Journal entries for the following events during january and the adjustments for January 31.

CASE STUDY Account Balances as of December 31st Credit Balance Debit Balance $248,018 108,420 2,500 750 32.000 281,298 66,474 5,000 1,000 4.500 425,000 915,000 305,000 100000 Bank Account 110100 Accounts Receivable (Direct Posting Account) 110150 Allowance for Bad Debtg 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 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 Equip 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 Expense 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) 47,900 110,000 988 3,063 1,000,000 618,009 Dana A CASE STUDY Events During January Event Date 1 January 3 2 3 4 January 7 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. GBI received $55,692 in safety product inventory and $37,128 in raw materials from Dallas Bike Basics. This inventory was ordered on December 28. The payment terms for the invoice total of $92,820 are net 10 days. GBI paid the CWX shipping company $550 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. Windy City Bikes in Chicago, IL ordered $22,000 of bicycle accessories from GBI. The cost of the accessories (to GBI) is $15,180. 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. GBI received payment of $16,850 from Northwest Bikes in Seattle, WA for the balance due on their account. 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 318) 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 $988 via the company's automatic electronic bill pay program. 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 $350 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. 5 January 10 7 January 11 Dana 0 GBI ordered $99,418 in raw materials from Space Bike CASE STUDY 8 net 30 9 Composites in Houston, TX. Terms of payment to Space Bikes are 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 $92,820 via bank transfer for the inventory order that they received from Dallas Bike Basics January 3. 10 January 12 11 January 13 12 January 17 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 $5,995 (including sales tax) and CSI will charge GBI $1,200 for the installation and tests. GBI paid a deposit of $3,000 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 $17,010 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 $128,130 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. 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 $802 were included in the $100.220 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 $1,610 that Bunky's owed them. GBI received a $89,960 funds transfer from Silicon Valley Bikes in Palo Alto for the balance due on their account. 14 15 16 January 18 17 January 19 GBI paid Staples for the office supplies they received January 11, 18 SoCal Bikes in Irvine, CA placed an order for $2,300 in bicycle helmets for a special event in February. The merchandise cost GBI $1,380. SoCal sent a truck to the GBI distribution center in San Dana in CASE STUDY 19 January 24 20 January 25 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.) Beantown Bikes in Boston, MA placed an order with GBI for $27.450 in bicycles. The cost of the bicycles is $17,092. 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 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 $15,000 for three months of advertising GBI received notification from their bank that $27,450 had been transferred to their account from Beantown Bikes, so GBI's warehouse personnel shipped Beantown's order. Beantown will be responsible for paying Fed-X $360 for shipping the order. The county approved GBI's building plans for their new warehouse. Estimated building costs are $1,050,000 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 $30,890 check to Night Rider Aluminum Products for an order of bicycle Parts GBI received December 30th 21 January 26 22 January 27 23 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 $232,315 in bicycles and $108,490 in bicycle accessories and safety gear at special discount prices. The cost of the bicycles in this order is $169,586 and the cost of the accessories is $65,094. 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 $3,063 in sales tax for the quarter ending December 31 GBI paid February's rent of $4,500 for the office and warehouse space in San Diego. 25 January 31 26 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 $4,195 and gave it to the installer SADA Dane 19 CASE STUDY Big Apple's truck arrived at GBI's warehouse and picked up the order from January 27th 28 Adjustment information as of January 31, not already given in the original transaction(s): 1. Based on prior experience, GBI estimates that approximately 5% 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 aken 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 $40,710 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 $620. 4. Production Machinery, Equipment and Fixtures were placed in service on January 1, 2008, 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 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 $1,046. 6. Liability insurance for the six month period ending on February 28 in the amount of $15,000 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 SADAR Dana 12 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 720000 720100 720200 720300 G/L Acct Long Text Bank Account Accounts Receivable (Direct Posting Account) Allowance for Bad Debt 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 Production Machinery, Equipment and Fixtures Accumulated Depreciation - Production mach, Equip 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 Post) Sales Revenue Sales Discount Miscellaneous Revenue Revenue Deductions Gain or Loss on Sale of Assets Customer Service Revenue Customer Service Revenue Settlement Raw Material Consumption Expense Finished Product Consumption Expense Trading Good Consumption Expense Semi-Finished Consumption Expense Dana CASE STUDY 740000 Supplies Expense 740100 Utilities 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 Labor Expense 741200 Bad Debt Expense 741300 Information Technology Expense Account 741400 Production Order Variance Expense Account 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 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, 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. Record the daily transactions if appropriate, (some events may not involve journal entries) as general journal entries into Excel. Also, post these journal entries into t-accounts and then calculate account balances using cell formulas in Excel. Link the t-account balances 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 2. The next step is to record the adjusting entries into the general journal and then post them into the l-accounts and trial-balance: ParaRT CASE STUDY 3. 