Computerized Accounting

Comprehensive Project

Exercise 1 Marinating company

1. Introduction

SMART Plc is an enterprise supervising three poultry farms located in Addis Ababa and
Debre Zeit. They are Shola Farm and Tadi Farm Addis Ababa, and Dandi Farm- Debre
Zeit. The enterprise office is in Addis Ababa, Yeka Kifle Ketema, and Kebele 17 House
no. 459. Tel. +251-116-454545, fax +251-116-454546. The enterprise decided to change
its manual accounting process to Computerized accounting system at May 1, 2006. The
company’s fiscal year starts on January 1 and ends on December 31. The business is a
sole proprietorship. It uses accrual basis of accounting and its posting system is real time
positing.

Required: Based on the above data, create and setup Smart Plc.

2. User ID and Passwords

You are assigned as an administrator of the Peachtree Accounting Software, the company
maintains for recording and reporting its financial affairs. The following are a list of employees
whose jobs are directly related with PCASP, and their related ID and passwords.

User General Control level

No. Name Password Duties
ID Duties
prepare monthly full control over all
payroll
1 Beti bn bn payroll payroll tasks
clerk
full control over all
purchase
perform all tasks
tasks
related to purchase
2 Chander ch ch sales clerk  read inventory
gather inventory status
reports only
and sales data
read sales reports
only
full control over all
inventory
perform all tasks
tasks
related to inventory
3 Dadu Da Da GL clerk read purchase
collect purchase and
reports only
sales data
read sales reports
only
3. Audit Trial

The firm wants to trace any activities performed in its Peachtree Accounting company
records through all possible options the program provides.

Required: Activate the “Use Audit Trial” Option.

Before performing the following activities, close your company and reopen it
using the user ID and password you have maintained earlier.

4. Chart of Accounts
Below are the Descriptions, identification number and related information for the
accounts the firm plans to use for recording its financial affairs at it’s headquarter using
Peachtree Accounting Software.

Balance
Particular Account ID
April 30,2006
Petty cash 1110 10,000
Cash at Bank 1120 2,432,000
Trade Debtors 1210 63000
Sundry Debtors 1220 82000
Staff Debtors 1230 5000
Merchandise Inventory 1310 3,010,000
Prepaid Insurance 1410 10,000
Poultry Equipment 1510 590,000
Accumulated Depreciation- Poultry Equ. 15101 400,000
Office Equipment 1520 10,000
Accumulated Depreciation- Office Equ. 15201 5,000
Vehicles 1530 300,000
Accumulated Depreciation-vehicles 15301 100,000
Office Furniture 1540 15,000
Accumulated Depreciation-Office Furni. 15401 10,000
Trucks 1550 480,000
Accumulated Depreciation-Trucks 15501 200,000
Building 1560 2,000,000
Accumulated Depreciation-Building 15601 500,000
Trade Creditors 2110 2,700,000
Salary Payable 2120 250,000
Employee PFC Payable 2130 380,000
Employer PFC Payable 2140 -
Employer Employee Tuition Fee Payable 2150 --
Employee Income Tax Payable 2160 --
Employee Bank Loan Payable 2170 --
Employee Union Due 2180 --
 Sales Tax (VAT) Payable 2190 --
Invested Capital 3110 3,000,000
Retained Earnings 3120 1,657,000
Sales 4110 --
Sales Discounts 41101 --
Cost of Sales 5110 --
Purchase Discount 51101 --
Salary Expense 6110 --
Payroll Expense 6120 --
Supplies Expense 6130 --
Miscellaneous Expenses 6140 --

Required: based on the above data, setup the chart of accounts for the company.

5. Vendor Information
The company buys goods and services from different vendors/suppliers both on cash and
credit basis. Majority of its vendors allow the company to buy goods and services worth
up to $1,000,000 on credit and earn a 4% discount if invoices are paid within 12 days
from the date of purchase or else pay within 42 days. The company uses the
Merchandise Inventory Account to record all purchases of goods from vendors, while it
records purchases of utility services in the Utility Expenses Account. Purchase discounts
taken are recorded in the Purchase Discounts Account while Purchases Returns and
Allowances are recorded in Purchases Returns & Allowances Account.. The company
wants to age vendor invoices by due date. The invoices are to be categorized as follows;
0-15, 16-30, 31-45, and over 45 days overdue in categories I, II, III and IV, respectively.
Besides, the company has special agreements with the following vendors

