Chapter 10: Chapter 10: Completing Quarterly Activities Completing Quarterly Activities

and Closing the Fiscal Yearand Closing the Fiscal Year

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Completing Quarterly Activities Completing Quarterly Activities and Closing the Fiscal Yearand Closing the Fiscal Year

Chapters 9 and 10 work together. In Chapter 10, you will continue recording financial information for Matt Richards, Designer. You will complete the Computer Accounting Cycle for November and December. Mr. Richards’ checkbook registers and bank statements will be used as source documents.

At the end of December, which is also the end of the fourth quarter, you will complete adjusting entries for Mr. Richards, print financial statements, and close the fiscal year.

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Software Objectives, p. 289Software Objectives, p. 289 Restore data from Chapter 9. (The Chapter 9 October.ptb

back up was made on page 289. All activities in Chapter 9 must be completed before starting Chapter 10.)

Change accounting periods. Journalize and post transactions for November and

December. Complete account reconciliation. Print a General Ledger Trial Balance (unadjusted) Journalize and post quarterly adjusting entries in the

General Journal. Print adjusted trial balance and financial statements. Close the fiscal year. Print a Post-Closing Trial Balance. Make eight backups: four backups of Matt Richards,

Designer data: one backup of Exercise 10-1; three backups in Exercise 10-2.

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Web Objectives, p. 301Web Objectives, p. 301Use your Internet browser to go to the

book’s website at www.mhhe.com/yacht2006

Go to the Internet Activity link on the book’s website. Then, select WEB EXERCISES PART 2. Complete the second web exercise in Part 2, Understanding Accounting Terms.

Use a word processing program to write summaries of the websites that you visited.

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PCA’s Computer PCA’s Computer Accounting Cycle, p. 302Accounting Cycle, p. 302

PCA's Computer Accounting Cycle

1. Change accounting periods.

2. Journalize entries.

3. Post entries to the General Ledger.

4. Account Reconciliation.

5. Print the General Ledger Trial Balance (unadjusted).

6. Journalize and post adjusting entries.

7. Print the General Ledger Trial Balance (adjusted).

8. Print the financial statements: Balance Sheet, Income Statement, Statement of Cash Flow, Statement of Retained Earnings, and Statement of Changes in Financial Position.

9. Close the fiscal year.

10. Interpret accounting information.

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Peachtree TipsPeachtree TipsYou must complete Chapter 9 before starting Chapter 10.

To check that you have completed Chapter 9, display Matt Richards, Designer’s general ledger trial balance. Compare it to the one shown on page 286. This is the trial balance at the end of Chapter 9.

If any of the account balances are incorrect on the general ledger trial balance, follow the steps for Editing Journal Transactions on page 285. Then, reprint the trial balance.

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Peachtree Tips (continued)Peachtree Tips (continued)If you do not get the correct year-to-date amounts on your Income Statement (p. 326), Statement of Cash Flow and Statement of Changes in Financial position (pp. 328 and 329), you may have set your chart of accounts beginning balances in Chapter 9 incorrectly. Refer to pages 255-261, Entering Chart of Accounts Beginning Balances in Chapter 9. Matt Richard’s beginning balance sheet is dated October 1, 2006 (p. 260). Since Peachtree posts on the last day of the month (September 30), you must set beginning balances for the preceding month—September 1 through 30, 2006. This is shown on the Select Period window illustration below step 3 on page 257.

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Backing Up Chapter 10Backing Up Chapter 10

Backup Name Kilobytes Pages

Chapter 10 November 294 KB 312-313

Chapter 10 December UTB 304 KB 319-320

Chapter 10 December 301 KB 329-330

Chapter 10 EOY 300 KB 336-337

Asset depreciation.xls 24 KB 338

Exercise 10-1 289 KB 344

Exercise 10-2 Unadjusted Trial Balance 299 KB 346

Exercise 10-2 Financial Statements 303 KB 346

Exercise 10-2 End of Year 303 KB 346.

Part 2 continues in Chapter 10. The chart below shows the size of the backups made in Chapter 10. Refer to textbook p. 238 for the entire chart of backups made in Part 2-Chapters 9, 10 and Project 1.

