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CASE STUDY Journal Entries in an ERP This assignment reviews basic accounting entries for a series of transactions, emphasizes the integration of journals to the financial Product SAP ERP GBI Release 6.04 MOTIVATION PREREQUISITES statements, and introduces students to these journal entries in SAP ERP Level Undergraduate Graduate Beginner Focus Accounting Entries in Manual and Automated Systems Integration of Accounting Journals Authors Jim Menschen Nancy Jones Contributors Patti Brown Version 1.0 This assignment is a review of general financial accounting principles and procedures. In the first part of the assignment, you will create general journal entries for a series of transactions in Excel. For the last part of the assignment you will enter your \"manual\" journal entries into the SAP ERP system. The SAP system will then be used to produce a set of financial statements (balance sheet and income statement). Primary learning objectives are: Review the concepts of the beginning financial accounting course Review the accounting cycle Work with a manual accounting information system Secondary learning objective: Before you use this case study, you should be familiar with navigation in the SAP system. You should also be familiar with Excel or other spreadsheet programs. Prior completion of the sample problem provided with this assignment is also recommended. . NOTES This case study uses the Global Bike Inc. (GBI) data set, which has exclusively been created for SAP UA global curricula. SAP AG CASE STUDY SAP AG Review basic Excel skills Page 2 CASE STUDY Assignment Overview This assignment is a review of general financial accounting principles and procedures. In this assignment you will create general journal entries for a series of transactions. You will also show the impact of these transactions as a Pivot Table and create a trial balance and adjusted trial balance. You will then close out the income statement accounts as you would at year-end. For the last part of the assignment you will explore how your journal entries might be created in an automated system by entering your \"manual\" journal entries into the SAP ERP system. The SAP system will then be used to produce a set of financial statements (balance sheet and income statement). Global Bike Inc. (GBI) We will be working with a company called Global Bike Inc., (GBI). You may have seen GBI in other classes if you have completed other SAP assignments. Information regarding GBI follows. Company History Global Bike Inc. has a pragmatic design philosophy that comes from its deep roots in both the offroad trail racing and long-distance road racing sports. Nearly 20 years ago, its founders designed their first bikes out of necessitythey had races to win and the bikes that were available at the time did not perform to their extremely high standards. So, they took matters into their own hands and built legendary bikes that would outlast and outperform the competition. From these humble origins, Global Bike Incorporated was born and continues to deliver innovative high-performance bicycles to the world's most demanding riders. This heritage of entrepreneurial spirit and quest for design perfection is still the cornerstone of GBI's corporate philosophy. GBI produces bikes for the most demanding competitorswhether the competition is on pavement or dirt, for money, fame or just bragging rights. John Davis earned his racing scars in the mountain racing circuit in America, where he won numerous downhill and cross-country championships. Early on, John realized that the mass-produced bicycles available were inadequate in many ways for the type of racing he was doing. So, John stripped four of his old bikes down to the bare metal and rebuilt them into a single \"Frankenstein\" bike that he rode to win the national championship. Once news of his Frankenstein bike got out, John's friends and even his competitors began asking him to build them a Frankenstein bike too. While recovering from an injury in 1990, John started producing the first series of Frankenstein bikes in his garageeach one custom-built from cannibalized parts from other bikes. As more and more orders came in, John successfully expanded Frankenstein Bikes from his garage operations into a full-blown manufacturing facility in Dallas and began producing custom trail bikes, which he sold through a network of specialized bike dealers throughout the country. At nearly the same time, halfway around the world in Heidelberg, Germany, Peter Schwarz was studying engineering and competing in regional touring races on weekends. In between his races and studies, Peter worked at a bike shop in Heidelberg, fixing student bikes and tuning the touring bikes that he and his friends rode for competitions. As Peter's reputation as a fierce competitor and mechanical