Chapter 11:

Completing Quarterly

Activities

and Closing the Fiscal

Year

McGraw-Hill/Irwin Copyright © 2013 by The McGraw-Hill Companies, Inc. All rights reserved.

Completing Quarterly Activities

and Closing the Fiscal Year

Chapters 9, 10 and 11 work together. In Chapter 11, you continue recording financial information for Mark Foltz Designer. You complete the Computer Accounting Cycle for November and December. Mr. Foltz’s transaction registers and bank statements are used as source documents.

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

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PCA’s Computer

Accounting Cycle, p. 362PCA'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, and Statement of Retained Earnings.

9. Close the fiscal year.

10. Interpret accounting information.

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Peachtree Tips

You must complete Chapters 9 and 10 before starting

Chapter 11.

To check that you have completed Chapter 10, display

Mark Foltz Designer’s general ledger trial balance.

Compare it to the one shown on page 347. This is the

trial balance at the end of October.

If any of the account balances are incorrect on the

general ledger trial balance, follow the steps for Editing

Journal Entries on page 346. Then, reprint the trial

balance.

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Peachtree Tips (concluded)

If you do not get the correct year-to-date amounts on the

Income Statement (pages 373 and 390) and Statement of

Cash Flow (page 392), you probably set your chart of

accounts beginning balances in Chapter 9 incorrectly (refer

to steps 1-8, pages 302-307, Entering Chart of Accounts

Beginning Balances).

The Select Period window, From 9/1/12 through 9/30/12, is

shown on page 304 below step 3.

To check that your beginning balances were set up correctly,

display the September 30, 2012 balance sheet (refer to

pages 307-308).

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Backing Up Chapter 11

Peachtree Backup (.ptb)

Excel (.xlsx) and Adobe (.pdf) Kilobytes Pages

Chapter 11 November.ptb 1,010 KB 374-375

Chapter 11 December UTB.ptb 1,011 KB 382-383

Chapter 11 December.ptb 1,017 KB 393-394

Chapter 11_Adjusted Trial Balance and Financial

Statements.xlsx

30 KB 393-394

Chapter 11_Adjusted Trial Balance.pdf 38 KB 394

Chapter 11_December Balance Sheet.pdf 5 KB 394

Chapter 11_December Income Statement.pdf 6 KB 394

Chapter 11_December Statement of Cash Flow.pdf 5 KB 394

.

The chart below shows the size of the backups made in Chapter 11. Refer to

textbook pp. 277-278 for sizes of backups (.ptb), Excel files (.xlsx), and Adobe (.pdf)

files in Part 2-Chapters 9, 10, 11 and Project 1.

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Backing Up Chapter 11 (continued)

Peachtree Backup (.ptb)

Excel (.xlsx) and Adobe (.pdf) Kilobytes Pages

Chapter 11_December Statement of Retained Earnings.pdf 4 KB 394

Chapter 11 EOY.ptb 1,026 KB 400-401

Chapter 11_Postclosing Trial Balance.xlsx 12 KB 401

Chapter 11_Postclosing Trial Balance.pdf 51 KB 401

Asset depreciation.xlsx (Going to the Net) 14 KB 402

Exercise 11-1.ptb 973 KB 406

Exercise 11-2_Unadjusted Trial Balance.ptb 1,008 KB 408

Exercise 11-2 Financial Statements.ptb 1,011 KB 409

Exercise 11-2_Adjusted Trial Balance and Financial

Statements.xlsx

29 KB 409

Exercise 11-2_Adjusted Trial Balance.pdf 53 KB 409

Exercise 11-2_Balance Sheet.pdf 5 KB 409

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Backing Up Chapter 11 (concluded)

Peachtree Backup (.ptb)

Excel (.xlsx) and Adobe (.pdf) Kilobytes Pages

Exercise 11-2_Income Statement.pdf 6 KB 409

Exercise 11-2_Statement of Cash Flow.pdf 5 KB 409

Exercise 11-2_Statement of Retained Earnings.pdf 4 KB 409

Exercise 11-2 End of Year.ptb 1,020 KB 409

Exercise 11-2_Postclosing Trial Balance.xlsx 12 KB 409

Exercise 11-2_Postclosing Trial Balance.pdf 50 KB 410

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Change accounting periods, pp. 364-366

Click on Tasks, then System. From the System menu, select Change Accounting Period. Select 11-Nov 01, 2012 to Nov 30, 2012.

