Mulungushi University

School of Business Study

Accounting Information System
Practical Exercise

Use the following information to complete the new company setup wizard using Peachtree
Complete Accounting (Quantum):
Company Name and Address Information
Land and Sea COMPANY
Lusaka, House # 777
P.O.Box 205433
Telephone: +220116185422
Fax: +260116631544
Lusaka, Zambia
Web site: www. Landandsea.zm
E-mail: [email protected]

Business Type: Sole Proprietorship

Chart of Accounts: Build your own company
Method of Accounting: Accrual
Posting Method: Real Time
Accounting Period: Number of accounting periods in a fiscal year - 12
First fiscal year to start - January 2020

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Use the information below to setup chart of accounts, customers, vendors and inventory items
opening balance as of January 1, 2020. The post closing trial balance, including accounts with
zero balances, shows the following as of Januray1, 2020.
Beginning Balance
Account ID Account Description Debit Credit
1010 Petty Cash 12,000.00
1020 Cash in Bank- Saving 18,000.00
1030 Cash in Bank-Checking 15,000.00
1100 Account Receivable 1450.00
1150 Allowance for Uncollectible 150.00
1200 Notes Receivable 1,000.00
1300 Loan to Employees 1,200.00
1400 Inventory 7,900.00
1600 Supplies 2,500.00
1700 Prepaid Insurance 1,400.00
1710 Prepaid Rent 400.00
1810 Equipment 48,000.00
1815 Accum. Depn. - Equipment 10,000.00
1820 Automobile 60,000.00
1825 Accum. Depn. - Automobile 11,200.00
1830 Office Furniture 38,600.00
1835 Accum. Depn. - Office Furniture 16,000.00
2000 Accounts Payable 2,160.00
2310 Accruals
2320 Notes Payable 5,000.00
2330 Employee Income Tax Payable 100.00
2340 Turnover Tax Payable
2400 Mortgage Payable 14,000.00
3000 z - Capital 144,340.00
3100 z - Withdrawal
3200 Retained Earning 4,500.00
4000 Sales
4050 Sales Returns and Allowances
4051 Sales Discounts
4100 Miscellaneous Revenue
4200 Finance Charge Income
5000 Cost of Goods Sold
6000 Salaries & Wages Expense
6100 Repair and Maintenance Expense
6200 Income Tax Expense
6300 Interest Expense
6500 Depreciation Expense-Equipment
6510 Depreciation Expense- Automobile
6520 Depreciation Expense- Office Furniture
6600 Payroll Tax Expense
6700 Purchase Discount Expense

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 6800 Rent Expense
6810 Insurance Expense
6820 Transportation Expense
6830 Supplies Expense
6840 Miscellaneous Expense
6850 Gain/Loss on Sale of Assets
6900 Amortization Expense _________ ________
Grand Total K 207,450.00 K 207,450.00
Customer ledger balance as of January 1, 2020
Invoice Account
Customer Name Code Address Date Invoice # balance
DM S1001 Lsaka 12/17/19 CSI-0041 420.00
EM E1001 Choma - - -
DA R1001 Livingston 12/25/19 CSI-0039 230.00
KY G1001 Kabwe - - -
RG R1002 Ndola 12/08/19 CSI-0040 400.00
DK D1001 Lusaka - - -
MB N1001 Kitwe 12/24/19 CSI-0042 180.00
RM R1003 Chingola 12/01/19 CSI-0038 220.00
Grand Total K.1450

vendor ledger balance as of January 1, 2020

Account
Vendor Name Code Address Invoice Invoice # balance
Date
TNT Company R2001 Lusaka 11/22/19 0074 360.00
Shalom & Company S2001 Lusaka 12/20/19 0076 225.00
D&D Supply Company B2001 Lusaka 12/15/19 0077 200.00
Philips Company P2001 Lusaka 12/26/19 0078 600.00
Valley Company V2001 Lusaka 12/24/19 0075 400.00
Johon Company M2001 Lusaka 12/13/19 0079 375.00
Grand Total K. 2,160

Inventory item balance as of January 1, 2013

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 Quantity
Product Name Code Measurement Cost Price Sale Price on Hand Location
Product A 0001 Each K 20 K30 80 W-1
Product B 0002 Each 50 80 50 W-1
Product C 0003 Each 10 20 100 W-1
Product D 0004 Each 30 50 120 W-1

Additional Information:
▪ The company collects a turnover tax (TOT) of 3% on all products it sales. The sales tax is remitted to the
Zambia Revenue Authority (FIRA).

