How do you prepare the following journal entries needed after the beginning balance?

Global Bike, Inc. 1a (Excel) 2015 WINT ACCY 310 - Accounting Systems Due, Monday, Jan 12, 8am Estimated time to complete: 3 hours 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 on a set of t-accounts and create a trial balance and adjusted trial balance. You will then close out the income statement accounts as you would at year end. In the next assignment (Global Bike 1b) 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). This assignment emphasizes the integration of journals to the financial statements and introduces students to these journal entries in SAP ERP Assignment Learning Objectives: Primary Learning Objectives: o Review the concepts of the beginning financial accounting courses o Review the accounting cycle o Work with a primarily manual accounting information system Secondary Learning Objective: o Review basic Excel skills o Link accounting information using Excel tools In addition to introducing the concept of using Excel as a stepping stone AIS on the way toward a full-fledged ERP, this assignment is a review of general financial accounting principles and procedures. The assignment is broken into two parts. In the first part of the assignment you will create general journal entries for a series of transactions. You will also show the impact of these transactions on a set of t-accounts and create an interim trial balance (this should be familiar from your work in previous accounting courses!). The second part of the assignment continues the review of accounting procedures with SAP University Alliances GBI 1a Product SAP ERP GBI Release 6.04 Level Undergraduate Graduate Beginner Focus Accounting Entries in Manual and Automated Systems Integration of Accounting Journals MOTIVATION 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). pg. 1 GBI 1a additional journal entries and the adjusting journal entries for month end close. You will again be able to show the impact of the transactions on t-accounts and create a trial balance. However, the second part of the assignment highlights how your journal entries can be created in an automated system by entering your \"manual\" journal entries into the SAP/R3 system. The SAP system will then be used to produce a set of basic 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 off-road trail racing and longdistance 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 competitors whether 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 crosscountry championships. Early on, John realized that the massproduced 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 SAP University Alliances ACCY 310 GBI 1a 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: Review basic Excel skills PREREQUISITES 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. Original Authors Jim Mensching Nancy Jones Contributors Patti Brown pg. 2 GBI 1a ACCY 310 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 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, Peter's frames were being used by racers all over Europe and he started Heidelberg Composites to market and design frames which would be fabricated by a contract manufacturer on a larger scale. 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's. 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. SAP University Alliances pg. 3 GBI 1a ACCY 310 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. 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 which will help enhance riders' performance and comfort while riding GBI bikes. Note that the accessories list shown here is classified 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 SAP University Alliances pg. 4 GBI 1a ACCY 310 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 University Alliances pg. 5 GBI 1a 100000 101000 110100 110150 110200 200400 200500 200600 200900 200910 200920 200930 210000 211000 212000 215000 216000 220000 220050 220060 220110 220210 220310 220400 220500 220600 220700 220800 220900 221100 221200 221300 221400 300100 300200 300300 300400 300500 300600 300700 300800 310000 320000 321000 322000 329000 329100 330010 ACCY 310 G/L Acct Long Text - Chart of Accounts Bank Account Alternate Bank Account Accounts Receivable (Direct Posting Account) Allowance for Bad Debts Interest Receivable Inventory-Production Supplies Inventory-Suspense (Heaven) 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 Fixed Assets Accumulated Depreciation - Fixed Assets 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 Vehicles Accumulated Depreciation-Vehicles Intangible Assets Accumulated Amortization - Intangible Assets Buildings Accumulated Depreciation - Buildings 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 Posting) SAP University Alliances 600000 610000 620000 630000 640000 650000 650100 700000 720000 720100 720200 720300 740000 740100 740200 740300 740400 740500 740600 740700 740800 740900 741000 741100 741200 741300 741400 741500 741600 741700 741800 741900 742000 742100 760000 760100 770000 780000 G/L Acct Long Text - Chart of Accounts 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 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 Warranty Expense Bad Debt Expense Information Technology Expense Account Production Order Variance Expense Account Utilities (electricity & phone) 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 pg. 6 GBI 1a ACCY 310 DETAILED 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, t-accounts, and a trial balance, all of which will be generated in Excel, (see the sample problem for the format). Don't forget to include your beginning and ending balances in your t-accounts. 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. Download \"GBI1a Start....xlsx\" from Blackboard and rename it \" GBI1a.xlsx\" 2. Rename four of the existing Excel worksheet tabs as follows: Beg Bal Gen Journ T Accts Trial Bal 3. Enter beginning balances in the \" Beg Bal\" worksheet. 