Peachtree Module
Peachtree Module
Peachtree Module
Prepared By: Naod Mekonnen/ Wollo University-Accounting & Finance Dep’t Page of 112
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Contents
CHAPTER ONE: INSTALLING PEACHTREE SOFTWARE..................................................... 1
1.1. Introduction ...................................................................................................................... 1
1.2. Installing Peachtree Software........................................................................................... 2
1.3. Registering Peachtree..................................................................................................... 11
CHAPTER TWO: BASIC PEACHTREE OVERVIEW .............................................................. 12
1.1. Introduction .................................................................................................................... 12
1.2. Starting the Program....................................................................................................... 12
1.3. Create a New Company.................................................................................................. 13
1.4. System Basics................................................................................................................. 24
1.5. Working in Peachtree ..................................................................................................... 27
1.6. Open a Company............................................................................................................ 28
1.7. Close Peachtree .............................................................................................................. 30
CHAPTER THREE: FILE SETUP............................................................................................... 31
3.1. Introduction .................................................................................................................... 31
3.2. Setting up Chart of Accounts ......................................................................................... 31
3.3. Setting up Customer, Vendor, and Inventory Defaults .................................................. 39
3.4. Customer, Vendor, and Inventory Maintenance ............................................................ 47
3.5. Setting-Up Sales Taxes .................................................................................................. 57
3.6. Setting up Payroll ........................................................................................................... 60
3.7. Changing the Accounting Period ................................................................................... 71
CHAPTER FOUR: TRANSACTIONS ........................................................................................ 74
4.1. Introduction .................................................................................................................... 74
4.2. Sales and Accounts Receivable (Customers Transactions)............................................ 74
4.3. Purchases and Accounts Payable (Venders Transactions) ............................................. 81
4.4. Entering Customer Credit Memos (Sales Return and Allowance) ................................ 85
4.5. Entering Vendor Credit Memos (Sales Return and Allowances) .................................. 87
4.6. Payroll Transactions....................................................................................................... 89
4.7. General Journal Entry..................................................................................................... 93
4.8. Inventory Adjustments ................................................................................................... 96
CHAPTER FIVE: OTHER TASKS ............................................................................................. 98
5.1. User Security .................................................................................................................. 98
5.2. Backup and Restore........................................................................................................ 99
5.3. Year-End Wizard.......................................................................................................... 102
COMPREHENSIVE ILLUSTRATION ..................................................................................... 104
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Accounting as it exists today may be viewed as a system of assumptions, doctrines, tenets (views),
and conventions, all encompassed by the phrase “generally accepted accounting principles.” Many
of these principles developed gradually. In recent decades, however, an authoritative body, such
as the Financial Accounting Standards Board, has determined standards or rules for accounting
principles. Thus, after you have learned accounting principles, applying this knowledge to
accounting software is an important next step of academic progress.
Accounting systems collect and process data from transactions and events, organize them in useful
reports and communicate results to decision makers. Three main steps are involved in processing
business transaction. First, the financial information collected from source documents (source
document: an original document containing information about a transaction), verified, and
analyzed to determine how it will be recorded. Next, the transactions are recorded (manually
recorded in the journal or electronically in the computer). Finally, reports are produced, analyzed
and summarized the financial information.
In doing so, accounting systems consists of people, records, methods, and equipment. The systems
are designed to capture information about a company’s transactions and to provide output
including financial, managerial and tax reports. All accounting information systems have these
same goals, and thus share some basic components. These components apply whether or not a
system is heavily computerized, yet the components of computerized systems usually provide
more accuracy, speed, efficiency, and convenience than those of manual systems.
In computerized accounting system, the computer able to classify and summarize the data. It can
post transactions to the main record, called the general ledger and within a second, the computer
produce financial statements of the business.
There are five basic components of the accounting systems. They are: source documents, input
devices, information processors, information storages, and output devices.
system. Commonly referred to this as ‘’garbage in garbage out’’ information systems are
set up with attention on control procedures to limit the possibility of entering faulty data in
the system.
2. Input Device: input device capture information from source documents and enable its
transfer to the system’s information processing component. Key board, scanner, and mouse
are some of the most common input devices. Controls are used to ensure that only
authorized individuals enter data to the system. Controls increase the system’s reliability
and allow information to be traced bake to its source.
3. Information Processors: are systems that interpret, transform, and summarize information
for use in analysis and reporting.
4. Information Storage: is the accounting system component that keeps data in a form
accessible to information processors. After being information entered and processed, data
are stored for use in the future analysis and reports.
5. Output Devices: are means to make information out of an accounting system and make it
available to users.
Peachtree Software
Multipurpose off-the-shelf (readymade) software applications exist for a variety of business
operations. These include familiar accounting programs such as Peachtree and QuickBooks. Off-
the-shelf programs are designed to be user friendly and menu driven, and many operate more
efficiently as integrated systems. In an integrated system, actions taken in one part of the system
automatically affect related parts. For instance, when a credit sale is recorded in an integrated
system several parts of the system are automatically updated, such as posting to the ledger.
Peachtree accounting software for windows use accounting principles and work for all types of
businesses. It performs all steps in the accounting cycle, from recording business transactions to
generating reports; in addition the software can analyze financial data and can provide time
management. Hence, the software requires a minimum hardware configuration. Besides, Peachtree
software has many versions depending on the advancements of Peachtree software engineers and
anybody can purchase the software and use.
1. Exit all programs and disable virus-protection and screen saver programs on your computer.
This frees up memory and avoids interference with the Peachtree setup process.
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It’s important to consider the importance of the following buttons, because almost each window
will have back, next, finish, cancel and help buttons. Thus, the buttons at the bottom of each
window let you go back, move forward, or cancel the setup process. The Help button gives you
immediate assistance for the current setup window.
2. Insert the Peachtree disc in your CD-ROM drive. The Peachtree Autorun window
automatically appears; it has a menu of options, including the installation of Peachtree and
its components. NB: If the Autorun window does not automatically appear, do the
following: From the Windows Start menu, select Run. Type “D:SETUP” and click OK.
(Substitute the appropriate drive letter for your CD-ROM drive.)
The Peachtree Accounting Setup - Welcome window appears. It tells you what to expect
when you run the Setup program. Read the information and instructions on the window,
and then select Next. NB:To stop and exit setup at any time, select the Cancel button. For
help on any window in the Peachtree Setup program, select the Help button.
3. Read the Licensing Agreement, and if you accept the terms, select the Agree option. Select
Next. (If you select Disagree, you will exit the setup program when you click Next.)
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4. Then, Peachtree will notify you to disable antiviruses by providing the following dialog
box. So, you have to temporally turn off any antiviruses and click ok.
5. After clicking the ‘ok’ button the installation progress shows like as the following picture.
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6. The Serial number window opens. Enter the serial number on your CD sleeve here and click
Next.
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7. After the serial number entered and clicked the ‘next’ button, Standalone or Network
window will appear. On this window, you select whether or not you will be installing
Peachtree solely on the current computer or if you will be installing it on more than one
computer and networking your computers.
• Select Yes if this is the only computer that Peachtree will be installed on and click ‘Next’.
That is, your Peachtree company data will not be shared with other computers on a network.
If you will be installing Peachtree on another machine, for example, at home, you should
still select Yes as long as your Peachtree company data will not be shared on a network or
by multiple users at the same time.
• Select No if you will be installing Peachtree on more than one computer and you will be
sharing your Peachtree company data with the other computers on a network and click
‘Next’.
8. The Set Peachtree Program Files Location window appears, asking you to specify where
you want to put the Peachtree program files. You can choose the folder where the Peachtree
Accounting program files will be installed. You must select a drive on this computer at this
point. You cannot install Peachtree on another computer here.
In the Peachtree program files box, enter the complete pathname of the location on the
hard drive where you want Peachtree installed—for example, C:\Program Files\Sage
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Software\Peachtree. OR you can select the Browse button to search for the appropriate
drive and folder name(s), and then click ‘Next’.
9. After creating the path of Peachtree program file locations, a window, i.e., Peachtree
Company Data Location will appears. If you specified that your Peachtree company data
files will be located on this computer, you will see this window. Ensure that the location
listed is correct and click ‘Next’. If the location is not correct, you can click the Browse
button and look for another location.
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10. Then after, a Components window will appear; note that, this window will not appear if you
are installing a trial Peachtree program. To install desired Peachtree components, follow
these steps:
i. In the Components list box, select the check box if you want to install the sample
company data.
ii. Click the Next button to continue. To stop and exit setup, click the Cancel button.
11. The summary window will appear after clicking next on the component window. This window
simply tells you where you have installed your Peachtree program and Peachtree company data files.
If you are installing Peachtree on the computer that will be the file server in a Client/Server network
configuration (Client/Server Network is a network with a traditional server acting as a central unit
(the primary server) with several workstations connecting to it. The server is where you store the
Peachtree company data that will be shared by the workstations), you will also see the location of
the Pervasive Database engine files that must be installed on the server computer. When you click
Install, Peachtree will begin installation. If you are installing onto a dedicated server, only the
Pervasive Database engine files will be installed on the server. If you are installing for any other
situation, the entire Peachtree program will be installed and you will be able to run Peachtree from
this computer.
This window also allows you to choose to Add the Peachtree desktop shortcuts to the desktop, which
include the Peachtree program icon, Checks and Forms, and Peachtree Knowledge Base; and/or you can
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choose to Add an icon to the quick launch toolbar. If you need to change anything, click Back. Otherwise,
click Install to install Peachtree.
12. After clicking the ‘Install’ button a picture shown at the step ‘5’ also appear at this stage
and you have to be patient until it finished the installation. Note that, if you are prompted
by antiviruses that unknown program changed your computer setups, you must allow certain
programs to run on your machine. These include peachw.exe, w3dbsmgr.exe,
w3lgo103.exe, peachpim16.exe, peachupdx16.exe, ais2.server.console.exe,
PeachtreePrefetcher.exe, SmartPostingService2010.exe, and possibly others. If these
programs are blocked by firewall software, Peachtree will not operate correctly.
13. After the installation completed the following window will appear. This window may ask
you to remove the Setup CD from the drive and restart Windows. Select an option regarding
restarting Windows and then select the Finish button.
Be sure to turn on your antivirus and anti-spyware applications when Peachtree installation
is complete!
You may also see three options (all will be checked automatically):
• Start Peachtree Accounting—check this box if you want the Peachtree program to
start running as soon as the setup program exits.
• View Network Setup Tips--we highly recommend that you view and print these tips,
because they tell you where your Peachtree company data files are stored But this is
not the case, because we have already installed the Peachtree program not to be
shared or accessed by other computers.
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• View the Release Notes—check this box if you want to see notes about the new
features in this release of Peachtree Accounting. The notes will appear as soon as the
setup program exits the Finish window.
Click the Finish button to close the window and complete the setup process.
14. If you checked the box of ‘Start Peachtree Accounting’, will see the following window of
Peachtree Accounting Program.
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• OR, if Peachtree is already running, select Peachtree Registration from the Help
menu.
2. Enter your Serial Number if not entered, Registration Number and Customer ID.
3. When finished entering your registration information, click OK to start using Peachtree. If
you select the Register Later button, you can use Peachtree a limited number of times
before you need to register. A message will display the remaining number of uses. If you
have no remaining uses left and choose not to register, Peachtree will shut down. If you
start Peachtree again, you will be prompted to register again.
Now you can set up a new Peachtree company, open an existing company, explore sample
company data, or convert from another accounting program to Peachtree program.
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Peachtree displays the Start screen when you first open Peachtree. Choose one of the following
startup options:
1. Open an existing (Peachtree) company: provides access to previously created
companies.
2. Create a new company: to construct company for the first time.
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3. Explore a sample company: Peachtree provides sample company data that you can open
and explore. The sample company data allows you to examine company setup options and
to practice entering records and transactions. This is a great way to introduce you to the
features of Peachtree without using your own company data.
