Trial balance

CASE STUDY

CASE STUDY

Journal Entries in an ERP

This assignment reviews basic accounting entries for a series of transactions, emphasizes the integration of journals to the financial statements, and introduces students to these journal entries in SAP ERP

Product SAP ERP GBI Release 6.04 Level Undergraduate Graduate Beginner Focus Accounting Entries in Manual and Automated Systems Integration of Accounting Journals Authors Jim Mensching Nancy Jones Contributors Patti Brown Version 1.0

MOTIVATION This assignment is a review of general financial accounting principles and procedures. In the first part of the assignment, you will create general journal entries for a series of transactions in Excel. For the last part of the assignment you will enter your “manual” journal entries into the SAP ERP system. The SAP system will then be used to produce a set of financial statements (balance sheet and income statement). Primary learning objectives are: · Review the concepts of the beginning financial accounting course · Review the accounting cycle · Work with a manual accounting information system Secondary learning objective: · Review basic Excel skills

PREREQUISITES Before you use this case study, you should be familiar with navigation in the SAP system. You should also be familiar with Excel or other spreadsheet programs. Prior completion of the sample problem provided with this assignment is also recommended. . NOTES This case study uses the Global Bike Inc. (GBI) data set, which has exclusively been created for SAP UA global curricula.

Assignment Overview

This assignment is a review of general financial accounting principles and procedures. In this assignment you will create general journal entries for a series of transactions. You will also show the impact of these transactions on a set of t-accounts and create a trial balance and adjusted trial balance. You will then close out the income statement accounts as you would at year end. For the last part of the assignment you will explore how your journal entries might be created in an automated system by entering your “manual” journal entries into the SAP ERP system. The SAP system will then be used to produce a set of financial statements (balance sheet and income statement).

Global Bike Inc. (GBI)

We will be working with a company called Global Bike Inc., (GBI). You may have seen GBI in other classes if you have completed other SAP assignments. Information regarding GBI follows.

Company History

Global Bike Inc. has a pragmatic design philosophy that comes from its deep roots in both the off-road trail racing and long-distance road racing sports. Nearly 20 years ago, its founders designed their first bikes out of necessity—they had races to win and the bikes that were available at the time did not perform to their extremely high standards. So, they took matters into their own hands and built legendary bikes that would outlast and outperform the competition. From these humble origins, Global Bike Incorporated was born and continues to deliver innovative high-performance bicycles to the world’s most demanding riders.

This heritage of entrepreneurial spirit and quest for design perfection is still the cornerstone of GBI’s corporate philosophy. GBI produces bikes for the most demanding competitors—whether the competition is on pavement or dirt, for money, fame or just bragging rights.

John Davis earned his racing scars in the mountain racing circuit in America, where he won numerous downhill and cross-country championships. Early on, John realized that the mass-produced bicycles available were inadequate in many ways for the type of racing he was doing. So, John stripped four of his old bikes down to the bare metal and rebuilt them into a single “Frankenstein” bike that he rode to win the national championship. Once news of his Frankenstein bike got out, John’s friends and even his competitors began asking him to build them a Frankenstein bike too. While recovering from an injury in 2000, John started producing the first series of Frankenstein bikes in his garage—each one custom-built from cannibalized parts from other bikes. As more and more orders came in, John successfully expanded Frankenstein Bikes from his garage operations into a full-blown manufacturing facility in Dallas and began producing custom trail bikes which he sold through a network of specialized bike dealers throughout the country.

At nearly the same time, halfway around the world in Heidelberg, Germany, Peter Schwarz was studying engineering and competing in regional touring races on weekends. In between his races and studies, Peter worked at a bike shop in Heidelberg, fixing student bikes and tuning the touring bikes that he and his friends rode for competitions. As Peter’s reputation as a fierce competitor and mechanical wizard grew, he also began to design and build road bikes based on an ultra-light composite frame that he had created for one of his engineering courses. Peter’s innovative use of carbon composite materials allowed him to build a frame that was significantly stronger and one tenth the weight of competing frames. As a student, Peter did not have a great deal of financial resources, so he partnered with a local company that manufactured his frame designs as a contract manufacturer. Soon, Peter’s frames were being used by racers all over Europe and he started Heidelberg Composites to market and design frames which would be fabricated by a contract manufacturer on a larger scale. Heidelberg Composites sold its frames to specialized bike stores throughout Europe and directly to racing teams, eventually becoming the leader in lightweight touring frames in Europe.

