Full completion of Systems Understanding Aid 8th edition (Blue Version).

Systems Understanding Aid (SUA) Guidelines, Hints, and Cautions

After the Systems Understanding Aid (SUA) is completed and graded, the SUA is yours to keep and use for future reference. You should mark up all parts of the materials as you consider appropriate, except for journals, ledgers and documents. The journals, ledgers, and documents will be handed in for grading and should include only the information stated in the SUA requirements. You are to do your own SUA project. Copying anothers work (even in part) or allowing another to copy your work is not allowed. However, you are encouraged to consult with your classmates as you work on the SUA project, and may compare answers and discuss differences after each student with whom you are consulting (including yourself) has completed each major segment.

Help is available from your instructor. Please do not hesitate to ask.

Due Dates

Dates as stated in the SUA schedule in a separate document

The first two submissions are not mandatory, but you get 1 extra point for each submission;

All submissions are due before the class is dismissed unless otherwise stated in the instructions.

First steps:

Use this handout as a guide, along with the Instructions in the Instructions, Flowcharts, and Ledgers booklet and the resources in your Reference booklet.

Print your name on the outside of your SUA packet envelope AND each of the individual booklets inside.

Your packet contains:

Documents Folder

Instructions, Flowcharts, and Ledgers booklet

Reference booklet (This is useful for the ENTIRE course, and beyond!)

Journals booklet

5 file tabs for filing documents after you have recorded each transaction. These have no bottom the SUA envelope acts as the bottom. So dont lift them out of the envelope after you have started using them for filing, or your filed documents will fall out!

Look CAREFULLY through the contents of the SUA packet, including scanning through each booklet and the Documents Folder. Part of this assignment is to be organized. It is essential to keep the materials in your packet organized to avoid trouble with the assignment. If you have already shuffled the documents in the Documents Folder, put them back in order by Document number (at top right). If more than one document has the same number, group all documents with that number together. Skim through the Reference booklet. This contains valuable material that you will use this throughout the SUA project and this course.

Look in the Documents Folder at Document #1. You will use the BLUE transaction list (Document #1). Discard the green list (also numbered as Document #1)

Go to page 10 in the Instructions, Flowcharts, and Ledgers booklet. You will use Option 1 on page 10. (You may cross out Option 2 at the top of page 11.) You will record the necessary journal and subsidiary ledger entries for each transaction cycle (Option 1) instead of recording all the transactions chronologically (Option 2). Additional instructions are given below.

Read pages 3 through 16 in the Instructions, Flowcharts, and Ledgers booklet. Pay attention to what you read, since you need this basic information to understand the SUA. You will refer to this section throughout the SUA assignment. It is a good idea to make notes in the instruction margins, including questions for class and the Discussion Board.

After the first steps (above) its time to start!

1. Be sure to read through the instructions and reference materials first (see above). Reading the requirements will save you time and confusion and prevent you from doing things wrong. You will probably spend the first hour just trying to figure out what you are doing. After that you will get the hang of things and the SUA project will go more smoothly.

2. Read through the transactions first (BLUE transactions list) many are related. The instructions on what to do and when to do it, as well as other necessary information to complete the transactions, are scattered throughout the instructions. This is intentional, so that the case resembles what would happen in the real world.

3. Go through the BLUE transactions list, and, as directed on page 10 of the Instructions, classify each transaction as ONE of the following: Revenue Cycle (REV) [This includes Sales & Cash Receipts.], Expenditures Cycle (EXP) [This includes Purchases & Cash Disbursements, as well as Payroll.]. Then go through the transactions again, and mark all transactions that actually involve cash ($) receipts or disbursements (checks are considered to be cash!), so that youll easily be able to determine if a transaction should be entered in the Cash Receipts Journal or Cash Disbursements Journal.

REVENUE CYCLE (Sales & Cash Receipts)

1. Since we are doing Option 1, you will do ALL of the transactions involving the Revenue Cycle first. Follow the seven-step process for recording a transaction on pp. 11-12 of the Instructions.

2. Follow the flowcharts (see the Instructions, Flowcharts, and Ledgers booklet plus pp. 27-32 in the Reference booklet). The flowcharts will tell you what documents to fill out, where to file

them, and who initials them. (Hint: Go through the flowcharts and highlight initials, since these controls will be graded!) Also use the Reference booklet to help you understand the transactions. You MUST pay attention to the smallest details as well as the big picture in order to do the SUA correctly. There are NO shortcuts. Work slowly and methodically. Dont rush!

3. Use a pencil to fill out journals and ledgers, so that you may easily make corrections. You may fill out the documents in pencil do not spend a lot of time making them neat, you are graded on internal controls more than neatness. (The documents must be legible, however!) Authorizations/approvals are an important control and will be graded.

