Chapter 11: Chapter 11: Accounts PayableAccounts Payable

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Accounts PayableAccounts Payable

Chapter 11 begins Part 3 of the book: Peachtree Chapter 11 begins Part 3 of the book: Peachtree Complete Accounting 2003 for Merchandising Complete Accounting 2003 for Merchandising Businesses. Merchandising businesses are retail Businesses. Merchandising businesses are retail stores that resell goods and services. stores that resell goods and services.

In Chapter 11, you will set up a merchandising In Chapter 11, you will set up a merchandising business called Jessica's Sales & Service. business called Jessica's Sales & Service. Jessica’s Sales & Service is a partnership owned Jessica’s Sales & Service is a partnership owned by Jessica Phelps and Ellen Smith.by Jessica Phelps and Ellen Smith.

Ms. Phelps and Ms. Smith divide their income Ms. Phelps and Ms. Smith divide their income equally.equally.

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Software Objectives, p. 367Software Objectives, p. 367Set up company information for Jessica's Sales & Set up company information for Jessica's Sales & Service.Service.Enter the following general ledger information: chart of Enter the following general ledger information: chart of accounts and account beginning balances.accounts and account beginning balances.Enter the following accounts payable information: vendor Enter the following accounts payable information: vendor defaults and vendor records.defaults and vendor records.Enter the following inventory information: inventory Enter the following inventory information: inventory defaults, inventory items and assembly records, and defaults, inventory items and assembly records, and inventory beginning balances.inventory beginning balances.Record accounts payable transactions: merchandise Record accounts payable transactions: merchandise purchases, purchase orders, cash purchases, and purchases, purchase orders, cash purchases, and purchase returns.purchase returns.Make four backups: two backups for Jessica's Sales & Make four backups: two backups for Jessica's Sales & Service; one backup for Exercise 11-1; one backup for Service; one backup for Exercise 11-1; one backup for Exercise 11-2.Exercise 11-2.

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Web Objectives, p. 367Web Objectives, p. 367Use your Internet browser to go to the Use your Internet browser to go to the book’s website at book’s website at www.mhhe.com/yacht2003www.mhhe.com/yacht2003

Go to the Internet Activity link on the Go to the Internet Activity link on the book’s website. Then, select WEB book’s website. Then, select WEB EXERCISES PART 3. Complete the first EXERCISES PART 3. Complete the first web exercise in Part 3, “Accounting List.”web exercise in Part 3, “Accounting List.”

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

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Accounts Payable Transactions, p. 368Accounts Payable Transactions, p. 368

A vendor sends Jessica's Sales & Servicean invoice (bill)

You enter the invoice as a purchase(Tasks/Purchases-Receive Inventory).

When it is time to pay the invoice, you select theinvoice(s) from the vendor you want to pay and

print a check (Tasks/Payments).

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Peachtree TipsPeachtree Tips

In Chapter 11, you set up two merchandising In Chapter 11, you set up two merchandising businesses: Jessica's Sales & Service and the end-businesses: Jessica's Sales & Service and the end-of-chapter sales and service company (Exercise 11-of-chapter sales and service company (Exercise 11-1 on pp 419-425)1 on pp 419-425)The companies that you set up in Chapter 11, The companies that you set up in Chapter 11, continue in Chapters 12, 13 and 14.continue in Chapters 12, 13 and 14.If the general ledger account (GL account column) is If the general ledger account (GL account column) is not displayed on the Purchases/Receive Inventory not displayed on the Purchases/Receive Inventory window, check the global options. In the “Hide window, check the global options. In the “Hide General Ledger Accounts” section, all boxes must General Ledger Accounts” section, all boxes must be unchecked (see p. 52, steps 1-4; top of page be unchecked (see p. 52, steps 1-4; top of page 394).394).

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Peachtree Tips (continued)Peachtree Tips (continued)What if you want to use Jessica's Sales & Service, on a computer What if you want to use Jessica's Sales & Service, on a computer that does not have this company set up in Peachtree?that does not have this company set up in Peachtree?   