4. Convert from another accounting program (not discussed on this course)
Note that, before starting set up a new company in Peachtree, it is important to make some
initial decisions based on how you work and the legal regulations that apply to the business,
those are:
1. Accounting Method
In setting up a new company in Peachtree, one of our first choices is between cash-basis and
accrual accounting. The accounting method displayed in the Maintain Company Information
window determines how Peachtree handles general ledger, accounts receivable, accounts payable,
and payroll transactions.
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Accrual Accounting: revenues are recorded as the company invoice its customers, and expenses
are recorded when the company receive bills from its vendors, regardless of when cash is actually
exchanged. This confirms the matching principle of revenues and expenses and most companies
use this method.
Cash-Basis Accounting: revenues are recorded when cash (checks, money orders, or currency)
are received, and expenses are recorded when paid. However, unpaid credit sales and purchases
do not shown on ledgers, which can present a misleading picture of revenues and expenses. NB:
Once you choose the accounting method and complete the New Company Setup wizard, you
cannot change it for this company.
2. Posting Methods
Posting is the process of updating the General Ledger's chart of accounts to reflect all journal
entries that have been entered into the system. Posting also updates all general ledger and other
accounting reports (financial statements). Therefore, the posting method determines how
Peachtree processes transactions to journals and the general ledger. There are two options: batch
posting and real-time posting, hence there is one additional option in latest Peachtree
program, i.e. SmartPosting. This option available only on Peachtree 2009 and latest versions.
Real-Time Posting: Transactions are posted to the journals and the general ledger as they are
entered and saved.
Batch Posting: Transactions are saved by the program and then posted in a group. When you use
batch posting, you can print registers and check the batch of transactions before posting them to
the journals.
SmartPosting: Transactions are saved by the program and then automatically posted by the
SmartPosting service. This posting method helps improve performance by allowing you to save
transactions without waiting for them to post. Unlike batch posting where you have to manually
post transactions, the posting happens automatically when you use SmartPosting. In a network
environment, you can use a separate computer to post the transactions and get even better
performance. This method is the recommended one to use. You can switch posting methods at
any time.
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In addition to the above information, ABC Inc accountants intended to construct chart of account
themselves. The accounting method is accrual accounting and the posting method that will be
used is Smartposting. The accounting period is 12 month per period and the fiscal year start on
January 2017. You use the Create a New Company wizard to establish basic information of ABC
Company and specific information about the company to work.
When we click Create a new company the introduction window appears. It lists the areas you’ll
fill up. When you’re done working in any window, click Next to go on. Then, the following
window appears to select the type of Peachtree product to use in the new company; most often it
is advisable to select Peachtree Quantum 2010.
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When you've selected which product to use for the new company, select the Next button. The
followings are steps to create a new company:
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Exempt Organization
Select this option if you are setting up a non-profit organization of any kind. When you select this
option, the following equity accounts are automatically set up:
• Board Designated Net Assets
• Board Designated Quasi-Endow
• Use Restricted net Assets
• Time Restricted Net Assets
• Endowment Net Assets
All of these are Equity-Doesn't Close type accounts.
Corporation
This is a business that is owned by a few persons or thousands of persons and is incorporated under
the laws of the country. It is a body formed and authorized to act as a single entity and is legally
endowed with various rights and duties including the capacity of succession. When you select the
Corporation business type during New Company Setup, the following equity accounts are
automatically set up:
• Common Stock (Equity - doesn't close)
• Paid In Capital (Equity - doesn't close)
• Retained Earnings (Equity - Retained Earnings)
• Dividends Paid (Equity - gets closed)
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In a corporation, you cannot touch equity except to pay dividends or sell stock. You may need to
set up a Preferred Stock account if you differentiate between Common and Preferred. In addition,
you may require a Paid-in Capital account for stocks sold at temporarily higher prices.
S Corporation
This is a type of corporation that, for federal tax purposes (in most states of USA), may be taxed
as a partnership provided certain requirements are met. There are certain limitations that restrict
this election typically to small businesses. These are limits on the number of shareholders, the
types of shareholders, the classes of stock issued, and other restrictions. When you select the S
Corporation business type during New Company Setup, the following equity accounts are
automatically set up:
• Common Stock (Equity - doesn't close)
• Paid In Capital (Equity - doesn't close)
• Retained Earnings (Equity - Retained Earnings)
• Dividends Paid (Equity - gets closed)
Note that there is no account that gets set up for contributions. You usually do not contribute to an
S Corporation.
Partnership
This is a business owned by two or more persons associated as partners. The partners have joint
control over operations and the right to share in profits. When you select the Partnership business
type during New Company Setup, the following equity accounts are automatically set up:
• Retained Earnings (Equity - Retained Earnings)
• Partner's Contribution (Equity - gets closed)
• Partner's Draw (Equity - gets closed)
Note that all equity gets rolled into Retained Earnings at year-end. Everything you add increases
Partner's Contribution; withdrawals decrease Partner's Draw.
Sole Proprietorship
This is a business owned by a single individual and often managed by that same individual. A
person who does business for himself or herself is engaged in the operation of a sole proprietorship.
Many small service businesses such as doctors, lawyers, barbers, electricians, and small retail
establishments are sole proprietorships. This is the simplest form of business. The owner is the
business operator. When you select the Sole Proprietorship business type during New Company
Setup, the following equity accounts are automatically set up:
• Retained Earnings (Equity - Retained Earnings)
• Owner's Contribution (Equity - gets closed)
• Owner's Draw (Equity - gets closed)
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Note that all equity gets rolled into Retained Earnings at year-end. Everything you add increases
Owners Contribution; withdrawals decrease Owners Draw.
iii. Enter your company’s Web site and e-mail address, if applicable and click next.
Select a method for creating the company. This includes selecting a sample business type, copying
information from another Peachtree company, converting from another application, building your
own company from scratch (particularly your chart of accounts), and creating a consolidated
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company. For our example case, select ‘build your own chart of accounts’ and click next. The
following window will appear and click next.
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To continue setting up your company, select the Next button. Peachtree displays the next Create a
New Company window corresponding to your setup option.
Starting dates need to be established for setting up your company and entering data. Once you
establish a starting date, Peachtree will automatically set up monthly accounting periods for your
first two fiscal years.
6. Finish Window
Congratulations! When you see this window, you’re done. Just click the Finish button, and
Peachtree will create your new company. Of course, if you want to make any changes beforehand,
you can always click the Back button to return to the appropriate Create a New Company wizard
window.
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This guide is designed to walk you through the process of completing new company setup. Because
the Setup Guide assists you in entering all the information you need to set up your company, and
in an orderly fashion. However, it will not be discussed here because different tasks of it will be
covered through other options.
a. Menu Bar
d. Button Control
Bar
b. Navigation Bar
c. Navigation Centers
From this window, you can move around in Peachtree and perform your daily work. There are four
methods of navigating available from the desktop:
a. Menu Bar: The menu bar provides drop-down lists of options.
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b. Navigation Bar: The Navigation Bar provides entry to the Navigation Centers. It also
features a group of Shortcuts, links to Peachtree functions that you use on a regular basis.
c. Navigation Centers: These provide useful, at-a-glance information about areas of
Peachtree such as Customers & Sales. They also let you access functions related to each of
those areas—for example, Sales/Invoicing.
d. Button Control Bar
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The Navigation Bar appears at the left side of the Peachtree main window and offers access to
seven "pages" called Navigation Centers. It has a series of icons that represent individual
Navigation Centers They provide information about and access to the Peachtree program:
• Business Status
• Customers & Sales
• Vendors & Purchases
• Inventory & Services
• Employees & Payroll
• Banking
• Company
c. Navigation Centers
There are several Navigation Centers; they resemble pages of information about the following
areas of Peachtree and also provide access to functions that pertain to those areas:
• Customers & Sales
• Vendors & Purchases
• Inventory & Services
• Employees & Payroll
• Banking
• Company
As an example, the Customers & Sales Navigation Center displays the following information about
your company’s customers: Customer List, Recently User Customer Reports, and Aged
Receivables. Each Navigation Center also provides a graphic representation of the flow of tasks
related to that area of Peachtree. The Customer & Sales Navigation Center, for example, has a
“flow chart” of customer-related tasks and offers access to those tasks.
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are currently working with appear each time you open a Peachtree company. When it reads
This is the default page, the Navigation Center you’re working with is the current default
and will appear each time you open a company.
Thus, Peachtree allows us to enter or access information by using the menus, navigation bar,
navigation center and Button Control Bar.
a. Default information makes entering records easier by pre-filling certain fields. For example,
you can set your standard terms in Customer Defaults, and those terms are automatically
applied to all customers you enter. You can adjust the terms either at the customer level or at
the transaction level. Reports (like Aged Receivables) and forms (like statements) will reflect
these default parameters.
b. Records are lists of information, such as your customer list, vendor list, item list, employee
list, and so on. You access Records through the Maintain menu. These are easy to set up and
will make entering transactions easier for you. The more information that you put in the record,
the more that will be transferred automatically to the transaction whenever you select the record
on the transaction.
Let’s look at a typical Record window, first start Peachtree, open ABC Inc Company, then
from Menu Bar go to Maintain Menu and click ‘Customers/Prospects’. Below, the most
important features of Maintain Customers/Prospects window discussed.
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The toolbar
provides Use the lookup on the
several ID field to call up a list
options for of all the records.
working with
the record. Drop-down List
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If a company name is not listed, click the Browse button to locate and select the company you
want to open.
To open the last company that you were working in when Peachtree starts
1. Start Peachtree, if it is not already running.
2. From the Options menu, select Show Start Screen at Startup.
When the check mark is not next to the Show Start Screen at Startup menu option, the
Start screen will not open each time you start Peachtree.
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Note: Peachtree displays the Start screen each time (regardless of startup option selected) if the
last company opened was Bellwether Garden Supply, Peachtree's sample company.
Warning: Do not turn off the computer while a company is open in Peachtree. If you exit Windows
without closing Peachtree first, Peachtree asks if you are sure you want to close the current
company.
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When we convert from a manual system to Peachtree, much of the initial work is gathering and
entering Maintenance data. We need to also enter some Task data: all outstanding invoices and
purchases, and payroll data if we want to track it.
In Peachtree, the company's chart of accounts is a complete list of all account names that will be
used in the General Ledger. Each account is associated with an account ID to help locate it when
recording data. Accounts are used to classify transaction information for reporting purposes. Chart
of accounts can vary depending on the business type.
It is better to categorize accounts according to the type of balance sheet or income statement
account. This categorization breaks the accounts into six types of accounts, with each type starting
with 1 through 6. For a set of accounts with four digits, the breakdown is as follows:
1000 – 1999 - Asset Accounts (Cash, Accounts Receivable, Fixed Assets, etc)
2000 – 2999 - Liability Accounts (Accounts Payable, Taxes Due, etc)
3000 – 3999 - Equity Accounts (Retained Earnings, Owners Withdrawal, etc)
4000 – 9999 - Revenue Accounts (Sales, Service Income, Interest Income, etc)
5000 – 5999 - Cost of Sales Accounts (Direct Material, Cost of Purchase, etc)
6000 – 6999 - Expense Accounts (Salaries, Entertainment, Office Expenses, etc)
Organizing chart of accounts is equivalent to organizing the business, because what we will see on
financial statements depends on what we set up in chart of accounts. When we set up a company,
we can select to either copy one of the Peachtree charts of accounts, to copy from another company,
or to create ourselves. In our illustration case, we have selected the field ‘’Build your own chart of
accounts’’ when we setup ABC Inc. However, it is recommended that to copy one of the many
Peachtree charts of accounts. Because account names are often standardized in accounting, we will
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surely be able to save time by tweaking the Peachtree chart of accounts versus entering one from
scratch.
The Chart of Accounts is nothing more than a list of places to enter transactions. It contains a code
(often called as account number), a description for each account, and a type code. Peachtree allows
us a great deal of flexibility in designing chart of accounts.
