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 codes 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. Below is GBIs chart of accounts followed by the account balances as of December 31, 20YY-1.

NOTE:

20YY = 2015 the current year

20YY -1 = 2014 the prior year.

(Note: Balances on December 31, 20YY-1 are the same as the balances on January 1, 20YY).

Chart of Accounts GBI GL00

G/L Account	G/L Acct Long Text
100000	Bank Account
110100	Accounts Receivable (Direct Posting Account)
110150	Allowance for Bad Debts
110200	Interest Receivable
200600	Inventory-Operating Supplies
200900	Inventory-Raw Materials (Direct Post)
200910	Inventory-Finished Goods (Direct Post)
200920	Inventory-Trading Goods (Direct Post)
200930	Inventory-Semi-finished Goods (Direct Post)
210000	Prepaid Insurance
211000	Prepaid Supplies
212000	Prepaid Advertising
215000	Prepaid Rent
216000	Deposits on Purchases
220000	Notes Receivable
220110	Land (Direct Post)
220210	Production Machinery, Equip & Fixtures(Dir.Post)
220310	Accumulated Depreciation-Machinery (Direct Post)
220400	Office Furniture
220500	Accumulated Depreciation-Office Furniture
220600	Office Equipment and Computers
220700	Accumulated Depreciation - Office Equipment
300100	Payables-Income Taxes
300200	Accounts Payable (Direct Posting Account)
300300	Payables-Interest
300400	Payables-Short-Term Notes
300500	Payables-Long-Term Notes
300600	Payables-Commissions
300700	Payables-Salaries and Wages
300800	Accrued Expenses
310000	Goods Receipt / Invoice Receipt Account
320000	Accrued Tax Output
321000	Accrued Tax- Input
322000	Unearned Revenues
329000	Common Stock
329100	Additional Paid-in-Capital
330010	Retained Earnings (Direct Posting)
600000	Sales Revenue
610000	Sales Discount
620000	Miscellaneous Revenue
630000	Revenue Deductions
640000	Gain or Loss on Sale of Assets
650000	Customer Service Revenue
650100	Customer Service Revenue Settlement
700000	Labor Expense
720000	Raw Material Consumption Expense
720100	Finished Product Consumption Expense
720200	Trading Good Consumption Expense
720300	Semi-Finished Consumption Expense
740000	Supplies Expense
740100	Telephone and Internet Expense
740200	Legal and Professional Expense
740300	Rent Expense
740400	Insurance Expense
740500	Payroll Expense-Office
740600	Payroll Expense-Administrative
740700	Sales Expense
740800	Tax Expense - Property
740900	Tax Expense- Income
741000	Miscellaneous Expense
741100	Warranty Expense
741200	Bad Debt Expense
741300	Information Technology Expense Account
741500	Utilities Expense
741600	Manufacturing Output settlement
741700	Manufacturing Output Settlement Variance
741800	Depreciation Expense
741900	Advertising Expense
742000	Vendor Discounts Missed
742100	Shipping Expense
760000	Purchase Price Difference
760100	Production Variance
770000	Research and Development
780000	Cost of Goods Sold

Global Bike, Inc.

Account Balances as of December 31, 20YY-1

These need to be input into SAP as your first journal entry.

See Enter Journal Entry Instructions.

		Debit Balance	Credit Balance
100000	Bank Account	$367,584
110100	Accounts Receivable (Direct Posting Account)	109,420
110150	Allowance for Bad Debts		5,800
200600	Inventory-Operating Supplies	700
200900	Inventory-Raw Materials (Direct Post)	32,000
200910	Inventory-Finished Goods (Direct Post)	281,298
200920	Inventory-Trading Goods (Direct Post)	66,474
210000	Prepaid Insurance	7,500
212000	Prepaid Advertising	3,200
220110	Land (Direct Post)	500,000
220210	Production Machinery, Equip & Fixtures(Dir.Post)	815,000
220310	Accumulated Depreciation-Machinery (Direct Post)		203,750
300200	Accounts Payable (Direct Posting Account)		48,250
300700	Payables-Salaries and Wages		115,000
300800	Accrued Expenses		988
320000	Accrued Tax Output		3,063
329000	Common Stock		975,000
330010	Retained Earnings (Direct Posting)		831,325
	TOTAL	$2,183,176	$2,183,176

Monthly Transactions and Closing Transactions

Next, you will be reviewing a series of events that have occurred during the month of January 20YY and recording and posting as appropriate the necessary journal entries.