Start Peachtree. Select “Start Peachtree. Select “OOpen an existing company.” If Jessica’s Sales & pen an existing company.” If Jessica’s Sales & Service is not listed on the “Open” list, click <Browse>. If the company is Service is not listed on the “Open” list, click <Browse>. If the company is listed on the “Company Name” list, select it. (Remember, you may have listed on the “Company Name” list, select it. (Remember, you may have used your first name Sales & Service.) Then, restore data from your back used your first name Sales & Service.) Then, restore data from your back up file. Once you restore data, Jessica’s Sales & Service will start where up file. Once you restore data, Jessica’s Sales & Service will start where you left off the last time you recorded data for this company.you left off the last time you recorded data for this company.If Jessica’s Sales & Service is If Jessica’s Sales & Service is notnot listed either on the “Open” list or when listed either on the “Open” list or when you select <Browse>, use the New Company Set Up Wizard to set up the you select <Browse>, use the New Company Set Up Wizard to set up the company. On the “Company Information” screen, complete the “Company company. On the “Company Information” screen, complete the “Company Name” field only. Then, click on Name” field only. Then, click on NNext repeatedly until you get to the Finish ext repeatedly until you get to the Finish button. Restore your data from your back up file and you can start where button. Restore your data from your back up file and you can start where you left off the last time you recorded data for this company. you left off the last time you recorded data for this company.

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Backing Up Chapter 11Backing Up Chapter 11

DiskDisk Backup Name Backup Name

KBKB Page Page Nos.Nos.

16 of 16 of 1818

A:\Chapter 11 BeginA:\Chapter 11 Begin 93 KB93 KB 391-392391-392

A:\Chapter 11A:\Chapter 11 105 KB105 KB 414-415414-415

A:\Exercise 11-1A:\Exercise 11-1 93 KB93 KB 425425

A:\Exercise 11-2A:\Exercise 11-2 99 KB99 KB 427427

TOTAL KBTOTAL KB 390 KB390 KB.

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Chapter 11 TopicsChapter 11 Topics1.1. Software & web objectives, p. 367Software & web objectives, p. 3672.2. Getting started, pp. 369-372Getting started, pp. 369-372

a. Using the setup checklist: general ledger, pp. a. Using the setup checklist: general ledger, pp. 372-372-378378b. Using the setup checklist: account payable, b. Using the setup checklist: account payable,

pp. 378-383pp. 378-383c. Using the setup checklist: inventory items,c. Using the setup checklist: inventory items,

pp. 383-391pp. 383-3913.3. Backing up your data, p. 391-392Backing up your data, p. 391-3924.4. Accounts Payable Tasks: Purchases/Receive Inventory, Accounts Payable Tasks: Purchases/Receive Inventory,

p. 392p. 392a. Using the purchase journal: “Purchases/Receive a. Using the purchase journal: “Purchases/Receive Inventory” window, pp. 393-397Inventory” window, pp. 393-397b.b. Additional purchases, p. 398Additional purchases, p. 398

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Chapter 11 Topics (continued)Chapter 11 Topics (continued)

5.5. Cash purchases: “Payments” window, pp. 398-400Cash purchases: “Payments” window, pp. 398-400

a. Printing the check, pp. 400-404a. Printing the check, pp. 400-404

6.6. Purchase returns, pp. 404-405Purchase returns, pp. 404-405

a. Paying a vendor, minus a return of a. Paying a vendor, minus a return of merchandise, merchandise, pp. 406-408pp. 406-408

7.7. Paying specific vendor invoices, pp. 408-410Paying specific vendor invoices, pp. 408-410

a. Editing payments, p. 410a. Editing payments, p. 410

8.8. Printing the purchase journal and cash disbursements Printing the purchase journal and cash disbursements journal, pp. 411-412journal, pp. 411-412

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Chapter 11 Topics (concluded)Chapter 11 Topics (concluded)