wizard grew, he also began to design and build road bikes based on an ultra-light composite frame that he had created for one of his engineering courses. Peter's innovative use of SAP AG Page 3 CASE STUDY carbon composite materials allowed him to build a frame that was significantly stronger and one tenth the weight of competing frames. As a student, Peter did not have a great deal of financial resources, so he partnered with a local company that manufactured his frame designs as a contract manufacturer. Soon, racers all over Europe were using Peter's frames and he started Heidelberg Composites to market and design frames, which a contract manufacturer on a larger scale would fabricate. Heidelberg Composites sold its frames to specialized bike stores throughout Europe and directly to racing teams, eventually becoming the leader in lightweight touring frames in Europe. Through a twist of fate, Peter and John met each other in 2000 and immediately recognized their mutual passion for performance and complimentary business models. Each had been looking for a partner in another racing field and each had been looking for a partner in a different market. They quickly realized that a merger between their two companies would be extremely synergistic and that the combination of their product lines and regional distribution channels would generate a great deal of efficiencies. So, in 2001, Heidelberg Composites and Frankenstein Bikes merged to form Global Bike Incorporated. Today, John and Peter share the responsibilities for managing GBI's growing organization as co-CEO. John is responsible for sales, marketing, service & support, IT, finance and human resources groups and Peter is responsible for research, design, procurement and manufacturing groups from an organizational reporting perspective. GBI is a world-class bicycle company serving the professional and \"prosumer\" cyclists for touring and off-road racing. GBI's riders demand the highest level of quality, toughness and performance from their bikes and accessories. Product Development Product development is the most critical element of GBI's past and future growth. GBI has invested heavily in this area, focusing on innovation, quality, safety and speed to market. GBI has an extensive innovation network to source ideas from riders, dealers and professionals to continuously improve the performance, reliability and quality of its bicycles. In the touring bike category, GBI's handcrafted bicycles have won numerous design awards and are sold in over 10 countries. GBI's signature composite frames are world-renowned for their strength, low weight and easy maintenance. GBI bikes are consistently ridden in the Tour de France and other major international road races. GBI produces two models of their signature road bikes, a deluxe and professional model. The key difference between the two models is the type of wheels used, aluminum for the basic model and carbon composite for the professional model. SAP AG Page 4 CASE STUDY GBI's off-road are also recognized as incredibly tough and easy to maintain. GBI trail bikes are the preferred choice of world champion off-road racers and have become synonymous with performance and strength in one of the most grueling sports in the world. GBI produces two types of off-road bike, a men's and women's model. The basic difference between the two models is the smaller size and ergonomic shaping of the women's frame. GBI also sells an accessories product line comprised of helmets, t-shirts and other riding accessories. GBI partners with only the highest quality suppliers of accessories that will help enhance riders' performance and comfort while riding GBI bikes. The accessories list is shown here as trading goods. Information System When the company first started, a manual accounting system was put in place. However, the company has decided that it needs to computerize its accounting process to be more efficient. In addition, in order to expand their sales to additional wholesale markets, Global Bike, Inc. (GBI) must have EDI (electronic data interchange) capabilities by July 1. A project team has been established to meet this deadline and the computerization of the accounting system is the first step in implementation of the company's new information system and their link to global partners. GBI uses a perpetual inventory system to account for both product line inventories, bicycles and accessories, as well as raw materials and work-in-process. Consultants have configured the new computer system and it is ready to use. The books of the company were closed on December 31st to prepare for the transition to the new system. The account balances are now ready to be transferred to the new computer system. GBI will run parallel systems during January; that is, they will record transactions in both the manual system and their