Through a twist of fate, Peter and John met each other in 2000 and immediately recognized their mutual passion for performance and complimentary business models. Each had been looking for a partner in another racing field and each had been looking for a partner in a different market. They quickly realized that a merger between their two companies would be extremely synergistic and that the combination of their product lines and regional distribution channels would generate a great deal of efficiencies.

So, in 2011, Heidelberg Composites and Frankenstein Bikes merged to form Global Bike Incorporated. Today, John and Peter share the responsibilities for managing GBI’s growing organization as co-CEO’s. John is responsible for sales, marketing, service & support, IT, finance and human resources groups and Peter is responsible for research, design, procurement and manufacturing groups from an organizational reporting perspective.

GBI is a world class bicycle company serving the professional and “prosumer” cyclists for touring and off-road racing. GBI’s riders demand the highest level of quality, toughness and performance from their bikes and accessories.

Product Development

Product development is the most critical element of GBI’s past and future growth. GBI has invested heavily in this area, focusing on innovation, quality, safety and speed to market. GBI has an extensive innovation network to source ideas from riders, dealers and professionals to continuously improve the performance, reliability and quality of its bicycles.

In the touring bike category, GBI’s handcrafted bicycles have won numerous design awards and are sold in over 10 countries. GBI’s signature composite frames are world-renowned for their strength, low weight and easy maintenance. GBI bikes are consistently ridden in the Tour de France and other major international road races. GBI produces two models of their signature road bikes, a deluxe and professional model. The key difference between the two models is the type of wheels used, aluminum for the basic model and carbon composite for the professional model.

GBI’s off-road are also recognized as incredibly tough and easy to maintain. GBI trail bikes are the preferred choice of world champion off-road racers and have become synonymous with performance and strength in one of the most grueling sports in the world. GBI produces two types of off-road bike, a men’s and women’s model. The basic difference between the two models is the smaller size and ergonomic shaping of the women’s frame.

GBI also sells an accessories product line comprised of helmets, t-shirts and other riding accessories. GBI partners with only the highest quality suppliers of accessories which will help enhance riders’ performance and comfort while riding GBI bikes. The accessories list is shown here as trading goods.

Information System

When the company first started, a manual accounting system was put in place. However, the company has decided that it needs to computerize its accounting process to be more efficient. In addition, in order to expand their sales to additional wholesale markets, Global Bike, Inc. (GBI) must have EDI (electronic data interchange) capabilities by July 1. A project team has been established to meet this deadline and the computerization of the accounting system is the first step in implementation of the company’s new information system and their link to global partners. GBI uses a perpetual inventory system to account for both product line inventories, bicycles and accessories, as well as raw materials and work-in-process.

Consultants have configured the new computer system and it is ready to use. The books of the company were closed on December 31st to prepare for the transition to the new system. The account balances are now ready to be transferred to the new computer system. GBI will run parallel systems during January; that is, they will record transactions in both the manual system and their new computerized system to make sure the new system is set up properly. This is a standard business practice that reduces the risks associated with implementing new systems.

Chart of Accounts for Global Bike, Inc.