4. Record closing entries in your trial-balance as if this were a year-end close(Do not enter the closing entries in your t-aeeounts.) 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. 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). iv. 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 v. Record the adjusting entries. vi. 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. SARA CASE STUDY Account Balances as of December 31 Credit Balance Debit Balance $248,018 108,420 2,500 750 32,000 281,298 66,474 5,000 1.000 4,500 425,000 915,000 305,000 100000 Bank Account 110100 Accounts Receivable (Direct Posting Account) 110150 Allowance for Bad Debtg 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 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 Equip 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 Expense 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) 47,900 110,000 988 3,063 1,000,000 618,009 Dane CASE STUDY Events During January Event Date 1 January 3 2 3 4 January 7 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. GBI received $55,692 in safety product inventory and $37,128 in raw materials from Dallas Bike Basics. This inventory was ordered on December 28. The payment terms for the invoice total of $92,820 are net 10 days. GBI paid the CWX shipping company $550 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. Windy City Bikes in Chicago, IL ordered $22,000 of bicycle accessories from GBI. The cost of the accessories (to GBI) is $15,180. 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. GBI received payment of $16,850 from Northwest Bikes in Seattle, WA for the balance due on their account. 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 $988 via the company's automatic electronic bill pay program 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 $350 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. 5 January 10 7 January 11 Dana CASE STUDY 8 9 10 January 12 11 January 13 12 January 17 GBI ordered $99.418 in raw materials from Space Bike Composites in Houston, TX. Terms of payment to Space Bikes are net 30. 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 $92.820 via bank transfer for the inventory order that they received from Dallas Bike Basics 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 $5.995 (including sales tax) and CSI will charge GBI $1,200 for the installation and tests. GBI paid a deposit of $3,000 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 $17,010 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 $128,130 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. 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 $802 were included in the $100,220 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 $1,610 that Bunky's owed them. GBI received a $89,960 funds transfer from Silicon Valley Bikes in Palo Alto for the balance due on their account. 13 14 15 16 January 18 17 January 19 GBI paid Staples for the office supplies they received January 11. 18 SoCal Bikes in Irvine, CA placed an order for $2,300 in bicycle helmets for a special event in February. The merchandise cost GBI $1,380. SoCal sent a truck to the GBI distribution center in San SAP AG CASE STUDY 19 January 24 20 January 25 21 January 26 Diego, CA and picked up the merchandise directly from Gers warehouse. Terms of payment are net 30. (Don't forget to charge sales tax of 8.75% for this order.) Beantown Bikes in Boston, MA placed an order with GBI for $27,450 in bicycles. The cost of the bicycles is $17,092. 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. 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 $15,000 for three months of advertising, GBI received notification from their bank that $27,450 had been transferred to their account from Beantown Bikes, so GBI's warehouse personnel shipped Beantown's order. Beantown will be responsible for paying Fed-X $360 for shipping the order. The county approved GBI's building plans for their new warehouse. Estimated building costs are $1,050,000 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 $30,890 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 $232,315 in bicycles and $108,490 in bicycle accessories and safety gear at special discount prices. The cost of the bicycles in this order is $169,586 and the cost of the accessories is $65,094. Big Apple will have a contract trucking 22 January 27 23 24 25 January 31 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 $3,063 in sales tax for the quarter ending December 31. GBI paid February's rent of $4,500 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 S4,195 and gave it to the installer 26 27 Parat SAPO Adjustment information as of January 31, not already given in the original GBI needs to recognize the wages expense for the month. Since all employees are paid month salaries. (For purposes of this assignment, ignore manufacturing and assume all salaries and no changes have been made, this amount is the same as the previous CASE STUDY Big Apple's truck arrived at GBI's warehouse and picked up the 28 order from January 27th transaction(s): 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 $40.710 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 $620. 750 620 Production Machinery, Equipment and Fixtures were placed in service on January 1, 2008, 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 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 $1,046. 6. Liability insurance for the six month period ending on February 28 in the amount of $15,000 was paid last August on the first of the month. Liability insurance is assumed to be utilized uniformly over the six month policy period. OSAD AR Pana 12