1. Chapter 11: Accounts Payable

2. ©The McGraw-Hill Companies, Inc., 2004 2 of 58 Accounts Payable Chapter 11 begins Part 3 of the book: Peachtree Complete Accounting 2003 for Merchandising Businesses. Merchandising businesses are retail stores that resell goods and services. In Chapter 11, you will set up a merchandising business called Jessica's Sales & Service. Jessica’s Sales & Service is a partnership owned by Jessica Phelps and Ellen Smith. Ms. Phelps and Ms. Smith divide their income equally.

3. ©The McGraw-Hill Companies, Inc., 2004 3 of 58 Software Objectives, p. 367 Set up company information for Jessica's Sales & Service. Enter the following general ledger information: chart of accounts and account beginning balances. Enter the following accounts payable information: vendor defaults and vendor records. Enter the following inventory information: inventory defaults, inventory items and assembly records, and inventory beginning balances. Record accounts payable transactions: merchandise purchases, purchase orders, cash purchases, and purchase returns. Make four backups: two backups for Jessica's Sales & Service; one backup for Exercise 11-1; one backup for Exercise 11-2.

4. ©The McGraw-Hill Companies, Inc., 2004 4 of 58 Web Objectives, p. 367 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 3. Complete the first web exercise in Part 3, “Accounting List.” Use a word processing program to write summaries of the websites that you visited.

5. ©The McGraw-Hill Companies, Inc., 2004 5 of 58 Accounts Payable Transactions, p. 368 A vendor sends Jessica's Sales & Service an invoice (bill) You enter the invoice as a purchase (Tasks/Purchases-Receive Inventory). When it is time to pay the invoice, you select the invoice(s) from the vendor you want to pay and print a check (Tasks/Payments).

6. ©The McGraw-Hill Companies, Inc., 2004 6 of 58 Peachtree Tips Peachtree Tips In Chapter 11, you set up two merchandising businesses: Jessica's Sales & Service and the end- of-chapter sales and service company (Exercise 11- 1 on pp 419-425) The companies that you set up in Chapter 11, continue in Chapters 12, 13 and 14. If the general ledger account (GL account column) is not displayed on the Purchases/Receive Inventory window, check the global options. In the “Hide General Ledger Accounts” section, all boxes must be unchecked (see p. 52, steps 1-4; top of page 394).

7. ©The McGraw-Hill Companies, Inc., 2004 7 of 58 Peachtree Tips (continued) Peachtree Tips (continued) What if you want to use Jessica's Sales & Service, on a computer that does not have this company set up in Peachtree? What if you want to use Jessica's Sales & Service, on a computer that does not have this company set up in Peachtree? Start Peachtree. Select “Open an existing company.” If Jessica’s Sales & Service is not listed on the “Open” list, click. If the company is listed on the “Company Name” list, select it. (Remember, you may have used your first name Sales & Service.) Then, restore data from your back up file. Once you restore data, Jessica’s Sales & Service will start where you left off the last time you recorded data for this company. If Jessica’s Sales & Service is not listed either on the “Open” list or when you select, use the New Company Set Up Wizard to set up the company. On the “Company Information” screen, complete the “Company Name” field only. Then, click on Next repeatedly until you get to the Finish button. Restore your data from your back up file and you can start where you left off the last time you recorded data for this company.

8. ©The McGraw-Hill Companies, Inc., 2004 8 of 58 Backing Up Chapter 11 Disk Backup Name KB Page Nos. 16 of 18 A:\Chapter 11 Begin 93 KB 391-392 A:\Chapter 11 105 KB 414-415 A:\Exercise 11-1 93 KB 425 A:\Exercise 11-2 99 KB 427 TOTAL KB 390 KB.

