MERCHANDISING BUSINESS PROJECT METRO SHOE STORE

Steps for completing the project, Metro Shoe Store merchandising business

In this project, you will complete the Computer Accounting Cycle for Metro Shoe Store, a merchandising business. Metro Shoe Store sells men's shoes, women's shoes, and children's shoes. It is organized as a corporation. Vendors offer Metro Shoe Store a purchase discount of 2% 15, Net 30 days. Metro Shoe Store does not offer customers a sales discount. A checklist is shown listing the printed reports that you should have at the end of this project. The step-by-step instructions also remind you to print reports at certain intervals. Complete the following steps. Step 1: Start Windows and Peachtree in the usual way. Step 2: At the "Peachtree Accounting" startup screen, click on "Set up a new company." Step 3: Complete the following company information: Company Name: Metro Shoe Store Address Line 1: 100 Biltmore Street City, State, Zip: Phoenix, FBR 85031 Country: USA Phone: 602-555-3319 Fax: 602-555-3320 Business Type: Corporation Federal Employer ID: 81-5013292 State Employer ID: 22-5413211 State Unemployment ID: 222794-6 E-mail: metroshoes@gmail.com Step 4: Step 5: Step 6: Copy Settings from an existing Peachtree accounting company to extract Chart of Accounts" Accept the default for "Accrual" accounting. Accept the default for "Real Time" posting. 1

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Accept the default for "12 monthly accounting periods." Read the information about "Monthly Accounting Periods." In the "When do you want your first fiscal year to start?" box, click on the down arrow in the "Year" box. Select "2010" as the year. Make sure that "January" is displayed in the "Month" box. In the "What is the first month you will be entering data?" box, select "January." Make sure that "2010 displayed in the "Year" box. In the "What is the first year you will be entering payroll?" box, make sure that "2010" is shown. Accept the information on the "Defaults" screen.

Step 10:

Step 11: Step 12:

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Read the information on the "Congratulations!" screen. Accept the default for "Yes, I would like to follow the Setup Checklist," by clicking on Finish.

General Ledger Information 1. Click on Account Beginning Balances. 2. You purchased Metro Shoe Store in January of 2010. Record beginning balances "From 1/1/10 through 12/31/10."
Metro Shoe Store Balance Sheet January 1, 2010 ASSETS Current Assets MCB Bank Stockmen's Savings & Loan Inventory-Men's Shoes Inventory-Women's Shoes Inventory-Children's Shoes Prepaid Insurance Total Current Assets Property and Equipment: Furniture and Fixtures Other Assets: Organization Costs Total Property and Equipment and Other Assets Total Assets LIABILITIES AND STOCKHOLDERS EQUITY Short-Term Notes Payable Long-Term Notes Payable Total Liabilities Stockholder's Equity: Common Stock Total Liabilities and Stockholders Equity 4,000.00 6,500.00 $10,500.00 55,550.00 $66,050.00 6,000.00 1,000.00 7,000.00 $66,050.00 $ 25,430.00 12,920.00 6,000.00 8,250.00 4,050.00 2,400.00 $59,050.00

4. This task is complete. Accounts Payable Follow the instructions below to set up vendor information for Metro Shoe Store. 1. Click on Vendor Defaults. defaults. Set up the following vendor 3

Standard Terms: Net due in: Discount in: Discount % Credit Limit: GL Link Accounts:

Due in number of days 30 days 15 days 2.00 10,000.00

Purchase Account: Inventory-Men's Shoes Discount GL Account: Inventory-Men's Shoes 2. Click on Vendor Records. Set up the following vendors: Vendor ID: Name: Contact: Address: City, ST Zip: Vendor Type: 1099 Type: Telephone 1: Fax: E-Mail BAP111 Baker Athletic Pro Terry Baker 13 N. Fifth Street San Francisco, CA 92818 men's Independent Contractor 415-555-4899 415-555-3290 baker@bap.com

Purchase Defaults folder tab: Purchase Acct: Tax ID #: Vendor ID: Name: Contact: Address: City, ST Zip: Vendor Type: 1099 Type: Telephone 1: Fax: E-mail: Purchase Defaults: Purchase Acct: Tax ID #: Inventory-Women's Shoes 22-2266213 4 Inventory-Men's Shoes 22-1798665 EZW112 Easy Walker Mary Currier 900 Main Street El Paso, TX 76021 women's Independent Contractor 915-555-5632 915-555-6595 ezwalkr@elpaso.com