• Determine a conversion date (Conversion Date is the date that we will use as a starting
point. This must be a date on which we know all accounting balances, for customers,
vendors, and employees as well as General Ledger accounts) , and gather balances as
of that date. We will use this information to enter beginning balances.
• If we are setting up a new chart of accounts (instead of copying from one of Peachtree's
sample businesses), we need to have all account numbers and names of accounts written
down.
• Have all transactions that have occurred after the conversion date ready to enter to bring
accounts up to date.
Step 1: Select the Chart of Accounts option from the Maintain menu. Peachtree displays the
following Maintain Chart of Accounts window.
a b d
c
e f
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Chart of account fields are located as a, b, c, d, e, and f on the Maintain Chart of Accounts window.
This is where we enter lookup information about the account such as the account ID, account
description, status, account type, and the beginning balances.
a. Account ID
This identifies the account in the chart of accounts, lookup lists, transactions, and reports. Enter
up to 15 alphanumeric characters to name the account.
N.B: we cannot use asterisks (*), question marks (?), or plus signs (+). we cannot use leading or
trailing spaces. Spaces in between characters are allowed. Account numbers are sorted
alphabetically with numbers coming before letters. For example, an account starting with a "6"
would list before an account starting with an "A." we need to use leading zeroes to make the
numbers sort properly. For example, these numbers are ordered this way: 1, 100, 1000, 27. To
properly sort, enter the numbers as 0001, 0027, 0100, and 1000.
c. Description
We can describe the account, for example, "Petty Cash," "Cash in Checking," "Cash in Savings,"
‘’cash’’ and so on. The naming convention for accounts is important; we want to be able to
establish a system that is easily understood by everybody who uses the system.
d. Inactive
If we no longer plan to use an account, we might want to make the account inactive. If we try to
use an inactive account, a warning tells us that the account is inactive and asks if we want to
continue. Important: When we choose to Purge (clean or remove) after closing the fiscal year, all
accounts that have no outstanding transactions are eligible for purging.
e. Account Types
Account types define how the account will be grouped in reports and financial statements. They
also control what happens during the fiscal year-end. Choose one of the following account types
from the drop-down list when maintaining the chart of accounts:
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1. Accounts Payable: This represents balances owed to vendors for goods, supplies, and
services purchased on account when cash is not paid at the time of purchase. Accounts
payable balances are used in accrual-based accounting.
2. Accounts Receivable: This represents amounts owed by customers for items or services
sold to them when cash is not received at the time of sale. Accounts receivable are used in
accrual-based accounting.
3. Accumulated Depreciation: This is a contra asset account to depreciable (fixed) assets
such as buildings, machinery, and equipment. Depreciable basis (expense) is the difference
between an asset's cost and its estimated salvage value. Recording depreciation is a way to
indicate that assets have declined in service potential. Accumulated depreciation represents
total depreciation taken to date on the assets. Select this account type to set up depreciation
accounts for fixed assets.
4. Cash: This represents deposits in banks available for current operations, plus cash on hand
consisting of currency, outstanding checks, drafts, and money orders. Select this account
type to set up bank checking accounts, petty cash accounts, money market accounts, and
certificates of deposit (CDs).
5. Cost of Sales: This represents the cost incurred by the business for items or services sold
to customers. Cost of sales (also known as cost of goods sold) for inventory items is
computed based on inventory costing method (FIFO, LIFO, or Weighted Average). Select
this account type to set up cost-of-goods-sold accounts to be used when selling inventory
items.
6. Equity - doesn't close (Corporation): This represents equity that is carried forward from
year to year (like common stock). Equity is the owner's claim against the assets or the
owner's interest in the entity. These accounts are typically found in corporation-type
businesses. Select this account type if the business entity is a corporation type and want to
record common stock or other equity intended as owner investment.
7. Equity - gets closed: This represents equity that is zeroed out at the end of the fiscal year,
with their amounts moved to the retained earnings account. Equity, also known as capital
or net worth, are owners' (partners' or stockholders') claims against assets they contributed
to the business. Select this account type to record withdrawals made by partners or if the
business entity pay dividends to stockholders.
8. Equity - Retained Earnings: This represents the earned capital of the enterprise. Its
balance is the cumulative, lifetime earnings of the company that have not been distributed
to owners. We can have only one retained earnings account in Peachtree.
9. Expenses: The assets surrendered or consumed when serving customers indicate company
expenses. If income exceeds expenses, net income results. If expenses exceed income, the
business is said to be operating at a net loss. Select this account type to set up accounts
such as operation expense, supplies expense, salary and wage expense, payroll tax expense,
travel expense, or charity expense.
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10. Fixed Assets: These represent property, plant, or equipment assets that are acquired for
use in a business rather than for resale. They are called fixed assets because they are to be
used for long periods of time. Select this account type to set up any of the following fixed
assets: land, buildings, machinery, etc.
11. Income: Income (also known as revenue) represents the inflow of assets resulting from the
sale of products and services to customers. If income exceeds expenses, net income results.
If expenses exceed income, the business is said to be operating at a net loss. Select this
account type to set up sales revenue accounts. It is common practice to create different
income accounts for each category of revenue that you want to track (for example, retail
income, service income, interest income, and so on).
12. Inventory: This represents the quantity (value) of goods on hand and available for sale at
any given time. Inventory is considered to be an asset that is purchased, manufactured (or
assembled), and sold to customers for revenue. Select this account type to set up assets that
are intended for resale. It is common practice to create different accounts for each category
of inventory that we want to track (for example, inventory, raw materials inventory, work
in progress inventory, finished goods inventory, and so on).
13. Long term liabilities: This represents those debts that are not due for a relatively long
period of time, usually more than one year. Select this account type to set up long-term
liabilities (for example, long-term loans and noncurrent notes payable).
14. Other assets: This represents those assets that are considered nonworking capital and are
not due for a relatively long period of time, usually more than one year. Notes receivable
with maturity dates at least one year or more beyond the current balance sheet date are
considered to be "noncurrent" assets. Select this account type to set up assets such as
deposits, organization costs, noncurrent notes receivable, and so on.
15. Other current assets: This represents those assets that are considered nonworking capital
and are due within a short period of time, usually less than a year. Prepaid expenses,
employee advances, and notes receivable with maturity dates of less than one year of the
current balance sheet date are considered to be "current" assets. Thus, select this account
type to set up those types of assets.
16. Other current liabilities: This represents those debts that are due within a short period of
time, usually less than a year. The payment of these debts usually requires the use of current
assets. Select this account type to set up accrued expenses from a vendor, short-term loans,
sales tax payables, payroll tax payables, and so on.
17. Payables Retainage: Payables Retainage (security against completion of contract) is used
to specify a liability account that is dedicated to retainage payables. Any account that has
an Account Type of Payables Retainage may be used on the Purchases and Vendor Credit
Memo Withhold Retainage tab.
18. Receivables Retainage: Receivables Retainage (security against completion of contract)
is used for an asset account that is dedicated to Receivables Retainage. Peachtree will use
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the amounts applied to those accounts for tracking retainage on the Retainage Report and
for releasing retainage during the Progress Billing routine.
The columns where we enter amounts for accounts on this window are set up to give us a better
feel for how the different accounts in our chart of accounts affect the balance of company’s
finances. When we finish entering balances for all of accounts, the total of the amounts in the
Assets, Expenses column must equal the total of the amounts in the Liabilities, Equity, and
Income column. Notice that the Trial Balance keeps a running total, or trial balance, of entries.
In addition, totals for income and expenses are calculated.
Step 2: Enter an account ID and click ok or press enter; and enter description for the account.
The account ID determines how the account is identified and sorted in the chart of
accounts list. Most charts of accounts are set up with specific account types grouped
together.
Step 3: Select an account type from the drop-down list.
Step 4: Select Save.
Step 5: Select the Beginning Balances button on the General tab. Peachtree displays the Select
Period window. Select the period in which we want to enter beginning balances. We can
select from previous, current, or future periods.
Step 6: Select OK. Peachtree displays the Chart of Accounts Beginning Balances window. Click
or tab to any of the white cells in the grid to add an amount. (The gray cells are for viewing
purposes only.) Enter all the beginning balances for the accounts. Scroll the list box to
make sure the account amounts are correct. Note that for each period, a running beginning
balance is kept. Thus, if you change an amount in Period 1, the amounts for subsequent
periods are also changed. However, if you change an amount in Period 2, the same account
balance in Period 1 is unchanged.
If we are just starting out with new company and have not posted any transactions,
Peachtree assumes that we are entering beginning balances for accounts when we select
the Beginning Balances button. If we have posted transactions, Peachtree assumes that
we are entering adjustments to accounts for a period in a prior year. If we enter a new
account, Peachtree assumes that this account has a zero balance. It is easier to add all
necessary accounts and then create one cumulative beginning-balance entry.
When entering beginning balances in the general ledger, make sure that customer, vendor,
item (inventory), and employee beginning balances total the amount shown in general
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ledger. In other words, if we are using the accrual accounting method, the accounts
receivable total in the general ledger must match the total of outstanding invoices in
customer beginning balances; likewise, the accounts payable total in general ledger must
equal all outstanding bills. The beginning balances for customers and vendors are not
connected to the general ledger beginning balances, so we must check to make sure they
match.
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If an account has a nonzero balance, we can enter an adjusting G/L transaction in the General
Journal to bring the account's balance to zero. Then, after two year-end closings, we can purge
(remove) or delete the account.
If the account has a nonzero balance in any accounting period within the two currently open fiscal
periods, Peachtree displays a message stating that you cannot delete the account.
If you still want to remove an account that has had a nonzero balance at one time, examine the
history of the account in the Maintain Chart of Accounts window. Then, display the General
Ledger report including a date range of the two open fiscal years. Locate the account transactions;
then double-click to display the corresponding task window where the transactions originated.
Finally, delete these transactions, and return to the general ledger. To remove an account
beginning-balance entry, select the Beginning Balances button in the Maintain Chart of Accounts
window and clear the balance.
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To set up or review customer defaults, select Default Information from the Maintain menu, and
choose Customers. The following window will appear:
• C.O.D (cash on delivery), Prepaid, Due in number of days, Due on day of month, Due
at end of month: Select one of these to tell you the type of payment your customers make.
• Net Due in ... Days: Enter the number of days past the invoice date before the invoice
becomes due.
• Discount in ... Days: Enter the number of days past the invoice date beyond which you
will not allow customers to get discounts.
• Discount %: If payment is made within the Discount Days range, enter the percent of the
total invoice amount that you will allow to customers as a discount. Enter fractions as
decimals; for example, two-and-one-half percent should be entered as 2.5.
• Credit Limit: Enter the total amount of credit you allow your customers.
• Credit Status: Use the drop-down list to select from five options:
No Credit Limit: All customer transactions can be saved regardless of credit limit.
Notify Over Limit: When you save a transaction that will put the customer over the
specified credit limit, Peachtree will issue a warning message. You can close the
message and continue saving the transaction.
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Always Notify: Regardless of customer credit limit, you will always receive a
warning message whenever you save a customer transaction with a positive balance.
You can close the message and continue saving the transaction.
Hold Over Limit: When you try to save a transaction that will put the customer over
the specified credit limit, Peachtree will issue an error message. You will not be able
to save the transaction.
Always Hold: Regardless of customer credit limit, you will always receive an error
message when you try to save a customer transaction with a positive balance. You
will not be able to save transactions for the customer unless you change the credit
status for the customer.
• G/L Sales Account: Enter or select the account ID you want to use as the default sales
(income) account when entering customers. You must enter an account number here.
• Discount G/L Account: Enter the number of the account you want to use for discounts.
You must enter an account number here.
To display a list of existing accounts, type ‘’?’’ in the G/L Account ID field, or select the Lookup
button. To add a new account, type + or double-click the field, which displays the Maintain Chart
of Accounts window.