9. ©The McGraw-Hill Companies, Inc., 2004 9 of 58 Chapter 11 Topics 1. Software & web objectives, p. 367 2. Getting started, pp. 369-372 a. Using the setup checklist: general ledger, pp. 372-378 b. Using the setup checklist: account payable, pp. 378-383 c. Using the setup checklist: inventory items, pp. 383-391 3.Backing up your data, p. 391-392 4.Accounts Payable Tasks: Purchases/Receive Inventory, p. 392 a. Using the purchase journal: “Purchases/Receive Inventory” window, pp. 393-397 b.Additional purchases, p. 398

10. ©The McGraw-Hill Companies, Inc., 2004 10 of 58 Chapter 11 Topics (continued) 5. Cash purchases: “Payments” window, pp. 398-400 a. Printing the check, pp. 400-404 6. Purchase returns, pp. 404-405 a. Paying a vendor, minus a return of merchandise, pp. 406-408 7.Paying specific vendor invoices, pp. 408-410 a. Editing payments, p. 410 8. Printing the purchase journal and cash disbursements journal, pp. 411-412

11. ©The McGraw-Hill Companies, Inc., 2004 11 of 58 Chapter 11 Topics (concluded) 9. Vendor ledgers, 413 10. Printing the General Ledger Trial Balance, pp. 413- 414 11. Backing up Chapter 11 data, pp. 414-415 12. Internet activity, p. 415 13. Summary and review, pp. 415-416 a.Going to the net, p. 416 b.True/make true questions, pp. 417-419 c.Exercise 11-1, pp. 419-425 d.Exercise 11-2, pp. 425-427 e.Chapter 11 index, p. 428

12. ©The McGraw-Hill Companies, Inc., 2004 12 of 58 Getting Started, pp. 369-370 Complete steps 1 –6 on pp. 369 and 370. Then compare your screen with the one shown on p. 370. Make sure that “Sales & Service Company” is highlighted. Click on. Continue with steps 9-15 on p. 371.

13. ©The McGraw-Hill Companies, Inc., 2004 13 of 58 Monthly accounting periods, p. 371 Complete step 15 on p. 371. Select “2003” as the year. Check this screen carefully. You cannot change it later. Continue with steps 16, 17, and 18 on page 372.

14. ©The McGraw-Hill Companies, Inc., 2004 14 of 58 Setup Checklist, p. 372 The Setup Checklist is shown on page 372.

15. ©The McGraw-Hill Companies, Inc., 2004 15 of 58 Pages 373 - 376 Read the instructions on pages 373 – 376. Then, complete the steps shown.

16. ©The McGraw-Hill Companies, Inc., 2004 16 of 58 Select Period, p. 376 Select “From 12/01/02 through 12/31/02” as your Chart of Accounts Beginning Balance period so that your journals will start on January 1, 2003. Peachtree posts on the last day of the month. Check this screen carefully. You cannot change the period for entering beginning balances later. Click on.

17. ©The McGraw-Hill Companies, Inc., 2004 17 of 58 Continue on pp. 377-378 After recording the chart of accounts beginning balances, complete steps 7 and 8 on page 378. Read the “Using the Setup Checklist: Accounts Payable” instructions on page 378.

18. ©The McGraw-Hill Companies, Inc., 2004 18 of 58 Vendor Defaults, pp. 378-379 After completing steps 1- 5 on p. 378, the “Vendor Defaults” window appears. Continue reading the instructions on p. 379. Then, complete the steps shown on pp.379-380.

19. ©The McGraw-Hill Companies, Inc., 2004 19 of 58 “Maintain Vendors” pp. 380-381 To add a vendor, complete the steps on page 380. The “Maintain Vendors” window is shown on page 381. Click on the “Purchase Defaults” tab. Then, continue with step 8a on page 381.

20. ©The McGraw-Hill Companies, Inc., 2004 20 of 58 Purchase defaults tab, p. 381 After completing step 8a on page 381, this screen appears. Click on the “Save” icon. Then, continue with the steps shown on pages 382 and 383.

21. ©The McGraw-Hill Companies, Inc., 2004 21 of 58 Setting up Inventory Items, pp. 383-384 Complete steps 1 – 4 on p. 384. Continue with steps 5 – 6o on pp. 384-386.

22. ©The McGraw-Hill Companies, Inc., 2004 22 of 58 Maintain Inventory Items, pp. 387-389 After completing step 6o on p. 386, the “Maintain Inventory Items” window appears. Continue with the steps shown on pages 387, 388, and 389.

23. ©The McGraw-Hill Companies, Inc., 2004 23 of 58 Inventory Beginning Balances, pp. 388-389 After completing step 8e on p. 389, the “Inventory Beginning Balances” screen appears. Continue with the steps shown on pages 389 and 390.

24. ©The McGraw-Hill Companies, Inc., 2004 24 of 58 Setup Checklist, p. 390 This screen illustration is shown on page 390.