9.9. Vendor ledgers, 413Vendor ledgers, 413

10.10. Printing the General Ledger Trial Balance, pp. 413-Printing the General Ledger Trial Balance, pp. 413-414414

11.11. Backing up Chapter 11 data, pp. 414-415Backing up Chapter 11 data, pp. 414-415

12.12. Internet activity, p. 415Internet activity, p. 415

13.13. Summary and review, pp. 415-416Summary and review, pp. 415-416

a.a. Going to the net, p. 416 Going to the net, p. 416

b.b. True/make true questions, pp. 417-419True/make true questions, pp. 417-419

c.c. Exercise 11-1, pp. 419-425Exercise 11-1, pp. 419-425

d.d. Exercise 11-2, pp. 425-427Exercise 11-2, pp. 425-427

e.e. Chapter 11 index, p. 428Chapter 11 index, p. 428

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Getting Started, pp. 369-370Getting Started, pp. 369-370Complete steps 1 –6 on pp. 369 and 370. Then compare Complete steps 1 –6 on pp. 369 and 370. Then compare your screen with the one shown on p. 370.your screen with the one shown on p. 370.

Make sure that “Sales & Service Company” is highlighted. Make sure that “Sales & Service Company” is highlighted. Click on <Next>. Continue with steps 9-15 on p. 371.Click on <Next>. Continue with steps 9-15 on p. 371.

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Monthly accounting periods, p. 371Monthly accounting periods, p. 371

Complete step 15 on p. 371. Select “Complete step 15 on p. 371. Select “20032003” as the year.” as the year.

Check this screen carefully. You cannot change it Check this screen carefully. You cannot change it later. later. Continue with steps 16, 17, and 18 on page 372.Continue with steps 16, 17, and 18 on page 372.

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Setup Checklist, p. 372Setup Checklist, p. 372The Setup Checklist is shown on page 372.The Setup Checklist is shown on page 372.

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Pages 373 - 376Pages 373 - 376

Read the instructions on pages 373 – 376. Read the instructions on pages 373 – 376. Then, complete the steps shown.Then, complete the steps shown.

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Select Period, p. 376Select Period, p. 376Select “From 12/01/02 through 12/31/02” as your Chart of Select “From 12/01/02 through 12/31/02” as your Chart of Accounts Beginning Balance period so that your journals Accounts Beginning Balance period so that your journals will start on January 1, 2003.will start on January 1, 2003.

Peachtree posts on the last day of the month. Check this Peachtree posts on the last day of the month. Check this screen carefully. You screen carefully. You cannot changecannot change the period for the period for entering beginning balances later. entering beginning balances later. Click on <OK>.Click on <OK>.

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Continue on pp. 377-378Continue on pp. 377-378

After recording the chart of accounts After recording the chart of accounts beginning balances, complete steps 7 and beginning balances, complete steps 7 and 8 on page 378. 8 on page 378.

Read the “Using the Setup Checklist: Read the “Using the Setup Checklist: Accounts Payable” instructions on page Accounts Payable” instructions on page 378. 378.

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Vendor Defaults, pp. 378-379Vendor Defaults, pp. 378-379After completing steps 1- 5 on p. 378, the “Vendor Defaults” After completing steps 1- 5 on p. 378, the “Vendor Defaults” window appears.window appears.

Continue reading the instructions on p. 379. Then, complete Continue reading the instructions on p. 379. Then, complete the steps shown on pp .379-380.the steps shown on pp .379-380.

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““Maintain Vendors” pp. 380-381Maintain Vendors” pp. 380-381To add a vendor, complete the steps on page 380. The To add a vendor, complete the steps on page 380. The “Maintain Vendors” window is shown on page 381.“Maintain Vendors” window is shown on page 381.

Click on the “Click on the “PPurchase Defaults” tab. Then, continue urchase Defaults” tab. Then, continue with step 8a on page 381.with step 8a on page 381.

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Purchase defaults tab, p. 381Purchase defaults tab, p. 381After completing step 8a on page 381, this screen appears.After completing step 8a on page 381, this screen appears.

Click on the “Click on the “SSave” icon. Then, continue with the steps ave” icon. Then, continue with the steps shown on pages 382 and 383.shown on pages 382 and 383.

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Setting up Inventory Items, pp. 383-384Setting up Inventory Items, pp. 383-384Complete steps 1 – 4 on p. 384.Complete steps 1 – 4 on p. 384.