The chart of accounts is a means of organizing general ledger accounts for grouping or sorting and to generate financial statements. Generally a unique numeric code (although alphanumeric can also be used) is given to an account based on its type. A block of code may be set aside for specific types of accounts. For instance, in the case of GBI, account numbers 100000 through 109999 are reserved for “cash” or liquid asset accounts. The entire set of codes and blocks of code is called the chart of accounts. Global Bike’s chart of accounts follows:

G/L Account	G/L Acct Long Text
100000	Bank Account
110100	Accounts Receivable (Direct Posting Account)
110150	Allowance for Bad Debt
110200	Interest Receivable
200600	Inventory-Operating Supplies
200900	Inventory-Raw Materials (Direct Post)
200910	Inventory-Finished Goods (Direct Post)
200920	Inventory-Trading Goods (Direct Post)
200930	Inventory-Semi-finished Goods (Direct Post)
210000	Prepaid Insurance
211000	Prepaid Supplies
212000	Prepaid Advertising
215000	Prepaid Rent
216000	Deposits
220000	Notes Receivable
220110	Land
220210	Production Machinery, Equipment and Fixtures
220310	Accumulated Depreciation –Production mach, Equip.
220400	Office Furniture
220500	Accumulated Depreciation-Office Furniture
220600	Office Equip and Computers
220700	Accumulated Depreciation- Office Equipment
300100	Payables-Income Taxes
300200	Accounts Payable (Direct Posting Account)
300300	Payables-Interest
300400	Payables-Short-Term Notes
300500	Payables-Long-Term Notes
300600	Payables-Commissions
300700	Payables-Salaries and Wages
300800	Accrued Expense
310000	Goods Receipt / Invoice Receipt Account
320000	Accrued Tax – Output
321000	Accrued Tax- Input
322000	Unearned Revenues
329000	Common Stock
329100	Additional Paid-in-Capital
330010	Retained Earnings (Direct Post)
600000	Sales Revenue
610000	Sales Discount
620000	Miscellaneous Revenue
630000	Revenue Deductions
640000	Gain or Loss on Sale of Assets
650000	Customer Service Revenue
650100	Customer Service Revenue Settlement
720000	Raw Material Consumption Expense
720100	Finished Product Consumption Expense
720200	Trading Good Consumption Expense
720300	Semi-Finished Consumption Expense
740000	Supplies Expense
740100	Utilities Expense
740200	Legal and Professional Expense
740300	Rent Expense
740400	Insurance Expense
740500	Payroll Expense-Office
740600	Payroll Expense-Administrative
740700	Sales Expense
740800	Tax Expense - Property
740900	Tax Expense- Income
741000	Miscellaneous Expense
741100	Labor Expense
741200	Bad Debt Expense
741300	Information Technology Expense Account
741400	Production Order Variance Expense Account
741600	Manufacturing Output settlement
741700	Manufacturing Output Settlement Variance
741800	Depreciation Expense
741900	Advertising Expense
742000	Vendor Discounts Missed
742100	Shipping Expense
760000	Purchase Price Difference
760100	Production Variance
770000	Research and Development
780000	Cost of Goods Sold

Detailed Assignment Requirements

The next few pages show the balances in GBI accounts as of December 31st and then the descriptions of events occurring during January for which you are to make general journal entries in a manual accounting system. Your manual accounting system needs to include a general journal, t-accounts, and a trial balance, all of which will be generated in Excel, (see the sample problem for the format). Don’t forget to include your beginning and ending balances in your t-accounts.

After you have created your entries in your manual system, you will enter all the data into the SAP ERP system. When you enter your data into the SAP system the resulting financial information from the manual system and the SAP system should match exactly.

Assignment Steps

1. Record the daily transactions if appropriate, (some events may not involve journal entries), as general journal entries into Excel. Also, post these journal entries into t-accounts and then calculate account balances using cell formulas in Excel. Link the t-account balances into your Excel worksheet as a trial balance. You should create links between your spreadsheets to expedite this process and minimize the risk of an error in data entry.

2. The next step is to record the adjusting entries into the general journal and then post them into the t-accounts and trial balance.

3. Record closing entries in your trial balance as if this were a year-end close. (Do not enter the closing entries in your t-accounts.)

