Chapter 11: Chapter 11: Vendors & PurchasesVendors & Purchases

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Vendors & PurchasesVendors & Purchases

Chapter 11 begins Part 3 of the book: Peachtree Chapter 11 begins Part 3 of the book: Peachtree Complete Accounting 2007 for Merchandising Complete Accounting 2007 for Merchandising Businesses. Merchandising businesses are retail Businesses. Merchandising businesses are retail stores that resell goods and services. stores that resell goods and services.

In Chapter 11, you will set up a merchandising In Chapter 11, you will set up a merchandising business called Nancy's Sales & Service. business called Nancy's Sales & Service. Nancy's Sales & Service is a partnership owned Nancy's Sales & Service is a partnership owned by Nancy Roberts and Mike Hughes.by Nancy Roberts and Mike Hughes.

Ms. Roberts and Mr. Hughes divide their income Ms. Roberts and Mr. Hughes divide their income equally.equally.

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Software Objectives, p. 377Software Objectives, p. 377Set up company information for Nancy's Sales & Service.Set up company information for Nancy's Sales & Service.Enter the following general ledger information: chart of Enter the following general ledger information: chart of accounts and beginning balances.accounts and beginning balances.Enter the following accounts payable information: vendor Enter the following accounts payable information: vendor defaults and vendor records.defaults and vendor records.Enter the following inventory information: inventory Enter the following inventory information: inventory defaults, inventory items, and inventory beginning defaults, inventory items, and inventory beginning balances.balances.Record accounts payable transactions: merchandise Record accounts payable transactions: merchandise purchases, purchase orders, cash purchases, and purchases, purchase orders, cash purchases, and purchase returns.purchase returns.Make four backups: 1) back up Chapter 11 beginning Make four backups: 1) back up Chapter 11 beginning

data; 2) back up Chapter 11 data; 3) back up Exercise data; 2) back up Chapter 11 data; 3) back up Exercise 11-1; 4) back up Exercise 11-2.11-1; 4) back up Exercise 11-2.

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Web Objectives, p. 377Web Objectives, p. 377

Use your Internet browser to go to the book’s Use your Internet browser to go to the book’s website at website at www.mhhe.com/yacht2007www.mhhe.com/yacht2007. .

Go to the Internet Activity link on the book’s Go to the Internet Activity link on the book’s website. Then, select WEB EXERCISES PART website. Then, select WEB EXERCISES PART 3. Complete the first web exercise in Part 3—3. Complete the first web exercise in Part 3—Accounting List.Accounting List.

Use a word processing program to write Use a word processing program to write summaries of the websites that you visited.summaries of the websites that you visited.

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Accounts Payable Transactions, p. 378Accounts Payable Transactions, p. 378

A vendor sends Nancy’s Sales & Service an invoice (bill).

You enter the invoice as a purchase.

When it is time to pay the invoice, you select theinvoice(s) from the vendor you want to pay and

print a check.

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Peachtree TipsPeachtree Tips

In Chapter 11, you set up two merchandising In Chapter 11, you set up two merchandising businesses: businesses: Nancy's Sales & ServiceNancy's Sales & Service and the end- and the end-of-chapter Service Merchandise company of-chapter Service Merchandise company (Exercises 11-1 and 11-2 on pp 428-437)(Exercises 11-1 and 11-2 on pp 428-437)The companies that you set up in Chapter 11, The companies that you set up in Chapter 11, continue in Chapters 12, 13 and 14.continue in Chapters 12, 13 and 14.If the general ledger account (GL account column) is If the general ledger account (GL account column) is not displayed on the Purchases/Receive Inventory not displayed on the Purchases/Receive Inventory window, check the global options. In the Hide window, check the global options. In the Hide General Ledger Accounts section, all boxes must be General Ledger Accounts section, all boxes must be unchecked (see p. 54, Chapter 2, for the global unchecked (see p. 54, Chapter 2, for the global settings).settings).

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Peachtree Tips (continued)Peachtree Tips (continued)

What if you want to use What if you want to use Nancy's Sales & ServiceNancy's Sales & Service, on a , on a computer that does not have this company set up in computer that does not have this company set up in Peachtree?Peachtree?   