4. Record the transactions as general journal entries in your Excel Gen Journ worksheet, if appropriate (Note: some of the events may not require journal entries). Note that the worksheet has already been started for you. Be sure to record the event number as a reference for each journal entry in addition to the sequential journal entry number you create. You must use the following guidelines to create your journal entries: Use VLOOKUP to find the account names for each of your journal entries. You will find the account names in the Chart of Accounts worksheet tab. Use the example in the first journal entry as a guide. Round all transaction amounts to the nearest dollar. Format your entries for readability as follows: i. Italicize the description for each journal entry and use a different color for the text. ii. Leave a blank row between journal entries (events) iii. Remove gridlines from the worksheet (this provides a cleaner look for someone trying to read the journal entries). iv. Make sure that the numbers are formatted appropriately, with commas as thousands separators for currency amounts. SAP University Alliances pg. 7 GBI 1a ACCY 310 5. Post the beginning balance amounts to the appropriate location in your t-accounts worksheet (debit or credit column), using cell references in your formulas that link back to your beginning balances. 6. Post the journal entry amounts into your t-accounts on the appropriate worksheet using cell references in your formulas that link back to the journal entries. 7. For each entry in your t-accounts, link back to the journal entry number in your General Journal worksheet with a formula that uses a cell reference. This reference goes in the \"JE\" column for each T-account. 8. Calculate t-account total debits, total credits, and ending balances using cell formulas. 9. Create links (references) from your t-accounts and beginning balances tabs to your trial balance worksheet to prepare an accurate trial balance. Be sure to calculate beginning balances, activity totals (debits and credits) for transactions, and ending balances correctly, using appropriate source data. For ending balances, use an IF function to place the final balance in the appropriate (Debit, Credit) column. 10. Next, record the adjusting entries into the general journal and then post them into the taccounts (below your unadjusted balance totals for each account) and trial balance (in the adjusting columns). In the general journal, start a new sequence for your adjusting entries, beginning with \"ADJ1.\" Continue the sequence for your remaining adjusting entries. Record your adjusting activity in the trial balance using the approach described above for the monthly activity. Note: In addition to the adjusting information listed below, you must consider other adjusting entries that need to be made (Hint: consider your pre-paid accounts). 11. Record your closing entries in the Excel trial balance only (closing columns) as if this were a year-end close. (You do not need to enter the closing entries as a journal entry or in your t-accounts.) Use formulas with references to calculate your closing entries. Remember, you are creating links between your worksheets to expedite the process of posting entries to the appropriate t- and trial balance accounts. With this approach, you can minimize the risk of an error in your accounts (i.e., a change in the originating journal entry should be reflected in the t-accounts and the trial balance worksheet automatically). Look over the answer to the sample problem set and review previous Excel work you've done for guidance. A starting Excel workbook file has been provided for you. Note: Since GBI 1b builds on documents you create in GBI 1a, you should review your instructor's feedback on GBI 1a prior to investing significant time on GBI 1b. SAP University Alliances pg. 8 GBI 1a ACCY 310 GBI Account Balances as of December 31st 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 Bank Account Accounts Receivable (Direct Posting Account) Allowance for Bad Debtg 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 Notes Receivable Land (Direct Post) Production Machinery, Equip & Fixtures(Dir.Post) Accumulated Depreciation-Machinery (Direct Post) Office Furniture Accumulated Depreciation-Office Furniture Office Equip 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 Expense Goods Receipt / Invoice Receipt Account Accrued Tax - Output Accrued Tax- Input Unearned Revenues Common Stock Additional Paid-in-Capital Retained Earnings (Direct Posting) SAP University Alliances Debit Balance $265,000 103,950 Credit Balance 2,500 1,175 32,300 265,800 68,350 6,000 1,400 5,500 435,000 990,000 330,000 49,600 110,000 1,068 3,098 1,000,000 678,209 pg. 9 GBI 1a ACCY 310 DESCRIPTION OF EVENTS OCCURRING in JANUARY of the CURRENT YEAR Date 1 January 3 Description of Event 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 $110,000. (Ignore payroll taxes for this assignment.) Accounting wrote and distributed the paychecks. 2 Windy City Bikes in Chicago, IL ordered $25,500 of bicycle accessories from GBI. The cost of the accessories (to GBI) is $16,880. 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 2/10 net 30 days. 3 GBI received $54,450 in safety product inventory and $36,850 in raw materials from Dallas Bike Basics. This inventory was ordered on December 28. The payment terms for the invoice total of $91,300 are net 10 days. GBI paid the CWX shipping company $1100 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 120 lbs and the raw materials came on a pallet and weighed 100 lbs. 4 January 7 GBI received payment of $18,850 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 of $1,068 via the company's automatic electronic bill pay program. 6 SAP University Alliances 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. This is the only advertising GBI purchased last year. pg. 10 GBI 1a ACCY 310 Date 7 January 11 Description of Event The office manager in San Diego ordered $475 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. 