Sales Tax Authority Sales Tax Code

ID Description Tax Rate (%) ID Description Tax Freight
ZRA Turnover Tax 3.00 TOT08 Turnover Tax No

▪ The company provides to majority of its credit customers a term of 2/10, n/30. A maximum credit limit of
K 1,500 is given to all customers, but specific decisions will be made depending on circumstances requiring
credit of more than this balance. The company’s credit policy requires that all customers who fail to act
according to the agreement shall be able to pay interest on all over due invoices starting 10 days from the
overdue date.

▪ The company charges 10% simple interest on balance up to K 2,000 overdue amount but 15% for a balance
above K 2,000 with a minimum charge of K 5. It appears on invoices and statements as “Late charge”. Print
finance charge warning message as “Overdue invoices are subject to late charges”. The aging reports are
based on invoice date and categorized as: 1st column, 0-15 days; 2nd column, 16-30 days; 3rd column, 31-45
days; and 4th column above 45 days.

▪ Most of the vendors provide a credit term of 3/15, n/45. The vendors usually provide a credit limit of K
10,000.00 with certain transactions being able to go beyond this limit depending on the circumstances. The
aging reports are presented based on due date and the aging categories being presented as follows: 1 st
column, 0-15 days; 2nd column, 16-30 days; 3rd column, 31-45 days; and 4th column, above 45 days.

The following are transactions during the month of January 2020

Jan Sold 5 units of Product A to EM for K 30 each. Sales invoice issued CSI-0043.
1........
Jan Received on account from RM K 220 for sales invoice CSI-0038. Received check # 224578.
1........ Cash receipt reference number CR -230. Deposit ticket # 001.
Jan Received on account from DA K 230 for Sales Invoice CSI-0039. Received check # 129576
2…… and issued cash receipt CR -231. Deposit ticket # 002.
Jan Customer purchase order (PO-0125) has been received from EM for 5 units of Product
2…… A at K 30 each. Sales order SO-0014 is issued to Eden. The goods are expected to be
delivered on January 8.
Jan Received cash from the owner Z, as an additional investment in the business, K 20,000.
3…… Cash receipt reference number CR -232. Deposit ticket # 003.
Jan Sold 3 units of Product B on account to DM and issued sales invoice CSI-0044.
3……
Jan Received on account from DM K 420 for sales invoice CSI-0041. Received check # 230455.
3…… Cash receipt reference number CR -233. Deposit ticket # 004.
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Jan Paid on account to Philips Company for Purchase Invoice # 0078 K 600 by Check #
3…… 567805. Reference PV-0025.

Jan Received prepayment of K 408.00 from RG for purchase of 5 units of Product B. Received
4…… check # 304585 and issued cash receipt CR -234. Deposit ticket # 005.
Jan 7… Sold 8 units of Product A on cash for K 244.80 including a 2% TOT. Received check #
204785.Cash receipt reference number CR -235. Deposit ticket # 006.
Jan Sold 4 units of Product A on account to GM for K 120 and issued sales invoice CSI-0045.
8……
Jan Shipped the order made on January 2 to EM and issued sales invoice CSI-0046.
8…… Customer PO # PO-0125
Jan Paid on account to Valley Company for Purchase Invoice # 0075 K 400 by Check #
8…… 567806. Reference PV-0026.
Jan Received on account from MB K 180. Sales invoice CSI-0042. Received check # 403765.
9…… Cash receipt reference number CR -236. Deposit ticket # 007.
Jan Purchase 20 units of Product C from Valley Company K 200 by Check # 567807.
10…… Reference PV-0027.
Jan Purchase 10 units of Product D on account from Valley Company K 30 each. Purchase
10…… Invoice # 0080. Reference JV-0007
Jan Grant credit to DM for 1 unit of Product B returned by her. Sales invoice CSI-0044. Credit
10…… number CM-0020.
Jan Received on account from EM K 149.94. Sales invoice CSI-0043. Received check # 443765
10…… and issued cash receipt CR -237. Deposit ticket # 008.
Jan Send purchase order to TNT Company for the purchase of 15 units of Product A at K
11…… 300. Purchase order number PO-0025.
Jan Paid liability to Zambia Revenue Authority for employees’ income tax payable K 100 by
12…… Check # 567808. Reference PV-0028.
Jan Bought supplies on account from D&D Supply Co K 300 by Memo No 0056 Reference
13…… JV-0008.
Jan Purchase 10 units of Product A on account from TNT Company K 200. Purchase Invoice
14…… # 0081. Reference JV-0009
Jan Sold 4 units of Product B on cash for K 326.40 including a 2% TOT. Cash receipt reference
14…… number CR -238. Deposit ticket # 009.
Jan Bought supplies for cash from D&D Supply Company K 300 by Check # 567809.
15…… Reference PV-0029.
Jan Sold 11 units of Product D on account to MB for K 561 and issued sales invoice CSI-0047.
16……
Jan Sold 9 units of Product C on account to RG for K 180 and issued sales invoice CSI-0048.
17……
Jan Received on account from GM K 119.95. Sales invoice CSI-0045. Received check #
17…… 248775. Cash receipt reference number CR -239. Deposit ticket # 0010.
Jan Grant credit to MB as an allowance on damage 2 units of Product D returned by her.
19…… Sales invoice CSI-0047. Credit number CM-0021.
Jan Paid miscellaneous expense K 125 by Check # 567810 to Messenger. Reference PV-0030.
20……