4. Now use the SAP ERP system to make all above entries using the general ledger system in SAP. This should be done in a series of steps as follows:

i. Examine the GLXX chart of accounts where XX is your assigned SAP student login ID#. (Whenever you see XX in the instructions, substitute your SAP login ID#.)

ii. Record beginning account balances in the SAP general ledger. This should be done as one composite journal entry (the first journal entry). Use January 1, as the journal entry date for the beginning account balances. Be sure to compare this to your Excel spreadsheet to make sure the entries are correct.

iii. Record the daily transactions for January in the SAP general ledger (do each journal entry as a separate entry, not as one giant composite entry, be sure to use appropriate dates – this allows for a good audit trail).

iv. Display the trial balance (you should compare this to your manual entries). If the trial balance does not match your manual entries, research the errors and make necessary corrections.

v. Record the adjusting entries.

vi. Simulate closing the books as of January 31 using the SAP utility. (Do not enter closing entries into the general ledger. These entries would be done automatically through the SAP month-end closing function.)

Instructions for using the SAP ERP system start on page 13 of this document.

Account Balances as of December 31st

		Debit Balance	Credit Balance
100000	Bank Account	$248,018
110100	Accounts Receivable (Direct Posting Account)	108,420
110150	Allowance for Bad Debtg		2,500
110200	Interest Receivable
200600	Inventory-Operating Supplies	750
200900	Inventory-Raw Materials (Direct Post)	32,000
200910	Inventory-Finished Goods (Direct Post)	281,298
200920	Inventory-Trading Goods (Direct Post)	66,474
200930	Inventory-Semi-finished Goods (Direct Post)
210000	Prepaid Insurance	5,000
211000	Prepaid Supplies
212000	Prepaid Advertising	1,000
215000	Prepaid Rent	4,500
216000	Deposits
220000	Notes Receivable
220110	Land (Direct Post)	425,000
220210	Production Machinery, Equip & Fixtures(Dir.Post)	915,000
220310	Accumulated Depreciation-Machinery (Direct Post)		305,000
220400	Office Furniture
220500	Accumulated Depreciation-Office Furniture
220600	Office Equip and Computers
220700	Accumulated Depreciation- Office Equipment
300100	Payables-Income Taxes
300200	Accounts Payable (Direct Posting Account)		47,900
300300	Payables-Interest
300400	Payables-Short-Term Notes
300500	Payables-Long-Term Notes
300600	Payables-Commissions
300700	Payables-Salaries and Wages		110,000
300800	Accrued Expense		988
310000	Goods Receipt / Invoice Receipt Account
320000	Accrued Tax – Output		3,063
321000	Accrued Tax- Input
322000	Unearned Revenues
329000	Common Stock		1,000,000
329100	Additional Paid-in-Capital
330010	Retained Earnings (Direct Posting)		618,009