Vendor ID: Name: Contact: Address: City, ST Zip: Vendor Type: 1099 Type: Telephone 1: Fax: E-mail:

TTT113 Tic-Tac-Toes Jeff Campbell 877 West Gila Avenue Flagstaff, FBR 86001 children Independent Contractor 928-555-1200 928-555-1201 tictac@tots.com

Purchase Defaults folder tab: Purchase Acct: Tax ID #: Inventory-Children's Shoes 22-8973244

3. This task is complete. Accounts Receivable Follow the instructions below to set up customer information for Metro Shoe Store. 1. Click on Customer Defaults. Standard Terms: Due in number of days Net due in: 30 days Discount in: 0 days Discount %: 0.00 Credit Limit: 5,000.00 GL Sales Account: Sales-Men's Shoes Discount GL Account: Sales Discounts 2. Click on Statement and Invoice Defaults." Print statements for customer accounts with: Any activity since the last statement was printed Balances at least $1.00 At least one invoice 15 days past due

Company Print Options: Print your company name, address, phone and fax on invoices and statements. 5

3. Click on Customer Records. Customer ID: Name: Address: City, ST Zip: Sales Tax: DB001 Doug Bale 360 Logan Circle Phoenix, FBR 86031

Follow these steps to add FBR sales taxes: a. b. c. d. box. e. Click on the magnifying-glass icon. Click on the New icon. Type FBR in the Sales Tax Code box. Type Federal Board of Revenue in the Description

Double-click on the ID column. The Maintain Sales Tax Authorities window pops up. f. Type FBR in the ID box. g. Type Federal Board of Revenue in the Description box. h. Type 7 in the Tax rate box. i. In the Sales Tax Payable G/L Account box, type Sales Tax Payable. Then, press <Enter>. j. Click on the Save icon, then on Close. You are returned to the Maintain Sales Tax Codes window. k. Click on Save, then Close. You are returned to the Maintain Customer/Prospects window. FBR is shown in the Sales Tax box. Customer Type: MAR (Maricopa County) Telephone 1: 602-555-3299 Fax: 602-555-3300 E-mail bale@phnx.com Web address: www.phnx.com/baleD "Sales Defaults" folder tab: G/L Sales Acct: Customer ID: Name: Address: City, ST Zip: Sales Tax: Customer Type: Telephone 1: Sales-Men's Shoes RL002 Rene Lozano 9965 W. City Line Flagstaff, FBR 86001 FBR COC (for Coconino County) 928-555-5233 6

Fax: E-mail: Web address:

928-555-5234 rene@flag.com www.flag.com/lozano

"Sales defaults" folder tab: G/L Sales Acct: Customer ID: Name: Address: City, ST Zip: Sales Tax: Customer Type: Telephone 1: Fax: E-mail: Web address: Sales-Women's Shoes SW003 Scott Wolf 800 W. Forest Meadows Phoenix, FBR 89102 FBR MAR 602-555-4077 602-555-4078 wolf@valley.net www.valley.net/scottW

Sales defaults folder tab: G/L Sales Acct: 4. Click on Close. Sales-Children's Shoes This task is complete.

Payroll 1. Click on Employee defaults. State: PB Unemployment Percent for Your Company: 3.4 Do You Want to Record Employee Meals and Tips: No Gross Pay Acct: Payroll Expense Tax Liability Acct: Payroll Taxes Payable Tax Expense Acct: Payroll Tax Expense 2. Accept the following defaults: 401(k) plan not offered Vacation time not tracked Sick time not tracked 3. Click on <Finish> to exit the Payroll Setup Wizard. 4. The "Employee Defaults" window appears. Click on the Pay Levels folder tab. Payroll Expense, is used for Salaries. 5. Click on the EmployEE Fields folder tab. following accounts: GP Fund Soc_Security Insurance 6. Click on the EmployER Fields folder tab. following accounts: Liability column GP Fund GP Fund payable Taxes Payable Select the Create the

Expense column GP Fund Expense Expense

7. Click on <OK>. This task is complete. 8. Click on Employee Records. Employee ID: ML Name: Matthew Lowe Accept the default for "Employee" Address: 1301 Poinsettia Blvd. City, ST Zip: Phoenix, FBR 86103 Social Security #: 899-42-1255 8

