some 18 Document No. 1 Transactions List December 16 - 31, 2017 Complete each of the following transactions in accordance with the seven-step process on pages 11-12 of the instructions, Flowcharts, and Ledgers book (step 5). Remember the importance of the systems flowcharts on pages 18 - 24 for details as to (a) documents to prepare, (b) approvals and other internal control procedures, (e) accounting entries, and (d) filing. Also, remember from the requirements that some of the following events require the preparation or modification of systems documents and do not. You are to perform the roles of Ray Kramer, Nancy Ford, and Jim Adams Hints are provided in boxed areas like this. December Yes Received validated deposit receipt (Doc. No. In from the bank for $7.931.96 for deposit made December 14. Follow flowchart on page 21. No recording occurs at this time Cash receipts prelist is Doc. No. 9. File Doc. No. 9 and Doc. No. 11 in the Temporary file tab. Yes 18 Ordered the following inventory on account from Velocity Sporting Goods, using purchase order No. 328 (Doc. No. 16). Units Description 120 Basketball pole pad 80 Basketball bag 30 Portable inflation pump 75 Trainer's first aid kit Vendor Address: 1285 Colgrove Ave., Pierre, SD 57501 Freight carrier: Interstate Motor Freight Freight charges: Colleet (i.c., paid by Waren Sports Supply) Allowances: None Follow flowchart on page 22. Use purchase order No. 325 (Doc. No. 16) as a guide. Use the price list (Doc. No. 3). No Receiving or recording occurs at this point for this transaction. Tear document apart and file, following the flowchart guidance. December Yes 18 Yes 19 Borrowed 560,000 from First American Bank and Trust by issuing a two-year note payable (Doe No. 14) with a stated annual interest rate of 5%. Check No. 545 (Doc. No. 8) for $60,000 was received from the bank and deposited. Reviewed the terms and conditions of the note and signed it (Ray Kramer) as the borrower. Restrictively endorse means to write the following on the back of the check: "For deposit only. Waren Sports Supply." See flowchart, page 21, for recording and depositing. Detach the bottom portion of the check and file in the Shipping Banking filetab File the note in the Shipping/Banking file tab. Received customer purchase order No. 37225 (Doc. No. 4) in the mail from the University of Southern lowa (USI), approved their credit and shipped the goods. All good ordered were shipped, except only 60 shoulder pad sets were available for shipment Carrier & number: Allied Trucking: Carrier number 2154 Freight charges: FOB shipping point: Billed to buyer (i.e. paid by USI) Route: Express Truck & driver: Truck 2961 XZ, John Arens Freight rate: $19.00 per 100 lbs. Shipment: 3 cartons/goal and rim sets @ 40 lbs./carton 5 cartons backboards @ 150 lbs/carton 7 cartons shoulder pad sets @ 25 lbs./carton 10 cartons/football helmets @ 16 lbs./carton See flowchart, pages 18 and 19; follow all steps carefully. You will use several documents and record an entry in the sales joumal and the accounts receivable subsidiary ledger for this transaction. For guidance in preparing the bill of lading, see pages 35 - 36 of the Reference book Received sales return request No R8034 (Doc. No. 12) in the mail from Eastern Wisconsin University (EWU). The request was approved and the acknowledgment copy mailed to EWU Follow the flowchart stops on page 20, Yes 20 December No 20 Yes 22 Increased employee pay rates, and employees changed their federal income tax withholding amounts, both effective December 16. There were no changes in filing status or withholding allowances. New Federal Income Tax New Pay Rate Withholding Amt. Ray Kramer $3,600.00 semimonthly $400,00 Jim Adams $23.00 per hour $245.00 Nancy Ford $18.00 per hour $72.00 No accounting entries are necessary, but you must update the pay rate history information in the Employee Earnings Subsidiary Ledger. Received merchandise from Velocity Sporting Goods as listed on purch order No. 328. All merchandise listed on the Po was delivered in good condition and in the quantities ordered, except that only 100 basketball pole pads (Item No BB-019) were received. The goods were placed immediately in the inventory warehouse. Freight carrier: Interstate Motor Freight Freight bill: No. 26425 (Doc. No. 19), received with shipment Remember to follow the flowchart on page 22. You can't record a purchase yet because the invoice hasn't been received. Received check No. 28564 (Doc. No. 8) from Branch College for payment in full for charge invoice No. 730, and deposited the check Received legal notification from Benson, Rosenbrook, and Martinson, P.C., attorneys at law, that Stevenson College had filed bankruptcy and will be unable to pay any of its outstanding debts to its suppliers. Write off the account as a bad debt. Remember that Waren Sports Supply uses the "Allowance" method rather than "Direct write-off" for accounting for bad debts. Received all the goods that Waren authorized Eastern Wisconsin University (EWU) to return on EWU's return request No. R8034 for credit against their account balance. Process and record the sales return now. Received check No. 49326 (Doc. No. 8) for $10,000 from Eastern Wisconsin University in partial payment of the remaining amount (after sales retum) on charge invoice No. 729, and deposited the check Do not finalize a deposit slip until you determine whether there are other cash receipts on the same day. Yes 22 No 22 26 Yes Yes 26 December Yes 26 Yes 26 Yes 26 Received vendor invoice No. 34719 (Dec. No. 18) from Velocity Sporting Goods for goods ordered December 18 and received December 22. Follow the flowchart steps on page 22. Upon receiving the invoice, you can now record the purchase using the date on which Waren incurred the liability for the goods, December 22. Issued check (Doc. No. 20) to Interstate Motor Freight for the amount of the freight bill (Doc. No. 19) for the Velocity Sporting Goods shipment received December 22. Follow the flowchart steps on page 23. Received check No. 65891 (Doc. No. 8) for $7,855 and customer purchase order No. D9794 (Doc. No. 4) in the mail from Andrews College for a cash sale. All goods ordered were shipped and the cash sale was processed and recorded. Carrier & number: Interstate Motor Freight: Carrier number 62XY404 Freight charges: Collect (i..., paid by Andrews College) Route: Direct Truck & driver Truck 64, Brian Ward Freight rate: $19.00 per 100 lbs. Shipment: 5 cartons basketballs @ 35 lbs./carton 2 cartonship, tail, arm pad sets @ 7 lbs./carton 4 cartons/footballs @ 19 lbs./carton Start with the flowchart on page 21. Received office supplies from Chicago Office Supply as listed on purchase order No. 327 (Doc. No. 16), a copy of which is being held in accounting. Chicago Office Supply's vendor invoice No. 2378 (Doc. No. 18) was received with the goods. All supplies ordered were received in good condition and taken directly to the office, but the invoice was not paid Issued check (Doc. No. 20) to Velocity Sporting Goods for payment in full of their invoice No. 34719 for goods received December 22. Consider the credit terms before making the payment. Printed and reviewed payroll time record reports (Doc. No. 21) for Ford and Adams for the time period ended December 31 and prepared the payroll for all three employees, including paychecks. Paychecks are considered "Mailed Given to Outsiders." Time record reports are filed in the "Accounting" file tab. Recall that federal income tax withholding amounts were listed earlier with employee pay rate increases. Yes 26 15 Yes 28 Yes 29 December Yes 29 Received the 11-inch tablets ordered on Waren's purchase order No. 325 (Doc. No. 16) and vendor invoice No. 2423 (Doc. No. 