new computerized system to make sure the new system is set up properly. This is a standard business practice that reduces the risks associated with implementing new systems. Chart of Accounts for Global Bike, Inc. The chart of accounts is a means of organizing general ledger accounts for grouping or sorting and to generate financial statements. Generally a unique numeric code (although alphanumeric can also be used) is given to an account based on its type. A block of code may be set aside for specific types of accounts. For instance, in the case of GBI, account numbers 100000 through 109999 are reserved for \"cash\" or liquid asset accounts. The entire set of codes and blocks of code is called the chart of accounts. Global Bike's chart of accounts follows: SAP AG Page 5 CASE STUDY G/L Account 100000 110100 110150 110200 200600 200900 200910 200920 200930 210000 211000 212000 215000 216000 220000 220110 220210 220310 220400 220500 220600 220700 300100 300200 300300 300400 300500 300600 300700 300800 310000 320000 321000 322000 329000 329100 330010 600000 610000 620000 630000 640000 650000 650100 700000 720000 720100 SAP AG G/L Acct Long Text Bank Account Accounts Receivable (Direct Posting Account) Allowance for Bad Debts Interest Receivable Inventory-Operating Supplies Inventory-Raw Materials (Direct Post) Inventory-Finished Goods (Direct Post) Inventory-Trading Goods (Direct Post) Inventory-Semi-finished Goods (Direct Post) Prepaid Insurance Prepaid Supplies Prepaid Advertising Prepaid Rent Deposits on Purchases Notes Receivable Land (Direct Post) Production Machinery, Equip & Fixtures (Dir.Post) Accumulated Depreciation-Machinery (Direct Post) Office Furniture Accumulated Depreciation-Office Furniture Office Equipment and Computers Accumulated Depreciation - Office Equipment Payables-Income Taxes Accounts Payable (Direct Posting Account) Payables-Interest Payables-Short-Term Notes Payables-Long-Term Notes Payables-Commissions Payables-Salaries and Wages Accrued Expenses Goods Receipt / Invoice Receipt Account Accrued Tax - Output Accrued Tax- Input Unearned Revenues Common Stock Additional Paid-in-Capital Retained Earnings (Direct Post) Sales Revenue Sales Discount Miscellaneous Revenue Revenue Deductions Gain or Loss on Sale of Assets Customer Service Revenue Customer Service Revenue Settlement Labor Raw Material Consumption Expense Finished Product Consumption Expense Page 6 CASE STUDY 720200 720300 740000 740100 740200 740300 740400 740500 740600 740700 740800 740900 741000 741200 741300 741400 741500 741600 741700 741800 741900 742000 742100 760000 760100 770000 780000 SAP AG Trading Good Consumption Expense Semi-Finished Consumption Expense Supplies Expense Telephone and Internet Expense Legal and Professional Expense Rent Expense Insurance Expense Payroll Expense-Office Payroll Expense-Administrative Sales Expense Tax Expense - Property Tax Expense- Income Miscellaneous Expense Bad Debt Expense Information Technology Expense Account Production Order Variance Expense Account Utilities (electricity & phone) Expense Manufacturing Output settlement Manufacturing Output Settlement Variance Depreciation Expense Advertising Expense Vendor Discounts Missed Shipping Expense Purchase Price Difference Production Variance Research and Development Cost of Goods Sold Page 7 CASE STUDY Detailed Assignment Requirements The next few pages show the balances in GBI accounts as of December 31st and then the descriptions of events occurring during January for which you are to make general journal entries in a manual accounting system. Your manual accounting system needs to include a general journal, Pivot Tables (that acts as a General Ledger), and a trial balance, all of which will be generated in Excel, (see the sample problem for the format). After you have created your entries in your manual system, you will enter all the data into the SAP ERP system. When you enter your data into the SAP system the resulting financial information from the manual system and the SAP system should match exactly. Assignment Steps 1. 2. 3. 4. 5. Record the daily transactions if appropriate, (some events may not involve journal entries), as general journal entries into Excel. Summarize the effects of the journal entries in a Pivot Table summary. Link the Pivot Table into your Excel worksheet as a trial balance. You should create links between your spreadsheets to expedite this process and minimize the risk of an error in data entry. Looking over the answer to the sample problem may be helpful in reviewing your Excel skills. The next step is to record the adjusting entries into the general journal and then summarize them into a Pivot Table and then the trial balance. Record closing entries in your trial balance as if this were a year-end close. (Do not enter the closing entries in your General Journal). Prepare the SAP ERP system