Events During January

Event Date Description of Event

1	January 3	Employees are paid monthly on the first business day of the month for work done in the previous month. The total payroll for the previous month is $110,000. (Ignore payroll taxes for this assignment.) Accounting wrote and distributed the paychecks.
2		GBI received $55,692 in safety product inventory and $37,128 in raw materials from Dallas Bike Basics. This inventory was ordered on December 28. The payment terms for the invoice total of $92,820 are net 10 days. GBI paid the CWX shipping company $550 with a manual check for the shipment of the goods. The bill of lading showed that the safety product inventory arrived in 6 boxes with a total weight of 120 lbs and the raw materials came on a pallet and weighed 100 lbs.
3		Windy City Bikes in Chicago, IL ordered $22,000 of bicycle accessories from GBI. The cost of the accessories (to GBI) is $15,180. The goods were shipped to Windy City immediately via UPS using Windy City’s UPS shipping number. The terms of payment for Windy City’s order are 2/10 net 30 days.
4	January 7	GBI received payment of $16,850 from Northwest Bikes in Seattle, WA for the balance due on their account.
5	January 10	GBI’s account on the utility company website is updated at the end of each month when the meter is read. GBI uses this data to accrue the expenses at the end of each month (in this case on December 31st.) This allows recognition of the expense in the correct period. Expenses are usually accrued at the end of the month as “Accrued Expenses”. GBI paid the December utility bill of $988 via the company’s automatic electronic bill pay program.
6		GBI’s advertisement in the English language edition of Italian Cycling Journal was published today. This ad was prepaid at the end of July for six months of advertising, August through January, (Five months of advertising have already been used.)
7	January 11	The office manager in San Diego ordered $350 of office (operating) supplies from Staples. While on the way back from a delivery, one of the warehouse staff picked up the Staples order and brought it to GBI’s office. GBI has an account with Staples and payment terms are net 10. Operating supplies expense is figured at the end of the month determined by the amount of supplies used during the month.
8		GBI ordered $99,418 in raw materials from Space Bike Composites in Houston, TX. Terms of payment to Space Bikes are net 30.
9		GBI received payment from Windy City Bikes for their order from January 3. Windy City paid the invoice amount less the discount for paying within 10 days.
10	January 12	GBI paid $92,820 via bank transfer for the inventory order that they received from Dallas Bike Basics January 3.
11	January 13	In order to better track inventory, GBI ordered a bar-coding and tracking system which will be installed and tested by Computer Specialists, Inc. (CSI). The system will allow employees to track inventory using mobile devices and special software which will link into their new computerized accounting system. The barcode system costs $5,995 (including sales tax) and CSI will charge GBI $1,200 for the installation and tests. GBI paid a deposit of $3,000 on the system and the remainder is due and payable when the system is installed. GBI will classify the bar-coding system as “Production Machinery, Equipment and Fixtures”.
12	January 17	GBI paid an invoice from Lightbulb Accessory Kits for ordered goods that were received on December 20. The amount of the invoice from Lightbulb is $17,010 due net 30.
13		The city of Denver will be hosting a decathlon at the end of February. The event is expected to create demand for high quality bikes. Rocky Mountain Bikes in Denver, CO placed an order with GBI for $128,130 worth of bicycles to be delivered immediately. Rocky Mountain will pay the shipping. The bikes cost GBI $79,441. GBI shipped the order immediately so that Rocky Mountain can start promoting the bikes. Because Rocky Mountain is a good customer, GBI is giving them special terms of net 45 days on this order.
14		GBI received raw materials inventory ordered from Space Bike Composites January 11. Shipping charges of $802 were included in the $100,220 invoice from Space Bike.
15		GBI received notice that Bunky’s Bicycle Emporium had declared section 13 bankruptcy which meant GBI would not be able to collect the $1,610 that Bunky’s owed them.
16	January 18	GBI received a $89,960 funds transfer from Silicon Valley Bikes in Palo Alto for the balance due on their account.
17	January 19	GBI paid Staples for the office supplies they received January 11.
18		SoCal Bikes in Irvine, CA placed an order for $2,300 in bicycle helmets for a special event in February. The merchandise cost GBI $1,380. SoCal sent a truck to the GBI distribution center in San Diego, CA and picked up the merchandise directly from GBI’s warehouse. Terms of payment are net 30. (Don’t forget to charge sales tax of 8.75% for this order.)
19	January 24	Beantown Bikes in Boston, MA placed an order with GBI for $27,450 in bicycles. The cost of the bicycles is $17,092. Beantown Bikes is a new customer. Its buyers saw GBI’s booth at a trade show. Because Beantown is a new customer, they must either wait until their credit can be approved or pay for the order before GBI will ship the bikes to them.
20	January 25	GBI has been offered the opportunity to advertise in the Bicycle Times online magazine for a reduced price if they pay for three months in advance. In light of the upcoming Tour de France, the advertising is a great opportunity for GBI to get additional recognition. The advertising will start in February. GBI wrote a check for $15,000 for three months of advertising.
21	January 26	GBI received notification from their bank that $27,450 had been transferred to their account from Beantown Bikes, so GBI’s warehouse personnel shipped Beantown’s order. Beantown will be responsible for paying Fed-X $360 for shipping the order.
22	January 27	The county approved GBI’s building plans for their new warehouse. Estimated building costs are $1,050,000 which will be funded via a mortgage from Bank of America. GBI plans to break ground on the new building April 18th of this year.
23		GBI sent a $30,890 check to Night Rider Aluminum Products for an order of bicycle parts GBI received December 30th.
24		Big Apple Bikes in New York City is expanding to another location in New York and needs to stock the new location. GBI received a phone order from Big Apple for $232,315 in bicycles and $108,490 in bicycle accessories and safety gear at special discount prices. The cost of the bicycles in this order is $169,586 and the cost of the accessories is $65,094. Big Apple will have a contract trucking company pick up the order when it is ready. The order is sent to GBI’s warehouse for picking and packing which may take a couple days. Payment terms to Big Apple for this order are net 30.
25	January 31	GBI pays sales tax once a quarter via the state’s electronic filing and payment system. GBI filed its return and paid $3,063 in sales tax for the quarter ending December 31.
26		GBI paid February’s rent of $4,500 for the office and warehouse space in San Diego.
27		CSI installed and tested the new barcode system. The warehouse manager approved the installation and commented that she thinks it works great. GBI wrote a check to CSI for $4,195 and gave it to the installer.
28		Big Apple’s truck arrived at GBI’s warehouse and picked up the order from January 27th.

