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37 CHAPTER 6 DAILY MENU - OPTION 1 As mentioned in Chapter 1, CPA-LEDGER has two main menu options - the SETUP menu and the DAILY menu. The SETUP menu and its processing options were discussed in Chapters 3 through 5, except for SETUP Option 4 which is discussed in Chapter 16. Beginning with this chapter, we will take up the DAILY menu. Refer to Chapter 1 for an overview of the DAILY menu. Also refer to Chapter 2 for standard message and reminders that are designed to help you use CPA-LEDGER. For brevity, these standard message and reminders will not be repeated. THE DAILY MENU. Chapter 1 tells you how to use PC-DOS for loading BASICA and for starting the DAILY menu. When the menu appears on your computer screen, it will look like this: CPA-LEDGER DAILY MENU SELECT ONE OF THE OPTION NUMBERS BELOW. 1. ENTER NEW TRANSACTIONS IN THE GENERAL LEDGER - NOT AUTOMATIC. SEE NBR. 10. 2. PRINT AN UNADJUSTED TRIAL BALANCE. 3. PRINT FINANCIAL STATEMENT(S). 4. PRINT TRANSACTIONS THAT HAVE BEEN POSTED TO THE GENERAL LEDGER. 5. PRINT GENERAL LEDGER ACCOUNTS WITH DETAILS OF ALL DEBITS AND ALL CREDITS. 6. PRINT BANK DEPOSITS AND CHECKS WRITTEN (CHECK REGISTER). 7. PRINT GENERAL LEDGER ACCOUNTS AND THEIR BALANCES. 8. ADD NEW ACCOUNTS TO THE GENERAL LEDGER. 9. PRINT A POST-CLOSING TRIAL BALANCE. 10. ENTER NEW TRANSACTIONS IN THE GENERAL LEDGER - AUTOMATIC. 11. STOP ALL CPA-LEDGER PROCESSING AND RETURN CONTROL TO PC-DOS. WHICH OPTION NUMBER DO YOU SELECT? __ (C) COPYRIGHT 1986, 1988, 1989 TRONOLONE & FOSTER, PC 38 WHAT OPTION 1 IS USED FOR. Option 1 is used for: . Entering your day-to-day financial transactions in the general ledger, and . Entering any adjusting entries that are needed prior to preparing the financial statements. Read Appendix D and Appendix E before you use Option 1. The Appendices contain an overview of the accounting process and identify procedures that will help ensure that your account balances are kept current and accurate. as indicated above, Option 1 may be used to enter adjusting entries in the general ledger prior to preparing financial statements. Consider using the following procedures IF YOU MAKE ADJUSTING ENTRIES prior to preparing the financial statements. (There is a way to make monthly adjustments, without necessity of the following procedures. However, the details are beyond the scope of this User's Manual. Se your local CPA.) . Return to PC-DOS and make a copy onto another disk the data files that are on your data disk. Use the COPY command to make the copy. Your IBM Disk Operating System Manual explains how to use COPY. . Return to BASICA and then to the DAILY menu of CPA-LEDGER, as explained in Chapter 1. . Use Option 1 to record the adjustments. Prepare the financial statements. Then, erase the data disk that you used to prepare the financial statements (the disk has been permanently altered). Finally, copy the data files without the adjustments to the disk that you erased. This will restore the data files to their form prior to preparing the financial statements. Please remember this - DO NOT USE OPTION 1 TO ENTER CLOSING ENTRIES! CPA-LEDGER DOES THAT FOR YOU, AUTOMATICALLY. USE CPA-LEDGER, OPTION 1, FOR RECORDING DAILY TRANSACTIONS AND FOR ADJUSTING ENTRIES, ONLY. CPA-LEDGER AUTOMATICALLY PREPARES THE CLOSING ENTRIES. OPTION 1 SEQUENCE OF EXECUTION. Option 1 starts with this message: WOULD YOU LIKE A BRIEFING ON HOW TO USE THIS COMPUTER PROGRAM TO BE DISPLAYED ON THE COMPUTER SCREEN? ENTER `Y' OR `YES' OR `N' FOR `NO'. _ 39 If your answer is `N' (for `NO'), Option 1 asks you to start entering your daily transactions or adjustments. See the paragraph, following, entitled, "ENTERING YOUR DAILY TRANSACTIONS OR THE ADJUSTMENTS FOR FINANCIAL STATEMENTS." If your answer is `Y' (for `YES'), the following appears on your computer screen: THIS COMPUTER PROGRAM IS TO BE USED ONLY FOR POSTING DAILY OR ADJUSTING ENTRIES TO THE GENERAL LEDGER ACCOUNTS. EACH GENERAL LEDGER ACCOUNT TO BE POSTED M-U-S-T (REPEAT, MUST) BE AN ACTIVE ACCOUNT. YOU