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Chapter 10 TopicsChapter 10 Topics1. Software & web objectives, p. 301

2. Getting started, pp. 302-304

3. Checkbook register and bank statement: November 2006, p. 305-312

4. Backing up November Data, pages 312-313

5. Data File Statistics, pages 313-314

6. Changing accounting periods: December 1-31, 2006, p. 315

7. Checkbook register and bank statement: December 2006, pages 315-319

8. Backing up the unadjusted trial balance, pp. 319-320

9. End-of-Quarter Adjusting Entries, pp. 320-329

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Chapter 10 Topics, concludedChapter 10 Topics, concluded

10. Backing up December Data, pp. 329-330

11. Closing the Fiscal Year, pp. 330-335

12. Printing the Post-Closing Trial Balance, pages 335-336

13. Backing up year-end data, pages 336-337

14. Internet Activity, page 337

15. Summary and Review, pp. 337-338

a. Going to the Net, page 338

b. True/Make True questions, page 339-341

c. Exercise 10-1, pages 341-344

d. Exercise 10-2, pages 344-346

e. Chapter 10 Index, page 347

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Change accounting periods, pp. 303-304Change accounting periods, pp. 303-304

Click on Tasks, then System. From the System menu, select Change Accounting Period. Select 11-Nov 01, 2006 to Nov 30, 2006. The Change Account Period window is shown on p. 304.

Click on <OK>. Click on <No> at the window prompt.

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Pages 305 through 310Pages 305 through 310 Continue with the steps shown on pages 305 – 310. Compare your Cash Account Register to the one

shown on p. 307. Compare your account reconciliation report to the

one shown on p. 308. Compare your cash receipts journal to the one shown

on p. 308. Compare your cash disbursements journal to the one

shown on p. 309. Compare your general journal to the one shown on p.

309. Print the general ledger trial balance, then compare it

to the one shown on p. 310.

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Pages 311 and 312Pages 311 and 312

Print the balance sheet, then compare it to the one shown on p. 311.

Print the income statement, then compare it to the one shown on p. 312.

Follow the steps to back up November data shown on pages 312-313.

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Data File Statistics, pp. 313-314Data File Statistics, pp. 313-314

From the menu bar, click on Help, Customer Support and Service, then select File Statistics.

The File Statistics window shows the shortened name for the company. If you used your name in the company name, your shortened name will differ. The Data File Statistics window is shown on page 314.

Click OK to close the Data File Statistics window.

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Pages 315 - 319Pages 315 - 319 Continue with the steps for changing the accounting period shown

on page 315. Complete entries using the December check register, pp. 315-316 Complete account reconciliation, pp. 316-317. Compare your Cash Account Register to the one shown on p. 317. Compare your Account Reconciliation to the one shown on p. 317. Compare your General Journal to the one shown on p. 318. Compare your cash receipts journal to the one shown on p. 318. Compare your cash disbursements journal to the one shown on p.

319. Print the general ledger trial balance, then compare it to the one

shown on p. 319.

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Backing up the Unadjusted Trial Backing up the Unadjusted Trial Balance, pages 319-320Balance, pages 319-320

Follow steps a through f on pages 319-320 to back up your unadjusted trial balance.

Use Chapter 10 December UTB as the file name. (UTB is an abbreviation of unadjusted trial balance.)

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End-of-Quarter Adjusting Entries, End-of-Quarter Adjusting Entries, p. 320-323p. 320-323

Mr. Richards’ accounting records are adjusted at the end of December. Follow the steps on pages 320-323 to record adjusting entries.

Compare your December 31, 2006 general journal to the one shown on p. 323.

Compare your adjusted trial balance to the one shown on p. 324.

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Financial Statements, pp. 325-329Financial Statements, pp. 325-329

Compare your balance sheet to the one shown on p. 325.

Compare your income statement to the one shown on p. 326.

Compare your statement of retained earnings to the one shown on p. 327.

Compare your statement of cash flow to the one shown on p. 328.

Compare your statement of changes in financial position to the one shown on p. 329.

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Backing up December data, pp. 329-330Backing up December data, pp. 329-330

Follow the steps on pp. 329-330 to back up December data.