Adjustment information as of January 31, not already given in the original transaction(s):

1. Based on prior experience, GBI estimates that approximately ½ % of the net credit sales (gross credit sales minus returns of credit sales) for the month will become bad debt. GBI writes off bad debts as they occur and recognizes bad debt expense based on anticipated bad debts as an adjusting entry each month.

2. As a control measure, physical inventories are taken on a periodic basis alternating between the raw materials inventory, finished goods inventory and trading goods inventory. Physical inventory of the trading goods inventory was taken at the end of January. It was determined that the value of the trading goods merchandise on hand was $40,710.

3. GBI counted the office supplies on hand after the close of business on the last day of the month and determined the cost of the unused office supplies to be $620.

4. Production Machinery, Equipment and Fixtures were placed in service on January 1, 2018, are expected to last 15 years with no salvage value. The bar-code system has a 5 year life and no salvage value. GBI depreciates fixed assets on a straight-line basis and those assets acquired in the first half of the month are depreciated for the entire month, while fixed assets placed in service during the last half of the month are not depreciated until the second month. Depreciation is rounded to the nearest dollar and assets are depreciated on a monthly basis (i.e. number of days in the month is not of consequence).

5. GBI used the Internet to review the monthly charges for utilities the business consumed during January. Based on the internet report, the amount to be billed by the utilities company for January usage is $1,046.

6. Liability insurance for the six month period ending on February 28 in the amount of $15,000 was paid last August on the first of the month. Liability insurance is assumed to be utilized uniformly over the six month policy period.

7. GBI needs to recognize the wages expense for the month. Since all employees are paid salaries and no changes have been made, this amount is the same as the previous month salaries. (For purposes of this assignment, ignore manufacturing and assume all labor costs will be expensed.)

8. GBI needs to recognize the rent expense for the month.

Following are the instructions for entering the accounting data into the SAP system:

Your instructor will tell you the SAP server (instance) and the client you will be using. Your login is AIS-XXX (where the XXX is your assigned SAP student login ID number – this number may be found on Blackboard Announcement). Your initial password is “auditing”. You will be asked to change the password when you first log on. Change it and be sure to remember this new password. That will be the password you will use on your subsequent logons for SAP assignments. If you forget your password or your can not access to the system because of too many failed attempts, please contact your professor for resetting your password and unlocking your account.

Your company code is USXX (where the XX is your assigned number). Do not use any company code other than the one assigned to you.