If you start Peachtree and the appropriate company If you start Peachtree and the appropriate company cannotcannot be be opened, use the Restore Wizard to select A New Company. Using opened, use the Restore Wizard to select A New Company. Using the appropriate backup file, and the selection for A New Company, the appropriate backup file, and the selection for A New Company, you can start where you left off the last time Peachtree was used.you can start where you left off the last time Peachtree was used.If Nancy's Sales & Service (or another name Sales & Service) is If Nancy's Sales & Service (or another name Sales & Service) is notnot listed either on the Open an Existing Company window or when you listed either on the Open an Existing Company window or when you select <Browse>, click Cancel; then Close. From Peachtree’s startup select <Browse>, click Cancel; then Close. From Peachtree’s startup window, there are three menu bar options— .window, there are three menu bar options— .Select File; Restore. Restore A New Company from the appropriate Select File; Restore. Restore A New Company from the appropriate backup file. This allows you to bypass Peachtree’s new company backup file. This allows you to bypass Peachtree’s new company setup and restore the company data from a backup file (.ptb setup and restore the company data from a backup file (.ptb extension).extension).

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Backing Up Chapter 11Backing Up Chapter 11

Backup Name Backup Name

KilobytesKilobytes Page Nos.Page Nos.

Chapter 11 BeginChapter 11 Begin 580 KB580 KB 399-400399-400

Chapter 11Chapter 11 633 KB633 KB 423-424423-424

Exercise 11-1Exercise 11-1 576 KB576 KB 434434

Exercise 11-2Exercise 11-2 590 KB590 KB 437437

The chart below shows the size of the backups made in Chapter 11. The textbook steps show you how to back up to Peachtree’s default hard drive location at C:\Program Files\Sage Software\Peachtree\Company\[shortened company name]. You can also specify a hard drive location, or back up to external media such as a floppy disk, Zip disk, CD-R, or USB media. The chart showing the size of all the backups made in Part 3 (Chapters 11-14) is shown on page 376.

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Chapter 11 TopicsChapter 11 Topics1.1. Software & web objectives, p. 377Software & web objectives, p. 3772.2. Getting started, pp. 379-383Getting started, pp. 379-3833.3. General Ledger, pp. 383-388General Ledger, pp. 383-3884.4. Accounts Payable, 388-393Accounts Payable, 388-3935.5. Inventory Items, pp. 394-399Inventory Items, pp. 394-3996.6. Backing up your data, pp. 399-400Backing up your data, pp. 399-4007.7. Vendors & Purchases: Purchases/Receive Vendors & Purchases: Purchases/Receive

Inventory, pp. 400-401Inventory, pp. 400-401a. Using the purchase journal: Purchases/Receive a. Using the purchase journal: Purchases/Receive

Inventory window, pp. 401-405Inventory window, pp. 401-405b.b. Additional purchases, p. 405-406Additional purchases, p. 405-406

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Chapter 11 Topics (continued)Chapter 11 Topics (continued)

8.8. Cash purchases: Write Checks window, Cash purchases: Write Checks window, pp. 406-407pp. 406-407a. Printing the check, pp. 407-411a. Printing the check, pp. 407-411

9.9. Purchase returns: pp. 411-413Purchase returns: pp. 411-413a. Paying a vendor, minus a return of a. Paying a vendor, minus a return of merchandise, pp. 413-416merchandise, pp. 413-416

10.10. Paying specific vendor invoices, pp. 416-417Paying specific vendor invoices, pp. 416-417a. Editing payments, p. 418a. Editing payments, p. 418

11.11. Printing the purchase journal and cash Printing the purchase journal and cash disbursements journal, pp. 418-421disbursements journal, pp. 418-421

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Chapter 11 Topics (concluded)Chapter 11 Topics (concluded)12.12. Vendor ledgers, 422Vendor ledgers, 42213.13. Printing the General Ledger Trial Balance, Printing the General Ledger Trial Balance,

pp. 422-423pp. 422-42314.14. Backing up Chapter 11 data, pp. 423-424Backing up Chapter 11 data, pp. 423-42415.15. Internet activity, p. 424Internet activity, p. 42416.16. Summary and review, pp. 424-425Summary and review, pp. 424-425

a.a. Going to the net, p. 425 Going to the net, p. 425 b.b. True/make true questions, pp. 425-True/make true questions, pp. 425-427427c.c. Exercise 11-1, pp. 428-434Exercise 11-1, pp. 428-434d.d. Exercise 11-2, pp. 435-437Exercise 11-2, pp. 435-437e.e. Chapter 11 index, p. 438Chapter 11 index, p. 438