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display all invoices that are between 31 and 60 days overdue. Entering 90 in the 3rd column
displays all invoices that are more than between 61 and 90 days overdue. The fourth column will
show all invoices that are more than 91 days overdue.
Select the Enabled check box to enter or change the field label. If we decide not to use a field,
clear the Enabled check box. The data will remain, but it will be inaccessible. If we decide to use
the field label again, select the Enabled check box, and the program will make the data available.
Below are examples of customer custom fields we could set up.
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G/L Link Accounts: The defaults are used to link purchase and discount G/L accounts to most of
your vendors. You can change individual vendor setup, if necessary.
• G/L Expense Account: Enter the ID of the liability or expense account you usually use
for purchases. You can change the account entered at the vendor level (Maintain Vendors)
or when entering purchases (Purchases/Receive Inventory or Purchase Orders).
• Discount G/L Account: Enter the ID of the account you want to use for early-payment
discounts you can take.
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To set up or review inventory item defaults, select Default Information from the Maintain menu,
and choose Inventory Items. Use this feature like a template or model upon which to build all your
item records. You can enter the most common information. Then, when you set up new inventory
items and enter transactions, the default information is automatically included. Default information
for inventory includes:
• How Peachtree handles general issues such as out-of-stock warnings
• General Ledger Accounts and Costing Methods for each item class
• Item Tax and Shipping Information
• Item Custom Fields
• Item Sales Price Levels
To open Inventory Defaults, Select Maintain, Default Information, Inventory Items. And the
following window shown on the next page will appear:
General Tab
These options allow you to specify if you want to allow for duplicate values in certain fields. You
can also select a default item class.
Ordering Tab
On this tab are a number of important options that affect how Peachtree calculates the quantity
available for sale on orders and invoices. You have the option of selecting whether or not you want
Peachtree to count items on outstanding purchase orders when it calculates the quantity available
for an item. Once this is done, you can set how Peachtree to notify you that quantities are low
when you try to sell the items. Finally, you can specify whether or not you want Peachtree to
automatically create purchase orders for items that are ordered on sales orders and invoices.
Peachtree will calculate the amounts that you are currently deficient and create a purchase order
for them, using the vendor listed in the Preferred Vendor field for the items.
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GL Accts/Costing Tab
Since Peachtree stores several different types of “inventory” items, including stock, service,
assembly, activity items, and so forth, there are several default values that should be set prior to
adding your inventory items. These defaults will carry over automatically to the different types of
items you create, saving you a great deal of time when you add your items. Depending on which
Peachtree product you own, your list of item types will vary. The GL accounts selected will be
used when these item types are bought, sold, or used during different tasks in Peachtree. You also
can choose your default costing method. Peachtree supports three costing types for stock and
assembly items, and a dedicated costing type called Specific for Serialized items. Activity and
Charge items are used with Peachtree’s time and billing features. You can select from Average,
FIFO, and LIFO costing methods. Average provides a weighted average costing, while FIFO and
LIFO track cost levels as items are purchased and sold. Finally, you should select the account to
which freight costs will be credited when you sell items.
Taxes/Shipping Tab
Use this tab to create up to ten ship methods that can be specified on customer and vendor records,
as well as on most customer and vendor transactions. Also, you can create up to 25 different tax
categories for items. Use these tax types for classifying items for sales taxes.
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When you click Edit, you will open the Default Price Level Calculation window. Use the options
to create your calculation. This calculation will be applied by default to all inventory items, but
can be customized or overwritten by a non-calculated price, if necessary, for individual items. If
you base your item prices on Last Cost, Peachtree will not update the price of an item automatically
if the Last Cost should change. You must either use the Multiple Price Levels window in Maintain
Inventory and click Recalc, or you must use the Maintain Prices routine. For instance, if the Last
Cost of an item was $10 and your sales price is calculated as Last Cost*1.5, the sales price will be
$15. If you purchase the item at $20, making the Last Cost $20, your sales price will remain $15
until you click Recalc in the Multiple Price Levels window in Maintain Inventory or until you use
Maintain Prices to update the prices of items.
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Header Fields
In the header you define the customer ID, customer name, and the status of the customer. Note that
the customer ID is not case sensitive and must be unique for each customer.
General Tab
On the General tab, you enter basic information on the customer, including billing address, phone
numbers, and account number. In addition, you can use the dynamic Customer Type field to
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classify your customers. When you print Accounts Receivable reports, you will be able to filter
your reports using this field.
Contacts Tab
Use this tab to enter contacts for this customer. You can specify such information as the contact’s
name, title, address, phone number and E-mail address.
Addresses Tab
Use this tab to enter and store shipping addresses for this customer. Peachtree automatically copies
the Billing Address to this tab.
History Tab
The History tab will show you sales and receipt history for the customer on a period by period
basis. It will also give you such information as the last invoice and last payment date. This tab
provides a handy reference for accessing information on the customer.
Note that, if you are responsible for collecting sales tax when selling items or services to your
customers, then you must set up sales tax IDs. These sales tax IDs can be applied to customer
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invoices and customer records to calculate proper sales tax for your customers. To set up sales tax,
refer its section later.
1. From the Maintain menu, select Customers/Prospects. Peachtree displays the Maintain
Customers/Prospects window.
2. Enter or select the customer ID. To display a list of existing customers, select the drop-
down arrow button.
3. Then select the History tab and select the Customer Beginning Balances button. Peachtree
displays the Customer Beginning Balances window.
4. On the Invoices for tab, enter the invoice number, invoice date, purchase order number (if
applicable), amount, and the appropriate A/R account (if necessary) for each unpaid
invoice for this customer that needs to be recorded when starting Peachtree.
5. To enter beginning balances for additional customers, select the Customer Balances tab.
Double-click the customer name, or highlight the name and select the Invoices for tab. Note
that, when you are setting up your company, it is important to remember that the total of
the beginning balances entered here needs to equal the total amount you entered in your
G/L for all accounts receivable account types.
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Setting up a vendors record could be started on the following choices, do one of the following:
o From the Maintain menu, select Vendors. Or click the Vendors icon on the Purchases
Navigation Aid. The following window shown on the next page will appear.
Vendor ID: This code can be up to 20 alphanumeric characters. Lists and reports sort on vendor
IDs, so the coding convention you use is important. Numeric characters sort before alpha
characters. Also, the code is not case sensitive, so that codes A1 and a1 would be seen as the same
vendor IDs. You cannot use *, ?, or + in the code.
Name: Enter the name of the new vendor (up to 39 alphanumeric characters) here. This name
prints on checks and reports. This can be a company name or an individual's name.
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General Tab
General information includes the name of the contact person, your account number with the
vendor, mailing and remit-to addresses, and so forth. You enter this information on the General
tab. Besides name and addresses, on the General tab you can also specify a custom vendor type,
1099 information, telephone and fax numbers, e-mail address, and Web site address.
• Vendor Type lets you classify your vendors however you want. For example, you might
use SUPPLY or SERVICE as your different vendor types. The field is case sensitive; that
is, Supply and SUPPLY are treated as two different words.
• 1099 Type lets you select whether the vendor type is Interest (you pay at least $10 in
interest to the vendor), Independent Contractor (you pay then vendor more than $600 in
one year), or None (the vendor fits neither category).
• E-mail and Web site fields identify the vendor’s chief e-mail address and Web site address.
Click the buttons to the right of the fields to quickly create an e-mail message or go to their
Web site.
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Peachtree does the rest, adjusting inventory levels each time when posting a purchase or sale of an
inventory item. In addition, the program will track the cost of each item on a daily basis, based on
the transaction date and item class. In addition to tracking costs and quantities, using inventory
items makes entering transactions easier. Through Maintain Inventory Items, we can set up the
goods and/or services we sell. We can set a unit price and the account to be adjusted by the sale of
commodity. Then, when we enter the sale, we need only select an inventory item and enter a
quantity ordered; Peachtree computes the total. Use this procedure to set up a new inventory item
record.
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1. Enter a new item ID, and complete the necessary item information. For example, choosing
the correct Item Class. For the most part, you set them up using the fields on the General
tab of the Maintain Inventory Items window. But the additional tabs in the window—Bill
of Materials, Item Attributes, and Serial Numbers—let you set up special item types such
as assembly, master stock, substock, and serialized items. For more information, click a
link below.
3. When you're finished filling in the window, select the Save button.
Inventory Item header fields are located above the folder tabs of the Maintain Inventory Items
window. This is where we enter lookup information about the item such as item ID, name, short
description for lists, item class (type of inventory item), and item status.
Item Class Field: This identifies the type of inventory item. Item classes define what type of
inventory item we are setting up. Item classes determine how an item's costing information is
recorded. Once an item class is established (saved) for an inventory item, it cannot be changed.
Peachtree allows the following some classes of inventory items:
• Stock Item: Use this item class for traditional inventory items that are tracked for
quantities, average costs, vendors, low stock points, and so on.
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• Master Stock Item: Use this item class when we want to set up a master stock item, a
special item that does not represent inventory we stock but rather contains information
(item attributes) shared with a number of substock items generated from it.
General Tab: Select this tab to set up item descriptions, item types, sale price levels, default G/L
accounts, and costing methods.
G/L Sales Account: Enter or select the income type account that will be credited when
selling the item. All item classes except for Description require a sales account.
G/L Inventory Account: For stock items only, enter the account (typically an inventory
type account) that the inventory for this item is charged to. This account is used as the
default account for entering purchases. Generally, the account gets debited when
purchasing of the item and credited when selling the item.
G/L Cost of Sales Account: For stock items and assembly items, enter or select the
account that gets debited for the item when sold. Peachtree allows to use Average Cost,
LIFO (last in, first out), FIFO (first in, first out), and Specific Unit. Costing occurs as of
the transaction date for the sale.
Item Tax Type: These are the inventory item tax types that have been set up in the
Inventory Item Defaults. They define whether or not the stock item is taxable.
Sales/Purchase Description: This identifies the text that will appear for this item in the
Description field in transaction windows and on forms. Select either type of description
from the drop-down list. Each description can be up to 160 alphanumeric characters long.
Select for Sales to enter a description that will be used in quotes, sales orders,
sales/invoicing, and receipts. Select for Purchases to enter a description that will be used
in purchase orders, purchases/receive inventory, and payments. It could reference the
vendor's catalog number for the item.
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1. From the Maintain menu select Inventory Items, Maintain Inventory Items window
appears, then on the General tab, select the Beginning Balances button at the right lower
bottom of the window. Peachtree displays the Inventory Beginning Balances window.
2. From the item list, enter or select an item ID that has beginning balance.
4. For each item, enter two of the three fields: quantity (on hand), unit cost, and total cost.
Peachtree will calculate the third or remaining field.
5. When finished entering beginning balances for all your inventory items, select OK.
You will set up your sales taxes by following the Sales Tax Wizard. Here, you will set up your
Sales Tax Agencies and your Sales Taxes. Sales Tax Agencies are the individual taxing bodies,
such as the state you do business in, a particular county or city, or a special tax (school tax, building
tax). Sales Taxes consist of a number of Sales Tax Agencies that make them up. For instance, the
county where you do business might impose a state tax, county tax, and special school tax; all of
these could be covered by a single Sales Tax. Or you could have a sales tax for sales made in the
city limits, in a county, or in an out-of-state location. You’ll assign a Sales Tax to each customer.
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• How many individual rates make up this total rate: Here, specify the number of
agencies that make up this sales tax. For instance, in the example above, where there is a
state tax and a county tax, you would enter 2 here.
• Agency ID: Enter a brief ID here, something that clearly identifies the agency to you, such
as FED for the federal or other ID like 123.
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• Sales tax ID: Enter an ID for this sales tax ID, such as VAT or TOT.
• Sales tax name: enter a name to the sales tax ID. It should be something descriptive so
you can easily identify it, such as Federal Inland Revenue or Custom Duty.
• Do you charge sales taxes on freight?: Select Yes if you are required to add sales tax to
any freight charges that your customers pay for shipping services. This requirement varies
from state to state.