Type: Telephone 1: E-mail: Hired:

FULL 602-555-5609 ml326@mail.net 1/4/2010

"Pay Info" folder tab: "Salary," $475 per week. Employee ID: JW Name: Jessica Wood Accept the default for "Employee" Address: 157 N. Central Avenue City, ST Zip: Mesa, FBR 86432 Social Security #: 993-12-5476 Type: FULL Telephone 1: 602-555-3211 E-mail: jessicaW@mail.net Hired: 1/4/2010 "Pay Info" folder tab: "Salary," $475 per week. 9. Click on "Close." This task is complete. Inventory 1. Click on Inventory Defaults. 2. Set up LIFO as the inventory costing method. 3. Click on Inventory Items and Assembly Records. Then, set up the following stock items: Item ID: mshoes Description: men's shoes Item Class: Stock item Description for Sales: men's shoes Price Level 1: 300.00 Unit/Measure: each Item Type: men's GL Sales Acct: Sales-Men's Shoes GL Inventory Acct: Merchandise Inventory-Men's Shoes GL Cost of Sales Acct: Cost of Sales- Men's Shoes Cost Method: LIFO Last Unit Cost: 150.00 Item Tax Type: 1 Regular Minimum Stock: 10 Reorder Quantity: 5 9

Preferred Vendor ID: Baker Athletic Pro Beginning Balances: Quantity: Unit Cost: Total Cost: men's shoes 40 150.00 6,000.00

Item ID: wshoes Description: women's shoes Item Class: Stock item Description for Sales: women's shoes Price Level 1: 150.00 Unit/Measure: each Item Type: women's GL Sales Acct: Sales-Women's Shoes GL Inventory Acct: Inventory-Women's Shoes GL Cost of Sales Acct: Cost of Sales-Women's Shoes Cost Method: LIFO Last Unit Cost: 75.00 Item Tax Type: 1 Regular Minimum Stock: 10 Reorder Quantity: 5 Preferred Vendor ID: Easy Walker Beginning Balances: Quantity: Unit Cost: Total Cost: Women's Shoes 110 75.00 8,250.00

Item ID: cshoes Description: children's shoes Item Class: Stock item Detailed Description: children's shoes Price Level 1: 90.00 Unit/Measure: each Item Type: children GL Sales Acct: Sales-Children's Shoes GL Inventory Acct: Inventory-Children's Shoes GL Cost of Sales Acct: Cost of Sales-Children's Shoes Cost Method: LIFO Last Unit Cost: 45.00 Item Tax Type: 1 Regular 10

Minimum Stock: 10 Reorder Quantity: 5 Preferred Vendor ID: Tic-Tac-Toes Beginning Balances: children's shoes

Quantity: 90 Unit Cost: 45 Total Cost: 4,050.00 4. This task is complete. 5. Close the Setup Checklist. Make a backup. Use Metro Shoe Store Begin as the file name. Journalize and post the following transactions. Remember to click on the "Save" icon between each transaction to post. Date Description of Transaction

01/09/2010 Invoice No. 22bap was received from Baker Athletic Pro for 10 pairs of men's shoes for $150 each. 01/09/2010 Invoice No. E58 was received from Easy Walker for 12 pairs of women's shoes for $75 each. 01/09/2010 Invoice No. 76tac was received from Tic-Tac-Toes for 15 pairs of children's shoes for $45 each. 01/11/2010 Issue payroll checks 1001 and 1002 for Jessica Wood and Matthew Lowe. Payroll checks are drawn on the First Bank account. On the "Payroll Entry" window, type 1001 in the "Check Number" field. (Remember, you must download the tax table files so that Peachtree can automatically compute payroll tax amounts for the employee and employer. See page 1 for instructions for downloading the payroll tax table files.) 01/12/2010 Deposited cash sales of $2,670, plus sales taxes of $186.90: 4 pairs of men's shoes, $1,200; 5 pairs of women's shoes, $750; 8 pairs of children's shoes, $720. Cash is deposited in First Bank. 01/15/2010 Deposited cash sales of $1,950, plus sales taxes of $136.50: 5 pairs of children's shoes, $450; 4 pairs of 11

women's shoes, $600; and 3 pairs of men's shoes, $900. 01/16/2010 Sold one pair of men's shoes to Doug Bale on account, $300 plus $21 sales tax. Type 101 in the "Invoice #" field