CAN DETERMINE WHICH ACCOUNTS ARE ACTIVE BY RETURNING TO THE DAILY MENU, SELECTING OPTION 7, AND SPECIFYING THAT ALL ACCOUNTS BE PRINTED. IF YOU DESIRE TO RECLASSIFY AN ACCOUNT FROM INACTIVE TO ACTIVE STATUS (SO THAT YOU WILL BE ALLOWED TO POST A TRANSACTION TO IT), YOU SHOULD USE OPTION 8 FROM THE DAILY MENU. DO YOU WISH TO CONTINUE WITH THIS SESSION? ENTER `Y' FOR `YES' OR `N' FOR `NO'. _ If your answer is `N' (for `NO'), Option 1 stops processing and you will be returned to the DAILY menu. If your answer is `Y' (for `YES'), the following will appear on your computer screen: THE COMPUTER IS READY TO START ACCEPTING YOUR GENERAL LEDGER ENTRIES. EACH ENTRY REQUIRES AT LEAST ONE DEBIT AND ONE CREDIT. EACH DEBIT OR CREDIT, IN TURN, REQUIRES INPUT UNDER DESCRIPTIVE COLUMN HEADINGS THAT WILL APPEAR ON THE COMPUTER SCREEN. TO ASSIST YOU BRIEF INSTRUCTIONS WILL BE DISPLAYED ABOVE THE COLUMN HEADINGS. AFTER EACH CREDIT TO A BANK ACCOUNT, THE COMPUTER WILL ASK YOU FOR THE PAYEE`S NAME. THE COMPUTER WILL PROMPT YOU FOR THIS INPUT. ALL MESSAGES WILL APPEAR ABOVE THE COLUMN HEADINGS. THE ERROR MESSAGES ARE SELF EXPLANATORY. (Continued on next page.) 40 PRESS THE RETURN KEY AFTER YOU ENTER EACH REQUESTED INPUT. NEVER, UNDER A-N-Y CIRCUMSTANCES, INTERRUPT THIS PROGRAM BY PRESSING THE `Ctrl-Break' KEYS ON YOUR KEYBOARD! PRESS ANY KEY TO CONTINUE. After you press a key, Option 1 is ready to start accepting your general ledger entries. ENTERING YOUR DAILY TRANSACTIONS OR THE ADJUSTMENTS FOR FINANCIAL STATEMENTS. The following will appear on your computer screen when Option 1 is ready to accept your general ledger entries: EACH DEBIT OR CREDIT ENTRY REQUIRES INPUT IN THE COLUMNS BELOW. 1. `DATE' COLUMN IS FOR TRANSACTION DATE. USE FORMAT YYMMDD-6/30/84=063084. 2. `POSTING REFERENCE' COLUMN IS FOR FUTURE REFERENCE TO SUPPORTING DOCUMENTATION. EXAMPLES ARE SALES INVOICE NUMBER AND PURCHASE INVOICE NUMBER. 3. ENTER `S' (FOR SAME) TO USE THE PREVIOUS DATE OR POSTING REFERENCE. ---->4. ENTER `?' FOR DR/CR TO SUM ALL PREVIOUS DR/CR IN AN ENTRY - AUTO TOTAL. 5. ENTER `Q' (FOR QUIT) FOR ACCOUNT NUMBER WHEN JOURNAL ENTRY IS COMPLETE. 6. YOUR COMPUTER'S CAPS-LOCK KEY MUST BE `ON'. ********************************************************************* ACCOUNT D=DEBIT DOLLAR POSTING CHECK DATE NUMBER C=CREDIT AMOUNT REFERENCE NUMBER (Reader, to make sure you don't misunderstand - the following is also part of the screen.) ************************************************************************* * Read this before you begin. It is very important that you enter the * * correct date for each transaction. The date that you enter is used * * to update a data base that accumulates transactions according to the * * date that they occurred. If you use an incorrect date, your data * * base will be updated for the improper period and your monthly * * financial statements will be incorrect. Follow rule #1 at the top * * of the screen for the date format. PRESS ANY KEY TO CONTINUE. * ************************************************************************* After you press a key, the message (immediately above) disappears and CPA-LEDGER begins to ask for your input. 41 Notice the instructions that appear above the column headings. You will enter each debit or credit under the columns shown - with one line being used for each debit or credit. When you enter an account ---->number, the account's title appears at the bottom of the screen. The last two column headings (POSTING REFERENCE and CHECK NUMBER) appear only when needed. Also, as you enter the dollar amounts, the totals of the debits and credits also appear at the bottom of the screen. . The POSTING REFERENCE column appears for the first debit or credit of each general ledger entry. After that, it disappears. . The CHECK NUMBER column appears each time that you credit a bank account. After entering the check number, the following message appears immediately below the credit entry: ENTER THE PAYEE FOR THE ABOVE CHECK. _______________________ After you enter the payee, the CHECK NUMBER column