For each event listed on the subsequent pages, you should prepare a journal entry to reflect the event and record this journal entry in SAP. It might be helpful to document all of the entries on paper first and then book them in SAP.

See the document Enter Journal Entry Instructions for instructions on how to enter the transactions.

A couple of reminders and hints about transactions:

In general, this company does not recognize revenue until a product is shipped

In general, this company does not record ownership until an item is received

Trading Goods these are items that are purchased for resale to customers such as bicycle accessories or safety products.

Sales tax is only recorded on a sale if noted below.

DESCRIPTION OF EVENTS OCCURRING during the month of January, 20YY

#	Date	Description of Event
1	January 3	Employees are paid monthly on the first business day of the month for work done in the previous month. The total payroll for the previous month is $100,000. (Ignore payroll taxes for this assignment.) Accounting wrote and distributed the paychecks.
2	January 3	GBI received payment of $20,750 from Northwest Bikes in Seattle, WA for the balance due on their account.
3	January 3	Windy City Bikes in Chicago, IL ordered $23,525 of bicycle accessories (trading goods inventory) from GBI. The cost of the accessories (to GBI) is $13,280. The goods were shipped to Windy City immediately via UPS using Windy Citys UPS shipping number.
4	January 7	GBI received $16,544 in safety product inventory ( trading goods) and $18,119 in raw materials from Dallas Bike Basics. This inventory was ordered on December 28.
5	January 10	GBI paid the December 2014 accrued utility bill of $988. NOTE: GBIs 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.
6	January 10	GBIs advertisement in the English language edition of Italian Cycling Journal was published today. This ad was prepaid at the end of October 2014 for six months of advertising, November 2014 through April 2015, (Two months of advertising have already been used through December 2014.)
7	January 10	GBI received payment from Windy City Bikes for their order from January 3.
8	January 12	GBI paid for the inventory order that they received from Dallas Bike Basics January 7.
9	January 17	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 $14,000 due net 30.
10	January 17	Rocky Mountain Bikes in Denver, CO placed an order with GBI for $128,130 worth of bicycles to be delivered immediately. Rocky Mountain will pay the shipping. The bikes cost GBI $79,441. GBI shipped the order immediately so that Rocky Mountain can start promoting the bikes.
11	January 20	GBI received notice that Bunkys Bicycle Emporium had declared section 13 bankruptcy which meant GBI would not be able to collect the $1,460 that Bunkys owed them.
12	January 20	GBI sent a $15,000 check to Night Rider Aluminum Products for an order of bicycle parts GBI received December 30th.
13	January 31	GBI pays sales tax once a quarter via the states electronic filing and payment system. GBI filed its return and paid $3,063 in sales tax for the prior quarter ending December 31.

Using these account balances and additional adjustment information below, record adjusting journal entries. Adjustment information as of January 31, 20YY not already given in the original transaction(s):):

Production Machinery, Equipment and Fixtures were placed in service on January 1, 2010, are expected to last 20 years with no salvage value. GBI depreciates fixed assets on a straight-line basis and those assets acquired in the first half of the month 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).

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 $996

GBI counted the office supplies (Inventory 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 $480. Any difference is expensed to supplies expense.

Liability insurance for the six month period October 1, 2014 - March 31, 2015 in the amount of $15,000 was paid September 1, 2014. Liability insurance is assumed to be utilized uniformly over the six month policy period. Determine any January 20YY expense.

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. Ignore payroll taxes).