18) from Chicago Office Supply. The tablets were received in new and undamaged condition and taken directly to the office The estimated useful life is 5 years with no salvage value. Yes 29 Received vendor invoice No.72654 (Doc. No. 18) from University Athletic News for advertisements Waren ran during the Christmas scason and immediately issued a check (Doe No. 20) for payment in full. Purchase orders are not issued for services that Waren purchases. MONTH-END PROCEDURES - After you have recorded all the transactions, go to page 12 of the Instructions, Flowcharts, and Ledgers book and complete all the month-end procedures. An additional month-end requirement for this project is Yes Monthly Statement Prepare a monthly statement ((Doc. No. 15) for University of Southern lowa YEAR-END PROCEDURES. After completing all the month-end procedures, go to page 14 of the Instructions, Flowcharts, and Ledgers book and complete all the year-end procedures. Additional information for the year-end procedures is: No Ending Inventory. A physical inventory was taken 1/1/18, before business began for the new year. Merchandise on hand cost $193,867.00 No Bad Debt Expense The expense for bad debts is estimated at the end of the year as one-fifth of one percent(0.0020 ) of net sales. No Marketable Securities - At December 31, 2017, the market value of marketable securities held by Waren approximated the cost of the securities. The project is now complete. Good work! Review your materials to make certain everything is finalized. Complete the filing of documents, records, and working papers using the file tabs and the envelope in which the Aid is packaged. File all materials as indicated in the flowcharts. Document No. 3 PRICE LISTS CURRENT AS OF DECEMBER 1, 2017 Cost Selling Price $139.00 42.00 46.00 65.00 48.00 27.00 23.00 24.00 164.00 111.00 $200.00 60.00 70.00 100.00 70.00 40.00 35.00 30.00 250.00 185.00 VELOCITY SPORTING GOODS Item No. Description Baseball items: BA-054 Premium aluminum bat BA-158 Baseballs - 12 game balls BA-199 Fielding glove BA-281 60 lb. dry line marker BA-445 Catcher's mask BA-507 Baseball equipment bag BA-667 Ball bucket with seat-set of 3 BA-694 Batting gloves - 1 pair BA-807 Pitching machine BA-859 Set of bases Basketball items: BB-ODS Basketball B8-019 Basketball pole pad 88-113 Scoreboard and timer B8-267 Goal and rim set B8-358 Backboard 88-399 Basketball net 38-431 Whistle and lanyard - set of 6 B8-538 Basketball bag B8-688 Portable inflation pump 88-926 Trainer's first aid kit Football items: FB-027 Shoulder pad set FB-091 Hip, tail, arm pad set FB-225 Football helmet FB-344 Football FB-513 Portable storage locker FB-573 Kicking tees - set of 6 FB-650 Football post pad FB-812 Collapsible cones - set of 8 FB-874 Sideline repair kit FB-952 Portable hand warmer 25.00 94.00 258.00 95.00 83.00 10.00 25.00 26.00 69.00 30.00 35.00 135.00 400.00 130.00 130.00 15.00 35.00 35.00 100.00 40.00 89.00 39.00 55.00 21.00 135.00 16.00 96.00 27.00 83.00 26.00 140.00 58.00 90.00 29.00 200.00 25.00 150.00 36.00 119.00 36.00 CHICAGO OFFICE SUPPLY Item No. Description Cost 4126 4733 5207 8509 5302 6211 6218 Laser printer toner cartridge Copier paper.box Manilla file folders - box of 50 Flash drive - 16GB Invoice forms. 100 Legal pad-box of 12 Correction tape-box of 6 Black ink pens-box of 12 Pencils - box of 24 Business envelopes - box of 1000 $124.75 39.95 12.50 19.25 16.50 7.95 13.25 2342 12.75 6277 7246 2.25 19.50 11477 12480 15321 11-inch tablet LCD monitor 146 GB rack server $349.00 195.00 6,950.00 Approved by Ray Kramer EQUIREMENTS REQUIREMEI vi File decuments in the appropriate filetab in the envelope in accordance with the flowchart description. See pages and bed this book for additional filing guidance vil Proceed to the next transaction. Repeat this process until you have completed all transactions on the transactionist (Document No 1. except month-end and year-end procedures WAREN'S MONTH-END PROCEDURES Following are the procedures performed at the end of each month by Waren's employees after all transactions are recorded in the journals and subsidiary ledgers. You are to assume the roles of Ray Kramer, Nancy Ford, and Jim Adams and perform each of these month end procedures for December. The only materials needed are this list of seven month-end procedures, all journals and ledgers, and four tems from the loose document set: blank monly statement (Dec. No. 15). henk com for November Dec. No. 22) December bank stre (Doe No. 23. and the list of caring the beskstar (Dec. Na 24. Set all other documents and records temporarily side 1 Jim Adams foots and crosstoets each of the five special journals (les, cash receipts purchases, cash disbursements, and payroll) He uses the following wymbols in the special journals to indicate that his work has been performed for Footing and C for Cross-footing 2 Jim Adams posts the column totals and individual transactions in other columns to the appropriate merlin per account and updates eacher Inper count balance He places a posting reference check mark [/under each column total in the journals and by each of the individual transactions in the "Other columns to show that the numbers have been posted 3 Ray Kramer prepares a beskrew on a separate working Papers provided) After receiving the statement (Doe No. 23) and list of its dering with statement (Doe No. 20 from the bank, he performs the following procedures a. Traces and agrees the monthly totals from the cash account columns of the cash receipts and cash disbursements journals to the posting in the general ledger cash account. He initials the cash account column totals in the journals as well as the general ledger lines where the totals are posted b. Compares each entry in the cash receipts prelist (Dec. No. 9 to the cash receipts journal for name, date, and amount and puts a check mark ] by each entry in the list c. Prepares a Rukwilation using the procedures outlined in the Systems Understanding Aid Reference book on pages 2 through 65 You can also use November's han reconciliation (Doe No. 2) as a model Deposits in transit and outstanding checks at November 30 are listed there. d. Adjusts the cash general ledger account using the general Journal, regardless of materiality for all reconciling items requiring an adjustment e Attaches together and files the bank reconciliation, den stor list of its dering with her sale, and the cash receipts prelist in the file labeled Shipping/Banking 4. Jim Adams calculates and records the unemployment taxes paid by employers, and Waren's portion of the FICA payroll tax. These payroll taxes are calculated at the end of the month on gross payroll and recorded in the general journal. The taxes are paid the following month State and federal unemployment taxes are imposed on the first $7,000 of wages paid to covered employees in 2017. Thus, a review of the employee earnings subsidiary ledger on pages 40 and 41 of this book indicates that only one of Waren's employees remains subject to this taxe, has not yet exceeded the wage base maximum). The same wape base maximum is used in the project for both state and federal unemployment taxes to simplify the calculations The state unemployment tax (SUTA) rate is 3.58%. Because employers are allowed credits against the federal unemployment tax (FUTA) rate for participation in state unemployment programs, the net FUTA rate is 6% 5. Jim Adams posts transactions from the general Journal to the general ledger and subsidiary if applicable places a posting reference check mark in the general journal post reference column for each item posted, and updates each general ledger balance 6. Nancy Ford foots the balances of each subsidiary for the accounts receivable, accounts payable, employee earnings and fixed assets subsidiaries, and compares the total to the appropriate general ledger control account (G/L accounts 10200, 20100, 500 10800, and 1000, respectively). She initials each general ledger control account to indicate that she has made the comparison 7. Jim Adams prepares a monthly statement (Dec. No 15) for each customer with a balance He includes information about each unpaid including its aging status. Aging totals and the total amount due are shown at the bottom. He completes the remote afice attached to the monthly statement in a similar fashion except that no aging is included. Ray Kramer reviews each statement and initials before it is mailed to the customer. In this project, you are to prepare a December menthly statement for only one customer and file it in the "Mailed to Outsiders file tab. The name of the selected customer is stated in the transactions list (Doe No. 1) provided with your loose document set in this package. After completing all swen month-end procedures for December, continue to the next section and perform Waren's year-end procedures. 