and the message disappear. ---->After you complete your entry for each debit or credit, CPA-LEDGER asks you if all information on that line of information is correct. It does that by displaying "OK? (Y/N)" in the extreme right side of the screen. If you enter "Y", the system asks for the next debit or credit. If you enter "N", however, your erroneous input is erased from the screen (and ignored by CPA-LEDGER) and you are asked to reenter that line of information. This process continues until you have completed your general ledger entry. As indicated in instruction 5 above the column headings, signal the end of a complete general ledger entry by entering a single `Q' (for QUIT) in the ACCOUNT NUMBER column. ---->Each general ledger entry may contain up to 30 debits and 30 credits. If you exceed either of those limits, the following message will appear on your computer screen: MAXIMUM OF 30 DEBIT OR 30 CREDIT POSTINGS EXCEEDED. REDESIGN YOUR ENTRY SO THAT THE MAXIMUMS WILL NOT BE EXCEEDED. NONE OF THIS ENTRY WILL BE POSTED UNTIL YOU REDESIGN THE ENTRY. PRESS ANY KEY TO CONTINUE. After you press a key, Option 1 returns to that part of the computer program that gets ready for the next general ledger entry. See the paragraph, following, entitled "GETTING READY FOR THE NEXT GENERAL LEDGER ENTRY." 42 HOW TO DISCONTINUE INPUT FOR A GENERAL LEDGER ENTRY. A single `Q' (for QUIT) in the ACCOUNT NUMBER column is used to signal that a general ledger entry is complete. After you enter the `Q', the following request is displayed: ENTER EXPLANATION FOR THE ABOVE ENTRY. ______________________________ After you enter the explanation, Option 1 displays your entire general ledger entry for your review and approval. The entry will not be posted to the general ledger unless you approve it. The display and approval process is explained below. REVIEWING AND APPROVING YOUR GENERAL LEDGER ENTRY. Option 1 gives you a chance to approve each entry before posting the general ledger. The approval process starts with this message: YOUR INPUT WILL BE DISPLAYED ON THE SCREEN SO THAT YOU MAY VERIFY IT. (FOR YOUR INFORMATION, ACCOUNT TITLES ASSIGNED TO THE ACCOUNT NUMBERS THAT YOU INPUT WILL ALSO BE DISPLAYED.) CAREFULLY NOTE ANY ERRORS SO THAT INCORRECT DATA WILL NOT BE POSTED TO THE ACCOUNTS. PRESS ANY KEY TO CONTINUE. After you press a key, the following appears on your screen. (The example given is for debit entries. A separate screen is used for credits, in the same format.) YOUR DEBIT ENTRIES (WITH ACCOUNT TITLES) APPEAR BELOW. THE LIST FOR DEBIT ENTRIES IS COMPLETE. NOTE ANY INPUT ERRORS. PRESS ANY KEY TO CONTINUE. ACCOUNT DOLLAR POSTING CHECK DATE NUMBER ACCOUNT TITLE AMOUNT REFERENCE NUMBER Each debit and credit entry that you entered will be displayed under the columns. After the display of both debits and credits is complete and after you have pressed a key to continue, the following question will appear on your computer screen: 43 DO YOU DESIRE TO POST THE DEBIT AND CREDIT ENTRIES THAT YOU JUST REVIEWED? ENTER `Y' FOR `YES' OR `N' FOR `NO'. _ If you notice a mistake and answer `N' (for `NO'), Option 1 erases the entry from its memory and returns to the section of the program that gets ready for the next general ledger entry. See the paragraph, following, entitled "GETTING READY FOR THE NEXT GENERAL LEDGER ENTRY." If you answer `Y' (for `YES'), Option 1 automatically makes sure that the total value of debits equals the total value of credits. If the debits and credits agree, your entry is posted to the general ledger. ---->There is a process that CPA-LEDGER follows that you should know about. It you enter `Y' to the above inquiry and debit amounts equal credit amounts, CPA-LEDGER posts to TWO data bases, (1) the master data base used to prepare cumulative financial statements and (2) a data base use for accumulating information for monthly income statements. If the data base for monthly financial statements become unusable, the following message will appear: PROCESSING ERROR. MONTHLY DATA BASE RECORD NOT FOUND. DISCONTINUE