconciliation, p. 279 • Peachtree’s Account Reconciliation feature allows you to adjust Mr. Richard’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. Internet Activity, p. 289 ©The McGraw-Hill Companies, Inc.

  50. Going to the Net, p. 291 Access information about the chart of accounts at www.allianceonline.org. In the Search field, type chart of accounts; click . Link to What should our chart of accounts include?, and then link to What are the Features of a Simple Chart of Accounts? The URL for this website is www.allianceonline.org/FAQ/financial_management/what_should_our_chart.faq/#features • List the standard order that accounts are presented on the balance sheet and income statement. • How are account numbers organized? Why are they organized that way? ©The McGraw-Hill Companies, Inc.

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