Fields to be Filled in the Wizard Tax Type 1 (VAT) Turn Type 2 (TOT)
Total Rate……………………………... 15 2
Number of Total Rate…………………. 1 1
Sales Tax Agency ID.............................. FED RSA
Sales Tax Agency Name……………… Inland Revenue Authority Regional State of Amhara
Vender **..…..…………….................. INLANDREVENUE REGION3
Sales Tax Calculation………................. By Single Rate By Single Rate
Rate……………………………………. 15 2
Sales Tax Account ……………………. 2005 - VAT Payable 2002, Sales Tax Payable
Sales Tax ID………………................... VAT17 TOT17
Sales Tax Name…………….................. Value Added Tax Turn Over Tax
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**Here you must have to maintain new vendor to receive VAT and TOT collected from
customers. Thus, set up a new vendor using the following data:
To begin the Payroll Setup wizard, from the Maintain menu, select Payroll and choose Payroll
Setup Wizard, then the figure depicted on the next page will appear.
Peachtree displays the Payroll Setup Wizard. (Once you complete the wizard, its name changes to
Payroll Settings.) The initial screens tell you about your options for processing payroll with
Peachtree: full-service and in-house payroll.
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• Choose Payroll Options: select do it yourself In–House, because the other (Full Service
Payroll) only used in USA.
Full Service Payroll: Peachtree Managed Payroll by online service.
Do It Yourself In-House: You can maintain and update your payroll formulas and
calculations yourself.
• Enter Company Information:
Here you can enter basic payroll information for your company, such as:
Enter your federal and state employer ID.
Enter or select from the drop-down list the state abbreviation for the primary state in
which your employees work.
Enter your state unemployment ID and rate for unemployment insurance (not apply to
Ethiopia).
If there is a tax associated with your state, a field will display where you can enter the
rate for that tax. (Not all state taxes may be supported.)
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Select Yes to create payroll amounts for Meals and Tips that the company provides to
the employees. By default, the Tips and Meals are logged for reporting and tax
calculations, but no entry is posted to the general ledger.
Note: Peachtree requires that you first complete the Payroll Setup Wizard before you access
Employee Defaults. That's because the setup wizard will create most of the default information for
you. And, after setting up payroll defaults we must have to maintain payroll formulas. Thus, the
next section deals about setting up payroll formulas and then setting up employees default
information.
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1. Peachtree-Maintained Payroll Formulas apply to all the companies you have set up in
Peachtree. They include predefined formulas containing federal-, state-, and (some) local-
regulated tax calculations maintained by one of the payroll tax solutions for Peachtree.
When you subscribe to the tax service, you will receive tax updates periodically as dictated
by changes in tax laws. Installing these updates overwrites any changes you may have
made in Peachtree-Maintained Payroll Formulas.
2. User-Maintained Payroll Formulas are only used by the specific company for which they
are set up. They do not get overwritten by tax updates, so this is where you would enter
customized calculations for employees’ income tax. If you do not subscribe to any of the
payroll tax solutions, you would set up your federal, state, and local tax calculations in
User-Maintained Formulas. We also use the User-Maintained Payroll Formulas, because
the first one only applies to USA.
To open User-Maintained Payroll Formulas window, from the File menu, select Payroll Formulas,
then User-Maintained. Peachtree displays the following User-Maintained Payroll Formulas
window.
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Formula ID: If you plan to enter a new formula, enter an ID that is not already in the Formula list
box. You should follow the naming conventions of Peachtree and start the ID with the two-letter
postal abbreviation for your state.
Name: The name you choose for your formula is important, because it allows Peachtree to identify
which payroll formula to use for a particular field. The name has two (and sometimes three) parts
separated by a single space:
• calculation name: this is the name of the tax or plan--for example, income tax
• payee (for certain formula types): EE (employee pays) or ER (employer pays)
• payroll tax year: this is the last two digits of the calendar year to which this tax formula
applies
Effect on gross pay: A formula can either add to or subtract from gross pay. Most taxes or benefits
will subtract from gross pay. In some cases, the formula may either add or subtract from the gross
in payroll calculations. Use "Either subtracts or adds" for a vacation or sick time field to allow the
calculation of a deduction to be positive, or the calculation of an addition to be negative.
Filing Status: If this calculation is to be used for all employees, regardless of Filing Status, select
All Filing Statuses from the drop-down list. If you choose an alternate status, create multiple
formulas with unique IDs for each possible filing status; make sure each formula ID and filing
status variation uses the same tax name.
How do you classify this formula?: You can select either a Tax (income tax), a Deduction
(Pension), a Benefit (Insurance), or Reimbursement (positive adjustment).
Tax Agency: You select the type of government this tax applies to by selecting one of the available
options. If you select State or Local government, you must specify the state or locality to which
the tax applies. For State, enter the two-character postal abbreviation; for locality, you can type in
the name of the locality. You can indicate that this tax applies to all states or all localities.
Note: The state or locality specified for the government entered here must also be entered in
State/Locality field of the Withholding Information table in the Maintain Employees/Sales Reps
window.
Use this formula as a filter on the Payroll Tax report: Select this check box to have this
calculation appear on the Payroll Tax Report menu or to have the payroll field that uses this
calculation appear on the Exception Report. The Taxable_Gross variable must be included in the
formula when selecting this check box.
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Formula: The Formula box contains the equations you use to actually calculate taxes. If you
subscribe to the Peachtree tax service, Peachtree supplies the equations for most types of taxes. If
you are setting up your own tax calculations, enter the correct formula.
The new Ethiopian income tax proclamation required to calculate employees’ income tax obligation based
on the following schedule. For example, if one employee gets a monthly salary of Birr 1,450, his/her
monthly income tax will be ((1,450×10%)-60) = 85.
0 600 exempted 0
601 1650 10% 60
1651 3200 15% 142.50
3201 5250 20% 302.50
5251 7800 25% 565
7801 10900 30% 955
Over 10900 35% 1500
In Ethiopia also, government employees contribute 7 percent of their gross pay salary to the
pension fund. Thus, we must have to enter a formula for the employees’ contribution of pension
in the formula box.
Furthermore, most organizations give allowances for employees. The allowance can be
predetermined house rent, transport cost allowance and so on. However, these allowance most of
the time taxable by adding them with the basic salary amount. So, we have to enter the allowances
formula to be calculated when preparing payroll.
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Note that, Formula 4 is pseudo (false) formula used to make a workable formula of Formula 3
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General tab
This tab helps to set up basic default information for your employees, including custom field names
and how employee names display in lists.
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how Peachtree handles employee gross pay including any applicable calculations, select the
Employee Fields tab in the Employee Defaults window. This can include various employee
deductions and additions.
Field Name: Enter the name of the payroll field, or use the defaults.
G/L Account: Account number in general ledger where information entered into this field for this
employee is posted. Not applicable if the Memo check box is selected.
Calculate (Calc): Selecting this check box allows you to select a formula name to use when
calculating tax amounts. Formula names use formulas and (sometimes) tables to calculate tax
amounts. You can select formula names here but you must set them up in User-Maintained Payroll
Formulas before they will calculate. If you uncheck this box, then you would have to manually
calculate taxes and enter them on each paycheck..
Formula: If you chose to Calculate this field, enter the name of the formula to use (not the Formula
ID) without the payroll year. Type ? to display a list of the currently set-up formulas. (If you choose
to set up your own payroll formulas, make sure each formula entered here corresponds to a formula
in User-Maintained Payroll Formulas.)
Amount: If you aren't using a calculation, enter a flat rate here. Positive numbers are earnings and
negative numbers are deductions.
Memo: Select this check box if the information in this field does not affect your company general
ledger or financial statements. An example of this would be tips.
Run: Select this check box to indicate that you don't want the balance to be set to zero when you
close the year.
Adjust: If this field can be calculated, select this button to display the Calculate Adjusted Gross
window where you can choose which payroll fields are accumulated to determine the adjusted
gross for this calculation.
Description: Enter the name of the payroll field, or use the defaults.
Liability Account: This is the number of the general ledger liability account you want to use.
Typically this is employer-paid payroll tax liability.
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Expense Account: This is the number of the expense account you want to use. Typically this is
employer-paid payroll tax expense.
Calculate (Calc): Select this check box if you want Peachtree to automatically calculate the
payroll field amount when computing paychecks. If you select this check box, you must also select
a formula name to use when calculating the amount.
Formula: If this field can be calculated, enter the name of the payroll formula to use (not the
Formula ID) without the payroll year.
Adjust: If this field can be calculated, select this button to display the Calculate Adjusted Gross
window where you can choose which payroll fields are accumulated to determine the adjusted
gross for this calculation.
• In addition, from the Employee Field tab, select INCOMETAX row and click the Adjust
column, then from the Calculate Adjusted Gross window, tick the field of Use on
ALLOWANCE raw to include allowance amounts in the taxable income amount.
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assemble the names, addresses, phone numbers, e-mail addresses, Social Security numbers, and
hire/termination dates for all your company's employees.
Use the Maintain Employees/Sales Reps window to enter, change, and store information about
your company employees and sales representatives (reps). Thus, from the Maintain menu, select
Employees/Sales Reps. Setting up an employee record involves the following:
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time. Just uncheck the This employee uses the company default settings box and enter the unique
information.
Employee 1 2 3 4 5
Heading Fields
Employee ID TILA11 SOLO12 ALM13 SEID14 DAN15
Employee First Name Tilahun Solomon Almaz Seid Daniel
Employee Last Name Abebe Teka Tesfa Jemal Mekonnen
Type: Employee or Sales Employee Employee Employee Employee Employee
Rep
General Tab
Address Dessie Dessie Haik Kombolcha Kombolcha
Pay Info Tab
Pay Method Salary Salary Salary Salary Salary
Pay Frequency Monthly Monthly Monthly Monthly Monthly
Salary Pay Rate 500 1050 2500 1450 2100
Note that after you entered these data, i.e., customers, vendors, inventories and employees
default, sales tax, tax formula, maintaining customers, vendors, inventories and employees,
you must have to change the accounting period to the current period.
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you to move to an alternate account period. Typically, you'll do this at the beginning of each new
accounting period. To open the Change Account Period window, do one of the following:
• From the Tasks menu, select System, then Change Accounting Period.
• Click the Accounting Period button on the on the Button Control Bar at the top of the main
Peachtree window.
• Click the Accounting Period button on the Peachtree main application toolbar.
Open Accounting Periods: A list of accounting period numbers and dates for your company's two
open fiscal years. Accounting period dates are defined during the New Company Setup process
and cannot be changed once they are set up. Most companies operate with twelve accounting
periods per fiscal year. To move to a new accounting period, select the period from the drop-down
list box. You can change this to any other period in the one or two fiscal years for which you have
set accounting periods. You can create or edit transactions in a prior period without changing the
Accounting Period. However, the transaction date cannot be prior to the first period of the first
open fiscal year.
Note: If you have security rights activated in Peachtree, a lock icon appears next to prior
accounting periods. You can restrict users from editing transactions in prior accounting periods by
giving them View Only access to Transactions in Prior Periods. This setting is made in the Selected
Access window, under the Company/Tasks program area; choose Company in the menu at left,
and then find the Tasks subarea.
Current Accounting Period: Identifies the accounting period number and dates Peachtree is
currently operating in. If the current system date is within the current accounting period date range,
Peachtree dates new transactions automatically based on your system date. It also displays the
current dates for the first and second fiscal years as well as the first and second open payroll tax
(calendar) years.
Open Fiscal Years: Identifies the two open fiscal years in which you can enter new or edit old
transactions. The first fiscal year is typically referred to as the current year, the second is referred
to as the next fiscal year. To change the dates, you must close a fiscal year using the Year-End
wizard.
Open Payroll Tax Years: Identifies the two open payroll (calendar) tax years used in payroll
transactions and reports. To change the dates, you must close a fiscal year using the Year-End
wizard. The toolbar at the top of the window contains the following buttons: OK, Cancel, and
Help. Note that, if you are using the batch posting method, you must post all your transactions
before Peachtree will let you continue.