YOUR USE OF CPA-LEDGER UNTIL YOU HAVE CONTACTED JIM FOSTER AT (703)569-2254. PROCESSING WILL CONTINUE TO UPDATE THE MASTER DATA BASE FOR THIS TRANSACTION. WHEN YOU ARE ASKED, TELL CPA-LEDGER THAT YOU DO NOT WISH TO POST ANY ADDITIONAL TRANSACTIONS. THEN, CALL (OR WRITE IF YOU PREFER) JIM FOSTER AND GIVE HIM THIS MESSAGE: A message for Jim appears here. PRESS ANY KEY TO CONTINUE. As the message states, you should discontinue using CPA-LEDGER and contact Jim Foster. (You should rarely, if ever, see the message - it will appear only if CPA-LEDGER notices that notices that the data base is not usable. The message is listed in this manual so that you will know what to do - contact Jim Foster. In the meantime, be sure that you keep frequent backups of your data files (those with an extension of .FIL). 44 Continuing, if the debits and credits do NOT agree, the following message appears on your screen: FOR THE ENTRY THAT YOU JUST REVIEWED, THE TOTAL VALUE OF THE DEBITS DO NOT EQUAL THE TOTAL VALUE OF THE CREDITS. OR, YOU ENTERED ONLY DEBITS OR YOU ENTERED ONLY CREDITS, WITH ZERO VALUES. IF YOU ENTER ZEROS AS VALUES, THERE MUST BE AT LEAST ONE DEBIT AND ONE CREDIT. NONE OF THE DEBITS OR CREDITS FOR THIS ENTRY WILL BE POSTED TO THE GENERAL LEDGER. CAREFULLY REVIEW THE DEBIT AND CREDIT AMOUNTS AND REENTER THE ENTIRE ENTRY FROM THE BEGINNING. THE TOTAL VALUES ARE AS FOLLOWS: TOTAL VALUE OF DEBITS = $ TOTAL VALUE OF CREDITS = $ THE COMPUTER IS PAUSING FOR YOU TO REVIEW YOUR SOURCE DOCUMENTATION. DETERMINE WHETHER YOUR DOCUMENTATION OR YOUR INPUT IS IN ERROR. REMEMBER, NO DEBITS OR CREDITS OF THIS ENTRY WILL BE POSTED TO THE GENERAL LEDGER. REENTER THIS ENTRY EITHER DURING THIS SESSION OR AT A LATER TIME. IN E-I-T-H-E-R CASE, C-A-R-E-F-U-L-L-Y MARK THE ENTRY SO THAT YOU WILL REMEMBER THAT IS IT TO BE REENTERED. PRESS ANY KEY TO CONTINUE. Note: If you are wondering why provision was made for entering zeros as values, it is to allow you to enter your cancelled N checks. Just make you entry in normal fashion, with zeros for E values, and a credit to the bank account. Then enter the check W number and payee. Presto! You have a record of your cancelled check. Another suggestion, use "C-CHK" for the posting reference. Then you can use DAILY Menu Option 4 to print ALL cancelled checks, whenever you wish. After you press a key, Option 1 erases the erroneous entry from its memory and proceeds to get ready for the next general ledger entry, as discussed in the paragraph that follows. GETTING READY FOR THE NEXT GENERAL LEDGER ENTRY. After each general ledger entry is processed, Option 1 asks if you wish to enter additional debits and credits, with this question: DO YOU DESIRE TO ENTER ADDITIONAL DEBITS AND CREDITS? ENTER `Y' OR `YES' OR `N' FOR `NO'. _ If you answer `N' (for `NO'), the number and value of entries posted 45 to the general ledger are printed on the printer. Then, you will be returned to the DAILY menu. If you answer is `Y' (for `YES'), you will be asked to enter the next series of debits and credits. See the paragraph, above, entitled "ENTERING YOUR DAILY TRANSACTIONS OR THE ADJUSTMENTS FOR FINANCIAL STATEMENTS." This process will be repeated until you answer `N' (for `NO') to the above question. ERROR MESSAGES. Option 1 monitors your input, as much as possible, to help ensure that your general ledger entries are correct. Some of the error messages were discussed above. Others are discussed below. In some cases, the system will merely refuses to accept your input. An example is where you enter a date in the improper format - perhaps you enter 20 for the month. In these cases, instructions for such input are already displayed on the screen and, as stated, the system merely refuses to proceed. In other cases, however, you will need a more detailed explanation. Refer to the paragraph entitled "ENTERING YOUR DAILY TRANSACTIONS OR THE ADJUSTMENTS FOR FINANCIAL STATEMENTS" and get the column headings firmly in mind. The paragraphs that follow inform you what will happen if you enter incorrect data in the columns. In each case, when an error message is indicated, the instructions above the column headings will disappear and the error message will be displayed. After that, if appropriate, the instructions will reappear as they were before they disappeared. INACCURATE ENTRY IN THE DATE COLUMN. If you enter an incorrect date in the DATE column, the system will not proceed until you do make an entry, in the proper format. 