for data entry. Now use the SAP ERP system to make all above entries using the general ledger system in SAP. This should be done in a series of steps as follows: i. Examine the GLXX chart of accounts where XX is your assigned SAP student login ID#. (Whenever you see XX in the instructions, substitute your SAP login ID#.) ii. Record beginning account balances in the SAP general ledger. This should be done as one composite journal entry (the first journal entry). Use January 1, as the journal entry date for the beginning account balances. Be sure to compare this to your Excel spreadsheet to make sure the entries are correct. iii. Display the trial balance (you should compare this to your manual entries). If the trial balance does not match your manual entries, research the errors and make necessary corrections. iv. Record the daily transactions for January in the SAP general ledger (do each journal entry as a separate entry, not as one giant composite entry, be sure to use appropriate dates - this allows for a good audit trail). v. Display the trial balance (you should compare this to your manual entries). vi. Record the adjusting entries. vii. Display the trial balance (you should compare this to your manual entries). viii. Simulate closing the books as of January 31 using the SAP utility. (Do not enter closing entries into the general ledger. These entries would be done automatically through the SAP month-end closing function.) Instructions for using the SAP ERP system start on page 13 of this document. SAP AG Page 8 CASE STUDY Account Balances as of December 31st 100000 110100 110150 200600 200900 200910 200920 210000 212000 220110 220210 220310 300200 300700 300800 320000 329000 329100 330010 SAP AG Bank Account Accounts Receivable (Direct Posting Account) Allowance for Bad Debts Inventory-Operating Supplies Inventory-Raw Materials (Direct Post) Inventory-Finished Goods (Direct Post) Inventory-Trading Goods (Direct Post) Prepaid Insurance Prepaid Advertising Land (Direct Post) Production Machinery, Equip & Fixtures (Dir.Post) Accumulated Depreciation-Machinery (Direct Post) Accounts Payable (Direct Posting Account) Payables-Salaries and Wages Accrued Expenses Accrued Tax - Output Common Stock Additional Paid-in-Capital Retained Earnings (Direct Posting) Debit Balance $277,518 92,670 Credit Balance 2,500 8,832 52,000 281,298 66,474 5,000 1,100 528,000 915,000 408,000 48,000 94,313 1,200 3,000 1,000,000 52,870 618,009 Page 9 CASE STUDY Events During January Event 1 Date January 3 Description of Event Employees are paid monthly on the first business day of the month for work done in the previous month. (Ignore payroll taxes for this assignment.) Accounting wrote and distributed the paychecks. 2 GBI received $60,000 in safety product inventory and $40,000 in raw materials from Dallas Bike Basics. This inventory was ordered on December 28. The payment terms for the invoice total of $100,000 are net 10 days. GBI paid the CWX shipping company $1500 with a manual check for the shipment of the goods. The bill of lading showed that the safety product inventory arrived in 6 boxes with a total weight of 50 lbs. and the raw materials came on a pallet and weighed 60 lbs. 3 Windy City Bikes in Chicago, IL ordered $22,500 of bicycle accessories from GBI. The cost of the accessories (to GBI) is $15,000. The goods were shipped to Windy City immediately via UPS using Windy City's UPS shipping number. The terms of payment for Windy City's order are 3/10 net 30 days. 4 January 7 GBI received payment of $24,000 from Northwest Bikes in Seattle, WA for the balance due on their account. 5 January 10 GBI's account on the utility company website is updated at the end of each month when the meter is read. GBI uses this data to accrue the expenses at the end of each month (in this case on December 31st.) This allows recognition of the expense in the correct period. Expenses are usually accrued at the end of the month as \"Accrued Expenses\". GBI paid the December utility bill via the company's automatic electronic bill pay program. 6 7 January 11 8 SAP AG GBI's advertisement in the English language edition of Italian Cycling Journal was published today. This ad was prepaid at the end of July for six months of advertising, August through January, (Five months of advertising have already been used.) The office manager in San Diego ordered $400 of office (operating) supplies from Staples. While on the way back from a delivery, one of the warehouse staff picked up the Staples order and brought it to GBI's office. GBI has an account with Staples and payment terms are net 10. Operating supplies expense is figured at the end of the month determined by the amount of supplies used during the month. GBI ordered $75000 in raw materials from Space Bike Composites in Houston, TX. Terms of payment to Space Bikes are net 30. Page 10 CASE