1. Accounting From A to Z Advanced Accounting St Louis / April 2007 Presenter: Kathleen Graw

2. Why do you care what I have to say? I’ve worked in a Johnstone operation for 9 years, 11 months, 27 days… I’ve been a Database user for 9 years, 11 months, 13 days… I’ve been teaching DST classes for over 4 years… I’ve been a DST consultant for accounting related jobs & issues for over 3 years…. I have a Bachelor’s & a Master’s Degree from Texas Tech & California State Universities… I think I am smart and I like to hear myself talk…

3. Class Objectives: To expose you to as many facets of the DST accounting package as possible. To demonstrate as many of those features as possible. To facilitate an exchange of ideas between users.

4. Ground Rules: PLEASE ask questions – I don’t 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 isn’t the ONLY way.

5. Kathleen’s Silver Rule: The system is really hard to break – not much that you can do that we can’t undo with a Journal Entry, Programmer’s Magic or some fast thinking!

6. Class Structure: -We have A LOT of ground to cover and FOUR hours just SEEMS like a long time. -Tried to give you as many screenshots as I could to cut down on your note taking. -One break at halfway point (15 minutes)

7. System Modules YOUR System Accounts Payable – Close is dependant on the user. Can post to future periods. General Ledger – Close is dependant on the user. Multiple GL periods can be open at the same time; however, can only run statements for current period. Accounts Receivable - Close happens on the last day of the month. Only one AR period can be open at a time. How it all ties together...

8. Men 13 Helpful tidbits

9. ft Create a folder on C drive” pick Enter “ft” at any printer select prompt Will be called “ft.txt” in C:\\pick Text file or convert to Excel format File Transfer

10. If users available – multiple ports Turn on Scroll Bar Accuterm Settings

11. Service Charges Menu 4.3

12. System Purge Parameters Menu 28.0

14. System Purge Parameters Menu 28.

15. Product/GL Control Menu 12.3.3 – Set up Product Class

16. Product/GL Control Set-up Product – Only works with Product CLASS in Product MASTER

18. Men 13 Parameters

19. Menu 12 Menu Path Focus

20. Menu 12

21. Menu 12.1

22. Menu 12.1.1

23. Menu 12.1.2

24. Menu 12.1.7

25. Nash ville, April 2006 Menu 12.1.16

26. Menu 12.2

27. Menu 12.2 Summary 12.2.7 & 12.2.8 Edit, Add or Delete Customer Classes and Types Assign Tax Rate percentages by jurisdiction *Recommend Regular Review 12.2.10 Define the Terms Code used in the system (Affects AR & AP) 12.2.11 Menu 12.2

28. Terms Code ‘NC’ M-12.2.11 New terms code of ‘NC’ assign to customers in customer master maintenance. Only allows cash or CC in OE. Prevent flagged accounts from paying by check. Requirements: Set in customer master. M-12.2.2.2, screen 2, field 23 Extra line of defense against bad checks..

29. Neat Trick – 12.2.21

30. Menu 12.3

31. Menu 12.3.2

32. Taxable & Non Taxable Customer (Cust.Mast)Invoice GOV’T = E TAXABLE = Y NON TAX = N TAXABLE = Y NO TAX TAXED Part (Prod.Det) Y Y Y N N NON TAX = N / GOV’T = E NO TAX

33. Menu 12.4

34. Chart of Accounts – ▫12.4.3 – Create /Change GL Account ▫12.4.13 – Print out listing

35. Menu 12.7 - Demonstration

36. Menu 35 Menu Path Focus

37. Menu 35

38. Menu 35.1

41. Menu 35

42. Menu 35.6

44. Aging Options M-35.6, Screen 2 field 18 Set the parameter, run through eod, see how it works. AR Aging options for system to age based on month-end, due date, or invoice date. Find the AR aging method that works best for how you do your business.