Vendor Name Address Terms Contact Beginning

ID Balance
V200 ABC Company A.A. Standard Lemma $ 750,000.
W.14,K52, Inv# 1600
Tel. 12345678 PO. 20
Ethiopia
V201 A2 Company A.A. W 01 2/10,2/45 Abel $ 650,000
K.18, Tele $ 800,000 Inv# 1500,
2121212 PO# 25
Ethiopia
V202 KK Trading A.A. W 10 Standard Habib $ 800,000
K.28, Tele Inv# 1599,
3131313 PO# 23
Ethiopia
V203 XPO Plc A.A. W 2/15,n/EOM Nasir $500,000
19K.55, Tele $ 750,000 Inv# 1597,
4141414 PO# 19
Ethiopia
V204 Federal Inland A.A., W 13, Due on the Endale -
 Revenue Authority K22 Tel. 7th day-next
121421515 month. No
Ethiopia Credit limit

6. Sales Tax Authority.

The company collects 15% VAT (description: Federal Value Added Tax) and submit the sum
collected to the Federal Inland Revenue Authority (ID: 15FIRA). Thus, it has one Sales Tax
Code-FVAT (Federal Value Added Tax). Taxes collected from customers are recorded in the
Sales Tax (VAT) Payable Account NO. 218H8. VAT is not payable on freight charges.

Required: Based on the above data, setup sales tax authority and code.

7. Inventory Information

The firm buys and various inventory items, which are all stock items, and Average is considered
to be the default inventory costing method. All inventory items are subject to VAT. The company
uses the Merchandise Inventory), Sales and Cost of Goods Sold) accounts to record transactions
related to inventory items. The Miscellaneous Expenses Account is used to record delivery costs.
Inventory items are received from vendors through the appropriate and best method of delivery.
At present the company uses one price level named Selling Price. The current price level need no
calculation.

Item Description Unit f Unit Locatio Mini. Beginning Bal.

Id Measure Selling n Stock/
Unit Quantity
price Reorder
Cost
Q.
V200 Vitamin Kg 120.00 Shola 100/800 100.00 400
F200 Feed Qtls 230.00 Shola 50/400 200.00 200
L200 Layer Each 20.00 Tadi 75,000/ 12.00 150,000
600,000
D200 Day old Each 6.00 Tadi 12,000/ 4.00 80,000
Ck. 189,000
B200 Broiler Each 25.00 Dandi 5,500/ 15.00 30,000
48,500

8. Customer Information

Sales and related discounts are recorded in the Sales Account and Sales Discounts
Account, respectively. Finance charges on overdue accounts are recorded in the Interest
Income Account. All credit customers, except those having special agreements with the
company, are required to settle their obligations for goods bought on credit within 45
days from the date of each credit sales invoice. They are entitled to 5% discount for
payments within 8 days from the date of each credit invoice. The credit limit is set at
$800,000 per credit customer. All customers failing to pay within the credit period (45
days) are subject to 7.5% interest on balances up to $55,000 and 8.5% interest on
balances above $55,000. The minimum finance charge is determined to be $5. The
company does not charge interest on finance charges. Finance charges are included and
explained in customer invoices and statements as service charges. At present, the
company accepts only cash, checks and Dashen VISA as payment methods. Customer
invoices are age by invoice date and are to be categorized as follows; 0-35, 36-70, 71-
100, and over 100 days overdue in categories I, II, III and IV, respectively.

Customer Name Address Terms Contact Beginning

ID Balance
C200 Sheraton Addis A.A., W 13, Standard Mikias $ 50,000. Inv#
K22 Tel. 1400
121421515
Ethiopia
C201 Ethiopia Hotel A.A, W 18. K 2/10,2/45 Daniel $2,000.00
23, Tel $1,000,000 Inv# 1398,
5263625
Ethiopia
C202 Hotel De A.A. Standard Kibrom $8,000.00
Leopol W.14,K52, Inv# 1399,
Tel. 12345678
Ethiopia
V203 Hilton Hotel A.A. W 01 3/15, Helen $3,000.00
K.18, Tele n/EOM Inv# 1390
2121212 $1,200,000
Ethiopia