STUDY 9 10 January 12 11 January 13 12 January 17 13 14 15 16 January 18 17 January 19 18 19 January 24 SAP AG GBI received payment from Windy City Bikes for their order from January 3. Windy City paid the invoice amount less the discount for paying within 10 days. GBI paid for the inventory order (via bank transfer) that they received from Dallas Bike Basics back on January 3. In order to better track inventory, GBI ordered a bar-coding and tracking system which will be installed and tested by Computer Specialists, Inc. (CSI). The system will allow employees to track inventory using mobile devices and special software which will link into their new computerized accounting system. The barcode system costs $6,000 (including sales tax) and CSI will charge GBI $1,300 for the installation and tests. GBI paid a deposit of $2,000 on the system and the remainder is due and payable when the system is installed. GBI will classify the bar-coding system as \"Production Machinery, Equipment and Fixtures\". GBI paid an invoice from Lightbulb Accessory Kits for ordered goods that were received on December 20. The amount of the invoice from Lightbulb is $15,890 due net 30. The city of Denver will be hosting a decathlon at the end of February. The event is expected to create demand for high quality bikes. Rocky Mountain Bikes in Denver, CO placed an order with GBI for $128,000 worth of bicycles to be delivered immediately. Rocky Mountain will pay the shipping. The bikes cost GBI $78000. GBI shipped the order immediately so that Rocky Mountain can start promoting the bikes. Because Rocky Mountain is a good customer, GBI is giving them special terms of net 45 days on this order. GBI received raw materials inventory ordered from Space Bike Composites January 11. Shipping charges of $600 were included in the invoice from Space Bike. GBI received notice that Bunky's Bicycle Emporium had declared section 13 bankruptcy which meant GBI would not be able to collect the $3,350 that Bunky's owed them. GBI received a $90,000 funds transfer from Silicon Valley Bikes in Palo Alto for the balance due on their account. GBI paid Staples for the office supplies they received January 11. SoCal Bikes in Irvine, CA placed an order for $2,750 in bicycle helmets for a special event in February. The merchandise cost GBI $1,300. SoCal sent a truck to the GBI distribution center in San Diego, CA and picked up the merchandise directly from GBI's warehouse. Terms of payment are net 30. (Don't forget to charge sales tax of 8.25% for this order.) Beantown Bikes in Boston, MA placed an order with GBI for $27,000 in bicycles. The cost of the bicycles is $17,000. Beantown Bikes is a new customer. Its buyers saw GBI's booth at a trade Page 11 CASE STUDY 20 January 25 21 January 26 22 January 27 23 24 25 January 31 26 27 28 show. Because Beantown is a new customer, they must either wait until their credit can be approved or pay for the order before GBI will ship the bikes to them. GBI has been offered the opportunity to advertise in the Bicycle Times online magazine for a reduced price if they pay for three months in advance. In light of the upcoming Tour de France, the advertising is a great opportunity for GBI to get additional recognition. The advertising will start in February. GBI wrote a check for $9,000 for three months of advertising. GBI received notification from their bank that Beantown Binkes had transferred funds into their account for their prior order, so GBI's warehouse personnel shipped Beantown's order. Beantown will be responsible for paying Fed-X $400 for shipping the order. The county approved GBI's building plans for their new warehouse. Estimated building costs are $1,100,000 which will be funded via a mortgage from Bank of America. GBI plans to break ground on the new building April 18th of this year. GBI sent a $28,000 check to Night Rider Aluminum Products for an order of bicycle parts GBI received December 30th. Big Apple Bikes in New York City is expanding to another location in New York and needs to stock the new location. GBI received a phone order from Big Apple for $230,000 in bicycles and $108,500 in bicycle accessories and safety gear at special discount prices. The cost of the bicycles in this order is $170000 and the cost of the accessories is $65,000. Big Apple will have a contract trucking company pick up the order when it is ready. The order is sent to GBI's warehouse for picking and packing, which may take a couple days. Payment terms to Big Apple for this order are net 30. GBI pays sales tax once a quarter via the state's electronic filing and payment system. GBI filed its return and paid its sales tax for the quarter ending December 31. GBI paid February's rent of $4,000 for the office and warehouse space in San Diego. CSI installed and tested the new barcode system. The warehouse manager approved the installation and commented that she thinks it works great. GBI wrote a check to CSI for the balance owed and gave it to the installer. Big Apple's truck arrived at GBI's warehouse and picked up the order from January 27th. Adjustment information as of January 31, not already given in the original transaction(s): 1. Based on prior experience, GBI estimates that approximately 2 % of the accounts receivable balance will become bad debt. GBI writes off bad debts as they occur and SAP AG Page 12 CASE STUDY recognizes bad debt expense based on analyzing accounts receivable as an adjusting entry each month. 