Continue with steps 5 – 6o on pp. 384-386.Continue with steps 5 – 6o on pp. 384-386.

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Maintain Inventory Items, pp. 387-389Maintain Inventory Items, pp. 387-389After completing step 6o on p. 386, the “Maintain Inventory After completing step 6o on p. 386, the “Maintain Inventory Items” window appears.Items” window appears.

Continue with the steps shown on pages 387, 388, and 389.Continue with the steps shown on pages 387, 388, and 389.

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Inventory Beginning Balances, Inventory Beginning Balances, pp. 388-389pp. 388-389

After completing step 8e on p. 389, the “Inventory After completing step 8e on p. 389, the “Inventory Beginning Balances” screen appears.Beginning Balances” screen appears.

Continue with the steps shown on pages 389 and 390.Continue with the steps shown on pages 389 and 390.

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Setup Checklist, p. 390Setup Checklist, p. 390This screen illustration is shown on page 390.This screen illustration is shown on page 390.

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Backing Up Your Data, pp. 391-392Backing Up Your Data, pp. 391-392

Complete steps 1-9 on pages 391-392 to Complete steps 1-9 on pages 391-392 to back up your data .back up your data .

The back up name is The back up name is Chapter 11 BeginChapter 11 Begin..

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Accounts Payable Tasks: Accounts Payable Tasks: Purchases/Receive Inventory, p. 392Purchases/Receive Inventory, p. 392

Read page 392.Read page 392.

Complete the steps shown on page 393. Complete the steps shown on page 393.

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Purchases/Receive Inventory, pp. 394-396Purchases/Receive Inventory, pp. 394-396

After completing the steps on pp. 394 and 395 the After completing the steps on pp. 394 and 395 the “Purchases/Receive Inventory” window appears.“Purchases/Receive Inventory” window appears.

Click on the “Journal” icon to see the Purchase Journal.Click on the “Journal” icon to see the Purchase Journal.

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Accounting Behind the Screens, p. 396Accounting Behind the Screens, p. 396The Purchase Journal screen, p. 396.The Purchase Journal screen, p. 396.

Complete the steps shown on pages 396 and 397. Complete the steps shown on pages 396 and 397. Record the “Additional Purchases” transactions on Record the “Additional Purchases” transactions on p. 398.p. 398.

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Cash Purchases: “Payments” Cash Purchases: “Payments” Window, pp. 398-399Window, pp. 398-399

Read the information about Cash Read the information about Cash Purchases: “Payments” Window on page Purchases: “Payments” Window on page 398.398.

Complete steps 1 – 9 on pages 398–399.Complete steps 1 – 9 on pages 398–399.

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Payments, p. 400Payments, p. 400After completing step 9 on page 399, the After completing step 9 on page 399, the “Payments” window appears.“Payments” window appears.

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Printing the Check, pp. 400-401Printing the Check, pp. 400-401

Follow steps 1 – 3 on pp. 400-401.Follow steps 1 – 3 on pp. 400-401.

Click on <OK>. Complete step 5 on p. 401.Click on <OK>. Complete step 5 on p. 401.

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Print Checks, p. 402Print Checks, p. 402

In the First check number box, type In the First check number box, type 20302030. Peachtree . Peachtree automatically sequences check numbers after the first one is automatically sequences check numbers after the first one is entered. Click on the “Print” icon. The textbook illustration entered. Click on the “Print” icon. The textbook illustration shows a preprinted check form; your check will print on plain shows a preprinted check form; your check will print on plain paper.paper.

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Select payment, pp. 403-404Select payment, pp. 403-404Click on the “Abc Open” icon to see if you have Click on the “Abc Open” icon to see if you have issued Check Nos. 2030 through 2035. The “Select issued Check Nos. 2030 through 2035. The “Select Payment” window is shown on p. 404.Payment” window is shown on p. 404.

Complete steps 9 and 10 on p. 404. Complete steps 9 and 10 on p. 404.

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Purchase Returns, pp. 404 and 405Purchase Returns, pp. 404 and 405Complete steps 1 – 8 on pp. 404-405. The Complete steps 1 – 8 on pp. 404-405. The “Purchase/Receive Inventory” window appears.“Purchase/Receive Inventory” window appears.