4. Pay attention to the "YES" and "NO" signs to the left of each transaction. See page 11 of the Instructions for more information. If you don't watch this, you will be looking for documents that don't exist and you will use up your checks for the wrong transactions!

5. I strongly recommend that you follow the Suggestions for Efficiency on page 9 of the Instructions.

6. Once you have completed all of the transactions on the BLUE transactions list related to the Revenue Cycle, complete Month-End Procedures 1, 2, 5, 6, and 7 on pages 12 13 of the Instructions for sales and cash receipts only. Then prepare an Accounts Receivable Aged Trial Balance using Excel (Year-End Procedure 6 on page 15 of the Instructions.)

7. Reality check: You should have finalized the Sales and Cash Receipts journals, and have posted the results of these journals to the general ledger. You should have posted any unposted journal entries in the general journal to the general ledger. You should have created an Accounts Receivable Aged Trial Balance using Excel. (All schedules and statements are to be prepared using Excel.) [It is also a good idea to do a trial balance of the general ledger accounts at this point in time just to make sure the accounts are in balance. Although this test trial balance isnt turned in, it will save you headaches later.]

EXPENDITURES CYCLE

1. Next do all of the transactions involving the Expenditure Cycle (Purchases & Cash Disbursements, and all of the Payroll transactions.) Follow Steps 1 through 5 above.

2. Once you have completed all of the transactions on the BLUE transactions list related to the Expenditures Cycle, complete all of the Month-End Procedures not yet completed on pp. 12 13 of the Instructions. Then prepare an Accounts Payable Trial Balance using Excel (Year-End Procedure 6 on page 15 of the Instructions.).

3. Reality check: You should have finalized the Purchases, Cash Disbursements, and Payroll journals, and have posted the results of these journals to the general ledger. You should have posted any unposted journal entries in the general journal to the general ledger. You should have finalized the Accounts Receivable, Accounts Payable, and the Employee Earnings subsidiary ledgers. You should have created an Accounts Payable Trial Balance and Bank Reconciliation, both using Excel.

YEAR-END WORKSHEET & PROCEDURES

1. You must use the Excel year-end worksheet for the SUA project. Do not begin the spreadsheet application until all parts of the project have been completed except the Year-End Procedures starting on page 13 of the Instructions, Flowcharts, and Ledgers booklet.

2. Download a copy of the SUA spreadsheet file from Blackboard (right-click on it and save). This file will be used to prepare Waren's year-end worksheet, financial statements, and post-closing trial balance. The spreadsheet is available in Microsoft Excel (2003 or higher).

3. Open the spreadsheet using Microsoft Excel. After opening the file, you will be in the year-end worksheet portion [sheet 1] of the file. The financial statements [sheets 2, 3, and 4] and the post-closing trial balance [sheet 5] are separate sheets stacked behind this front sheet. Notice the tabs at the lower left portion of the screen identifying each of these separate sheets. Click on each one respectively to view the various schedules, named as follows:

- Worksheet

- Balance Sheet

- Income & Retained Earnings Statement

- Statement of Cash Flows

- Post Close Trial Balance

The only amounts that you need to enter in the entire spreadsheet are the unadjusted trial balance amounts (Sheet 1, columns E and F), the adjusting entries (Sheet 1, columns G through J), and certain information in the statement of cash flows (Sheet 4, discussed in a later section). To move around the spreadsheet, use the four arrow keys. To move from sheet to sheet within the stacked sheets, click on the appropriate tab on the sheet bar at the lower left of the screen. To enter amounts, move to the appropriate cell, enter the amount and then push the [ Enter ] key. If you make a mistake, return to the cell and enter the correct amount. The only cells in which you can enter data are Sheet 1 (Worksheet) cells E10 through J53. The rest of the cells are protected against inadvertent data entry. If you try to enter data into a protected cell, the computer will beep and give you an error message. Press [ Esc ] and then move to the appropriate cell where you can enter the data.

4. Perform Year-End Procedure #1 on page 13 of the Instructions, Flowcharts, and Ledgers booklet, but use the spreadsheet instead of the manual year-end worksheet (Doc. No. 25) from the documents folder. Read the brief one paragraph of instructions immediately preceding Year-End Procedure #1 before beginning. To complete year-end procedure 1 using the spreadsheet, enter the account balance for every unadjusted general ledger account in the SUA in columns E and F (do this only after recording and posting all 2013 transactions except the year-end adjusting entries). After you enter all balances, total debits in column E should equal total credits in column F at the bottom of the worksheet. Do not proceed until they balance.