13 EQUIREMENTS REQUIREMENT 3. Jim Adams completes the yard work through the income statement and balance sheet columns. See page 18 of the Reference book for an example of a completed year end worksheet 4. Jim Adams calculates federal income tax expense from the income statement column on the yard sheet, enters it in the adjustments column of the worksheet and extends the expense and liability amounts to their respective income statement and balance sheet columns Corporate income tax rates are subject to change annually, but for 2017 the rates are reflected in the following table (most recent as of date of publication 000 U.S. CORPORATE INCOME TAX TABLE Pre-tax net income over But not awer Taxis 50 550.000 75.000 $7.500.28 15.000 100 000 13.7503 100.000 000 22.250.39% 335.000 10.000.000 113,000+ 345 0.000.000 15.000.000 3,400,000 35 15.000.000 8.333333 5,150,000.3% 18.333.330 359 or the amount 50 50.000 75.000 100 000 335.000 10 000 000 15.000000 D WAREN'S YEAR-END PROCEDURES Below are the procedures followed at the end of each year by Waren Sports Supply's employees. You are to assume the roles of Ray Kramer, Nancy Ford, and Jim Adams and perform each of these year-end procedures for 2017. The only materials needed are Waren's list of year-end procedures, general journal ledgereed wet (Dec. No 29), and post des trial we (Doe No. 3) All other theme can be permanently filed in the envelope All December month and procedures must be completed before the year-end procedures are done 1. Jim Adams prepares an unadjusted trial balance as of December 31 using the year and wort (Doe No. 25) provided in your loose document set. Be sure to include the December month-end general journal transactions in the 12-31-17 unadjusted trial balance 2. im Adams prepare year-end adjusting entries and posts each entry to the worksheet Below are the normal adjusting entries. Refer to your Systems Understanding AM Reference book for further help in preparing appropriate adjusting entries. It Be sure to number each adjusting entry on the yard worksheet to make it easier to complete year-end procedure 7 later Mowthly Adjustments. You should already have recorded and posted payroll FICA and unemployment taxes, and the bank service charge as part of December month-end procedures Depreciation Expense Depreciation expense is calculated once annually at the end of each year and recorded in the general journal as of December 31 The depreciation methods estimated lives, and salvage values are documented in the fied asset subsidiary Inder. Depreciation in the year of sale or acquisition is calculated following ahalleyear convention, which means that six months of depreciation is taken regardless of the amount of time the assets were actually owned during these years c. Interest Expense. Interest on loans is paid annually on the anniversary of the note. Interest accruals are calculated using a 365-day year with the day after the note was made counting as the first day d. Bad Debt Exprew. Bad debt expense is estimated once annually at the end of each year as a percent of net sales and is recorded as of December 31 in the general journal. The percentage estimate for 2017 is stated in the reacties list (Document No 1) Waren uses the allowance method for recording the estimate of bad debts. Ending luntory. A physical inventory is taken on New Year's Day before business begins for the new year. The December 31, 2017 ending inventory as counted and priced by Waren's employees is stated in the insactions list (Document No. 1) For an illustration of procedures used to record cost of goods sold and adjust the inventory balance for the year-end physical count, see pages 77 through 79 of the Systems Linderstanding Aid Reference book. Federal Income Tax Express. The adjusting entry for federal income tax expense must be saved until last, after the pre-tax net income has been cakulated from the worksheet. This entry will be done later, as year-end procedure 4. The 2017 corporate income tax rates are provided there 5. Jim Adams prepares financial statements in good form statement of income and retained earnings, comparative balance sheet and statement of cash flows indirect method) He uses the formed in the Systems Understanding All Reference book Nancy Ford prepare the supplementary trial balances as of December 31, which will wrw as valuable information for management and the external audits an aged trial balance of accounts receivable a trial balance of accounts payable, and a trial balance of fired (See through and of the System Lindesnio Ald Reference book for Information to help you prepare these tra lances) She cancies each of these traslaces to the general ledger. She indicates that she has performed the conciliations by putting her initials to the right of the total on each trial balance 7. Jim Adams posts the adjusting entries from the general Journal to the general ledger Next, he prepares and records the appropriate closing entries in the general journal and posts them to the general ledger Finally, he prepares a pul-closing trial (Doc No 2). Kramer compares the account balances on the post-desing till balance to the wend words and initials the trial ulance on the bottom-right corner to document is control procedure. (See pages 20 through 24 of the System derstanding Reference book for guidance) WRAPPING UP The project is now complete. Good Work! Review your materials to make certain everything is finalized. Complete the filing of documents, records, and working Papers using the file tabs and the envelope in which the All is packaged File all materials as indicated in the flowcharts. 