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In this chapter, we will use Tasks Menu to enter transactions and other task-related information,
for instance, to enter invoices, pay vendors, receive payments from customers, enter bank deposits,
pay employees, and make adjustments to general journal. In addition, we can make entries to the
account register, reconcile bank account, void checks, to change the accounting period, manage
action items, and launch the Peachtree Year-End wizard.
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1. From the Tasks menu, select Sales/Invoicing. The following window will appear:
Select the Layout toolbar button, and choose the Predefined Product template, Predefined
Service or Professional template from the pull-down menu.
2. Enter or select the customer ID. When the customer is selected, Peachtree supplies the
customer default information, including billing and shipping addresses, sales account,
shipping method, payment terms, and sales tax ID.
3. If this customer has open sales orders, the Apply to Sales Order tab appears in front. To
enter new items on the invoice, select the Apply to Sales tab.
4. Leave the Invoice # field blank if you want Peachtree to print an invoice. Peachtree will
increase the invoice number by one when it is printed. Otherwise, enter an invoice
number or other reference number. (If you print the invoice with an invoice number
assigned or print it again later, the invoice will have the word DUPLICATE on it.)
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5. Enter the date of the transaction if it is different from the displayed date.
6. Peachtree will automatically enter the Contact and Ship To information for the address
marked as Ship To Address 1 on the customer record. You can select another contact and
shipping address from the choices available in the Ship To drop-down list, or manually
enter another address in the Ship To fields.
7. If you have entered a default P.O.# in the customer's record, it will appear on the invoice.
If not, you can enter the customer's purchase order number now or change the default to
any other piece of information that will identify this invoice to the customer.
8. If you have entered a default shipping method in the customer's record, it will appear.
You can select the Ship Via button if you want to select a different shipping method. You
can also enter a ship date.
9. Peachtree uses the default terms you have entered for the customer, but you may want to
select the Terms button to change the default discount dates or amounts for this invoice.
When a receipt that qualifies for an early-payment discount is applied against the invoice,
Peachtree will calculate the discount.
10. If you entered a default Sales Rep in the customer's record, it will appear. Otherwise,
select the rate of the sales representative, if applicable.
11. Enter the information for each item included on the invoice on a separate line, including
the item's quantity, item ID, description, unit price, sales tax status, and job information.
12. Select the sales tax ID for this sale.
13. If you intend to charge freight for shipping this order, include an amount in the Freight
field.
14. If you have received a partial or full payment for this invoice at the time of the sale,
select the Amount Paid at Sale button. Peachtree displays the following Receive Payment
window, where you can enter receipt information.
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• Customer ID: This appears based on the customer selected on the invoice and cannot be
changed here.
• Date: The date is the invoice date and cannot be changed here.
• Name: The customer's name and billing address are displayed and cannot be changed
here. This information can be changed on the invoice, and any changes made will be
reflected here too.
• Receipt Amount: Enter the amount the customer is paying at this time.
• Payment Method: From the list, select the method of payment this customer is using.
The payment methods are entered on the Pay Methods tab of the Customer Defaults
window.
• Cash Account: The account that appears here when you open the Receive Payment
window is the last Cash Account that was used on the Receipts window. You can select a
different account or add a new one here. Note: If you want to apply an alternate G/L
account (an account that uses an account type other than Cash) for this payment receipt,
you must select the Journal button.
After entering the above information, the Net Amount Due field displays what the
customer currently owes for the sale.
15. At the bottom left corner of the window, the selected customer's balance, credit limit, and
credit status is displayed. You can click the arrow button to the right of the customer
balance to display the current Customer Ledgers report for this customer.
16. Select the Print button if you want to print and save the invoice. Otherwise, click the Save
button.
4.2.2. Receipts
When customers’ pays for goods and services sold to them, we have to record the receipt. Most
receipts are applied to sales invoices. However, we can also enter cash sales (transactions in which
no invoice is entered or required), prepayments, and customer refunds. This allows us to enter all
checks, cash, and credit card slips we receive and deposit them in checking account. The process
of entering a receipt is different depending on whether the receipt is against an invoice or a cash
sale. If the sale is to a customer who is not in company’s database, we can enter the customer's
name without keeping a record on that customer. There are two ways you can account for receipts
in Peachtree:
• If you sent an invoice to a customer, you apply the receipt to the invoice. Invoices entered
in the Sales/Invoicing window appear as distribution lines when you enter the customer
ID. You can check the Pay column beside each invoice being paid in full by this receipt.
• If you made a direct sale that didn't require an invoice, you use Receipts and enter it on
the Apply to Revenues tab. This requires you to specify a check number and sales
account.
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4. Enter a reference number that will help identify the receipt (for example, the customer's
check number).
5. If you are recording deposit tickets within the Receipts window, enter or accept the
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suggested Deposit Ticket ID. Otherwise, leave this field blank. You can record deposit
ticket IDs in the Select for Deposit window.
6. Select a payment method (for example, Cash or Check). Payment methods are set up in
Customer Defaults; these are quite useful in reports when managing receipts.
7. In the Cash Account list, enter or select the bank account in which the receipt is
deposited.
8. On the Apply to Invoices tab, select the Pay check box next to each invoice that the
customer is paying.
o If the customer has paid the invoice in full, place the cursor in the Amount
column for the invoice, and select the Pay check box. Peachtree will fill in the
Amount Paid field.
o If the customer has only paid a partial amount on the invoice, enter that amount.
Peachtree will automatically select the Pay check box.
Note: If your customer overpays the amount, a credit is made to the customer's ledger; for
underpayments, the payment amount is applied to the invoice balance. You will need a
reference number in order to post or save the record.
9. Select the Print button if you want to print and save the receipt. Otherwise, click the Save
button.
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delete the receipt if you want to change the invoice number or the customer on an invoice or if you
want to delete the invoice. Follow these steps:
1. From the Tasks menu, select Receipts. Then, select the List button so you can delete the
receipt you entered for the invoice.
2. From the list, select the receipt and then OK.
3. Once the receipt is displayed, select the Delete toolbar button to remove it.
4. From the Tasks menu, select Sales/Invoicing. Then, select the List button so you can edit
the original invoice.
5. From the list, select the invoice you want to edit, and click OK.
Once Peachtree displays the original invoice, make any necessary changes. If this invoice is for
items ordered on a sales order, you cannot change the customer ID. If you want to remove the
transaction, select the Delete toolbar button. If you were editing the invoice select the Save button.
You will have to enter the receipt for the payment again.
Note: When you view the voided invoice in the Sales/Invoicing window, you'll notice that it has
the same number as your original invoice but with a "V" appended to it. Also, a large "Void" notice
appears in red letters.
All totals and subtotals for the invoice appear as negative values:
• If the original invoice covers an existing sales order, negative values appear for the
quantities shipped.
• If the original invoice did not originate with a sales order, negative values appear for the
quantities sold.
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This window allows either to enter vendor purchase invoices or receiving inventory from purchase
orders:
• Apply to Purchase Order tab: When we select a vendor who has open purchase orders,
Peachtree displays this tab, allowing us to select which purchase order to receive items
against (not discussed in this course).
• Apply to Purchases tab: If we select a vendor with no open purchase orders, by default
Peachtree displays this tab, where we enter a purchase that did not originate on a
purchase order. In addition, if items were included on the purchase invoices that are not
included on the purchase order, we can add them here.
We can enter the purchase of an item on account and that did not originate from a purchase order
using the following procedure:
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2. Enter or select the vendor ID. To display a list of existing vendors, type ? in this field, or
select the Lookup button. To add a new vendor, type + or double-click the field, which
displays the Maintain Vendors window. When the vendor is selected, Peachtree supplies
the vendor default information, including name, remit address, shipping method, and
payment terms.
3. Enter the vendor's invoice number in the Invoice # field. This is a required field.
If you have not yet received a vendor invoice (bill) for this shipment, select the Waiting on
Bill from Vendor check box. Once your vendor sends you the bill, edit this invoice; clear
the Waiting on Bill from Vendor check box; and enter the invoice number. Then, when
you post the invoice with the invoice number, you will be able to select the invoice for
payment.
Note: If you have received inventory from a vendor by entering a purchase using the
Waiting on Bill from Vendor option, Peachtree will warn you when you select this vendor
so you don't enter the invoice for this vendor's order twice by mistake.
4. Enter the date of the transaction if it is different from the displayed date.
5. Change the shipping address if necessary and the method of shipment. Click the Ship To
drop-down arrow to display ship-to information. To change the shipment method, select
the method from the Ship Via drop-down list.
6. Enter discount, terms, and A/P account. The Displayed Terms field automatically fills in
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with the default terms. If the vendor used special terms, enter the new term information
here.
7. Enter the information for each item on a separate line, including the item's quantity, item
ID, U/M (displays if multi-packs enabled in Inventory Item Defaults), description, unit
price. The default unit price is the last posted price for this item.
8. At the bottom left corner of the window, the selected vendor's balance is displayed. You
can click the arrow button to the right of the vendor balance to display the current Vendor
Ledgers report for this vendor. Continue entering items until you have completed the
purchase invoice.
9. If you have paid a partial or full payment at the same time you received this invoice, enter
the amount in the Amount Paid at Purchase field. The Reference field and Cash Account
field will appear allowing you to enter payment information. The Net Amount Due
displays what you currently owe for the purchase.
10. When finished, select the Save button to record the purchase.
This allows us to write checks for vendor invoices, for payments that don't have a vendor invoice,
and for prepayments or discounts. The fields of the distribution box differ depending on whether
we are applying the payment to invoices or new purchase. If a vendor has open invoices, the Apply
to Invoices tab will be in front. However, if we are entering a payment to a one-time vendor not
in the system, the Apply to Expenses tab is default. There are two basic methods of paying
vendors:
• Apply vendor invoices: pay invoices that were previously entered in the Purchases
window.
• Apply to New Purchase (cash purchase): pay a vendor without using a vendor invoice.
See Enter a Cash Purchase for further information.
Use the following procedure to apply payments to vendor invoices:
1. From the Tasks menu, do one of the following:
• Select Payments or
• Select Bills and then Pay Bills. The following window will appear:
2. Enter or select the vendor ID that you want to pay. To display a list of existing vendors, type?
in this field, or select the Lookup button. If there are unpaid invoices for this vendor,
Peachtree lists them on the Apply to Invoices tab. If there are no unpaid invoices, Peachtree
displays the Apply to Expenses tab.
3. Enter check # and cash account
• If you are entering a handwritten check, enter the check number in the Check Number
field. If you want Peachtree to print the check, leave this field blank.
• Enter or select the cash account from which you will be writing the check.
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4. Select invoices to pay: Once you've entered vendor and check information, on the Apply to
Invoices tab, select the Pay check box next each the invoice that you want to pay.
• If you want to pay an invoice in full, place the cursor in the Amount column for
the invoice, and select the Pay check box. Peachtree will fill in the Amount Paid
field.
• If you want pay a partial amount on the invoice, enter that amount. Peachtree will
automatically select the Pay check box.
5. If you want to print the check, select the Print button; for step-by-step instructions on printing
from the Payments window. Otherwise, select the Save button to record the payment.
The program debits Accounts Payable for the total amount and credits the cash account for the net
check amount and also credits the discount-taken account (if applicable).
Enter a Cash Purchase and Print Checks
A cash purchase can either be a check that you write to a vendor or other payee that you have not
entered a purchase for, or it can be a purchase for which you have actually paid cash. A cash
purchase needs to be applied to expenses.
• Select Payments.
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2. Enter or select the vendor ID that you want to pay. To display a list of existing vendors,
type ? in this field, or select the Lookup button. Or, press ENTER to skip the Vendor ID
field, and type in the name in the Pay to the Order of field.
3. If you want to print a check, leave the Check # field blank. If you paid cash for the
purchase, enter CASH01, CASH02, and so on.