2. As a control measure, physical inventories are taken on a periodic basis alternating between the raw materials inventory, finished goods inventory and trading goods inventory. Physical inventory of the finished goods inventory was taken at the end of January. It was determined that the value of the finished goods merchandise on hand was $17,000. 3. GBI counted the office (operating) supplies on hand after the close of business on the last day of the month and determined the cost of the unused office supplies to be $1000. 4. Production Machinery, Equipment and Fixtures were placed in service on January 1, 2013, with no salvage value. The bar-code system has a 5-year life and no salvage value. GBI depreciates fixed assets on a straight-line basis and those assets acquired in the first half of the months are depreciated for the entire month, while fixed assets placed in service during the last half of the month are not depreciated until the second month. Depreciation is rounded to the nearest dollar and assets are depreciated on a monthly basis (i.e. number of days in the month is not of consequence). 5. GBI used the Internet to review the monthly charges for utilities the business consumed during January. Based on the Internet report, the amount to be billed by the utilities company for January usage is the same as was billed for December. 6. Liability insurance for the six-month period ending on February 28 was paid last September on the first of the month. Liability insurance is assumed to be utilized uniformly over the six-month policy period. 7. GBI needs to recognize the wages expense for the month. Since all employees are paid salaries and no changes have been made, this amount is the same as the previous month salaries. (For purposes of this assignment, ignore manufacturing and assume all labor costs will be expensed.) SAP AG Page 13 CASE STUDY Preparation of your Company Since we are using the global GBI data set, we do not have purely customized configurations for our AIS assignments. Many different curricula reside on GBI and thus, we need to do some minor preparations for our AIS curricula to run. In this assignment, there are two main areas to focus our attention prior to using the assignment in class: tolerance levels and the chart of accounts. Changing employee tolerances The current settings for the default tolerance group in GBI are $500,000 per document and $100,000 per open item for all employees. These tolerances will not allow you to post the beginning balances in the G/L accounts. Following are the instructions for preparing your SAP system: Tcode: SPRO Navigation: Financial Accounting (New) Financial Accounting Global Settings (New) Document Tolerance Groups Define Tolerance Groups for Employees Choose your company code and click on details SAP AG Page 14 CASE STUDY Change the document limit to $5,000,000 and the amount per open item to $1,000,000 and save SAP AG Page 15 . CASE STUDY Changing or adding the G/L master record Retained Earnings direct post needs to be added to your company code. Rather than creating the retained earnings direct post account from scratch, we will only need to copy it from company code US00, a simple and quick process. Accounting -> General Ledger -> Master Records -> G/L Accounts -> Individual Processing -> Centrally (FS00) To copy the direct posting retained earnings from US00, enter the following information: Field Input G/L Account 330010 Company Code USXX SAP AG Page 16 CASE STUDY Choose With Template Field Input G/L Account 330010 Company Code US00 The data will copy over from US00. Save. Following are the instructions for entering the accounting data into the SAP system: Your instructor will tell you the SAP server (instance) and the client you will be using. Your login is AIS-XXX (where the XXX is your assigned SAP student login ID number - this number will be supplied to you by your instructor). Your instructor will also supply your initial password to you. You will be asked to change the password when you first log on. Change it and be sure to remember this new password. That will be the password you will use on your subsequent logons for SAP assignments. Your company code is USXX (where the XX is your assigned number). Do not use any company