The Change Accounting Period window is shown on p. 365.

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

The toolbar shows

.

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Data File Statistics, pp. 375-377 From the menu bar, click Help,

Customer Support and Service, then select File Statistics.

The File Statistics window shows the shortened name for the company. If you used your first and last name Designer, your shortened company name will differ. The Data File Statistics window is shown on page 376.

Click OK to close the Data File Statistics window.

The shortened company name that Peachtree assigns is made from the first three letters in the first word, the first three letters in the second word, and two letters from the third word.

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Glossary of Terms

Chapter 11

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General Ledger System,

pp. 361-362

The complete collection of accounts (chart

of accounts) of a company, transactions

associated with these accounts, and

account balances for a specified period of

time. In Peachtree, the General Ledger

System is the combination of all journal

entries that have been shown on the

company’s financial statements.

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Unearned revenue, p. 386

Unearned revenue is a liability account

used to report advance collections from

customers or clients.

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Going to the Net, p. 402Access the asset depreciation schedule at

http://office.microsoft.com/en-us/templates/asset-depreciation-schedule-TC001046099.aspx. (Hint: You may need to copy/paste the website address into your browser. Excel 2000 or later is required.) Click . Save the asset depreciation schedule. An Asset Depreciation worksheet appears.

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

Date: 1/1/2006

Initial cost: 7000

Salvage value: 0Useful life (years) 7

Click on Asset Depreciation. Type Furniture to replace it.

From Excel’s menu bar, make the selections to Print.

Save. The suggested file name is Asset depreciation.xls. (The default is an .xls file.)

What depreciation methods are shown?

Close Excel; close Internet Explorer.

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Analysis Questions, p. 4101. When using Peachtree, why is it important to change

accounting periods? (Hint: Do a search on Peachtree’s

Help window for Change Accounting Period.)

Accounting Periods define segments of your fiscal year.

Peachtree permits you to operate within two open fiscal

years. The Change Accounting Period window serves two

purposes. First, it informs you of your company's current

fiscal year and payroll tax year setup. Second, this window

permits you to move to an alternate accounting period.

Typically, you'll do this at the beginning of each new

accounting period.

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Analysis Questions, p. 4102. Does the balance in retained earnings differ on the adjusted trial balance and the

postclosing trial balance?

3. How does the postclosing trial balance differ from the adjusted trial balance? (Answer to #2

and #3 below)

The adjusted trial balance shows all accounts in the general ledger that have account

balances. This includes the revenue and expense accounts. Since the revenue and expense

accounts have not been closed, there is no balance in Account No. 3910, Retained

Earnings, on the adjusted trial balance.

At the end of the fiscal year, the temporary owner’s equity accounts (revenues, expenses,

and drawing) are closed to a permanent owner’s equity account. In Peachtree, there are two

permanent owner’s equity accounts: the owner’s capital account and the Retained Earnings

account. Peachtree closes the temporary accounts to the Retained Earnings account.

After the fiscal year is closed, a postclosing trial balance is printed. Only permanent

accounts appear on the postclosing trial balance. All temporary accounts (revenues and

expenses) have been closed. The postclosing trial balance shows a balance in Account No.

3910, Retained Earnings. The retained earnings account balance is net income minus the

account balance in the drawing account. The Retained Earnings balance on the postclosing

trial balance agrees with Peachtree’s Statement of Retained earnings.

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Assessment Rubric, p. 410

Task Date Navigation Center

Task

Window

Ending GL

Balance

December

bank

reconciliation

Mark Foltz

Designer

Dec. 31,

2012

Banking; Reconcile

Accounts, Select Account

No. 1020, Checking

Account

Account

Reconciliation

$18,712.47

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Online Learning Center

Go online to www.mhhe.com/yacht2012 for additional

resources. Link to Student Edition, select Chapter 11.

o Interactive Testing

o Glossary of Terms

o Feature Quizzes

o PowerPoints

o Assessment Rubric

o Going to the Net

o QA Templates

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