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Jan Received the order (PO-0025) from TNT Company Purchase Invoice # 0082. Reference
22…… JV-0010
Jan Purchase 40 units of Product C on account from Philips Company K 400. Purchase
23…… Invoice # 0083. Reference JV-0011.
Jan Sold 4 units of Product C on account to RM for K 80 and issued sales invoice CSI-0049.
23……
Jan Collected K 1,200 from loans given to employees. Cash receipt reference number CR-
23…… 240. Deposit ticket # 0011.
Jan Paid cash for taking a client to dinner K 120 by Check # 567811 to Hotel Reference PV-
24…… 0031.
Jan Paid deliver expense K 120 by Check # 567812 to GM. Reference PV-0031.
24……
Jan Received on account from RG K 179.93. Sales invoice CSI-0048. Received check # 448075
25…… and issued cash receipt CR-241. Deposit ticket # 0012.
Jan Sold 3 units of Product B on account to DK for K 240 and issued sales invoice CSI-0050.
26……
Jan Paid on account to BK Supply Co K 200 by Check # 567813.Purchase invoice # 0077.
27…… Reference PV-0032.
Jan Purchase 10 units of Product D on account from Shalom &Company K 300. Purchase
28…… Invoice # 0084. Reference JV-0012.
Jan Sold 7 units of Product C on cash for K 142.80 including a 2% TOT. Cash receipt
28…… reference number CR -242. Deposit ticket # 0013.
Jan Paid on account to Rebecca Company for Purchase Invoice # 0082 K 291 by Check #
31…… 567814. Reference PV-0033.
Jan Paid monthly payroll K 600 covering salary expense K 680 less deduction for employee
31…… income tax K 80 by Check # 567815. Reference PV-0034.
Jan Sold 5 units of Product A on account to EM for K 150 and issued sales invoice CSI-0051.
31……
Jan Received cash on sales of Office Furniture K 200. Received check # 258175 and issued
31…… cash receipt CR -243. Deposit ticket # 0014. The Office Furniture has an original value of
K 420and Accumulated Depreciation of K 180.
Jan Sold 10 units of Product D on account to DM for K 500 and issued sales invoice CSI-
31…… 0052.
Jan Sold 10 units of Product D on cash for K 510.00 including a 2% TOT. Cash receipt
31…… reference number CR -244. Deposit ticket # 0015.
Jan Purchase computers and printers from PC House K 6,000 by Check # 567816. Reference
31…… PV-0035.
Jan Purchase Office Furniture from HOME CORP K 2,000 by Check # 567817. Reference PV-
31…… 0036.
Jan Paid a 60-day notes payable K 5,000 including interest K 65.93 by Check # 567818 to
31…… Awash Bank. Reference PV-0037
Jan Settled monthly principal payment of K 2,000 and interest of K 150 on mortgage loan by
31…… Check # 567819 to INDO Bank. Reference PV-0038

Jan The following are general journal transactions for the month. Reference AE-801
31…… Supplies Expense…………………….……………120.00
Rent Expense…………………………………….. 50.00
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 Insurance Expense………………………………. 100.00
Depreciation Expense-Equipment…………….. 150.00
Depreciation Expense-Automobile…………….. 100.00
Depreciation Expense-Office Furniture……….. 50.00
Jan Actual physical count as of this date revealed that there is a discrepancy in quantity
31…… between quantities on hand and book for Product B and Product D.
You are required to pass inventory adjustment entry for these two products. Use
inventory counting sheet number ICS-102 as reference.
▪ Three units of Product C are spoiled.
▪ Two units of Product D are missing from the warehouse.