code other than the one assigned to you. The first thing that you should do is to examine the chart of accounts. You will find that the SAP system chart of accounts has more general ledger accounts than those listed above. For simplicity, we have limited the number of accounts used in this assignment. This does not mean that you need to use all the accounts above, but that they are potentially the accounts you will use for this assignment. In addition, normally Accounts Receivable (A/R), Accounts Payable (A/P), Fixed Assets and Inventory accounts should not be posted to via journal entries in the general ledger. These accounts are linked to subsidiary accounts, which are posted via other functions within the order-to-cash, production, and procure-to-pay business processes. For instance, a sale will be processed in the order-to-cash process SAP AG Page 17 CASE STUDY and when the sale is billed on account, it will process directly through the customer's account in the A/R sub-ledger (subsidiary account). The GBI configuration of SAP does not allow users to post directly to the general ledger for A/R, A/P, Fixed Assets and Inventory. Instead the system passes the subsidiary ledger data on to the general ledger automatically. By disallowing direct posts, the system maintains the integrity of these accounts; that is, the total of the subsidiary accounts will always match the totals of the accounts in the general ledger. For purposes of this assignment, we have created accounts that will allow you to post directly to A/R, A/P, Fixed Assets and Inventory. They are noted by a suffix in the description, \"(Direct Post)\" or \"(Direct Posting Account)\". Even though any of the accounts in the system chart of accounts could be used by the GBI accounting system, limit yourself to the accounts listed in the chart of accounts on pages 5 and 6 of this assignment document. SAP AG Page 18 CASE STUDY To Look at the Chart of Accounts Note: The transaction code is noted in parenthesis following the explicit menu path for this and subsequent menu instructions. For example, the transaction code for this task is S_ALR_87012326. Accounting Financial Accounting General Ledger Information System General Ledger reports Master Data Chart of Accounts Chart of Accounts (S_ALR_87012326) Field Input Chart of accounts GLXX Execute Think about the following: Examine your chart of accounts. What are some of the accounts that are shown in your chart of accounts in SAP, but not listed on pages 5 and 6 of this document? Why do you think those accounts are included in the SAP chart of accounts? To enter transactions in General Ledger The next step is to enter the beginning balances and the transactional journal entries. In SAP this is called general ledger accounting because as you enter the journal entries into the system they are immediately posted to the general ledger accounts. Accounting Financial Accounting General Ledger Posting Enter G/L Account Document (FB50) The first time you log in and start doing journal entries or anything else that requires designation of a company code, you may see an input box as follows. Note: Make sure the company code is your assigned company code!!! To Change CC: EDIT Change Company Code. Be sure you are entering Journal entries into YOUR assigned Company Code. You grade depends on it! SAP AG Page 19 CASE STUDY Enter Your Beginning Balances before you begin entering the January transactions! Use a January 1 document and posting date for your beginning balances. Note: You do not need to enter anything for accounts with zero balances. GL Account Posting Field Input Doc. Date The transaction date (NOT TODAY\"S DATE!!!) Posting Date Same as the document date (NOT TODAY\"S DATE) Currency USD Reference Enter the Event # (See Page #9-11 for event numbers...) Doc. Header Text Enter a brief description of the event 1st Line and as many lines as you need to enter your transaction: Field Input G/L account The account number for posting the transaction D/C Debit or Credit depending on the transaction Amount in Doc. Currency The transaction amount ... And so on for each part of your journal entries. Note: typically in business, debits are entered before credits. Click on Enter Read any messages and then click on Enter again to acknowledge the messages. Look at the total debits and total credit fields. Debits should be equal to credits and the green light in the upper right part of the screen should be lit. Click on Simulate button. o This shows the accounting transaction you are going to post. o The period should be 1 which is January for GBI Save or Post the document icon. Do Not Park your document by mistake. The system will assign each journal entry a unique document ID number. This is similar to what you did in your manual journals. Write down the SAP document number in your Excel sheet as you enter each