4. If you chose a vendor with existing invoices, select the Apply to Expenses tab.
5. Enter the line items on the payment the same way as you do in Purchases/Receive
Inventory.
If the line item contains serialized inventory, you will need to either add or select serial numbers
for the item(s). Select the line item with the serialized inventory item, then select the Serial No
button to enter or select serial numbers. Either the Serial Number Entry or the Serial Number
Selection window appears, depending upon whether you entered a positive or negative quantity.
To find out which window will appear. Enter or select the serial numbers you need and select OK
when you're finished to return to the Payments window. However, if the transaction has more than
one line item that contains serialized inventory, you can select the OK/Next button to save the
current entry and move to the next serialized item.
6. If you need to enter retainage that you are withholding from this vendor, select the Apply
to Expenses tab and enter a new line item, specifying Retainage as the description,
selecting an appropriate Payable Retainage account, and entering the amount of retainage
in the Amount field as a negative number. This will ensure that the amount is subtracted
from the total and that the retained amount is tracked properly.
7. If you want to print the check, select the Print button. Otherwise, select the Save button to
record the payment.
To enter a credit memo and apply it immediately to an invoice, follow these steps:
1. From the Tasks menu, select Credit Memos. The following window will appear:
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Note that, in some cases (for example, when payment is not received at the time the invoice is
entered or when the sale is not invoiced), you will need to issue a refund check to your customer.
Thus, cash or check refund required and the tasks described as follow:
To print a refund check, do the following:
1. From the Tasks menu, select Payments.
2. Select Customer for the type of ID you want.
3. Enter or select the customer ID that you want to pay.
4. Go to the line-item grid, and in the Description field, enter a reason or reference for the
refund.
5. In the Amount field, enter the amount of the refund.
6. Select the Print button.
7. From the dialog box, select the check disbursement form that you want to use.
9. Select the Print button.
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2. Select the employee you want to pay using the lookup. Once you select an employee,
Peachtree will enter that employee's address information, as well as enter their default
pay (based on settings on the Pay Info tab of Maintain Employees). Deductions will be
calculated and displayed immediately.
3. Enter or select the paycheck date for this payroll period.
4. Select a cash account from which to write the paycheck (for example, Payroll Checking).
5. Enter the Pay Period ending date.
6. Modify earnings information
• If necessary, change the employee's hour or salary amounts for the pay period. This
would include adding overtime hours or bonus pay.
• The default G/L payroll accounts that Peachtree uses for each payroll field are
based on the employee's defaults. To change the account ID, click in the field to
display the lookup; then click the lookup and select another account.
• If necessary, enter or change payroll field amounts. This would include entering
vacation or sick hours taken by the employee during the pay period.
7. When you're finished filling out the check information, select the Print button to print the
check. Otherwise, click Save.
1. From the Tasks menu, choose Select for Payroll Entry. Peachtree displays the following
Select Employees--Filter Section window.
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2. Select the pay frequencies, pay types, and the range of employees for whom you want to
print checks.
3. Click OK. Peachtree displays the following Select Employees to Pay window, where you
can edit individual paychecks for hours, amounts, and pay frequencies (number of
weeks).
3. You can enter the date you want on the checks, the pay period ending date, and the cash
account number from which you want the checks to be paid.
4. Select the Pay check box next to the employees you want paid.
• To select all Pay check boxes, click the All (Select) button.
• To clear all Pay check boxes, click the All (None) button.
• Select the Detail button to edit the account and the amount for salaried employees,
as well as the amount and the hours worked for hourly employees.
5. After making your selections, select the Print button. Otherwise, click Save.
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1. On January 1, 2017 ABC Inc. sold five Televisions to Cannon Trading with a credit terms
of 2/10, n/30. The unit price of the Television was Birr 3,500 and they were subject to
Value Added Tax (VAT). In addition, the sales man sent Invoice Number 3338.
2. On January 2, 2017 ABC Inc. sold two Laptops to Chaplet Enterp at a price of Birr
12,500 and they are subject to Turn Over Tax (TOT) without a credit terms (no sales
discount). Chaplet Enterp made partial payment of Birr 6,000 at the time of the sale.
ABC’s sales man issued Invoice Number 3339 with Reference Number of 2/1/2017.
3. On January 3, 2017, ABC Inc. made purchase of three Laptops at a unit price of Birr
11,000 with credit terms of 2% 10, Net 30 Days from Dahlia Suppliers and received
Invoice Number 2136. In addition, ABC Inc. accountant maintained this new vendor
using the following data: Vendor ID: DAHL, Name: Dahlia Suppliers, Contact:
Abdul, Vendor Type: Vendor, and Telephone 1: +2519110456
4. On January 4, 2017, ABC Inc. received cash in full payment of Invoice Number 3334 from
Archer Limited. During the receipt, ABC Inc. issued Receipt Document with Reference:
4/1/2017 and Receipt Number: 001.
5. On January 5, 2017 ABC Inc. paid the full amount owed to Nae Company of the Invoice
Number 2126.
6. On January 6, 2017, ABC Inc. sold twenty Digital Cameras to Kurtu PLC at a price of
1,250 each and received the total amount in cash including the VAT. While the sale person
issued Receipt Document with Reference: 6/1/2017 and Receipt Number: 002
7. On January 7, 2017, ABC Inc made purchases of five AC, ten Digital Camera and eleven
Televisions at a unit price of Birr 12,250, 1,050, and 2,600, respectively; with credit terms
of 2/10, n/30 from Turu Exporter and received Invoice Number 2199.
8. On January 8, 2017, ABC Inc. made purchase of two Desktop Computers at a unit price
of Birr 4,900 from Gashy PLC. in cash.
9. On January 9, 2017, ABC Inc. received cash in full amount of Invoice Number 3335 and
3338 from Cannon Trading and issued Receipt Document with Reference: 9/1/2017 and
Receipt Number: 003
10. On January 10, 2017, ABC Inc. paid cash in full the amount owed to Brtu Enterp of the
Invoice Number 2123.
11. On January 11, 2017, ABC Inc. made purchase of two Laptops at a unit price of Birr
11,000 with credit terms of 2/10, n/30 from Brtu Enterp and received Invoice Number
2277.
12. On January 12, 2017, ABC Inc. received cash from Chaplet Enterp for the Invoice
Number 3336 and 3339 and issued Receipt Document with Reference: 12/1/2017 and
Receipt Number: 004. Whereas, the amount owned to Invoice Number 3339 is received
only Birr 6,500.
13. On January 13, 2017, ABC Inc. sold three AC to Ayat Real-estate at a price of Birr 15,000
each and received the total amount in cash including the Turn Over Tax (TOT). While
the sale person issued Receipt Document with Reference: 13/1/2017 and Receipt Number:
005
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14. On January 14, 2017, ABC Inc. paid the full amount owed to Turu Exporter of the Invoice
Number 2199 and 2127.
15. On January 15, 2017, ABC Inc. paid salary for its five employees for the pay month ended
January 9, 2017.
4.7. General Journal Entry
Journal Entry is an event that has a dollar impact on the company's accounting records. Journal
entries show the effects of business transactions as expressed in terms of debits and credits. Each
journal entry will usually have a transaction date, amount, account number, reference and
description.
The General Journal is unique—it’s the only journal in which we provide all the accounting
distributions. In all the other journals, Peachtree automatically distributes certain amounts based
on defaults we establish. But here, in the General Journal, we have to enter both debits and credits
balance of the transaction.
Thus, in the General Journal, we can enter transactions that don’t fit into other journals—for
example, depreciation or transferring funds from one account to another. Just remember that here,
we are responsible for balancing this journal entry—making sure debits equal credits. We can
check the progress in the Out of Balance field. It reads ‘’0.00’’ when the transaction has been
entered properly.
We have to use the General Journal to enter those types of transactions that are not readily
categorized in the Tasks menu. Typical General Journal entries include chart of account beginning
balances, depreciation, withdrawal, and account transfers.
Unlike other screens in Peachtree, we provide all the accounting distributions in the General
Journal. While, Peachtree automatically post the General Journal to the General Ledger when we
select the Save button, if we’re using the real-time posting method.
1. From the Tasks menu, select General Journal Entry. Peachtree displays the General
Journal Entry window.
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2. Enter or select the date of the transactions. Peachtree defaults this date to the Peachtree
system date. If we are in an accounting period that is different from the system date, then
Peachtree displays the first day of that period.
5. For each line enter an amount in either the Debit or Credit columns. When we enter
transactions in Peachtree, journal entries are automatically created based on generally
accepted accounting principles. Peachtree is a true accounting system that creates both
debits and credits. Much of the accounting is behind the scenes, leaving us to concentrate
on the transaction information itself. The journal entries Peachtree creates are based on
various defaults we have set up for the company. However, we can examine or edit these
journal entries through Accounting Behind the Screens.
6. For each line enter a description for the transaction. The description will appear in
General Ledger and various reports.
7. Once the Out of Balance field is zero (0.00): the total debit amount must equal the total
credit amount, select ‘’Save’’ to record the transaction in the General Journal.
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Peachtree has two methods for handling General Journal entries that we make on a consistent basis.
Memorized transactions are like a template that we can quickly flesh out for specific transactions.
They are not posted to the general ledger. Recurring transactions are complete transactions we set
up to happen on a set timetable: monthly, quarterly, yearly, etc. An example would be if we have
a contract with someone to provide a monthly service.
There are several ways to edit transactions. One method is to examine and modify journal entries
using Accounting Behind the Screens.
1. Open the task window, and enter a new transaction or select an existing transaction using
the List button.
2. With the transaction displayed in the task window, select the Journal button. This opens
the Accounting Behind the Screens window and displays the transaction's
corresponding journal entries.
3. If Peachtree displays more than one journal tab, select the journal we want to examine or
edit. Depending on what type of task is open, the Accounting Behind the Screens
window displays the journal tab(s) that correspond to the particular transaction.
4. To modify a journal entry distribution, select the line item and Account ID field we want
to edit. Then, enter or select an alternate account ID. When we have finished editing the
journal entry, select OK to return to the task window.
ABC Inc has made the following transaction for the month of March, 2017:
1. On March 2, 2017 ABC Inc. bought a building for Birr 45,000, Reference # 2000.
2. On March 3, 2017 ABC Inc calculated depreciation expense for Furniture, Equipment,
Vehicle, and Building Birr 1,000, 500, 1,000 and 1,000 respectively, Reference # 2001.
3. On March 31, 2017 ABC Inc remitted the entire sales tax to the government, Reference #
2002.
4. On March 31, 2017 ABC Inc paid Birr 5,000 of dividend to the common stock holders,
Reference # 2003.
5. The inventory of supplies on March 31 is determined that Birr 48,000 is on hand, Reference
# 2004.
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• For An Adjustment Up: we will enter a positive quantity and can also enter a unit
cost. This will increase the quantity on hand and total inventory value much as a
purchase would. If we previously miscounted the inventory and now have more units on
hand than we thought the Company had, we could adjust up.
• For An Adjustment Down: we will enter a negative quantity, but we can't enter a unit
cost. Peachtree will figure out the cost value that these units are being removed at, much
like a sale. An inventory adjustment down will decrease the quantity on hand as well as
the total value. If something was stolen or broken or if inventory was previously
miscounted, we could adjust down.
1. From the Tasks menu, select Inventory Adjustments. Peachtree displays the Inventory
Adjustment window.
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We cannot delete an inventory item if it is used in a transaction nor has an established beginning
balance. If this is the case, the only way is, we can remove the item is to display it on the General
tab, select the inactive check box, and use the purging function from the Tasks, System option.
1. From the Maintain menu, select Inventory Items. Peachtree displays the Maintain
Inventory Items window.
2. Enter or select the ID of the item that we want to delete.
3. Select the Delete toolbar button. The system displays a warning message, asking if we're
sure to remove this record.