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Getting Started, pp. 379-381Getting Started, pp. 379-381

Complete steps 1 –5 on pp. 379 and 380. Then compare your Complete steps 1 –5 on pp. 379 and 380. Then compare your window with the one shown on p. 380.window with the one shown on p. 380.

Click <Next>. Make sure that Retail Company (in the Detailed Click <Next>. Make sure that Retail Company (in the Detailed type list) is selected. Continue with steps 8-11 on p. 381.type list) is selected. Continue with steps 8-11 on p. 381.

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Monthly accounting periods, p. 382Monthly accounting periods, p. 382Complete step 12 on p. 381. Select Complete step 12 on p. 381. Select 20072007 as the year. The as the year. The Fiscal Year window is shown on p. 382.Fiscal Year window is shown on p. 382.

Check this window carefully. You cannot change it Check this window carefully. You cannot change it later. later. Continue with steps 13-15 on page 382.Continue with steps 13-15 on page 382.

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General Ledger, pp. 383-385General Ledger, pp. 383-385

Read the instructions on pages 383-385. Read the instructions on pages 383-385. Then, complete the steps shown.Then, complete the steps shown.

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Select Period, p. 386Select Period, p. 386Select From 12/01/06 through 12/31/06 as your Chart of Select From 12/01/06 through 12/31/06 as your Chart of Accounts Beginning Balance period so that your journals Accounts Beginning Balance period so that your journals will start on January 1, 2007. The Select Period window is will start on January 1, 2007. The Select Period window is shown on p. 386.shown on p. 386.

Peachtree posts on the last day of the month. Check this Peachtree posts on the last day of the month. Check this window carefully. You window carefully. You cannot changecannot change the period for the period for entering beginning balances later. entering beginning balances later. Click on <OK>.Click on <OK>.

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Continue on pp. 386 & 387Continue on pp. 386 & 387

After recording the chart of accounts After recording the chart of accounts beginning balances, complete steps 4 and beginning balances, complete steps 4 and 5 on p. 386. 5 on p. 386.

Compare your balance sheet to the one Compare your balance sheet to the one shown on p. 387.shown on p. 387.

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Vendor Defaults, p. 388Vendor Defaults, p. 388After completing steps 1- 5 on p. 388, the Vendor Defaults After completing steps 1- 5 on p. 388, the Vendor Defaults window appears.window appears.

Continue reading the instructions on p. 389. Then, complete Continue reading the instructions on p. 389. Then, complete the steps shown on pp. 389-390.the steps shown on pp. 389-390.

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Maintain Vendors p. 390Maintain Vendors p. 390To add a vendor, complete steps 7a. through k. shown on pages To add a vendor, complete steps 7a. through k. shown on pages 389-390. The Maintain Vendors window is shown on page 390.389-390. The Maintain Vendors window is shown on page 390.

Click on the Click on the PPurchase Defaults tab. Then, continue with step 8a. on urchase Defaults tab. Then, continue with step 8a. on page 390.page 390.

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Purchase defaults tab, p. 391Purchase defaults tab, p. 391After completing step 7a. on page 391, this window appears.After completing step 7a. on page 391, this window appears.

Click on the Click on the SSave icon. Then, continue with the steps shown ave icon. Then, continue with the steps shown on pages 391-393.on pages 391-393.

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Setting up Inventory Items, pp. 394-395Setting up Inventory Items, pp. 394-395Complete steps 1 – 4 on p. 394-395. This window is Complete steps 1 – 4 on p. 394-395. This window is shown on page 395.shown on page 395.

Continue with steps 5 through 7o. on pp. 395-397.Continue with steps 5 through 7o. on pp. 395-397.