45. Aging Options cont’d: Month-end - same aging calculation as before except that the credits will not age against overdue balances. Due Date – invoices will age based on the number of days past the due date. Invoice Date – Aging will be based on the number of days since the invoice was run. Secret Option #4

46. Menu 35.19

47. Demonstration

48. Questions?

49. Menu 13 Menu Path Focus

50. Bank Reconciliation Report: 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.

51. Demonstration

52. Menu 13.2.8

53. Menu 13.20

54. Demonstration

55. Menu 13.20.8

56. Reoccurring Vouchers Enter vouchers in 13.20.8 Listing 13.20.9 (Monthly) Update 13.20.10 (Monthly)

57. Inventory Valuation

58. Detail Summary Detail vs. Summary

59. Impact Inventory (Detail)? YES NO Stock AdjustmentsX Receive in Inventory X Voucher/Accounts PayableX Month End Journal EntriesX Detail General Ledger Implications

60. Impact Inventory (Summary)? YES NO Stock AdjustmentsX Receive in Inventory X Voucher/Accounts PayableX Month End Journal EntriesX Summary General Ledger Implications

61. How to balance your inventory…

62. NO easy solution, but it can happen with: Time Effort Attention to detail

63. Monthly Reconciling EOM Journal Entries Average Cost Pieces to Valuing Inventory Time & Effort

64. 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.

65. Potential Problems (cont’d): 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.

66. Potential Problems (cont’d): 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 ‘Y’es 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.

67. Potential Problems (cont’d): 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).

68. Average Cost Calculation

69. Menu 13.20.2

70. Average Cost Impact BUT

71. Average Cost Impact 122*22.97 + (120*24.417 - 120*22.952) = 2802.34 + (2930.04-2754.24) = 2978.14/122 = 24.410 for average cost 122*24.410 + (120*24.417 - 120*22.952) = 2978.02 + (2930.04-2754.24) = 3153.82/122 = 25.850 122*25.85 + (120*23.69 - 120*22.952) = 3153.70 + (2842.80-2754.24) = 3242.26/122 = 26.578

72. Questions?

73. Inventory Valuation $$ Quantity on Hand Purchase Price Variance (PPV) Average Cost

74. Calculation Step One Step Two End Result QOH x Average Cost New Average Cost Diff. on Inv v. PO

75. QOH = 300 jugs w/ Average Cost = $60.00ea Order/Receive 200 more @ $60.00ea Average Cost still = $60.00ea Vendor Invoice = 200 @ $70.00ea Average Cost Example

76. QOH x Average Cost (400 * $60) $24,000.00 PLUS Difference on Invoice vs. PO (200*$70) – (200*60) $2000.00 _________________________ QOH (400) Average Cost Example (sold 100 jugs)

77. $65.00 New Average Cost Average Cost Example

78. Balance Sheet & Income Statement Inventory Valuation Impact Overstate Inventory $ Overstate Profits Overpay Commissions Understate Inventory $ Understate Profits Underpay Commissions Widespread Impact

79. Average Cost Impact – one SKU Inventory Value @ $60 = $24,000 @ $65 = $26,000 Understated by $2,000 Sell 400 @ $90: @ $60 = $12,000 @ $65 = $10,000 Overstated by $2000 Net Income Commissions @ 3% of GP: @ $60 = $360 @ $65 = $300 Overpaid by $60 Commissions 400 jugs

80. Average Cost Impact Inventory Value Devalued your Company by understating your inventory. Paying taxes on income that you didn’t really realize. Net Income Paid out more to sales people than you needed to and inaccurately reduced your bottom line & affected cash flow. Commissions Bad Avg. Cost

81. 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 Average Cost Impact

82. Questions?

83. EOM Inventory Procedures

84. Use Menu 13.20.2 and 13.20.3 Run Menu 13.20.7 at month end and use for reversing Journal Entry Inventory XXXXX Inv. AccrXXXXX Inventory Journal Entry #1