8 GBI ordered $99,418 in raw materials from Space Bike Composites in Houston, TX. Terms of payment to Space Bikes are net 30. 9 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. 10 January 12 GBI paid Dallas Bike Basics via bank transfer for the inventory order that they received from Dallas Bike Basics January 3. 11 January 13 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 $8,250 (including sales tax) and CSI will charge GBI $1,550 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\". 12 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 $10,290 due net 30. SAP University Alliances pg. 11 GBI 1a ACCY 310 Date Description of Event 13 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 $165,630 worth of bicycles to be delivered immediately. Rocky Mountain will pay the shipping. The bikes cost GBI $94,250. 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. 14 GBI received raw materials inventory ordered from Space Bike Composites January 11. Shipping charges of $410 were included in the invoice from Space Bike. 15 GBI received notice that Bunky's Bicycle Emporium had declared section 13 bankruptcy which meant GBI would not be able to collect the $1,350 that Bunky's owed them. 16 January 18 GBI received a $92,250 funds transfer from Silicon Valley Bikes in Palo Alto for the balance due on their account. 17 January 19 GBI paid Staples for the office supplies they received January 11. 18 19 SoCal Bikes in Irvine, CA placed an order for $4,300 in bicycle helmets for a special event in February. The merchandise cost GBI $2,590. 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 8.75% for this order.) January 24 SAP University Alliances Beantown Bikes in Boston, MA placed an order with GBI for $29,975 in bicycles. The cost of the bicycles is $17,250. Beantown Bikes is a new customer. Its buyers saw GBI's booth at a trade 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. pg. 12 GBI 1a ACCY 310 Date Description of Event 20 January 25 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. 21 January 26 GBI received notification from their bank that $Error! Not a valid link.Error! Not a valid link.Error! Not a valid link.Error! Not a valid link.Error! Not a valid link.Error! Not a valid link.Error! Not a valid link.Error! Not a valid link.Error! Not a valid link.Error! Not a valid link.Error! Not a valid link.Error! Not a valid link.Error! Not a valid link.Error! Not a valid link.Error! Not a valid link.Error! Not a valid link.29,975 had been transferred to their account from Beantown Bikes, so GBI's warehouse personnel shipped Beantown's order. Beantown will be responsible for paying FedEx $360 for shipping the order. 22 January 27 The county approved GBI's building plans for their new warehouse. Estimated building costs are $1,550,000 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. 23 GBI sent a $30,250 check to Night Rider Aluminum Products for an order of bicycle parts GBI received December 30th. 24 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 $238,375 in bicycles and $108,850 in bicycle accessories and safety gear at special discount prices. The cost of the bicycles in this order is $170,750 and the cost of the accessories is $66,100. 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. 25 January 31 SAP University Alliances GBI pays sales tax once a quarter via the state's electronic filing and payment system. GBI filed its return and paid $3,098 in sales tax for the quarter ending December 31. pg. 13 GBI 1a ACCY 310 Date Description of Event 26 GBI paid February's rent of $5,500 for the office and warehouse space in San Diego. GBI is two years into a four-year lease for this space. 27 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 $7,800 and gave it to the installer. 28 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 events): 1. Based on prior experience, GBI estimates that approximately % of the net credit sales (gross credit sales minus returns of credit sales) for the month will become bad debt. GBI writes off bad debts as they occur and recognizes bad debt expense based on anticipated bad debts 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 trading goods inventory was taken at the end of January. It was determined that the value of the trading goods merchandise on hand was $36,950. 3. GBI counted the office 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 $920. 4. Production Machinery, Equipment and Fixtures were placed in service on January 1, 2010, are expected to last 15 years 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 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 following 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 $1,427. SAP University Alliances pg. 14 GBI 1a ACCY 310 6. Liability insurance for the six month period ending on February 28 in the amount of $18,000 was paid last August 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.) When you have completed your Excel manual AIS workbook for GBI as instructed, upload it to Blackboard under \"GBI1a.\" End of Assignment SAP University Alliances pg. 15 GBI 1a ACCY 310 Grading Guidelines - GBI 1a Required Beginning Balances set up properly in Beginning Balance worksheet tab Possible Points 4 Journal Entries Journal entries for appropriate events entered VLOOKUP used for account names in journal entries Descriptions entered for journal entries (w/ appropriate formatting) Event numbers noted in JE reference field 12 T-Accounts T-accounts pull in amounts from journal entries using formulas T-account entries refer back to the appropriate journal entry using cell references T-account balances calculated correctly 14 Trial Balance Beginning balances pulled in from appropriate worksheet source Transaction totals per account calculated from appropriate worksheet source Ending balances calculated correctly using IF function 10 TOTAL 40 Penalties Late Submission Not using downloaded Start file for assignment Incorrect worksheet tab names Not using appropriately Incorrect file name SAP University Alliances 50% + 50% + 10% + up to 100% 10% + pg. 16