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Maintain Inventory Items, p. 397Maintain Inventory Items, p. 397After completing step 7o. on p. 397, the Maintain Inventory After completing step 7o. on p. 397, the Maintain Inventory Items window appears. This window is shown on p. 397.Items window appears. This window is shown on p. 397.

Continue with the steps shown on pages 398 and 399.Continue with the steps shown on pages 398 and 399.

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Inventory Beginning Balances, p. 399Inventory Beginning Balances, p. 399

After completing step 8e. on p. 399, the Inventory After completing step 8e. on p. 399, the Inventory Beginning Balances window appears.Beginning Balances window appears.

Continue with the steps f. and g. shown on page 399.Continue with the steps f. and g. shown on page 399.

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Back Up Your Data, pp. 399-400Back Up Your Data, pp. 399-400

Complete steps 1 through 6 on pp 399-400 Complete steps 1 through 6 on pp 399-400 to back up your data.to back up your data.

The suggested files name is The suggested files name is Chapter 11 Chapter 11 Begin.Begin.

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Vendors & Purchases: Purchases/Receive Vendors & Purchases: Purchases/Receive Inventory, pp. 400-401Inventory, pp. 400-401

Read pages 400-401.Read pages 400-401.

Complete the steps shown on page 401Complete the steps shown on page 401

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Using the Purchase Journal: Purchases/Receive Using the Purchase Journal: Purchases/Receive Inventory, pp. 401-403Inventory, pp. 401-403

After completing the steps on pp. 402 and 403 the Purchases/Receive After completing the steps on pp. 402 and 403 the Purchases/Receive Inventory window appears. This window is shown on p. 403.Inventory window appears. This window is shown on p. 403.

Click on the Journal icon to see the Purchase Journal.Click on the Journal icon to see the Purchase Journal.

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Accounting Behind the Screens, pp. 404-405Accounting Behind the Screens, pp. 404-405The Purchase Journal window is shown on p. 404The Purchase Journal window is shown on p. 404

Complete the steps shown on pages 404 and 405. Record the Complete the steps shown on pages 404 and 405. Record the Additional Purchases on pp. 405 and 406.Additional Purchases on pp. 405 and 406.

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Cash Purchases: Write Checks Cash Purchases: Write Checks Window, pp. 406-407Window, pp. 406-407

Read the information about Cash Read the information about Cash Purchases on pages 406 and 407.Purchases on pages 406 and 407.

Complete steps 1 – 6 on pages 406-407Complete steps 1 – 6 on pages 406-407

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Write Checks, p. 407Write Checks, p. 407After completing step 6 on page 407, the After completing step 6 on page 407, the Write Checks window appears.Write Checks window appears.

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Printing the Check, pp. 407-409Printing the Check, pp. 407-409

Follow steps 1 – 3 on p. 407 and 408. This window is Follow steps 1 – 3 on p. 407 and 408. This window is shown on page 408.shown on page 408.

Click on <OK>. Complete steps 5 and 6 on p. 409 Click on <OK>. Complete steps 5 and 6 on p. 409 The check starts to print.The check starts to print.

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Printing the Check, p. 409Printing the Check, p. 409

After completing steps 4-6 on pages 408 and 409, After completing steps 4-6 on pages 408 and 409, Check No. 3030 prints. This check is shown on page Check No. 3030 prints. This check is shown on page 409 .409 .

Read the information on p. 410; then complete step 7 Read the information on p. 410; then complete step 7 on page 410 and the additional transactions on page on page 410 and the additional transactions on page 410.410.

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Write Checks List window, pp. 410-411Write Checks List window, pp. 410-411

Click to see if you issued Check Nos. 3030 through 3035. Click to see if you issued Check Nos. 3030 through 3035. The Write Checks list window is shown on page 411. The Write Checks list window is shown on page 411.

Complete steps 9 and 10 on p. 411. Complete steps 9 and 10 on p. 411.

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Purchase Returns, pp. 411-412Purchase Returns, pp. 411-412Complete steps 1 – 6 on p. 412. The Vendor Credit Complete steps 1 – 6 on p. 412. The Vendor Credit Memos window appears. This window is shown on p. Memos window appears. This window is shown on p. 412.412.

Click on the Click on the SSave icon to post, then Close.ave icon to post, then Close.