Click on the “Click on the “SSave” icon to post, then “Close.”ave” icon to post, then “Close.”

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Paying a Vendor, Minus a Paying a Vendor, Minus a Return of Merchandise, p. 406Return of Merchandise, p. 406Complete steps 1–4 on p. 406.Complete steps 1–4 on p. 406.

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Completed “Payments” window, p. 407Completed “Payments” window, p. 407

After completing step 5 on p. 407, the completed “Payments” After completing step 5 on p. 407, the completed “Payments” window appears.window appears.

Complete steps 6 – 10 on pages 407 and 408.Complete steps 6 – 10 on pages 407 and 408.

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Journal entry for payment to a Journal entry for payment to a specific vendor, p. 408specific vendor, p. 408

Account NameAccount Name DebitDebit CreditCredit

Accounts Payable/Rene Burton FabricsAccounts Payable/Rene Burton Fabrics 120.00120.00

Merchandise InventoryMerchandise Inventory 2.402.40

San Diego BankSan Diego Bank 117.60117.60

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How the purchases and payments tasks How the purchases and payments tasks work together with payments, p. 409work together with payments, p. 409

P rin t C h ecksP rin t th e D isb u rsem en t C h eck

P aym en ts TaskA p p ly th e V en d or In vo ice as a C h eck

P u rch ases /R ece ive In ven to ry TaskE n te r th e V en d or In vo ice

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Pay vendor invoice 201, pp. 409 and 410Pay vendor invoice 201, pp. 409 and 410

Complete steps 1 – 6 on pages 409 and Complete steps 1 – 6 on pages 409 and 410.410.

Remember to click on Save to post when Remember to click on Save to post when you are finished.you are finished.

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Editing Payments, p. 410Editing Payments, p. 410Display the “Payments” window.Display the “Payments” window.

Select the “Abc Open” icon.Select the “Abc Open” icon.

If necessary, highlight one of the vendors or If necessary, highlight one of the vendors or payments. Then click on <payments. Then click on <OOK>. Complete steps 4 K>. Complete steps 4 and 5 on p. 410.and 5 on p. 410.

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Printing the Purchase Journal, p. 411Printing the Purchase Journal, p. 411

Complete steps 1 – 4 on p. 411 to print the Complete steps 1 – 4 on p. 411 to print the purchase journal.purchase journal.

Compare your Purchase Journal printout Compare your Purchase Journal printout to the one shown on p. 411.to the one shown on p. 411.

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Printing the Cash Disbursements Printing the Cash Disbursements Journal, p. 412Journal, p. 412

Complete step 5 on p. 412 to print the Complete step 5 on p. 412 to print the cash disbursements journal.cash disbursements journal.

Compare your Cash Disbursements Compare your Cash Disbursements Journal printout to the one shown on Journal printout to the one shown on

p. 412.p. 412.

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Printing the Vendor Ledgers, p. 413Printing the Vendor Ledgers, p. 413

Complete steps 1 and 2 on p. 413 to print Complete steps 1 and 2 on p. 413 to print the vendor ledgers.the vendor ledgers.

Compare your Vendor Ledgers printout to Compare your Vendor Ledgers printout to the one shown on p. 413.the one shown on p. 413.

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Printing the General Ledger Trial Printing the General Ledger Trial Balance, pp. 413-414Balance, pp. 413-414

Complete steps 1 and 2 on p. 413 to print Complete steps 1 and 2 on p. 413 to print the general ledger trial balance.the general ledger trial balance.

Compare your General Ledger Trial Compare your General Ledger Trial Balance printout to the one shown on Balance printout to the one shown on

p. 414.p. 414.

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Backing Up Chapter 11 Data, Backing Up Chapter 11 Data, pp. 414 and 415pp. 414 and 415

Complete steps 1 – 9 on pages 414 and Complete steps 1 – 9 on pages 414 and 415 to back up Chapter 11 data.415 to back up Chapter 11 data.

Use Use Chapter 11Chapter 11 as the back up name. as the back up name.