45 INACCURATE ENTRY IN THE ACCOUNT NUMBER COLUMN. If you enter an INACTIVE account number in the ACCOUNT NUMBER column, the following error message will appear above the column headings: YOU SELECTED AN INACTIVE ACCOUNT NUMBER FOR POSTING. THE ACCOUNT NUMBER THAT YOU SELECTED IS NUMBER (a number is shown.) BEFORE A GENERAL LEDGER ACCOUNT CAN BE POSTED, IT M-U-S-T FIRST BE CLASSIFIED AS AN ACTIVE ACCOUNT BY USING OPTION 8 OF THE DAILY MENU. OTHERWISE, THE ENTRY WILL NOT BE PERMITTED. DO YOU WISH TO RETURN TO THE DAILY MENU? ENTER `Y' FOR `YES' OR `N' FOR `NO.' _ If you answer `N' (for `NO'), you will be allowed to continue with your general ledger entry. If you enter `Y' (for `YES'), processing will stop and you will be returned to the DAILY menu. If you enter an account number that is too large in the ACCOUNT NUMBER column, the following error message will appear above the column headings: YOUR INPUT FOR THE ACCOUNT NUMBER IS TOO LARGE. THE LARGEST ACCOUNT NUMBER IN THE GENERAL LEDGER IS ACCOUNT NUMBER (a number is shown.) IF DESIRED YOU CAN DETERMINE THE ACCOUNT NUMBERS IN THE GENERAL LEDGER BY SELECTING OPTION 7 IN THE DAILY MENU AND SPECIFYING THAT ALL ACCOUNTS BE PRINTED. PRESS ANY KEY TO CONTINUE. After you press a key, you will be allowed to continue with your general ledger entry. INACCURATE ENTRY IN THE D=DEBIT / C=CREDIT COLUMN. If you enter anything other than a `C ', `D' or `?' in this column, you will be asked to reenter your input. (Use `?' as the final input N for journal entry and all previous debits and credits will be summed E and the final debit or credit will be automatic - a handy device if W you don't like to add debits or credits for the final balancing amount.) 46 INACCURATE ENTRY IN THE DOLLAR AMOUNT COLUMN. If you make an incorrect entry in this column (such as alphabetic characters, blanks, or a misplaced decimal point), the following error message will appear above the column headings: YOUR INPUT FOR THE DOLLAR AMOUNT IS INCORRECT. THE O-N-L-Y ALLOWABLE CHARACTERS FOR THE DOLLAR AMOUNT ARE ZERO (0) THROUGH NINE (9) AND A DECIMAL POINT TO SEPARATE DOLLARS AND CENTS. EXAMPLES OF CORRECT INPUT, FOR EITHER DEBITS OR CREDITS, ARE SHOWN BELOW. 0 .01 1 1.00 1.01 126 126.00 126.59 1648 1648.00 1648.29 THE MINIMUM DOLLAR AMOUNT FOR ANY ONE DEBIT OR CREDIT IS 0 THE MAXIMUM DOLLAR AMOUNT FOR ANY ONE DEBIT OR CREDIT IS 9999999.99. PRESS ANY KEY TO CONTINUE. After you press a key, you will be allowed to continue with your general ledger entry. INCORRECT ENTRY IN THE POSTING REFERENCE COLUMN. Input is required for the posting reference. Unless you enter some combination of characters (alphabetic or numeric), Option 1 will refuse to continue until you do make an entry. Read Appendix E, which contains some suggestions on systematic procedures for using posting references. Posting references are IMPORTANT (especially with DAILY Option 4); so, please do not overlook R their significance. A "trick" with posting references - using E standard posting references (such as "LOAN 1") for standard A transactions (such as for an important loan) will allow you to use D DAILY Option 4 to print ALL of such transactions, anytime that you wish. Neat, eh! Carefully plan your posting reference scheme. INCORRECT ENTRY IN THE CHECK NUMBER COLUMN OR FOR THE PAYEE. Input is required for the CHECK NUMBER and for the PAYEE anytime you credit a bank account. If you do not enter this input, CPA-LEDGER refuses to continue until you do make an entry. Your input can be any combination of alphabetic or numeric characters. 