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Paying a Vendor, Minus a Paying a Vendor, Minus a Return of Merchandise, p. 413Return of Merchandise, p. 413

Complete steps 1–3 on pp. 413-414. The Payments window is shown Complete steps 1–3 on pp. 413-414. The Payments window is shown on p. 415.on p. 415.

Complete steps 4-8 on pages 415 and 416.Complete steps 4-8 on pages 415 and 416.

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Journal entry for payment to a Journal entry for payment to a specific vendor, p. 416specific vendor, p. 416

Account NameAccount Name DebitDebit CreditCredit

Accounts Payable/Ron Becker Fabrics Accounts Payable/Ron Becker Fabrics 120.00120.00

Purchase DiscountsPurchase Discounts 2.402.40

Highland BankHighland Bank 117.60117.60

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How the purchases and payments tasks How the purchases and payments tasks work together, p. 417work together, p. 417

Purchases/Receive Inventory

Enter the Vendor Invoice

Payments

Apply the Vendor Invoice as a Check

Print Checks

Print the Disbursement Check

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Pay vendor invoice No. 210, p. 417Pay vendor invoice No. 210, p. 417

Complete steps 1 – 6 on pages 417.Complete steps 1 – 6 on pages 417.

Remember to click on Save to post when Remember to click on Save to post when you are finished.you are finished.

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Editing Payments, p. 418Editing Payments, p. 418Display the Payments window.Display the Payments window.Select the icon.Select the icon.

Double-click on the appropriate vendors or Double-click on the appropriate vendors or payments. Then click on <payments. Then click on <OOK>. Complete steps 3-5 K>. Complete steps 3-5 on p. 418.on p. 418.

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Printing the Purchase Journal, p. 418-420Printing the Purchase Journal, p. 418-420

Read pp. 419-420.Read pp. 419-420.

Complete steps 1 – 3 on p. 420 to print the Complete steps 1 – 3 on p. 420 to print the purchase journal.purchase journal.

Compare your Purchase Journal to the Compare your Purchase Journal to the one shown on p. 420.one shown on p. 420.

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Printing the Cash Disbursements Printing the Cash Disbursements Journal, p. 421Journal, p. 421

Complete step 4 on p. 421 to print the Complete step 4 on p. 421 to print the cash disbursements journal.cash disbursements journal.

Compare your Cash Disbursements Compare your Cash Disbursements Journal to the one shown on p. 421.Journal to the one shown on p. 421.

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Printing the Vendor Ledgers, p. 422Printing the Vendor Ledgers, p. 422

Complete steps 1 and 2 on p. 422 to print Complete steps 1 and 2 on p. 422 to print the vendor ledgers.the vendor ledgers.

Compare your vendor ledger to the one Compare your vendor ledger to the one shown on p. 422.shown on p. 422.

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Printing the General Ledger Trial Printing the General Ledger Trial Balance, pp. 422-423Balance, pp. 422-423

Complete steps 1 and 2 on p. 423 to print Complete steps 1 and 2 on p. 423 to print the general ledger trial balance.the general ledger trial balance.

Compare your General Ledger Trial Compare your General Ledger Trial Balance to the one shown on Balance to the one shown on

p. 423.p. 423.

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Backing Up Chapter 11 Data, Backing Up Chapter 11 Data, pp. 423-424pp. 423-424

Complete steps 1 – 6 on pages 423-424 to Complete steps 1 – 6 on pages 423-424 to back up Chapter 11 data.back up Chapter 11 data.

Use Use Chapter 11Chapter 11 as the back up name. as the back up name.

Remember, Chapters 11, 12, 13, and 14 Remember, Chapters 11, 12, 13, and 14 work together. The data saved in Chapter work together. The data saved in Chapter 11 will be used to complete Chapter 12.11 will be used to complete Chapter 12.

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Glossary of TermsGlossary of TermsChapter 11Chapter 11

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Vendors, p. 378Vendors, p. 378

Merchandising businesses purchase the Merchandising businesses purchase the merchandise they sell from suppliers merchandise they sell from suppliers known as vendors.known as vendors.