15 SALES SALES Shipping and Billing (Nancy Ford) Accounting (Jim Adams) Bad Debt Write-Off (Ray Kramer) 18 Con ve 19 File Description Customer al face Note The provision for Badeb expense is done as part of Waren's year-end procedures Documents weg Note Waren ses diferent invoices for cash sales than for Credit sales. The two types of documents are similar and the two types of sales transactions are processed simaty, except where shown in the flowcharts File Description Numerically Customer SALES RETURNS CASH RECEIPTS Authorization (Ray Kramer) Accounting (Jim Adams) Deposit Validation (Nancy Ford) Deposit (Ray Kramer) Receipt of Cash (Jim Adams) O-D- d's File Description Neuer Mached &fied Nuray nogical NT Numerically, terrary DECIR De Teles ch Om A Pew NT Documents ded File Description NT Naily, leporary 21 20 PURCHASES ON ACCOUNT CASH DISBURSEMENTS Purchase Order (Nancy Ford) Receiving (Nancy Ford) Accounting (Jim Adams) Payments on Account (Jim Adams) (Ray Kramer) Cash Purchases and Other Cash Payments (Jim Adams) Te M 0-D-03-baik-bm-C-> File Description VT Vendor, perwy, by due date VTC Verde Cay, chronologa dig D To show evidence of a transfer of ownership, a copy of bidding normally would accompany poods received. This copy is not included for merchandise moved in this project because the door oud have been prepared by the vender her than any Wiren personnel However, af lading is prepared for each of Warships to customers File Description V Vendor VT - Vendorrporary, by dudale pa Receive order from customer Receipt of CHAPTER 3 ce ACTIONS for he the al an order from a customer for goods is the starting point for a sale. The order may be a document or an order can be prepared by a salesperson or receptionist taking orders over the phone or in person. Ship goods or perform services - In most cases, generally accepted accounting principles require the recognition of a revenue and the transaction recorded as of the date when the goods were shipped or services performed. The shipment of goods or performance of services is therefore an essential function in accounting. In some systems, a shipping document is prepared as a by-product of billing customers. In these systems, billing precedes shipping is al DOCUMENTS Customer purchase order - A document pre- pared to request goods or services from a customer. The form should include the name and address of the customer, goods or services desired, and the desired delivery or performance date Bill of lading or other shipping document - A document prepared at the time of shipment indicating the description of the merchandise, the quantity shipped, and other relevant data. A bill of lading is a written contract of the receipt and shipment of goods between the seller and the carrier. It must be used when a common carrier (shipper registered with the Interstate Commerce Commission) ships the goods. A different type of shipping document is used when a company ships its own goods, but the document's function is the same. Ordinarily, bills of lading and other shipping documents do not include dollar values. Figure 3-2 (page 36) shows an example of a completed bill of lading for the shipment of goods sold by Simple Example Company. In this example, the freight is being charged to the seller. Bill customer - Billing is the means by which the customer is informed of the amount that is owed for the merchandise shipped. The proper amount of the bill depends on the quantity shipped and the price charged. The billing must also recognize freight charges, insurance, and terms of payment Sales invoice - A document prepared indicating the description and quantity of goods sold. the price including freight, insurance, terms, other relevant data, and the total amount of the sale. It is the method of indicating to the customer the amount of a sale and due date of a payment. The original is sent to a customer and one or more copies are retained. It is also the document used for recording sales in the accounting records Price List - A list prepared by the company indicating product prices for billings. It is usually developed by marketing personnel and approved by management. 35 CHAPTER 3 FIGURE 3-2 Example of a Typical Bill of Lading UNIFORM STRAIGHT BILL OF LADING-Domestic Shipper No Carrier No Simple Example Company 19100 Stewart Avenue Battle Creek, Michigan 49015 (616) 555-2600 138694 5439 11-11-17 Date TO: Conan Taylor Products 5005 Territorial Boulevard East Lansing, MI Ze Code 48826 Lucas Trucking Company (Name of Camer) Vehicle Number XY 2497 Charges Rate Weight Suede Correction Route Express No. Shipping Kind of Packaging, Description of Articles. Unit Special Marks and Exceptions 4 Cartons UB134 Frames 2 Cartons TX201 Photo Albums 6 Cartons DF844 Digital Cameras Carton VJ693 Scanners 124 lb. $19.00/100 lb. 113 lb. $19.00/100 lb. 225 lb. $19.00/100 lb. 70 lb. $19.00/100 lb. 23.56 21.47 42.15 13.30 REMIT C.O.D. TO: C.O.D. FEE: PREPAID CODES N/A $ N/A ADDRESS N/A COLLECT Collect Note-When there is dependent on valve whippers are Subject to Section of the condition is shipment required to a specifically in writing the agreed or declared one without recourse on the valve of the property The agreed or deered value of the property is hereby consignor the corner shell sign the following watement The carrier shall not make delivery of this shipment Total Charges $ 101.08 specifically stated by the shipper lo be no exceeding without payment of brand other lawful charges FREIGHT CHARGES $ N/A N/A N/A Check Appropriate Box Freight Prepaid Signature of Congor) Bill to Shipper Receved up to the classifications and tariffs in effect on the date of the issue of this Bill of Lading the property described above parent good order carreres noted contents and condition of contents of packages unknown, marked. consigned, and destined as indicated above which said carrier (he word carter being understood throughout this contracts meaning any person or corporation in possession of the property under the contract) agrees to carry to s sul place of delivery Msaid destination, it on its roula, otherwise to deliver to another carrier on the route to said destination. It is mutually agreed as to each carrier of all or any of tad property over all or any portion of said route to destination and as to each party at any time interested in or any said property, the Shipper hereby certifies that he is for iar with all the bill of lading terms and conditions in the governing classification and the said terms and conditions are hereby agreed to by the shipper and accepted for himself and his assigns. BHOPPER Simple Example Company CARRIER Lucas Trucking DATE PER Joe Driver PER Simple Example's Employee 11-17-17 (Loding to be red by the per 36 Document No. 9 WAREN SPORTS SUPPLY CASH RECEIPTS PRELIST MONTH December Data Can SCO 581000 401400 584100 40 40.51 De Gates University 2 DEC. Rosemont University DEC, 12. Hancock College Del Clayborn University Dec, 14 Alwood Brothers 141152-18 13501 721 28446 6-24 2413 128 724 N/A 500 53000 72.5200 N/A 10010 9.2.5.00 Document No. 16 PURCHASE ORDER No. 325 WAREN SPORTS SUPPLY T ESTBORD SEND INVOICE ONLY TO: CORESPONDEMO 0 11 CHICNO OFFICE SUPPLY 1411 MICHOAN SHONO IL 606 1978 MICHIGAN AVE CHICAGO, IL 60612 12 Document No. 11 12-04-19 DEPOSIT RECEIPT YOUR TRUCK MORE NON HOME First American 1141 NOTALMENT LOAN COMERCIAL LOAN 11-inch Tablet $349.00 MORTGADE 12-10-17 AM N11:34 37.931.96 DA COM DEP 00033418 03/19346704 MERIDIAN FABT 031046 5104 RC 3009 PAPOUR LINE VALIDATION APPEARS. SEE BELOW WONDO HOME CHORARUARI IF A THREE LINE VALIDATION APPEARS, SEE BELOW DE AFTAR OURCE SAMPLE PURCHASE CONDITIONS ALL SINGLE LINE VALIDATION APPEARS. SEE BELOW Ray Kramer MINILOR MOLILOAN MA NOT SPED - 88 ACCOUNTINO Do PURCHASE ORDER PROMISSORY NOTE, SECURED BY ACCOUNT 12-35-17 UNIVERSITY OF SOUTHERN IOWA CEDAR DURUM, 2000 JAN First American 37225 2/10,30 TO: KAREN SPORTS SUPPLY 1978 Michigan TO FLOREROWICKA WA PERCENTAGE RATE NOTE MUNDER PRINCE SYRS 009 EX- 24 RK 25 30-350 Goal and it Backboard shoulder pad set roothall be 7-027 BORT TITLE AND INTEREST IN ACCOUNT MER 000334 18 OC 9 HOMO FARSA SANTO VENDOR COPY Jolon Hedgins Documento 545 . W SPORTS SUPPLY 1918 Michoan Avenue Chicago, Illinois 60612 Owner's Arc Hai Linda Seatt 0000000004 ONCOOCH HISTAMINA BALD TRUST 545 261 RELAX SPORTEREY 12 MEXIGLAVE CACADO, ALTHIES Acopance- Scott Armond Document ho 19 OTOR FROM NTERSTATE Chi. Document No. 12 METFLY VELOCITY ST003 111 ore Madison, Wecon me Cago WAARTS Niche REQUEST TO RETURN FROM VENDOR Ret Reque No R8034 MAN PORTAILY Chicago Tinel 1612 dition and shaped pred A promet reply be really apreciated that you 33 W TAKI SPORTIN DOS FOR CLINICATION CONTACT Round. Please Wote Account Please Account No