25. ©The McGraw-Hill Companies, Inc., 2004 25 of 58 Backing Up Your Data, pp. 391-392 Complete steps 1-9 on pages 391-392 to back up your data. The back up name is Chapter 11 Begin.

26. ©The McGraw-Hill Companies, Inc., 2004 26 of 58 Accounts Payable Tasks: Purchases/Receive Inventory, p. 392 Read page 392. Complete the steps shown on page 393.

27. ©The McGraw-Hill Companies, Inc., 2004 27 of 58 Purchases/Receive Inventory, pp. 394-396 After completing the steps on pp. 394 and 395 the “Purchases/Receive Inventory” window appears. Click on the “Journal” icon to see the Purchase Journal.

28. ©The McGraw-Hill Companies, Inc., 2004 28 of 58 Accounting Behind the Screens, p. 396 The Purchase Journal screen, p. 396. Complete the steps shown on pages 396 and 397. Record the “Additional Purchases” transactions on p. 398.

29. ©The McGraw-Hill Companies, Inc., 2004 29 of 58 Cash Purchases: “Payments” Window, pp. 398-399 Read the information about Cash Purchases: “Payments” Window on page 398. Complete steps 1 – 9 on pages 398–399.

30. ©The McGraw-Hill Companies, Inc., 2004 30 of 58 Payments, p. 400 After completing step 9 on page 399, the “Payments” window appears.

31. ©The McGraw-Hill Companies, Inc., 2004 31 of 58 Printing the Check, pp. 400-401 Follow steps 1 – 3 on pp. 400-401. Click on. Complete step 5 on p. 401.

32. ©The McGraw-Hill Companies, Inc., 2004 32 of 58 Print Checks, p. 402 In the First check number box, type 2030. Peachtree automatically sequences check numbers after the first one is entered. Click on the “Print” icon. The textbook illustration shows a preprinted check form; your check will print on plain paper.

33. ©The McGraw-Hill Companies, Inc., 2004 33 of 58 Select payment, pp. 403-404 Click on the “Abc Open” icon to see if you have issued Check Nos. 2030 through 2035. The “Select Payment” window is shown on p. 404. Complete steps 9 and 10 on p. 404.

34. ©The McGraw-Hill Companies, Inc., 2004 34 of 58 Purchase Returns, pp. 404 and 405 Complete steps 1 – 8 on pp. 404-405. The “Purchase/Receive Inventory” window appears. Click on the “Save” icon to post, then “Close.”

35. ©The McGraw-Hill Companies, Inc., 2004 35 of 58 Paying a Vendor, Minus a Return of Merchandise, p. 406 Complete steps 1–4 on p. 406.

36. ©The McGraw-Hill Companies, Inc., 2004 36 of 58 Completed “Payments” window, p. 407 After completing step 5 on p. 407, the completed “Payments” window appears. Complete steps 6 – 10 on pages 407 and 408.

37. ©The McGraw-Hill Companies, Inc., 2004 37 of 58 Journal entry for payment to a specific vendor, p. 408 Account Name DebitCredit Accounts Payable/Rene Burton Fabrics 120.00 Merchandise Inventory 2.40 San Diego Bank 117.60

38. ©The McGraw-Hill Companies, Inc., 2004 38 of 58 How the purchases and payments tasks work together with payments, p. 409

39. ©The McGraw-Hill Companies, Inc., 2004 39 of 58 Pay vendor invoice 201, pp. 409 and 410 Complete steps 1 – 6 on pages 409 and 410. Remember to click on Save to post when you are finished.

40. ©The McGraw-Hill Companies, Inc., 2004 40 of 58 Editing Payments, p. 410 Display the “Payments” window. Select the “Abc Open” icon. If necessary, highlight one of the vendors or payments. Then click on. Complete steps 4 and 5 on p. 410.

41. ©The McGraw-Hill Companies, Inc., 2004 41 of 58 Printing the Purchase Journal, p. 411 Complete steps 1 – 4 on p. 411 to print the purchase journal. Compare your Purchase Journal printout to the one shown on p. 411.

42. ©The McGraw-Hill Companies, Inc., 2004 42 of 58 Printing the Cash Disbursements Journal, p. 412 Complete step 5 on p. 412 to print the cash disbursements journal. Compare your Cash Disbursements Journal printout to the one shown on p. 412.