47 AN ILLUSTRATION. Assume that the following entry is to made in the general ledger, using Option 1, for sales made on February 16, 1985. The sales transaction is recorded on an internal company DAILY CASH REPORT number DCR 36. (Appendix E illustrates a form that you may use for your DAILY CASH REPORT.) Account Number 3 Cash in Bank $ 5,000.10 Account Number 11 Accounts Receivable 12,450.00 Account Number 171 Sales $17,450.10 After the CPA-LEDGER briefing, the following will appear on your computer's screen. The entry to record the transaction is shown below the column headings. EACH DEBIT OR CREDIT ENTRY REQUIRES INPUT IN THE COLUMNS BELOW. 1. `DATE' COLUMN IS FOR TRANSACTION DATE. USE FORMAT YYMMDD-6/30/84=063084. 2. `POSTING REFERENCE' COLUMN IS FOR FUTURE REFERENCE TO SUPPORTING DOCUMENTATION. EXAMPLES ARE SALES INVOICE NUMBER OR PURCHASE INVOICE NUMBER. 3. ENTER `S' (FOR SAME) TO USE THE PREVIOUS DATE OR POSTING REFERENCE. 4. ENTER `?' FOR DR/CR TO SUM ALL PREVIOUS DR/CR IN AN ENTRY - AUTO TOTAL. 5. ENTER `Q' (FOR QUIT) FOR ACCOUNT NUMBER WHEN JOURNAL ENTRY IS COMPLETE. 6. YOUR COMPUTER'S CAPS-LOCK KEY MUST BE `ON'. ********************************************************************** ACCOUNT D=DEBIT DOLLAR POSTING DATE NUMBER C=CREDIT AMOUNT REFERENCE 021685 3 D 5000.10 DCR 36 11 D 12450.00 171 C 17450.10 Q Notice, in the above illustration, that the CHECK NUMBER column is not shown. This is because there was no credit to a bank account. If there had been a credit to a bank account, the CHECK NUMBER column would have appeared to the right of the POSTING REFERENCE column. Also, the POSTING REFERENCE column, above, disappears after the first line of input. See the previous paragraph entitled "ENTERING YOUR DAILY TRANSACTIONS OR THE ADJUSTMENTS FOR FINANCIAL STATEMENTS" for a detailed discussion. Also notice that account titles were not used while entering the transaction. 47-1 There is one other point that you should understand. It is this: . While you enter your debits and credits, CPA-LEDGER: . Identifies the title of the most recent account number that you enter, and . Shows the cumulative total of all debits and credits for each journal entry, as you enter the debit and credit values. This information is shown at the bottom of your screen. For example, after the second debit shown on page 47 is entered the following appears at the bottom of the screen: ACCOUNT = ACCOUNTS RECEIVABLE - TRADE DR= 17,450.10 CR= .00 After the first credit is entered (see the entry on page 47), the information changes to: ACCOUNT = SALES DR= 17,450.10 CR= 17,450.10 After the entry is posted (or rejected for posting), the debit and credit amounts shown above return to zero. Please carefully note that the debit and credit values, shown above, pertain to the cumulative value of debits and credits entered for a specific journal entry and NOT to the account number identified to the left of the values. 48 Once the `Q' is entered (the fourth entry under the ACCOUNT NUMBER column, page 47), the following will appear on your computer screen: ENTER EXPLANATION FOR THE ABOVE ENTRY. __________________________ Assume that your input for the explanation is "DAILY SALES, 2/16/85". The explanation is included in the output, illustrated on pages 49 and 50. After you enter the explanation the following appears on your screen: YOUR INPUT WILL BE DISPLAYED ON THE SCREEN SO THAT YOU MAY VERIFY IT. (FOR YOUR INFORMATION, ACCOUNT TITLES ASSIGNED TO THE ACCOUNT NUMBERS THAT YOU INPUT WILL ALSO BE DISPLAYED.) CAREFULLY NOTE ANY ERRORS SO THAT INCORRECT DATA WILL NOT BE POSTED TO THE ACCOUNTS. PRESS ANY KEY TO CONTINUE. After you press a key the following appears on your screen: YOUR DEBIT ENTRIES (WITH ACCOUNT TITLES) APPEAR BELOW. THE LIST OF DEBIT ENTRIES IS COMPLETE. NOTE ANY INPUT ERRORS. PRESS ANY KEY TO CONTINUE. ACCOUNT DOLLAR POSTING CHECK DATE NUMBER ACCOUNT TITLE AMOUNT REFERENCE NUMBER 021685 3 CASH IN BANK 5,000.10 DCR 36 11 ACCOUNTS RECEIVABLE 12,450.00 After you press a key (refer to the instruction in the third line of the narrative, above), the credit entry will appear for your review: 49 YOUR CREDIT ENTRIES (WITH