Nama Emily Webster RETURN INDICE NOCE DUAR RET GOS DIE DO12 Banketball pole pad 146.2 12 AM 7 Scoreboard and time M Document BRANCH COLLEGE HOLT NATIONAL RANE Pay Onthousand Bird ventytwo and 1/100 dollar TOTAL HOLEN PORTU OVPLY 1978 Michigan Avenue Chicago, Illinois 60612 Por Mayent of votee 00000000000000000 Sally Smith Document Eastern Wisconsin University REISER $10,000.00 Invoice - SAMPLE PAY: Ten thousand and mo/100 dollars 1 SO SPOT SUPPLY 1978 Michigan Avec Chicago, Illinois 60612 James Jacken COCO00000000-0000-0 PURCHASE ORDER Document No. 10 ORIGINAL INVOICE No 09794 SPORTING GOODS 34219 D53097212-22-39 CUSTOMER SERVICE HOTUNE 222-09 SOLD WAREN SPORTU BUPPLY TO 1978 MICHEON AVENUE GUICNDO ILLINOIS 60612 WAREN SPORTS SUPPLY TO 1978 MICHIGAN AVENUE CLICADO, ILLINOIS 60612 ANDREWS COLLEGE 12/22/17 THESE ITEMS ARE FOR SALE CERT. NOUB LAN 101-5598 DE SAN 101-5598 ANDREWS COLLEGE ADRE COLLE 2007 W. GRAND ROVER 2007 W GRAND RIVER BERKLEY, MI 4002 BERKLEY. HE 4802 SHIPPING INSTRUCTIONS WARN SPORTS SUPPLY Other 1998 Michigan Avenue Chicago, Ilinois 60612 Cancelled by ) 30 days ) Do notis TINA KISS 248-555-6200 PURCHAL FOR Cash Payment ached Check No CURRE On Down Customer Act to Dy TH PRODUCE MUURER QUANTITY DEN 100 120 1420281 12/18/17 12/20/1733 1825 INTERSTATE MOTOR SIGHT 80 E 26.00 18-53 125 2,0TO 30.00 BB-003 FH-09 Portable inflation Basketball Hip tail, arm padset Pootbal 2.250 Document No. 65891 ANDREWS COLLEGE MOHAVINGS PRICES USED WITH ARE SPECIAL ER PRICOM IHRCT AMOUNT PAY - $17.60 Hay even thousand eight handed Fittyfive o/100 dollars 12-22-17 1-2-10 1517.60 57.355.00 - SAMPLE Document No. 15 PURCHASE ORDER No. 327 AL NAREN SPORTS SUPPLY 1976 Michigan Avenue Chicago, Illinois 60612 WAREN SPORTS SUPPLY Frank Hart Cash purchase, PO 09794 -00000000004 SEND INVOICE ONLY TO: 1978 MILIGAN AVE. CHICADO. 11, 60412 Document No. 20 CHICADO OFFICE SUPPLY 2011 E. MICHIGAN CHICAGO, IL 60606 No. 1152 WAREN SPORTS SUPPLY NONE NO CIRC Date YOUR TICK 12-13-17 $124.95 PAY TO THE CHORRO 2 4126 19.25 B 1509 Laser printer toner cartridge Flash drive - 16GB Invoice for box of 100 36.50 10 5302 - SAMPLE - INVOICE Document No. 21 Document No. 18 CHICAGO OFFICE SUPPLY 1411 Ethion Chicago, IL 60606 Waren Sports Supply Time Record Report Pay Period Ending 12/31/17 im Adam -**.**.9511 Employee ID DOR DOH 10/1/19 1/16/2013 Dary Date in Out Wedy 12/12/2017 12/20/2017 12/21/2017 1700 PO 904 BIL TO 7:30 WAREN SPORTS SUPPLY 1978 MICHIGAN AVENUE CHICAGO, ILLINOIS0612 WARN SPORTS SUPPLY 1978 HICHO AVENUE CHICO. LTNES 60512 od 12/2017 DO 305 200 HOP WA Approved by Pay Periodonal Pay Period bace Hours Overtime 8730 B0.00 120.25 Employee State 165.00 involce forma box of 100 Document No. 21 Waren Sports Supply Time Record Report Pay Period Ending 12/31/17 Nancy Ford Employee ID 000 DOH 10/1/2012 Bry M O 110 2012 NO SHE TOTAL BALTAX FREIGHT CHARGER VOICE TOTAL Wednesday Thunday 7:30 1700 TO Words Thunday 10 Approved By Pay Period Total Pay Period Base Hours 4.70 RETURNS POLICY must be clearly idented on the outside of med goods Employee Signature Damon No. 10 INVOICE INVOICE Documento COD wat hy w UNIVERSITY ATHLETIC NEWS CHICAGO OFFICE SUPPLY Min RETTO SOLD TO UMA 60 Wave MEN SPORTS SUPPLY 1978 Michiga vene | = | | | | DETS BUY 1993 MEGA MISTE CHINOILLE 06 LET US PUT YOUR ADO FRONT OF MORE COLLEGES AND UNIVERSITIES 350.00 124 COY AT FULL WE ADVERTENT PE NEVETTET LOPULLI ADVERTISEMENT PLE OVERTIMENT 10.00 LEEUT THE DRITE OF YOU ARE CONTACT GILENT BUTTON FOR SALESHORY BOY ANTOOR Dhe is WAREN SPORTS SUPPLY STATEMENT REMITTANCE ADVICE CUSTOMER NAME AND ADORES POLICY CUSTOMER TOEL DUE TOTAL CURRENT TOTAL 1 some 18 Document No. 1 Transactions List December 16 - 31, 2017 Complete each of the following transactions in accordance with the seven-step process on pages 11-12 of the instructions, Flowcharts, and Ledgers book (step 5). Remember the importance of the systems flowcharts on pages 18 - 24 for details as to (a) documents to prepare, (b) approvals and other internal control procedures, (e) accounting entries, and (d) filing. Also, remember from the requirements that some of the following events require the preparation or modification of systems documents and do not. You are to perform the roles of Ray Kramer, Nancy Ford, and Jim Adams Hints are provided in boxed areas like this. December Yes Received validated deposit receipt (Doc. No. In from the bank for $7.931.96 for deposit made December 14. Follow flowchart on page 21. No recording occurs at this time Cash receipts prelist is Doc. No. 9. File Doc. No. 9 and Doc. No. 11 in the Temporary file tab. Yes 18 Ordered the following inventory on account from Velocity Sporting Goods, using purchase order No. 328 (Doc. No. 16). Units Description 120 Basketball pole pad 80 Basketball bag 30 Portable inflation pump 75 Trainer's first aid kit Vendor Address: 1285 Colgrove Ave., Pierre, SD 57501 Freight carrier: Interstate Motor Freight Freight charges: Colleet (i.c., paid by Waren Sports Supply) Allowances: None Follow flowchart on page 22. Use purchase order No. 325 (Doc. No. 16) as a guide. Use the price list (Doc. No. 3). No Receiving or recording occurs at this point for this transaction. Tear document apart and file, following the flowchart guidance. December Yes 18 Yes 19 Borrowed 560,000 from First American Bank and Trust by issuing a two-year note payable (Doe No. 14) with a stated annual interest rate of 5%. Check No. 545 (Doc. No. 8) for $60,000 was received from the bank and deposited. Reviewed the terms and conditions of the note and signed it (Ray Kramer) as the borrower. Restrictively endorse means to write the following on the back of the check: "For deposit only. Waren Sports Supply." See flowchart, page 21, for recording and depositing. Detach the bottom portion of the check and file in the Shipping Banking filetab File the note in the Shipping/Banking file tab. Received customer purchase order No. 37225 (Doc. No. 4) in the mail from the University of Southern lowa (USI), approved their credit and shipped the goods. All good ordered were shipped, except only 60 shoulder pad sets were available for shipment Carrier & number: Allied Trucking: Carrier number 2154 Freight charges: FOB shipping point: Billed to buyer (i.e. paid by USI) Route: Express Truck & driver: Truck 2961 XZ, John Arens Freight rate: $19.00 per 100 lbs. Shipment: 3 cartons/goal and rim sets @ 40 lbs./carton 5 cartons backboards @ 150 lbs/carton 7 cartons shoulder pad sets @ 25 lbs./carton 10 cartons/football helmets @ 16 lbs./carton See flowchart, pages 18 and 19; follow all steps carefully. You will use several documents and record an entry in the sales joumal and the accounts receivable subsidiary ledger for this transaction. For guidance in preparing the bill of lading, see pages 35 - 36 of the Reference book Received sales return request No R8034 (Doc. No. 12) in the mail from Eastern Wisconsin University (EWU). The request was approved and the acknowledgment copy mailed to EWU Follow the flowchart stops on page 20, Yes 20 December No 20 Yes 22 Increased employee pay rates, and employees changed their federal income tax withholding amounts, both effective December 16. There were no changes in filing status or withholding allowances. New Federal Income Tax New Pay Rate Withholding Amt. Ray Kramer $3,600.00 semimonthly $400,00 Jim Adams $23.00 per hour $245.00 Nancy Ford $18.00 per hour $72.00 No accounting entries are necessary, but you must update the pay rate history information in the Employee Earnings Subsidiary Ledger. Received merchandise from Velocity Sporting Goods as listed on purch order No. 328. All merchandise listed on the Po was delivered in good condition and in the quantities ordered, except that only 100 