Use Chapter 10 December as the back up name.

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Closing the Fiscal Year, p. 330Closing the Fiscal Year, p. 330 From the menu bar, select Tasks, System, Year-End

Wizard.

Click on <Next>.

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Closing the fiscal year, continued, p. 331Closing the fiscal year, continued, p. 331

The Year-End Wizard – Welcome window appears.

Click on <Next>.

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Closing the fiscal year, continued, p. 331Closing the fiscal year, continued, p. 331

The Close Options window appears. Read the information on this window.

Click on <Next>.

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Closing the fiscal year, continued, p. 332Closing the fiscal year, continued, p. 332

Read the information on the Print Fiscal Year-End Reports window. Click Check None.

Makes sure the boxes are unchecked. Click on <Next>.

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Closing the fiscal year, continued, Closing the fiscal year, continued, pp. 332-333pp. 332-333

The Back Up Company Data window appears. You already made a back up of your data but you may want to make another one. Read the information on this window. Click on Back Up. The Back Up Company window appears.

Observe that the box next to Include company name in the backup file name is checked. Click on the Back Up button. Complete steps 10-13 on pages 332 and 333.

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Closing the fiscal year, continued, p. 333Closing the fiscal year, continued, p. 333

The New Open Fiscal Years window appears. Read the information on this window.

Accept the default for Next Fiscal Year by clicking on <Next>.

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Closing the fiscal year, continued, p. 334Closing the fiscal year, continued, p. 334

The Important – Confirm Year-End Close window appears. Read the information on this window.

Click on <Next>.

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Closing the fiscal year, continued p. 334Closing the fiscal year, continued p. 334

The Begin Close-Year Process window appears. Read the information on this window.

Click on <Begin Close>.

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Closing the fiscal year, concluded, p. 335Closing the fiscal year, concluded, p. 335

The Congratulations! window appears. Read the information on this window.

Click on <Finish>.

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Printing the Post-Closing Printing the Post-Closing Trial Balance, pp. 335-336Trial Balance, pp. 335-336

After the fiscal year is closed, a post-closing trial balance is printed. Only permanent accounts appear on the post-closing trial balance. All temporary accounts (revenues and expenses) have been closed. This completes the computer accounting cycle.

Follow steps 1 and 2 on page 335 to print the post-closing trial balance.

Compare your post-closing trial balance to the one shown on page 336.

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Backing Up Year-End Data, Backing Up Year-End Data, pp. 336-337pp. 336-337

Follow steps 1 through 6 on pages 336 & 337 to back up year-end data.

The back up name is Chapter 10 EOY.

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Glossary of TermsGlossary of TermsChapter 10Chapter 10

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Unearned revenue, p. 323Unearned revenue, p. 323

Unearned revenue is a liability account used to report advance collections from customers or clients.

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Internet Activity, p. 337Internet Activity, p. 337

1 Go to the book’s website at www.mhhe.com/yacht2006.

2 Link to Student Edition.

3 In the Course-wide Content list, link to Part 2 Internet Activities for Chapters 9-10. Open or save. (You can also choose Chapter 10, then link to Internet Activities. If you Choose a Chapter, observe that other chapter-specific links are available; for example, Quizzes, PowerPoints, and Going to the Net Exercises.)

4 Scroll down the window to UNDERSTANDING ACCOUNTING TERMS – Chapter 10. Read steps 1 – 3.

5 Follow the steps shown on the book’s website to complete this Internet activity.

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Going to the Net, p. 338Going to the Net, p. 338Access the asset depreciation schedule at http://office.microsoft.com/en-us/templates/TC010460991033.ASPX. (Hint: Excel 2000 or later is required.) Click . If a window appears asking if you want to automatically download and display links in the Template Help pane, click . An Asset Depreciation worksheet appears.

Complete the following fields. Press <Enter> to move between fields.

Date: 1/1/2004 Initial cost: 7000 Salvage value: 0Useful life (years) 7

Click on Asset Depreciation. Type Furniture to replace it. From Excel’s menu bar, click File, Print. Click File; Save. The suggested file name is Asset depreciation.xls; click . What depreciation methods are shown? Close Excel; close Internet Explorer.