ACCOUNT TITLES) APPEAR BELOW. THE LIST OF CREDIT ENTRIES IS COMPLETE. NOTE ANY INPUT ERRORS. PRESS ANY KEY TO CONTINUE. ACCOUNT DOLLAR POSTING CHECK DATE NUMBER ACCOUNT TITLE AMOUNT REFERENCE NUMBER 021685 171 SALES 17,450.10 DCR 36 ENTRY EXPLANATION = DAILY SALES, 2/16/85 After you press a key (refer to the instruction in the third line of narrative, above), the following will appear on your screen: DO YOU DESIRE TO POST THE DEBIT AND CREDIT ENTRIES THAT YOU JUST REVIEWED? ENTER `Y' FOR `YES' OR `N' FOR `NO'. _ If you answer `Y' (for `YES'), the entire entry will be posted to the general ledger. If you answer `N' (for `NO'), the entry will not be posted. Option 1 now needs to know if you wish to post additional debits and credits to the general ledger. To make that determination, the following question is next. DO YOU DESIRE TO ENTER ADDITIONAL DEBITS AND CREDITS? ENTER `Y' FOR `YES' OR `N' FOR `NO'. _ If you answer `N' (for `NO'), the number and value of entries posted to the general ledger are printed. Then, you are returned to the DAILY menu. If you answer `Y' (for `YES'), you will be asked to enter the next series of debits and credits. This process is repeated until you answer `N' to the above question. This illustration assumes that your general ledger entry is correct and that you instructed Option 1 to post the general ledger. See the previous paragraphs entitled "REVIEWING AND APPROVING YOUR GENERAL LEDGER ENTRY" and "ERROR MESSAGES" for a description of error processing. 50 PRINTED OUTPUT. Using the above general ledger entry for illustration, the output from Option 1 would be: PAGE 1 RUNDATE 02/16/85 ABC WHOLESALE, INC. GENERAL LEDGER ENTRIES ACCT. DATE NBR. ACCOUNT TITLE DEBIT CREDIT 021685 3 CASH IN BANK 5,000.10 11 ACCOUNTS RECEIVABLE 12,450.00 171 SALES 17,450.10 DAILY SALES, 2/16/85 POSTING REFERENCE = DCR 36 NUMBER OF GENERAL LEDGER ENTRIES POSTED = 1 VALUE OF ALL DEBITS POSTED = $ 17,450.10 VALUE OF ALL CREDITS POSTED = $ 17,450.10 DIFFERENCE - DEBITS LESS CREDITS POSTED = $ 0.00 Practice. Before starting this practice session, make sure that you have copied the practice general ledger (1) onto hard disk if you have the "hard disk only" version of CPA-LEDGER or (2) onto one of your blank floppy disks if you have either the hard disk-floppy disk or floppy disk only versions of CPA-LEDGER. For instructions, see the bottom of page 36 and page 36-1. We will move ahead slightly and use the DAILY menu to print an unadjusted trial balance. Do not be concerned. CPA-LEDGER knows what to do. Just follow these procedures: 51 . After you load BASICA, type this command at your keyboard, as you see it below: RUN "DAILY" (if you have either the hard disk only or hard disk-floppy disk versions of CPA-LEDGER.) RUN "B:DAILY" (if you have the two floppy disk version.) . Select Option 2 from the DAILY menu & direct output to the printer. . In a few seconds, the proper computer program will be loaded. Enter the date when it is asked for, and your unadjusted trial balance will be printed on the printer. Review the trial balance. Notice the account numbers in the left-hand column. You will use these account numbers in making two general ledger entries. The entries are: . On February 16, 1985, cash sales totaled $17,450.10. $5000.10 of the total was deposited in the bank on the same date. The remainder ($12,450.00) should be charged to accounts receivable. The company uses a DAILY CASH REPORT to record daily cash receipts and uses the report as a posting reference document. (See Appendix E.) The DAILY CASH REPORT is numbered DCR 36. The entry to be recorded is: Cash in Bank $ 5,000.10 Accounts Receivable 12,450.00 Sales $17,450.10 Transaction explanation = Daily sales, 2/16/85 Posting reference = DCR 36 . On the same day, February 16, 1985, the company collected and deposited in the bank $3000.00 from accounts receivable. The collection was recorded on DAILY CASH REPORT number DCR 36. The entry to be recorded is: Cash in Bank $ 3,000.00 Accounts Receivable $ 3,000.00 Transaction explanation = Collections on account Posting reference = DCR 36 Use Option 1 of the DAILY menu to record the above two general ledger entries. Use the trial balance to determine the account numbers that you should use while making the entries in Option 1. 