43. ©The McGraw-Hill Companies, Inc., 2004 43 of 58 Printing the Vendor Ledgers, p. 413 Complete steps 1 and 2 on p. 413 to print the vendor ledgers. Compare your Vendor Ledgers printout to the one shown on p. 413.

44. ©The McGraw-Hill Companies, Inc., 2004 44 of 58 Printing the General Ledger Trial Balance, pp. 413-414 Complete steps 1 and 2 on p. 413 to print the general ledger trial balance. Compare your General Ledger Trial Balance printout to the one shown on p. 414.

45. ©The McGraw-Hill Companies, Inc., 2004 45 of 58 Backing Up Chapter 11 Data, pp. 414 and 415 Complete steps 1 – 9 on pages 414 and 415 to back up Chapter 11 data. Use Chapter 11 as the back up name. Remember, Chapters 11, 12, 13, and 14 work together. The data saved in Chapter 11 will be used to complete Chapter 12.

46. ©The McGraw-Hill Companies, Inc., 2004 46 of 58 Glossary of Terms Chapter 11

47. ©The McGraw-Hill Companies, Inc., 2004 47 of 58 Vendors, p. 368 Merchandising businesses purchase the merchandise they sell from suppliers known as vendors.

48. ©The McGraw-Hill Companies, Inc., 2004 48 of 58 Accounts payable transactions, p. 368 Purchases of merchandise for resale, assets, or expenses incurred on credit from vendors. When Jessica's Sales & Service makes purchases on account from vendors, the transactions are known as accounts payable transactions.

49. ©The McGraw-Hill Companies, Inc., 2004 49 of 58 Accounts payable, p. 368 The money a company owes to a supplier or vendor.

50. ©The McGraw-Hill Companies, Inc., 2004 50 of 58 Accounts payable ledger, p. 392 Shows the account activity for each vendor. Same as vendor ledger.

51. ©The McGraw-Hill Companies, Inc., 2004 51 of 58 Vendor ledger, p. 392 Shows the account activity for each vendor. Same as accounts payable ledger.

52. ©The McGraw-Hill Companies, Inc., 2004 52 of 58 Purchase Journal, p. 392 In Peachtree, the Purchases/Receive Inventory task is the purchase journal. In the Purchase Journal, or “Purchases/Receive Inventory” window, you can enter invoices from vendors or enter and print purchase orders.

53. ©The McGraw-Hill Companies, Inc., 2004 53 of 58 Average cost, p. 397 A method of computing inventory. See weighted-average method on the next slide.

54. ©The McGraw-Hill Companies, Inc., 2004 54 of 58 Weighted-average method, p. 397 This method of inventory pricing divides the cost of the inventory purchased by the quantity of merchandise purchased. This unit cost is multiplied by the ending inventory

55. ©The McGraw-Hill Companies, Inc., 2004 55 of 58 Cash disbursements journal, p. 398 All payments of cash are recorded in the cash disbursements journal. In Peachtree, the Payments task is the cash disbursements journal.

56. ©The McGraw-Hill Companies, Inc., 2004 56 of 58 Audit trail, p. 409 The path from the source document to the accounts.

57. ©The McGraw-Hill Companies, Inc., 2004 57 of 58 Internet Activity, p. 415 1 Go to the book’s website at www.mhhe.com/yacht2003 www.mhhe.com/yacht2003 2 In the “Student Center” list, link to Internet Activities. 3 Link to WEB EXERCISES PART 3. 4 Complete the “ACCOUNTING LIST – Chapter 11” exercise. Read steps 1-4. 5 Follow the steps shown on the book’s website to complete this Internet activity. 6 Using a word processing program, write a brief summary of what you find. Include all appropriate website addresses.

58. ©The McGraw-Hill Companies, Inc., 2004 58 of 58 Going to the Net, p. 416 Access Peachtree’s NetSource at http://www.peachtree.com/netsource_news/pcw/archive.cfm? File=news_nov00.htm http://www.peachtree.com/netsource_news/pcw/archive.cfm? File=news_nov00.htm http://www.peachtree.com/netsource_news/pcw/archive.cfm? File=news_nov00.htm 1. When is real-time posting the preferred method? 2. When is batch posting the preferred method? 3. How do you change posting methods?