basketball pole pads (Item No BB-019) were received. The goods were placed immediately in the inventory warehouse. Freight carrier: Interstate Motor Freight Freight bill: No. 26425 (Doc. No. 19), received with shipment Remember to follow the flowchart on page 22. You can't record a purchase yet because the invoice hasn't been received. Received check No. 28564 (Doc. No. 8) from Branch College for payment in full for charge invoice No. 730, and deposited the check Received legal notification from Benson, Rosenbrook, and Martinson, P.C., attorneys at law, that Stevenson College had filed bankruptcy and will be unable to pay any of its outstanding debts to its suppliers. Write off the account as a bad debt. Remember that Waren Sports Supply uses the "Allowance" method rather than "Direct write-off" for accounting for bad debts. Received all the goods that Waren authorized Eastern Wisconsin University (EWU) to return on EWU's return request No. R8034 for credit against their account balance. Process and record the sales return now. Received check No. 49326 (Doc. No. 8) for $10,000 from Eastern Wisconsin University in partial payment of the remaining amount (after sales retum) on charge invoice No. 729, and deposited the check Do not finalize a deposit slip until you determine whether there are other cash receipts on the same day. Yes 22 No 22 26 Yes Yes 26 December Yes 26 Yes 26 Yes 26 Received vendor invoice No. 34719 (Dec. No. 18) from Velocity Sporting Goods for goods ordered December 18 and received December 22. Follow the flowchart steps on page 22. Upon receiving the invoice, you can now record the purchase using the date on which Waren incurred the liability for the goods, December 22. Issued check (Doc. No. 20) to Interstate Motor Freight for the amount of the freight bill (Doc. No. 19) for the Velocity Sporting Goods shipment received December 22. Follow the flowchart steps on page 23. Received check No. 65891 (Doc. No. 8) for $7,855 and customer purchase order No. D9794 (Doc. No. 4) in the mail from Andrews College for a cash sale. All goods ordered were shipped and the cash sale was processed and recorded. Carrier & number: Interstate Motor Freight: Carrier number 62XY404 Freight charges: Collect (i..., paid by Andrews College) Route: Direct Truck & driver Truck 64, Brian Ward Freight rate: $19.00 per 100 lbs. Shipment: 5 cartons basketballs @ 35 lbs./carton 2 cartonship, tail, arm pad sets @ 7 lbs./carton 4 cartons/footballs @ 19 lbs./carton Start with the flowchart on page 21. Received office supplies from Chicago Office Supply as listed on purchase order No. 327 (Doc. No. 16), a copy of which is being held in accounting. Chicago Office Supply's vendor invoice No. 2378 (Doc. No. 18) was received with the goods. All supplies ordered were received in good condition and taken directly to the office, but the invoice was not paid Issued check (Doc. No. 20) to Velocity Sporting Goods for payment in full of their invoice No. 34719 for goods received December 22. Consider the credit terms before making the payment. Printed and reviewed payroll time record reports (Doc. No. 21) for Ford and Adams for the time period ended December 31 and prepared the payroll for all three employees, including paychecks. Paychecks are considered "Mailed Given to Outsiders." Time record reports are filed in the "Accounting" file tab. Recall that federal income tax withholding amounts were listed earlier with employee pay rate increases. Yes 26 15 Yes 28 Yes 29 December Yes 29 Received the 11-inch tablets ordered on Waren's purchase order No. 325 (Doc. No. 16) and vendor invoice No. 2423 (Doc. No. 18) from Chicago Office Supply. The tablets were received in new and undamaged condition and taken directly to the office The estimated useful life is 5 years with no salvage value. Yes 29 Received vendor invoice No.72654 (Doc. No. 18) from University Athletic News for advertisements Waren ran during the Christmas scason and immediately issued a check (Doe No. 20) for payment in full. Purchase orders are not issued for services that Waren purchases. MONTH-END PROCEDURES - After you have recorded all the transactions, go to page 12 of the Instructions, Flowcharts, and Ledgers book and complete all the month-end procedures. An additional month-end requirement for this project is Yes Monthly Statement Prepare a monthly statement ((Doc. No. 15) for University of Southern lowa YEAR-END PROCEDURES. After completing all the month-end procedures, go to page 14 of the Instructions, Flowcharts, and Ledgers book and complete all the year-end procedures. Additional information for the year-end procedures is: No Ending Inventory. A physical inventory was taken 1/1/18, before business began for the new year. Merchandise on hand cost $193,867.00 No Bad Debt Expense The expense for bad debts is estimated at the end of the year as one-fifth of one percent(0.0020 ) of net sales. No Marketable Securities - At December 31, 2017, the market value of marketable securities held by Waren approximated the cost of the securities. The project is now complete. Good work! Review your materials to make certain everything is finalized. Complete the filing of documents, records, and working papers using the file tabs and the envelope in which the Aid is packaged. File all materials as indicated in the flowcharts. Document No. 3 PRICE LISTS CURRENT AS OF DECEMBER 1, 2017 Cost Selling Price $139.00 42.00 46.00 65.00 48.00 27.00 23.00 24.00 164.00 111.00 $200.00 60.00 70.00 100.00 70.00 40.00 35.00 30.00 250.00 185.00 VELOCITY SPORTING GOODS Item No. Description Baseball items: BA-054 Premium aluminum bat BA-158 Baseballs - 12 game balls BA-199 Fielding glove BA-281 60 lb. dry line marker BA-445 Catcher's mask BA-507 Baseball equipment bag BA-667 Ball bucket with seat-set of 3 BA-694 Batting gloves - 1 pair BA-807 Pitching machine BA-859 Set of bases Basketball items: BB-ODS Basketball B8-019 Basketball pole pad 88-113 Scoreboard and timer B8-267 Goal and rim set B8-358 Backboard 88-399 Basketball net 38-431 Whistle and lanyard - set of 6 B8-538 Basketball bag B8-688 Portable inflation pump 88-926 Trainer's first aid kit Football items: FB-027 Shoulder pad set FB-091 Hip, tail, arm pad set FB-225 Football helmet FB-344 Football FB-513 Portable storage locker FB-573 Kicking tees - set of 6 FB-650 Football post pad FB-812 Collapsible cones - set of 8 FB-874 Sideline repair kit FB-952 Portable hand warmer 25.00 94.00 258.00 95.00 83.00 10.00 25.00 26.00 69.00 30.00 35.00 135.00 400.00 130.00 130.00 15.00 35.00 35.00 100.00 40.00 89.00 39.00 55.00 21.00 135.00 16.00 96.00 27.00 83.00 26.00 140.00 58.00 90.00 29.00 200.00 25.00 150.00 36.00 119.00 36.00 CHICAGO OFFICE SUPPLY Item No. Description Cost 4126 4733 5207 8509 5302 6211 6218 Laser printer toner cartridge Copier paper.box Manilla file folders - box of 50 Flash drive - 16GB Invoice forms. 