ACCY 310/510 SUA Assignment #1 40 points Systems understanding aid 9th edition Prior to beginning this assignment, read Chapter 3 in the SUA Reference book. Examples of documents similar to those you will be preparing are illustrated in this chapter. In the SUA Instructions, Flowcharts and Ledgers Book (IFL), review the flowcharts on pages 18-21. Using the Transactions and Price lists (Docs. 1 and 3) REPLACED IN CLASS and the flowcharts, complete the seven-step process (steps 5.i.-vii) on pages 11 and 12 for recording sales and cash receipt (S/CR) transactions only. (The transactions marked purchase/cash disbursement (P/CD) and payroll (PR) will be completed in future SUA assignments). Refer to the next page for assistance on how to record the sale of fixed assets and the purchase/sale of marketable equity securities (investments). After completing all of the S/CR transactions indicated on the Revised Transactions List, complete month-end procedures #1, 2, 5, 6, and 7 on pages 12 & 13 of the IFL for S/CR entries only. Complete year-end procedure #6 for the accounts receivable aged trial balance only (page 15). You will be graded on completeness and accuracy in preparing your documents, journals, and ledgers (you must record the new balance in the G/L balance column in the general ledger). You should initial all documents as instructed in the practice set and separate and attach the documents as indicated in the flowcharts. File your documents as directed in the manila envelope distributed in class using the checklist provided below. Print out this checklist and include it as the first sheet in your envelope. The graded SUA will be returned to you in approximately a week. Check figure for account #10200 Accounts Receivable: $43,932 There should be two entries in the general journal for this assignment. Dont be alarmed if you have a negative (debit) balance in the Allowance for doubtful accounts. We will reestablish this reserve in the final SUA. Any transaction that results in the receipt of cash should be recorded in the cash receipts journal. You may use two rows in this journal if your journal entry has more that one credit. Common errors you do not want to make. It is likely that a transaction you will record in December was similar to one recorded in a prior month. Note how the experts recorded this similar transaction in the journal/ledger in the prior month. Also, dont forget to post the miscellaneous Other G/L accounts in the Cash Receipts Journal to the General Ledger accounts! Finally, remember that you are posting from the journals to the general ledger for the entire month of December, not just the last two weeks for which you were personally responsible for recording transactions. SUA #1 Helpful hints for some difficult transactions! Sales/Disposals of Fixed Assets Fixed assets are included on the balance sheet at book value (cost less accumulated depreciation). When a fixed asset is sold or disposed of, the company must eliminate both the fixed asset and the associated accumulated depreciation from the balance sheet. The company must also determine whether there is any gain or loss on the sale. Example: Assume XYZ Co. purchased a computer for $2,500 three years ago. To date, XYZ has recorded and accumulated $2,000 of depreciation. XYZ sells the computer to a resale shop for $200. The computer has a book value of $500 ($2,500 less $2,000 of accumulated depreciation). Given that XYZ trades an asset with a book value of $500 for another asset (cash) worth only $200, it has incurred a loss of $300. The journal entry to record this transaction is as follows: Dr. Cr. Cash $200 Accumulated depreciation $2,000 Loss on sale of fixed assets $300 Fixed assets ` $2,500 Purchase and sale of marketable equity securities (investments) When a company purchases the stock of another company, this is considered an investment. (The sale of a companys own stock is recorded as the common stock component of stockholders equity). Normally upon the purchase of an investment, the purchasing company will pay its broker a fee to handle the transaction. This brokerage fee is considered part of the cost of the investment. Example: Assume XYZ purchased 1,000 shares of ABC Co. common stock for $10 per share. Additionally, XYZ paid its broker $40 to handle the transaction. The journal entry to record this purchase is as follows: Dr. Cr. Marketable equity securities $10,040 Cash $10,040 Six months later, XYZ sells all 1,000 of these shares for $12. Again, the broker handles the transaction and charges a $40 fee. This fee will be deducted from the proceeds of the sale, and the net amount will be distributed to XYZ. The net proceeds from the sale are $11,960 ($12,000 less the $40 broker fee). The gain on the sale of the stock is $1,920 ($11,960, less the $10,040 cost). The journal entry to record this sale is as follows: Dr. Cr. Cash $11,960 Marketable equity securities $10,040 Gain on sale of investment 1,920 SUA #1 Checklist In your manila envelope, with your name, section #, and T.A.s name marked clearly on the outside in large print, include the following checklist with the indicated items: Accounts receivable aged trial balance (note: prepare this on a separate sheet of paper, there is no pre-printed form for this report). General and subsidiary ledgers (or copies thereof). Be sure to compute the updated balance for each account in the G/L balance column. Journals (or copies thereof) Warens copy of the University of Southern Iowa invoice together with the attached bill of lading and purchase order (note that all documents should be pulled apart and, if necessary, attached to other documents as indicated in the flowcharts) Warens copy of the Eastern Wisconsin University credit memo together with the attached receiving report and return request authorization form Warens copy of the Andrews College cash sales invoice together with the attached bill of lading and purchase order Cash receipts prelist Deposit tickets Month-end customer statement Promissory note