85. Multi Stores: EOM Account for inventory transfers S01/S02/S03 Inventory Journal Entry #2 (Can be automated)

86. J/E for Store #1 Debit Inventory 02$20960.79 Credit Inventory 01$20960.79 Inventory Journal Entry #2 Scenario One

87. Inventory Journal Entry #2 Scenario Two J/E for Store #1 Debit Inventory 02$20960.79 Credit Intercompany 02$20960.79 Debit Intercompany 01$20960.79 Credit Inventory 01$20960.79

88. Stock Adjustments Inventory Journal Entry #3 (Can be automated)

89. Questions?

90. Men 13 Inventory Processes

91. Reopening Receivers If you do it – have to reopen the first & only receiver on the PO OR It can throw out your AP/GL Reconciliation ** Doesn’t work with Dropship POs Reopening Purchase Orders

93. Physical Inventory Be sure to make note of the final variance amount that you update since you will need to make the journal entry on the books to balance the detail to the summary. You debit/credit inventory and an income statement account with this variance amount.

94. Buyback Corp is set up as customer 00000. Field 17 (Inv.sfer) in 12.2.2.3 is set to "1." This is so that the invoices will not show on the Invoice and Credit Memo Register and will not figure in the Gross Profit Report. Menu 19.7a &7b are updated so that these transactions can be seen in the inventory history. Also, A/R is not created and the G/L is not automatically updated. Since the General Ledger is not automatically updated, you have to do a journal entry to relieve inventory. We credit inventory and debit “buyback expense”. Then when we get the credit in from Corp, we credit buyback expense. The difference left in the account and gives us an idea of what expense we incurred (write off of dead inventory) as a result of the buyback.

95. Buyback The sales analysis files are not updated so they do not show up in sales. This is important since we don't want to pay 1% to Corp on the buyback sales. **An additional note along those same lines: the report that you get off at the end of the day that shows the invoices to customer 0000 at sell price. So using the report, figure out the average cost per invoice by using the sell and the GP figures. This is the number that you want to relieve inventory by (with journal entry). There may be multiple invoices for the buyback. It usually doesn't happen on just one invoice. Usually all the invoices for the buyback are generated the same day; however, if not, just make sure to stay in contact with the warehouse so that you know whenever an invoice is generated.

96. Daily Transfer Register for XX/XX/XX

97. Men 13 Warranty

98. Warranty Accounts

99. Widget Avg. cost = $10 Sale Price = $12 Credit from Vendor = $25 Warranty & the General Ledger

100. Warranty Reconciling EOM Balancing Unclaimed Warranties Claimed Warranties – AR Inventory?

101. Warranty & the General Ledger Warranty AR Warranty Clearing

102. Warranty & the General Ledger

103. Men 13 Sales Tax

104. EOM Sales Tax Report

105. Men 13 Excise Tax

106. Discussion

107. Men 13 General Ledger

108. Menu 14

109. 14.1.1 (for each company) (Menu 12.4.3) Add to financial statements Setting up a GL account

110. Demonstration

111. Menu 12.4.3

112. Menu 14.1.1

113. Setting up Financial Statements

114. Menu 14.1

115. Journal Entries 1.Enter JE 14.1.3 or 14.1.4 2.Print & Review JE 14.1.13 & 14.1.14 3.Update Trial Balance 14.2.4

116. Demonstration

117. Menu 14.1.3

118. Reoccurring Journal Entries Enter JE 14.1.5 Review JE 14.1.15 Update JE 14.1.16 Update Trial Balance 14.2.4

119. Demonstration

120. Menu 14.5

121. Menu 14.2

122. Menu 14.3

123. REAL TIME GENERAL LEDGER!!! *Have to run 14.2.4 first *AR & AP periods have to be current

124. Upgrade Suggestions

125. Discussion Topics Handling of Tanks R22 Pricing AP process, paper trail, filing

126. Session Evaluations