100 Legal pad-box of 12 Correction tape-box of 6 Black ink pens-box of 12 Pencils - box of 24 Business envelopes - box of 1000 $124.75 39.95 12.50 19.25 16.50 7.95 13.25 2342 12.75 6277 7246 2.25 19.50 11477 12480 15321 11-inch tablet LCD monitor 146 GB rack server $349.00 195.00 6,950.00 Approved by Ray Kramer EQUIREMENTS REQUIREMEI vi File decuments in the appropriate filetab in the envelope in accordance with the flowchart description. See pages and bed this book for additional filing guidance vil Proceed to the next transaction. Repeat this process until you have completed all transactions on the transactionist (Document No 1. except month-end and year-end procedures WAREN'S MONTH-END PROCEDURES Following are the procedures performed at the end of each month by Waren's employees after all transactions are recorded in the journals and subsidiary ledgers. You are to assume the roles of Ray Kramer, Nancy Ford, and Jim Adams and perform each of these month end procedures for December. The only materials needed are this list of seven month-end procedures, all journals and ledgers, and four tems from the loose document set: blank monly statement (Dec. No. 15). henk com for November Dec. No. 22) December bank stre (Doe No. 23. and the list of caring the beskstar (Dec. Na 24. Set all other documents and records temporarily side 1 Jim Adams foots and crosstoets each of the five special journals (les, cash receipts purchases, cash disbursements, and payroll) He uses the following wymbols in the special journals to indicate that his work has been performed for Footing and C for Cross-footing 2 Jim Adams posts the column totals and individual transactions in other columns to the appropriate merlin per account and updates eacher Inper count balance He places a posting reference check mark [/under each column total in the journals and by each of the individual transactions in the "Other columns to show that the numbers have been posted 3 Ray Kramer prepares a beskrew on a separate working Papers provided) After receiving the statement (Doe No. 23) and list of its dering with statement (Doe No. 20 from the bank, he performs the following procedures a. Traces and agrees the monthly totals from the cash account columns of the cash receipts and cash disbursements journals to the posting in the general ledger cash account. He initials the cash account column totals in the journals as well as the general ledger lines where the totals are posted b. Compares each entry in the cash receipts prelist (Dec. No. 9 to the cash receipts journal for name, date, and amount and puts a check mark ] by each entry in the list c. Prepares a Rukwilation using the procedures outlined in the Systems Understanding Aid Reference book on pages 2 through 65 You can also use November's han reconciliation (Doe No. 2) as a model Deposits in transit and outstanding checks at November 30 are listed there. d. Adjusts the cash general ledger account using the general Journal, regardless of materiality for all reconciling items requiring an adjustment e Attaches together and files the bank reconciliation, den stor list of its dering with her sale, and the cash receipts prelist in the file labeled Shipping/Banking 4. Jim Adams calculates and records the unemployment taxes paid by employers, and Waren's portion of the FICA payroll tax. These payroll taxes are calculated at the end of the month on gross payroll and recorded in the general journal. The taxes are paid the following month State and federal unemployment taxes are imposed on the first $7,000 of wages paid to covered employees in 2017. Thus, a review of the employee earnings subsidiary ledger on pages 40 and 41 of this book indicates that only one of Waren's employees remains subject to this taxe, has not yet exceeded the wage base maximum). The same wape base maximum is used in the project for both state and federal unemployment taxes to simplify the calculations The state unemployment tax (SUTA) rate is 3.58%. Because employers are allowed credits against the federal unemployment tax (FUTA) rate for participation in state unemployment programs, the net FUTA rate is 6% 5. Jim Adams posts transactions from the general Journal to the general ledger and subsidiary if applicable places a posting reference check mark in the general journal post reference column for each item posted, and updates each general ledger balance 6. Nancy Ford foots the balances of each subsidiary for the accounts receivable, accounts payable, employee earnings and fixed assets subsidiaries, and compares the total to the appropriate general ledger control account (G/L accounts 10200, 20100, 500 10800, and 1000, respectively). She initials each general ledger control account to indicate that she has made the comparison 7. Jim Adams prepares a monthly statement (Dec. No 15) for each customer with a balance He includes information about each unpaid including its aging status. Aging totals and the total amount due are shown at the bottom. He completes the remote afice attached to the monthly statement in a similar fashion except that no aging is included. Ray Kramer reviews each statement and initials before it is mailed to the customer. In this project, you are to prepare a December menthly statement for only one customer and file it in the "Mailed to Outsiders file tab. The name of the selected customer is stated in the transactions list (Doe No. 1) provided with your loose document set in this package. After completing all swen month-end procedures for December, continue to the next section and perform Waren's year-end procedures. 13 EQUIREMENTS REQUIREMENT 3. Jim Adams completes the yard work through the income statement and balance sheet columns. See page 18 of the Reference book for an example of a completed year end worksheet 4. Jim Adams calculates federal income tax expense from the income statement column on the yard sheet, enters it in the adjustments column of the worksheet and extends the expense and liability amounts to their respective income statement and balance sheet columns Corporate income tax rates are subject to change annually, but for 2017 the rates are reflected in the following table (most recent as of date of publication 000 U.S. CORPORATE INCOME TAX TABLE Pre-tax net income over But not awer Taxis 50 550.000 75.000 $7.500.28 15.000 100 000 13.7503 100.000 000 22.250.39% 335.000 10.000.000 113,000+ 345 0.000.000 15.000.000 3,400,000 35 15.000.000 8.333333 5,150,000.3% 18.333.330 359 or the amount 50 50.000 75.000 100 000 335.000 10 000 000 15.000000 D WAREN'S YEAR-END PROCEDURES Below are the procedures followed at the end of each year by Waren Sports Supply's employees. You are to assume the roles of Ray Kramer, Nancy Ford, and Jim Adams and perform each of these year-end procedures for 2017. The only materials needed are Waren's list of year-end procedures, general journal ledgereed wet (Dec. No 29), and post des trial we (Doe No. 3) All other theme can be permanently filed in the envelope All December month and procedures must be completed before the year-end procedures are done 1. Jim Adams prepares an unadjusted trial balance as of December 31 using the year and wort (Doe No. 25) provided in your loose document set. Be sure to include the December month-end general journal transactions in the 12-31-17 unadjusted trial balance 2. im Adams prepare year-end adjusting entries and posts each entry to the worksheet Below are the normal adjusting entries. Refer to your Systems Understanding AM Reference book for further help in preparing appropriate adjusting entries. It Be sure to number each adjusting entry on the yard worksheet to make it easier to complete year-end procedure 7 later Mowthly Adjustments. You should already have recorded and posted payroll FICA and unemployment taxes, and the bank service charge as part of December month-end procedures Depreciation Expense Depreciation expense is calculated once annually at the end of each year and recorded in the general journal as of December 31 The depreciation methods estimated lives, and salvage values are documented in the fied asset subsidiary Inder. Depreciation in the year of sale or acquisition is calculated following ahalleyear convention, which means that six months of depreciation is taken regardless of the amount of time the assets were actually owned during these years c. Interest Expense. Interest on loans is paid annually on the anniversary of the note. Interest accruals are calculated using a 365-day year with the day after the note was made counting as the first day d. Bad Debt Exprew. Bad debt