The first thing that you should do is to examine the chart of accounts. You will find that the SAP system chart of accounts has more general ledger accounts than those listed above. For simplicity, we have limited the number of accounts used in this assignment. This does not mean that you need to use all the accounts above, but that they are potentially the accounts you will use for this assignment. In addition, normally Accounts Receivable (A/R), Accounts Payable (A/P), Fixed Assets and Inventory accounts should not be posted to via journal entries in the general ledger. These accounts are linked to subsidiary accounts which are posted via other functions within the order-to-cash, production, and procure-to-pay business processes. For instance, a sale will be processed in the order-to-cash process and when the sale is billed on account, it will process directly through the customer’s account in the A/R sub-ledger (subsidiary account).

The GBI configuration of SAP does not allow users to post directly to the general ledger for A/R, A/P, Fixed Assets and Inventory. Instead the system passes the subsidiary ledger data on to the general ledger automatically. By disallowing direct posts, the system maintains the integrity of these accounts; that is, the total of the subsidiary accounts will always match the totals of the accounts in the general ledger. For purposes of this assignment, we have created accounts that will allow you to post directly to A/R, A/P, Fixed Assets and Inventory. They are noted by a suffix in the description, “(Direct Post)” or “(Direct Posting Account)”.

Even though any of the accounts in the system chart of accounts could be used by the GBI accounting system, limit yourself to the accounts listed in the chart of accounts on pages 5 and 6 of this assignment document.

To Look at the Chart of Accounts

Note: The transaction code is noted in parenthesis following the explicit menu path for this and subsequent menu instructions. For example, the transaction code for this task is S_ALR_87012326.

Accounting à Financial Accounting à General Ledger Information System General Ledger reports Master Data Chart of Accounts Chart of Accounts (S_ALR_87012326)

Field	Input
Chart of accounts	GLXX

Execute

Think about the following: Examine your chart of accounts. What are some of the accounts that are shown in your chart of accounts in SAP, but not listed on pages 5 and 6 of this document? Why do you think those accounts are included in the SAP chart of accounts?

To enter transactions in General Ledger

The next step is to enter the beginning balances and the transactional journal entries. In SAP this is called general ledger accounting because as you enter the journal entries into the system they are immediately posted to the general ledger accounts.

Accounting à Financial Accounting à General Ledger à Posting à Enter G/L Account Document (FB50)

The first time you log in and start doing journal entries or anything else that requires designation of a company code, you may see an input box as follows. Note: Make sure the company code is your assigned company code.

Enter Your Beginning Balances before you begin entering the January transactions! Use a January 1 document and posting date for your beginning balances. Note: You do not need to enter anything for accounts with zero balances.

GL Account Posting

Field	Input
Doc. Date	the transaction date
Posting Date	same as the document date
Currency	USD

1st Line and as many lines as you need to enter your transaction:

Field	Input
G/L account	the account number for posting the transaction
D/C	Debit or Credit depending on the transaction
Amount in Doc. Currency	the transaction amount

Note: GBI has configured SAP to allow for assignment of expenses to cost centers for purposes of managerial accounting reports. If the system asks you for a cost center while you are entering transactions, enter cost center NAAD10XX (administration) in the cost center field for the pertinent expense account. (You may have to scroll to the right to see the cost center field.)

… and so on for each part of your journal entries. Note: typically in business, debits are entered before credits.

· Click on Enter

· Read any messages and then click on Enter again to acknowledge the messages.

· Look at the total debits and total credit fields. Debits should be equal to credits and the green light in the upper right part of the screen should be lit.

· Click on Simulate button.

· This shows the accounting transaction you are going to post.

· The period should be 1 which is January for GBI

· Save or Post the document icon. Do Not Park your document by mistake.

The system will assign each journal entry a unique document ID number. This is similar to what you did in your manual journals. Write down the document numbers as you enter each transaction.

If you parked your documents by mistake, then here is the procedure you use to release these documents:

Accounting Financial Accounting General Ledger Document Parked Documents Post/Delete (FBV0)

Click on Document list on the application tool bar

Enter Company code: USXX

Fiscal Year: this year

If you are not the user who parked the document, clear the field “entered by”

Execute.

A list of parked documents will appear.

Select the document you wish to post by highlighting it

Click on the details icon.

Click on the Save as Completed icon.