Remember, Chapters 11, 12, 13, and 14 Remember, Chapters 11, 12, 13, and 14 work together. The data saved in Chapter work together. The data saved in Chapter 11 will be used to complete Chapter 12.11 will be used to complete Chapter 12.

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Glossary of TermsGlossary of TermsChapter 11Chapter 11

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Vendors, p. 368Vendors, p. 368

Merchandising businesses purchase the Merchandising businesses purchase the merchandise they sell from suppliers merchandise they sell from suppliers known as vendors.known as vendors.

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Accounts payable transactions, p. 368Accounts payable transactions, p. 368

Purchases of merchandise for resale, Purchases of merchandise for resale, assets, or expenses incurred on credit assets, or expenses incurred on credit from vendors.from vendors.

When Jessica's Sales & Service makes When Jessica's Sales & Service makes purchases on account from vendors, the purchases on account from vendors, the transactions are known as accounts transactions are known as accounts payable transactions.payable transactions.

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Accounts payable, p. 368Accounts payable, p. 368

The money a company owes to a supplier The money a company owes to a supplier or vendor.or vendor.

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Accounts payable ledger, p. 392Accounts payable ledger, p. 392Shows the account activity for each Shows the account activity for each vendor. Same as vendor ledger.vendor. Same as vendor ledger.

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Vendor ledger, p. 392Vendor ledger, p. 392

Shows the account activity for each Shows the account activity for each vendor. Same as accounts payable ledger.vendor. Same as accounts payable ledger.

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Purchase Journal, p. 392Purchase Journal, p. 392

In Peachtree, the Purchases/Receive In Peachtree, the Purchases/Receive Inventory task is the purchase journal.Inventory task is the purchase journal.

In the Purchase Journal, or In the Purchase Journal, or “Purchases/Receive Inventory” window, “Purchases/Receive Inventory” window, you can enter invoices from vendors or you can enter invoices from vendors or enter and print purchase orders. enter and print purchase orders.

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Average cost, p. 397Average cost, p. 397

A method of computing inventory. See A method of computing inventory. See weighted-average method on the next weighted-average method on the next slide.slide.

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Weighted-average method, p. 397Weighted-average method, p. 397

This method of inventory pricing divides This method of inventory pricing divides the cost of the inventory purchased by the the cost of the inventory purchased by the quantity of merchandise purchased. This quantity of merchandise purchased. This unit cost is multiplied by the ending unit cost is multiplied by the ending inventoryinventory

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Cash disbursements journal, p. 398Cash disbursements journal, p. 398

All payments of cash are recorded in the All payments of cash are recorded in the cash disbursements journal.cash disbursements journal.

In Peachtree, the Payments task is the In Peachtree, the Payments task is the cash disbursements journal.cash disbursements journal.

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Audit trail, p. 409Audit trail, p. 409

The path from the source document to the The path from the source document to the accounts.accounts.

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Internet Activity, p. 415Internet Activity, p. 41511 Go to the book’s website at Go to the book’s website at www.mhhe.com/yacht2003www.mhhe.com/yacht2003

22 In the “Student Center” list, link to Internet Activities.In the “Student Center” list, link to Internet Activities.

33 Link to WEB EXERCISES PART 3.Link to WEB EXERCISES PART 3.

44 Complete the “ACCOUNTING LIST – Chapter 11” Complete the “ACCOUNTING LIST – Chapter 11” exercise. Read steps 1-4.exercise. Read steps 1-4.

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

66 Using a word processing program, write a brief summary Using a word processing program, write a brief summary of what you find. Include all appropriate website of what you find. Include all appropriate website addresses.addresses.

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Going to the Net, p. 416Going to the Net, p. 416Access Peachtree’s NetSource at Access Peachtree’s NetSource at http://www.peachtree.com/netsource_news/pcw/archive.cfm?File=http://www.peachtree.com/netsource_news/pcw/archive.cfm?File=news_nov00.htmnews_nov00.htm

1.1. When is real-time posting the preferred method?When is real-time posting the preferred method?

2.2. When is batch posting the preferred method?When is batch posting the preferred method?

3.3. How do you change posting methods?How do you change posting methods?