4. Select Yes.
Enter an Inventory Return
If an item is returned at a cost that is different from the current cost of the item, then Peachtree
will create a purchase return adjustment for it. For example, the average cost of Television is 2,500.
A Television is returned for Birr 2,250. Peachtree makes an adjustment for the difference of Birr
250 between the average cost and the return cost.
1. On March 31, 2017, the Stock Custodian reported that one television has got Damage
due to Handling. Consequently, ABC’s accountant has made inventory adjustment on
this day with reference number 2000.
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• User Security: This allows you to limit access to sensitive areas of the Peachtree program.
• Backing up and restoring company data: Making backups is essential when using
accounting software and Peachtree has an easy to use system. You can make backups to a
disk or your hard drive. Peachtree has a wizard that you can use for restoring backups made
through Peachtree’s backup routine.
• Closing out your fiscal and/or payroll tax years: At some point in your fiscal year, you
will need to close previous years so that you can get ready for the upcoming fiscal year.
This routine walks you through the closing process.
Your first step is to add users in the User Security window. When you add a user here for the first
time, Peachtree automatically sets that user up as company administrator with access to all parts
of the Peachtree program. As with all users, the administrator assigns himself or herself a user
name and password and then saves the information.
The first user you set up must be an administrative user with full rights to each area of Peachtree
and the ability to set up and maintain user records and passwords. Once the administrator is set up,
he/she can then add other users to the system.
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3. To give the user full access to the program plus the ability to create individual users, select
the Administrator option.
4. When finished, select OK.
The User Security window returns. Note that the user name and access level information have been
added to the grid at the center of the window. Note, too, that the Licensed checkbox is
automatically checked. You're now ready to set up additional users.
Once you've set up the administrator of the company, you can enter your first regular user and user
role. Follow these steps:
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often you back up and which method you choose depends on how you use Peachtree. If you enter
transactions every two weeks, you can get by with backing up every two weeks. However, if you
enter transactions daily, you may need to establish a daily backup routine. You can choose to back
up your data using a utility other than Peachtree’s, but you should ensure that ALL Peachtree data
files are backed up. If you use Peachtree’s internal system, all other users must exit Peachtree
before you can do so. To make a backup using Peachtree’s internal utility
➥ Select File, Back Up. This will open the Back Up Company window.
On the next window, specify the name of the backup file and the location of the file. What you
name your file depends on you, but if you work with multiple companies, you should include the
name of the company in the file name. Otherwise, you run the risk of overwriting one company
with data from another company data should you ever restore that backup. Also, it is recommended
that the file name include the date the backup was made so that you can quickly determine if it is
the one you want.
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Next, Peachtree will notify you of the amount of data space the backup will take or the number of
disks it will need. Click OK to complete the process. The amount of time it takes to complete the
backup depends on the size of the backup and the medium to which you are backing it up. If the
company data file is large, we recommend backing up at the end of the day so that other users will
not need to access the company data.
2. Click the Browse button and locate your Peachtree backup. These files are
identified with the extension: .ptb. and once you have selected the file, click Next
to continue.
3. On the next window, you can verify that the correct backup has been selected.
4. On the Restore Wizard - Restore Options window, select the types of data you want
to restore and click Next.
5. Finally, click Finish on the Confirmation window. The length of time it takes to
restore depends on the size of the backup and the type of medium on which it was
stored.
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The Year-End wizard walks you through the process of closing out your first open fiscal year,
payroll tax year, or both. At every point in the process, the wizard makes your options clear and
tells you the consequences of every action you might take.
Before you launch the wizard, there are a number of tasks you should perform. These include
• Printing out any unprinted items such as invoices and payroll checks
• Clearing the Waiting on Bill from Vendor check box in the Purchases/Receive Inventory
window for any outstanding vendor purchases. If you start the wizard before performing
this task, the wizard will not be able to proceed. You will have to exit the wizard and clear
the check box before you can complete year-end close.
You may also want to purge inactive records before you start the wizard, though this can be done
at any time, including after year-end close. Purging records is accomplished with the Peachtree
Purge wizard.
Also, while the wizard requires that you back up your company data during the close process, you
can do so before launching the wizard if you prefer. In either case, back up of company data is
highly recommended.
The Year-End wizard comprises a series of windows with instructions and options. The first
window, the Welcome to the Peachtree Year-End Wizard window, tells you the date range of your
two open fiscal and payroll tax years. Once you've finished reading the text in this window, you
can click the Next button to go to the next window in the series. The windows that make up the
wizard are:
Close Options: The Close Options window lets you choose whether to close the first open fiscal
year, the first open payroll tax year, or both. To learn more, click .
Print Fiscal Year-End Reports: This window displays a list of the year-end reports that you should
print before completing the year-end process. For each listed report there is a check box; each
check box is preselected. You can click in the check box of any reports you don't want to print.
Internal Accounting Review (Peachtree Premium Accounting and higher only): This window gives
you the opportunity to run an Internal Accounting Review on your company before you close the
year. If you would like to run the review now, you can click one button to do so.
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Back Up Company Data: It's very important that before you close the year, you make a backup of
company data and customized forms; otherwise, this information will be lost. The Back Up
Company Data window creates a backup for you.
Archive Company Data: When you archive your company data, you are saving your data and
financial statements so you can have access to that information when you need to refer to it for
future use, such as providing your financial information for a tax audit.
New Open Fiscal Years: Since Peachtree automatically adjusts the start and end dates of fiscal
year accounting periods, it is usually not necessary for you to do this for your next open fiscal year.
However, if you do want to change accounting period dates for any reason, The New Open Fiscal
Years window gives you the opportunity.
Note: You will see this window only if you are closing a fiscal year or years.
Confirm Close: This window tells you the starting and ending dates of the open fiscal and payroll
tax years you are about to close. It also tells you what your two open fiscal and payroll tax years
will be after closing. Confirm that the information is right; then click the Next button to proceed.
Begin Close-Year Process: At this point, you are ready to begin the close process. To do so, click
the Begin Close button.
Congratulations! The open fiscal and payroll tax years you selected have been successfully closed.
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COMPREHENSIVE ILLUSTRATION
This example has 10 parts and using the steps you are learned in this module try to accomplish this example.
Part 1: Creating a new company (Use the following information to create a new company)
Company Name: Ethiopia Company
City – State – Zip: Dessie – AM – 251
Business Type: Corporation
Method to create your company: select “Build your own chart of accounts”
Accounting Method: select “Accrual”
Posting Method: select “SmartPosting”
Choose an accounting period structure: select “12 monthly accounting periods per year”
Choose the first period of your fiscal year: select "January 2017"
Part 2: Maintaining the following Chart of Accounts for the Created Company in Part 1.
(Use the following data to maintain chart of account)
Account Beginning Balance
Description
ID Debit Credit
1001 Cash 15,000
1002 Accounts Receivable 15,500
1003 Supplies 36,400
1004 Inventory 85,000
1005 Equipment 105,000
1006 Accum. Depreciation-Equipment 5,000
1007 Building 160,000
1008 Accum. Depreciation-Building 25,000
1009 Copy Right 40,000
2001 Accounts Payable 45,400
2002 Bond Payable 50,000
3001 Common Stock 160,000
3002 Retained Earnings 122,000
3003 Dividend
4001 Sales 90,000
5001 Cost of Goods Sold 24,000
6001 Supplies Expenses 7,000
6002 Depreciation Expense 4,500
6003 Salaries Expense 5,000
497,400 497,400
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general journal entries. Thus, enter the following transactions in the Peachtree program of Your
Company
Section 1: Special Journal Transactions:
• On June 2, 2017, Your Company has made payment to Gech Enterprise for the amount owed
to Invoice Number 3231.
• On June 2, 2017, Your Company sold 15 DVD Players at a unit price of Birr 1,000 to Kedir
Limited without a credit terms. The DVD Players were subject to Value Added Tax. In
addition, Kedir Limited has made partial payment of Birr 10,000 cash and the sales man
issued Invoice Number 2226 with Reference Number 2/3/2017.
• On June 4, 2017, Your Company received the amount owned from SIra Trading for the
Invoice Number 2224. While the cash receipt personnel issued receipt document with
Reference: 4/3/2017 and Receipt Number: 001
• On June 4, 2017, Your Company purchased 4 Generator at a unit price of Birr 5,500 from
Baba Importer on account with a credit term of 3/10, n/30. The Invoice Number was 6531.
• On June 4, 2017, You Company sold 2 Vacuum Cleaner at a unit price of Birr 6,500 to Elh
PLC with a credit term of 3/10, n/30. The items were subject to Turn Over Tax and Invoice
Number 3339 issued to the customer.
• On June 6, 2017, Your Company sold 2 Vacuum Cleaner to Walk-In Customer in cash at a
unit price of Birr 8,500 and the items were subject to Value Added Tax. The sales man issued
receipt document with Reference Number of 6/3/2017 and Receipt Number 002.
• On June 6, 2017, your Company sold 2 Refrigerator at a unit price of 12,000 to Kedir Limited
with a credit term of 3/10, n/30. The items were subject to Turn Over Tax. The Invoice Number
is 2227.
• On June 9, 2017, Your Company received the amount owned from Kedir Limited of the
Invoice Number 2223, 2226 and 2227. The cash receipt personnel issued a receipt document
with Reference Number 9/3/2017 and Receipt Number 003.
• On June 9, 2017, Your Company sold 10 DVD Players on account to new customer called
Ethio Company at a unit price of 1,500 and the items were subject to Turn Over Tax. Hence
Your Company has granted a credit term of 3/10, n/30. While the sales man maintained this
new customer using the following data: Customer ID: ETHIO, Name: Ethio Company,
Contact: Zenegnaw, Customer Type: Customer, and Telephone 1: +2519119956. The Invoice
Number is 2228.
• On June 10, 2017, Your Company paid the amount owed to Baba Importer of the Invoice
Number 6531 in full amount and Invoice Number 3235 a partial amount of Birr 5,000.
• On June 14, 2017, Your Company sold 2 DVD Players, 1 Generator, and 2 Vacuum
Cleaners at a unit price of Birr 1,200, 7,000 and 5,600, respectively, to Aka Company in cash.
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The items were subject to Value Added Tax. Hence, the sales man issued a receipt document
with Reference Number of 14/3/2017 and Receipt Number 004.
• On June 14, 2017, Your Company received the amount owned from Ethio Company of the
Invoice Number 2228. The cash receipt personnel issued a receipt document with Reference
Number 14/3/2017 and Receipt Number 005.
• On June 15, 2017, Your Company purchased 2 Refrigerators from Leon Company at a unit
price of Birr 10,000.
• On June 17, 2017, Your Company purchased 10 Digital Cameras at a unit price of Birr 1,000
from Alem PLC by paying cash. The accountant maintained these new inventories using the
following data: Item ID: DC, Description Digital Camera, Item Class: Stock item.
• On June 18, 2017, Your Company paid the amount owed to Baba Importer of the Invoice
Number 3235 of Birr 5,000.
Section 2: Payroll Transaction
• On June 18, 2017, for the pay month that ended on June 17, 2017, Your Company paid salaries
for Abebe Tadesse, Jemal Kedir and Zufan Terefe.
Section 3: General Journal Entry Transaction
• On June 18, 2017, Your Company recorded Birr 6,000 for Depreciation Expenses of
Equipment and Birr 3,500 for Depreciation Expenses of Building. The Reference Number
was 18/3/2017.
• On June 31, 2017, supplies on hand estimated to be Birr 35,000. The expired amount should
be recorded as supplies expense. (Hint: refer back to the supplies account running balance on
the chart of account from the List Menu bar). The Reference Number was 31/3/2013
• On June 31, 2017, Your Company remitted the two sales tax amount collected from customer
to the tax agencies. (Hint: refer back to the VAT Payable and TOT Payable account running
balance on the chart of account from the List Menu bar). The Reference Number was
31/3/2017
• On June 31, 2017, Your Company has paid Birr 10,000 as dividend to its common stock
holders. The Reference Number was 31/3/2015.
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