expense is estimated once annually at the end of each year as a percent of net sales and is recorded as of December 31 in the general journal. The percentage estimate for 2017 is stated in the reacties list (Document No 1) Waren uses the allowance method for recording the estimate of bad debts. Ending luntory. A physical inventory is taken on New Year's Day before business begins for the new year. The December 31, 2017 ending inventory as counted and priced by Waren's employees is stated in the insactions list (Document No. 1) For an illustration of procedures used to record cost of goods sold and adjust the inventory balance for the year-end physical count, see pages 77 through 79 of the Systems Linderstanding Aid Reference book. Federal Income Tax Express. The adjusting entry for federal income tax expense must be saved until last, after the pre-tax net income has been cakulated from the worksheet. This entry will be done later, as year-end procedure 4. The 2017 corporate income tax rates are provided there 5. Jim Adams prepares financial statements in good form statement of income and retained earnings, comparative balance sheet and statement of cash flows indirect method) He uses the formed in the Systems Understanding All Reference book Nancy Ford prepare the supplementary trial balances as of December 31, which will wrw as valuable information for management and the external audits an aged trial balance of accounts receivable a trial balance of accounts payable, and a trial balance of fired (See through and of the System Lindesnio Ald Reference book for Information to help you prepare these tra lances) She cancies each of these traslaces to the general ledger. She indicates that she has performed the conciliations by putting her initials to the right of the total on each trial balance 7. Jim Adams posts the adjusting entries from the general Journal to the general ledger Next, he prepares and records the appropriate closing entries in the general journal and posts them to the general ledger Finally, he prepares a pul-closing trial (Doc No 2). Kramer compares the account balances on the post-desing till balance to the wend words and initials the trial ulance on the bottom-right corner to document is control procedure. (See pages 20 through 24 of the System derstanding Reference book for guidance) WRAPPING UP The project is now complete. Good Work! Review your materials to make certain everything is finalized. Complete the filing of documents, records, and working Papers using the file tabs and the envelope in which the All is packaged File all materials as indicated in the flowcharts. 15 SALES SALES Shipping and Billing (Nancy Ford) Accounting (Jim Adams) Bad Debt Write-Off (Ray Kramer) 18 Con ve 19 File Description Customer al face Note The provision for Badeb expense is done as part of Waren's year-end procedures Documents weg Note Waren ses diferent invoices for cash sales than for Credit sales. The two types of documents are similar and the two types of sales transactions are processed simaty, except where shown in the flowcharts File Description Numerically Customer SALES RETURNS CASH RECEIPTS Authorization (Ray Kramer) Accounting (Jim Adams) Deposit Validation (Nancy Ford) Deposit (Ray Kramer) Receipt of Cash (Jim Adams) O-D- d's File Description Neuer Mached &fied Nuray nogical NT Numerically, terrary DECIR De Teles ch Om A Pew NT Documents ded File Description NT Naily, leporary 21 20 PURCHASES ON ACCOUNT CASH DISBURSEMENTS Purchase Order (Nancy Ford) Receiving (Nancy Ford) Accounting (Jim Adams) Payments on Account (Jim Adams) (Ray Kramer) Cash Purchases and Other Cash Payments (Jim Adams) Te M 0-D-03-baik-bm-C-> File Description VT Vendor, perwy, by due date VTC Verde Cay, chronologa dig D To show evidence of a transfer of ownership, a copy of bidding normally would accompany poods received. This copy is not included for merchandise moved in this project because the door oud have been prepared by the vender her than any Wiren personnel However, af lading is prepared for each of Warships to customers File Description V Vendor VT - Vendorrporary, by dudale pa Receive order from customer Receipt of CHAPTER 3 ce ACTIONS for he the al an order from a customer for goods is the starting point for a sale. The order may be a document or an order can be prepared by a salesperson or receptionist taking orders over the phone or in person. Ship goods or perform services - In most cases, generally accepted accounting principles require the recognition of a revenue and the transaction recorded as of the date when the goods were shipped or services performed. The shipment of goods or performance of services is therefore an essential function in accounting. In some systems, a shipping document is prepared as a by-product of billing customers. In these systems, billing precedes shipping is al DOCUMENTS Customer purchase order - A document pre- pared to request goods or services from a customer. The form should include the name and address of the customer, goods or services desired, and the desired delivery or performance date Bill of lading or other shipping document - A document prepared at the time of shipment indicating the description of the merchandise, the quantity shipped, and other relevant data. A bill of lading is a written contract of the receipt and shipment of goods between the seller and the carrier. It must be used when a common carrier (shipper registered with the Interstate Commerce Commission) ships the goods. A different type of shipping document is used when a company ships its own goods, but the document's function is the same. Ordinarily, bills of lading and other shipping documents do not include dollar values. Figure 3-2 (page 36) shows an example of a completed bill of lading for the shipment of goods sold by Simple Example Company. In this example, the freight is being charged to the seller. Bill customer - Billing is the means by which the customer is informed of the amount that is owed for the merchandise shipped. The proper amount of the bill depends on the quantity shipped and the price charged. The billing must also recognize freight charges, insurance, and terms of payment Sales invoice - A document prepared indicating the description and quantity of goods sold. the price including freight, insurance, terms, other relevant data, and the total amount of the sale. It is the method of indicating to the customer the amount of a sale and due date of a payment. The original is sent to a customer and one or more copies are retained. It is also the document used for recording sales in the accounting records Price List - A list prepared by the company indicating product prices for billings. It is usually developed by marketing personnel and approved by management. 35 CHAPTER 3 FIGURE 3-2 Example of a Typical Bill of Lading UNIFORM STRAIGHT BILL OF LADING-Domestic Shipper No Carrier No Simple Example Company 19100 Stewart Avenue Battle Creek, Michigan 49015 (616) 555-2600 138694 5439 11-11-17 Date TO: Conan Taylor Products 5005 Territorial Boulevard East Lansing, MI Ze Code 48826 Lucas Trucking Company (Name of Camer) Vehicle Number XY 2497 Charges Rate Weight Suede Correction Route Express No. Shipping Kind of Packaging, Description of Articles. Unit Special Marks and Exceptions 4 Cartons UB134 Frames 2 Cartons TX201 Photo Albums 6 Cartons DF844 Digital Cameras Carton VJ693 Scanners 124 lb. $19.00/100 lb. 113 lb. $19.00/100 lb. 225 lb. $19.00/100 lb. 70 lb. $19.00/100 lb. 23.56 21.47 42.15 13.30 REMIT C.O.D. TO: C.O.D. FEE: PREPAID CODES N/A $ N/A ADDRESS N/A COLLECT Collect Note-When there is dependent on valve whippers are Subject to Section of the condition is shipment required to a specifically in writi