52 CHAPTER 7 DAILY MENU - OPTION 2 WHAT OPTION 2 IS USED FOR. Option 2 is used to print on the printer or to display on your computer's screen an unadjusted trial balance from the general ledger. . When Option 2 starts execution, you will be given the option of having the output to be directed to either your printer or your computer's screen. Make your selection by entering `1' or `2' to this question, which appears on the screen: ENTER `1' FOR OUTPUT TO GO TO THE PRINTER OR `2' TO THE SCREEN. _ After the unadjusted trial balance has been printed, the following appears: DISPLAY THE TRIAL BALANCE AGAIN, OR PRINT IT? (Y/N) _ If you enter "Y", the first message, above, reappears. Thus, you may display the trial balance over and over and then print it, all in one processing session. This chapter will be short because, other than responding to standard message and reminders mentioned in Chapter 2, CPA-LEDGER does most of the work. If you completed the Practice section of Chapter 6, you already know how to use Option 2. The Practice section of Chapter 6 also asked you to enter two entries in the general ledger. The two entries, of course, changed some of the trial balance dollar amounts. In the Practice section of this chapter, you will be asked to prepare a second unadjusted trial balance. Then, you may compare the two trial balances (one from Chapter 6 and one from this chapter) to see how the dollar amounts changed. FOOTNOTE DISCLOSURES. Footnote disclosures are usually included financial statements. In our opinion, the unadjusted trial balance should not be an exception. The objective of footnotes is to disclose all relevant information needed for economic decisions but which cannot be effectively communicated in any other manner. Full disclosure is important so that the unadjusted trial balance will not be misleading. Examples of common disclosures are: 53 . An explanation of all significant accounting policies of the company, such as depreciation methods, amortization of intangibles, and inventory costing methods. . An explanation of adjustments needed to bring the unadjusted trial balance up-to-date. The merchandise inventory date should be disclosed. Old inventory values are common on unadjusted trial balances. . Details of pension plans. . Maturity dates on payables and receivables. . Certain restrictions related to long-term debt. . Long-term leases. . Contingencies. . Any changes in accounting principles. After the unadjusted trial balance has been printed (but NOT if you display it on your screen), Option 2 displays a message on your computer screen that: . Informs you of the importance of footnote disclosures. . Identifies common types of disclosures. . Shows an example of a disclosure that you can use as a guide. After you have had a chance to read the message, Option 2 continues by asking if you would like to include footnote disclosures as part of the trial balance. If your answer is no, you will be returned to the DAILY menu. If your answer is yes, you will be asked to enter each disclosure, one at a time. The disclosures will be consecutively numbered, automatically, and will be printed on pages that follow the unadjusted trial balance. The following is an example of a disclosure. FOOTNOTE DISCLOSURES. Note 1. Long-Term Notes Payable ($50,000) shown in the unadjusted trial balance is payable in 1990 ($20,000) and 1991 ($30,000). There is no limit to the number of disclosures that you can make. 54 Practice. Prepare an unadjusted trial balance, using the instructions contained in the Practice section of Chapter 6. Compare the dollar amounts on the trial balance with the dollar amounts on the trial balance that you prepared in the previous chapter. Notice that the dollar amounts changed based on the dollar value of the two general ledger entries that you entered.