As you make the entries into the system, you should check to be sure that they were entered correctly. I would suggest that you first enter the beginning balances and then check them by viewing the journal entries using one of the reports below or a report of your choosing. If an entry states that it is parked, that means you made a mistake and must un-park the document (see above for the unparking procedure). A parked document will not show in the general ledger until you unpark it and post it. Also, if you post the transaction with a date outside of the proper reporting period, it may not show in your report or will show in the incorrect month.

After you check the correctness of the beginning entries, then you can enter the journal entries for the month and compare the results to your unadjusted trial balance in Excel. If the results don’t match, then resolve the issue before posting the adjusting entries. Remember that you cannot delete erroneous entries in SAP. Deletion of the journal entry would erase the audit trail and make it more difficult to track transactions and analyze the results. If you make a mistake, you have to reverse the entry and then enter the correct entry.

Do not enter or post the closing entries. They will be handled automatically by the system close procedure.

Viewing Journal Entries

Following are three different ways in which you can display your journal entries:

1. Document Journal

Information System General Report Selection Financial Accounting General Ledger Reports Document General Compact Document Journal Compact Document Journal (S_ALR_87012289)

Field	Input
Company Code	USXX
Fiscal Year	current fiscal year

Execute

2. Drill down to the source document

Accounting Financial Accounting General Ledger Account Display/Change Line Items (FBL3N)

Field	Input
Company Code	USXX
In the Line Item Selection Box	Select All Items
Posting Date	January 1 through today

Execute

A list of cleared and open accounting documents is displayed

· Select any document

· Click on Display Document icon on the application tool bar to display line items

· Click on Call up Document overview button to display the source document.

3. Line Item Journal

Information System General Report Selection Financial Accounting General Ledger Reports Document General Line Item Journal Line Item Journal (S_ALR_87012291)

Field	Input
Company Code	USXX
Fiscal Year	current fiscal year

Execute

To Look at the Balance Sheet and Profit and Loss Statement

Accounting à Financial Accounting à General Ledger Information System General Ledger Reports Balance Sheet/ Profit and Loss statement/Cash Flow General Actual/Actual Comparisons Balance Sheet/ Profit and Loss Statement (S_ALR_87012284)

Field	Input
Chart of Accounts	GLXX
Company Code	USXX
Financial Statement Version	GL00
Language	EN
Reporting Year	Current fiscal year
Reporting Periods	1 to 16
Comparison Year	Last fiscal year
Comparison Periods	1 to 16

Execute

You may even want to print your financial statements if you have access to a printer for SAP or you can save the reports in Excel, Word or html formats.

Simulating the Closing of the Profit and Loss accounts

For a manual accounting system at the end of an accounting period, it is necessary to make a journal entry that zeroes out the nominal accounts and eventually closes them to the retained earnings account. However, in a computerized system the system can essentially do this by the push of a button. In this section you will simulate this process. In SAP the closing is done by executing the following transaction:

Accounting à Financial Accounting à General Ledger Periodic Processing Closing Carry Forward Balance Carryforward (New) (FAGLGVTR)

Field	Input
Ledger	0L
Company Code	USXX
Carry Forward Fiscal Year	Current fiscal year
	Select Test Run

Execute

Note that nothing transfers during this procedure because we are not at the end of the year yet. However, this activity shows just how easy it is to close the books with a fully-integrated ERP system. Had we actually been at year end, all the closing entries for the nominal (income statement) accounts and the transfer of the annual profit/loss to retained earnings would have posted automatically in the general ledger. In addition, the balance sheet account balances would have been moved forward to the new fiscal year.

Assignment Submission

Save your Excel workbook with all three spreadsheets: Beginning Balance, General Journal, and T-accounts as lastname_firstname_SAPloginID.xlsx. (Your SAP loginID is the three-digit number you were assigned in order to access the system; for instance 050.) Convert all spreadsheets of your Excel workbook to a PDF file and submit it to Canvas prior to the due date. There is nothing to submit for your SAP work. I will grade it from the system directly.

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