9. Selling and Purchase Activities

May 1. Issued a sales order to Sheraton Addis 210 kg of vitamin @ $100 by SO# 100.
May 1. Purchase 10,000 units of Layer at $12.50 on account from KK Trading by inv#
100. And made a down payment of $ 50,000. Ref # 001
May 3. Purchase 500 kg of vitamin @ 100 on cash from A2 Company by Ck# 100.
May 3. Issued a purchase order to ABC Company for 10,000 units of Day old @ 4.00 by
PO#100.
May 4. Issued a purchase order to A2 Company for 5,000 units of Broiler @ 15.00 by
PO# 101.
May 4. Convert SO# 100 into sales invoicing # 100.
May 5. Receiver 8,500.00 units of Day old form ABC Company which was ordered by
PO#100 by inv# 101.
May 5. Paid full amount of inv#1600 to ABC Company by Ck# 101
May 6. Received cash from Ethiopia Hotel for full settlement of Inv# 1398. Deposit Id#
100, Ref # 001 and Receipt # 100.
May 7. Received cash from Sheraton Addis l for full settlement of Inv# 1400. Deposit
Id# 101, Ref # 002 and Receipt # 101.
May 7. Purchase Office Furniture for $ 12,500.00 on cash from Ayele by Ck# 101.
May 7. Sold 58 quintals of Feed @ 230 on cash to Hotel De Leopol. Deposit Id# 102, Ref
# 003 and Receipt # 102.
May 7. Paid full amount of inv#1500 to A2 Company by Ck# 102.
May 8. Issued a purchase order to XPO Plc for 15,000 units of Layer @ 12.00 by PO#
102.
May 9. Receiver 4,500.00 units of Broiler form A2 Company which was ordered by
PO#101 by inv# 102.
May 9. Sold 100,000 units of Layer @ 20 on account Hilton Hotel by inv# 103, and
received cash $ 100,000. Ref# 001.
May 9. Sold 10,000units of Broiler @ 25 on cash to Hotel De Leopol. Deposit Id# 103,
Ref # 004 and Receipt # 103.
May 10. Purchased 60 poultry Equipments for birr $120,000 from XYZ Company by CK
# 102
May 11. Purchased 3 Managerial Desks for 5000 birr each and 6 Swivel Chairs for 1,000
each for the three poultry farms by Ck# 103
May 11. Purchased 30 quintals of Vitamins for Birr 300,000 on account from ABC Co.
Inv#103.
May 13. Received cash from Hotel De Leopol l for full settlement of Inv# 1399. Deposit
Id# 104, Ref # 005 and Receipt # 104.
May 13. Paid the remaining amount of inv#101 to ABC Company by Ck# 104.
May 14. Received cash from Hilton Hotel for full settlement of Inv# 103. Deposit Id#
105, Ref # 006 and Receipt # 105.
May 15. Birr 14,000 was paid for loading and unloading Expense by ck# 105.
May 15. Receiver all units of Layer form XPO Plc which was ordered by PO#102 by
inv# 104.
May 16. Paid full amount of Inv# 100 to KK Trading and also purchased 100 qtls @ 100
of Vitamin on cash by Ck# 105.
 10. Other Transactions

A. At the end of the month all stock items were counted and reported. The report
showed that:
 50 Layers were Missed
 2,000 day old chickens were dead
 15 kg of Vitamin were Missed
B. $4,500 of Insurance 3spired during May, 2006.

11. Fixed Assets

The following table provides data related to fixed assets of the company.

Economic Date
Serial Savage Depreciation
ID Description Cost Life
No. Value Acquired In-service Method
(years)
11C 1CC Computers 400,000 20,000 5 06/22/04 06/30/04 DBMMS
12V 1VV Vehicles 500,000 80,000 10 03/14/04 03/28/04 DBMMS
13B 1BB Buildings 100,000 30,000 20 01/06/05 01/12/05 SLMM
14F 1FF Furniture 200,000 40,000 10 01/13/05 01/19/05 SLMM
and
Fixtures
15L 1LL Land 500,000 ?? ?? 01/09/05 01/19/05 ??
15M 1MM Other 900,000 120,000 10 01/15/04 02/15/04 SLFM
Fixed
Assets
Note:
 All fixed assets are to be used for only business purposes.
 Life-to-date depreciation is equal to the depreciation balance given as of December 31,
2005 in the chart of accounts of the company.
 No investment tax credit is offered on fixed assets.
 The depreciation method given in the above table is applicable starting from January 1,
2006.
 You should create additional fixed asset accounts when necessary.
  Other fixed assets refer to fixed assets, which cannot be categorized as computers, vehicles,
buildings, land or furniture and fixtures.
Required: Based on the above data and using Peachtree Fixed Assets Program maintain fixed
assets records for the company.
Note that you should select the appropriate GL accounts for recording fixed asset related
transactions and specify your own location and department for the fixed assets.