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01/18/2010 Issue payroll checks 1003 and 1004 for Matthew Lowe and Jessica Wood. 01/19/2010 Deposited cash sales, $1,920, plus sales taxes of $134.40: 3 pairs of children's shoes, $270; 2 pairs of men's shoes, $600; 7 pairs of women's shoes, $1,050. 01/23/2010 Issue Check No. 1005 to Baker Athletic Pro in payment of purchase Invoice No. 22bap. Type 1005 in the "Check Number" field. 01/23/2010 Issue Check No. 1006 to Easy Walker in payment of purchase Invoice No. E58. (Remember to select Account No. 12050 Inventory-Women's Shoes as the Discount Account.) 01/23/2010 Issue Check No. 1007 to Tic-Tac-Toes in payment of purchase Invoice No. 76tac. (Remember to select Account. Inventory-Children's Shoes as the Discount Account.) 01/24/2010 Deposited cash sales of $1,230, plus sales taxes of $86.10: 2 pairs of men's shoes, $600; 3 pairs of women's shoes, $450; 2 pairs of children's shoes, $180. 01/25/2010 Issue Check No. 1008 to Biltmore Management for $900 in payment of mall space rent. 01/25/2010 Issue payroll checks 1009 and 1010 for Matthew Lowe and Jessica Wood. (Remember to type 1009 in the "Check Number" field.) 01/28/2010 Sold one pair of children's shoes to Scott Wolf on account, $90 plus $6.30 sales tax. If necessary, type 102 in the "Invoice #" field. 01/28/2010 Invoice No. 55bap was received from Baker Athletic Pro for three pairs of men's shoes for $150 each. 01/28/21010 Invoice No. E88 was received from Easy Walker for five pairs of women's shoes for $75 each.

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01/28/2010 Invoice No. 93tac was received from Tic-Tac-Toes for five pairs of children's shoes for $45 each. 01/30/2010 Deposited cash sales of $1,620 plus sales taxes of $113.40: 3 pairs of men's shoes, $900; 3 pairs of women's shoes, $450; 3 pairs of children's shoes, $270. 01/30/2010 Issue Check No. 1011 to Marilyn Cook for $167 in payment of Short-Term Notes Payable. (Remember to type 1011 in the "Check Number" field.) 01/30/2010 Issue Check No. 1012 to Bank of Phoenix for $108.33 in payment of Long-Term Notes Payable. 01/30/2010 Issue Check No. 1013 to Citizen's Utilities for $95.05 in payment of utilities. Print the following reports: 1. Print the General Ledger Trial Balance. 2. Print the financial statements: Balance Sheet, Income Statement, and Statement of Cash Flow. 3. Print the Customer Ledgers and Vendor Ledgers. 4. Make a backup. Use Metro Shoe Store January as the file name.

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CHECKLIST OF PRINTOUTS, Metro Shoe Store General Ledger Trial Balance Balance Sheet Income Statement Statement of Cash Flow Customer Ledgers Vendor Ledgers OPTIONAL PRINTOUTS, Metro Shoe Store Chart of Accounts Customer List Vendor List Purchase Journal Cash Disbursements Journal Sales Journal Cash Receipts Journal Payroll Journal Cost of Goods Sold Journal General Ledger

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Student

Name __________________ _____________Date ___________

CHECK YOUR PROGRESS: Metro Shoe Store 1. What are the total debit and credit balances on your General Ledger Trial Balance? _________ 2. What are the total assets on January 31? _________ 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. What is your balance in the MCB Bank account on January 31? _________

How much are the total revenues as of January 31? _________ How much net income <net loss> is reported on January 31? _________ What is the balance in the Inventory-Men's Shoes account on January 31? _________ What is the balance in the Inventory-Women's Shoes account on January 31? _________ What is the balance in the Inventory-Childrens Shoes account on January 31? _________ What is the balance in the Short-Term Notes Payable account on January 31? _________ What is the balance in the Common Stock account on January 31? _________ What are the total expenses reported on January 31? _________ Were any Accounts Payable incurred during the month of January? (Circle your answer.) NO YES 16

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