transaction. LOOK -> SAP AG Note: GBI has configured SAP to allow for assignment of expenses to cost centers for purposes of managerial accounting reports. If the system asks you for a cost center while you are entering transactions, enter cost center NAAD10XX (administration) in Page 20 CASE STUDY the cost center field for the pertinent expense account. (You may have to scroll to the right to see the cost center field.) If you parked your documents by mistake, then here is the procedure you use to release these documents: Accounting Financial Accounting General Ledger Document Parked Documents Post/Delete (FBV0) Click on Document list on the application tool bar Enter Company code: USXX Fiscal Year: this year If you are not the user who parked the document, clear the field \"entered by\" Execute. A list of parked documents will appear. Select the document you wish to post by highlighting it Click on the details icon. Click on the Save as Completed icon. As you make the entries into the system, you should check to be sure that they were entered correctly. I would suggest that you first enter the beginning balances and then check them by viewing the journal entries using one of the reports below or a report of your choosing. If an entry states that it is parked, that means you made a mistake and must un-park the document (see above for the unparking procedure). A parked document will not show in the general ledger until you unpark it and post it. Also, if you post the transaction with a date outside of the proper reporting period, it may not show in your report or will show in the incorrect month. After you check the correctness of the beginning entries, then you can enter the journal entries for the month and compare the results to your unadjusted trial balance in Excel. If the results don't match, then resolve the issue before posting the adjusting entries. LOOK ********** Remember that you cannot delete erroneous entries in SAP. Deletion of the journal entry would erase the audit trail and make it more difficult to track transactions => and analyze the results. If you make a mistake, you have to reverse the entry and then enter the correct entry. Do not enter or post the closing entries. They will be handled automatically by the system close procedure. SAP AG Page 21 CASE STUDY Viewing Trial Balance Accounting Financial Accounting General Ledger Information System General Ledger Reports (New) Account Balances General G/L Account Balances G/L Account Balances Chart of Accounts Input Chart of Accounts GLXX Company Code USXX Fiscal Year Current fiscal year Reporting Periods 01 to 01 You may even want to print your trial balance if you have access to a printer for SAP or you can save the reports in Excel, Word or html formats. Viewing Journal Entries Information System General Report Selection Financial Accounting General Ledger Reports Document General Line Item Journal Line Item Journal (S_ALR_87012291) Field Input Company Code USXX Fiscal Year Current fiscal year Execute Simulating the Closing of the Profit and Loss accounts For a manual accounting system at the end of an accounting period, it is necessary to make a journal entry that zeroes out the nominal accounts and eventually closes them to the retained earnings account. However, in a computerized system the system can essentially do this by the push of a button. In this section you will simulate this process. In SAP executing the following transaction does the closing: Accounting Financial Accounting General Ledger Periodic Processing Closing Carry Forward Balance Carryforward (New) (FAGLGVTR) Field Input Ledger 0L Company Code USXX SAP AG Page 22 CASE STUDY Carry Forward Fiscal Year Current fiscal year Select Test Run Execute Note that nothing transfers during this procedure because we are not at the end of the year yet. However, this activity shows just how easy it is to close the books with a fully integrated ERP system. Had we actually been at year-end, all the closing entries for the nominal (income statement) accounts and the transfer of the annual profit/loss to retained earnings would have posted automatically in the general ledger. In addition, the balance sheet account balances would have been moved forward to the new fiscal year. Assignment Submission Save your Excel workbook with all four spreadsheets: General Journals, Pivot Tables, Trial Balance, and COA as lastname_firstname_SAPloginID.xlsx. (Your SAP login ID is the three-digit number you were assigned in order to access the system; for instance 050.) Submit your Excel workbook via Blackboard electronically prior to the due date. **Do -NOT- e-mail me your assignment. You must \"SUBMIT\" your assignment. Don't know how to do that? Help> How to SUBMIT assignment in Blackboard There is nothing to submit for your SAP work. I will grade it from the system directly. SAP AG Page 23