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Accounts payable transactions, p. 378Accounts payable transactions, p. 378

Purchases of merchandise for resale, Purchases of merchandise for resale, assets, or expenses incurred on credit assets, or expenses incurred on credit from vendors.from vendors.

When Nancy’s Sales & Service makes When Nancy’s Sales & Service makes purchases on account from vendors, the purchases on account from vendors, the transactions are known as accounts transactions are known as accounts payable transactions.payable transactions.

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Accounts payable, p. 378Accounts payable, p. 378

The money a company owes to a supplier The money a company owes to a supplier or vendor.or vendor.

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Purchase Journal, p. 400Purchase Journal, p. 400

In Peachtree, the Purchases/Receive In Peachtree, the Purchases/Receive Inventory window is the purchase journal.Inventory window is the purchase journal.

In the Purchase Journal, or In the Purchase Journal, or Purchases/Receive Inventory window, you Purchases/Receive Inventory window, you can enter invoices from vendors or enter can enter invoices from vendors or enter and print purchase orders. and print purchase orders.

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Accounts payable ledger, p. 401Accounts payable ledger, p. 401Shows the account activity for each Shows the account activity for each vendor. Same as vendor ledger.vendor. Same as vendor ledger.

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Vendor ledger, p. 401Vendor ledger, p. 401

Shows the account activity for each Shows the account activity for each vendor. Same as accounts payable ledger.vendor. Same as accounts payable ledger.

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Average cost, p. 405Average cost, p. 405

A method of computing inventory. See A method of computing inventory. See weighted-average method on the next weighted-average method on the next slide.slide.

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Weighted-average method, p. 405Weighted-average method, p. 405

This method of inventory pricing divides This method of inventory pricing divides the cost of the inventory purchased by the the cost of the inventory purchased by the quantity of merchandise purchased. This quantity of merchandise purchased. This unit cost is multiplied by the ending unit cost is multiplied by the ending inventoryinventory

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Cash disbursements journal, p. 406Cash disbursements journal, p. 406

All payments of cash are recorded in the All payments of cash are recorded in the cash disbursements journal.cash disbursements journal.

In Peachtree, the Write Checks and In Peachtree, the Write Checks and Payments tasks are recorded the cash Payments tasks are recorded the cash disbursements journal.disbursements journal.

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Internet Activity, p. 424Internet Activity, p. 42411 Go to the book’s website at Go to the book’s website at www.mhhe.com/yacht2007www.mhhe.com/yacht2007. .

22 Link to Student Edition.Link to Student Edition. 33 In the Course-wide Content list, link to Part 3 Internet Activities for In the Course-wide Content list, link to Part 3 Internet Activities for

Chapters 11-14. Open or Save. (You can also choose Chapter 11, Chapters 11-14. Open or Save. (You can also choose Chapter 11, then link to Internet Activities. If you Choose a Chapter, observe then link to Internet Activities. If you Choose a Chapter, observe that other chapter-specific links are available; for example, Quizzes, that other chapter-specific links are available; for example, Quizzes,

PowerPoints, and Going to the Net Exercises.)PowerPoints, and Going to the Net Exercises.) 44 Complete the ACCOUNTING LIST – Chapter 11 exercise. Read Complete the ACCOUNTING LIST – Chapter 11 exercise. Read

steps 1 – 4.steps 1 – 4. 55 Follow the steps shown on the book’s website to complete this Follow the steps shown on the book’s website to complete this

Internet activity.Internet activity. 66 Using a word processing program, write a brief summary of what Using a word processing program, write a brief summary of what

you find. Include all appropriate website addresses.you find. Include all appropriate website addresses.

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Going to the Net, p. 425Going to the Net, p. 425Access information about Peachtree’s Easy Access information about Peachtree’s Easy Startup, Easy to Learn features at Startup, Easy to Learn features at www.peachtree.com/PeachtreeAccountingLine/Complete/features_easy_startup.cfmwww.peachtree.com/PeachtreeAccountingLine/Complete/features_easy_startup.cfm . .

Answer the following questions.Answer the following questions.

List four features that make Peachtree easy to List four features that make Peachtree easy to learn. learn.

What are the Navigation Centers?What are the Navigation Centers?

How many sample company chart of accounts How many sample company chart of accounts can you choose from?can you choose from?