5. Complete Year-End Procedure #2, parts a-e on page 14 of the Instructions, Flowcharts, and Ledgers booklet, but use the spreadsheet instead of the manual year-end worksheet (Doc. No. 25). Enter all adjusting entries in columns G through J, except for income tax expense. Only columns H and J should include dollar amounts. Enter a code number (b through f) for each entry's adjustment number in columns G and I. For example, code all parts of the year-end adjusting journal entry for Depreciation Expense as b to match that item on page 14 of your Instructions booklet. (Coding each entry will make it easier when you enter each adjusting entry in the general journal after youre finished with the worksheet.) Remember that, for EACH journal entry, the debits must equal the credits. After you enter all of the adjusting entries, total debits in column H should equal total credits in column J. Do not proceed until they balance. After you complete all other adjusting journal entries, calculate and enter income tax expense (Year-End Procedure #2, part f). Look at pre-tax net income (in Cell M56 or P56) in Sheet 1 (Worksheet). Use this pre-tax net income to calculate income tax expense. More info is in Year-End Procedure #4. After calculating the amount of income tax expense, cursor back to the adjustments columns (G-J) and enter this final adjusting entry.

6. Note that you have now already completed Year-End Procedures 3 through 5 on pages 14 and 15 of the Instructions, Flowcharts, and Ledgers booklet.

The worksheet for the financial statements should be complete. It is a good idea to review all of the financial statements on the screen to make sure that they balance and that the numbers are correct before printing. Keep in mind that most of the information for the financial statements comes from the year-end worksheet, so any errors that you make when entering the unadjusted trial balance amounts and adjusting journal entries will carry through to the financial statements.

7. Complete Year-End Procedure #6 on page 15 of the Instructions, Flowcharts, and Ledgers booklet, using Excel to prepare your Fixed Assets Trial Balance. (You should have already done the other trial balances.)

8. Complete Year-End Procedure #7 on page 15 of the Instructions, Flowcharts, and Ledgers booklet, except for the post-closing trial balance. This schedule was included on the electronic spreadsheet.

9. Print the following statements (on one page each) from your worksheet: Balance Sheet, Income Statement & Statement of Retained Earnings, Statement of Cash Flows, and Post-Closing Trial Balance. Although these are not specifically mentioned in the Year-End Procedures, they are a necessary and essential part of the year-end.

10. Complete the procedures described in the "WRAPPING UP" section on the bottom of page 15 of the Instructions, Flowcharts, and Ledgers booklet. Be sure to include printouts of the supplementary trial balances, bank reconciliation, financial statements, and post-closing trial balance. Write your name on all items and place in the SUA envelope. (Exception: do not turn in Reference booklet. Keep the Reference booklet for later use in this course and beyond.) Write your name CLEARLY on the SUA envelope, front and back.

Specific Hints (IMPORTANT!):

1. The Dec. 19th transaction takes at least an hour dont get discouraged! An additional note: The authors didnt say anything about how the company handled the shortage of shoulder pads. Assume that only the 45 shoulder pads in stock were shipped and billed and that the shortage was otherwise handled in a professional manner (but not within the scope of the SUA).

2. In the Dec. 20th payroll information, Withholding Amt is the Federal Income Tax Withheld from the paychecks. (Note: The fact that the authors gave you the Federal Income Tax Withheld before the gross pay is known for all the employees is a bit strange, since FIT Withheld isnt figured until gross pay is known. However, please use these FIT Withheld amounts when you do the payroll at the end of the month.)

3. There was a shortage in the merchandise received from Velocity Sporting Goods (Dec. 22). The authors dont mention how the shortage was handled, but assume that it was done in a professional manner (but not as part of the SUA).

4. Waren uses the allowance method of writing off bad debts (Dec. 22). See page 19 of the Instructions plus the Reference booklet Record in general journal and subsidiary ledger section on pages 44 (bottom of left column) and-45 (top of left column) for a description of the journal entry.

5. Do not write any checks to Chicago Office Supply even though the invoices are due upon receipt. (If you write these checks, you will run out of checks.)

6. Record the computers at the full invoice amount, including tax (Dec. 31). Dont forget to enter the computer acquisition in the fixed asset subsidiary ledger along with the Purchases journal.

7. Hints for Month-end and Year end procedures: The bank service charge goes to the Other operating expense account.

More Hints and Cautions:

Where are things filed? The flowcharts filing instructions are sometimes confusing. At the bottom of page 18 in the Instructions booklet, the "N" and "C" are explained. They refer to HOW to file an item in a tab (numerically, or by customer). For WHERE an item is to be filed, see the flowcharts PLUS page 6 of the Instructions booklet for a description of what goes in each file tab.

Remember to have the proper initials and tick marks on the ledgers as needed. (Initials and tick marks indicate that a specific step has been taken. Dont initial or tick a transaction without doing the required step!) Missing required initials and/or tick marks will cost you points.

Foot and cross-foot all totals in the journals and ledgers when appropriate.

Don't forget about necessary internal controls.

Make sure your name is on your packet and ALL pieces of paper that are turned in separately.