In Sage accounting, record the following payments, journals, prepayments, and accruals in the books of Ali & Sons Ltd., of Nairobi. Mr. Ali commenced business by putting Kshs. 200,000 in the bank on March 1st, 1998, at the commencement of business.
Sample question 1
March 2 (J) & (PRE) | Paid Kshs. 1600 by cheque for rent for the months of March and April 1998. |
April 2 (J) | Bought warehouse fixtures paying for them by cheque one week later for Kshs. 2,400 from Nairobi Glass Mart Ltd. |
May 3 (J) | Mr. Ali withdrew from the bank in cash Kshs. 3,000 for business June |
June 4 (J) | Paid wages in cash for three weeks of March 1998 Kshs. 2,400. |
July 5 (J) | Bought goods for Kshs. 1,400 paying for them immediately by cheque. |
August 6 (S) | Bought goods on credit from Mr. Mwaniki worth Kshs. 6,000; Otieno & Sons Ltd. Kshs. 2,400 and Nice & Lonely Co. Kshs. 1,100. |
August 8 (J) | Purchased a motor vehicle by cheque worth 48,000 from CMC Motors. We delivered the cheque at the end of the month. |
Sep. 11 (J) | Paid for motor expenses cash Kshs. 300. |
Oct. 12 (C) | Sold goods on credit to K. Pride Ltd. Worth Kshs. 6,400 and E. Griffiths Kshs. 1,400. |
Nov. 13 (B) | Cash sales of Kshs. 2,800. |
Nov 15 (J) | Paid for Light & Heat by cheque for Nov. Kshs. 1,600. |
Dec 19 (S) | Bought goods on credit form P. Gordon worth Kshs. 3,200. |
Dec 21 (C) | Sold goods on credit to K. Pride Ltd. Kshs. 6,800 and N. Fred Kshs. 2,400. |
Dec 24 (J) | Mr. Ali withdrew Kshs. 5,000 by cheque for his personal use. |
Dec 26 (Bank C-receipts) | Received cheques from E. Griffiths of Kshs. 1,365 (after deducting Kshs. 35 cash discount) and Kshs. 1,000 from K. Kitchen on account. |
Dec 27 (S-Credit Note) | Returned goods to Nice & Lonely Co. worth Kshs. 400 and Otieno & Sons Ltd. worth Kshs. 2,000. |
Dec 29 (Bank) | Paid by cheque, after deducting a 5% cash discount, the accounts of Mwaniki & P. Gordon. |
Jan 30, 1999 (c-Credit Note) | Goods were returned to us by K. Pride Ltd. worth Kshs. 800 and from N. Fred worth Kshs. 400 |
Feb 28, 1999 (J) | Mr. Ali withdrew Kshs. 400 cash for personal use. |
Depreciate on straight line method
- Motor Vehicle at 20% per annum; and
- Warehouse fixtures 10% per annum.
Wages at Kshs.3,200 per month are still outstanding for the months July 1998 to February 1999 which are paid in full by cheque on February 28, 1999.
- At the end of each month to process the prepayments and accruals:
- Change the programmer's date.
- Open the Period End option
- Select Month end procedure
- Check the prepayments and accruals buttons and click o.k.
Answer yes to the query “Process the prepayment/accrual for the month of --?”
- At the end of the year, to process depreciation:
- Change the programmer's date.
- Open the Period End option
- Select Month end procedure
- Check the depreciation button and click o.k.
Answer yes to the query “Process the depreciation for the month of --?”
Audit Trail, Trial Balance, Chart of Accounts, Trading Profit & Loss, and Balance Sheet
Sample question 2
Using the above information in exercise 1, create a new chart of accounts called Ali-Sons and display the Trading, Profit and Loss Account for the year ended 28 February 1999 and Balance Sheet as at 28 February 1998. Print out the following reports:
- Audit Trail.
- Trial Balance.
- Trading, Profit and Loss Account.
- Balance Sheet.
Journals skeletons
Sample question 3
Using the journal transactions you memorized in question 4 above:
- Create a new company called Memory Limited
- Recall each of the journals memorized using the Edit-Recall command and save them as new journal entries using the same values you had used in exercise 2.
- Print out the detailed audit trail.
Product details
- Open the Defaults menu from the Sterling for Windows menu bar and choose the Product
Defaults option.
- In the boxes provided, enter the product default details, as described below:
Nominal Code
Enter here the Nominal Account code you wish to be used as the default when you create orders and product invoices.
Tax Code
Use this dropdown list to select the VAT rate code to be used as the default for your products.
Unit of Sale
Use up to 8 characters to describe the default unit of sale, e.g., `each', `box', etc.
Category
Use this dropdown list to select the Product Category to be used as the default for your products.
Department
Use this dropdown list to select a department to be used as the default for your products.
Quantity DP
Use this dropdown list to define the number of decimal places to which your product quantities should be rounded, up to a maximum of six.
Unit DP
Use this dropdown list to define the number of decimal places to which your product sales prices should be rounded, up to a maximum of six.
To save your entries and exit choose the Ok button, or to exit without saving choose the Close button.
Adding and Removing a Product Category
- Open the Defaults menu on the Sterling for Windows menu bar and choose the Product Categories option.
- Select the product category you wish to change, then choose the Edit button.
- In the text box provided, enter the name for your product category.
- To save your entry, choose the Ok button, or to abandon your entry choose the Cancel button.
- To exit from the Product Categories list box, choose the Close button.
Product Category Exercise
1. | Furniture |
2. | Motor Vehicle Spare Parts |
3. | Computer Hardware |
4. | Motor Fuels |
5. | Telecommunications |
6. | Pharmaceutical |
Entering product details
The Details tab dialog is automatically displayed when you choose the Product Record button. To add a product record
- Choose the Product Record option from the Products window toolbar.
- In the Details tab dialog, enter the product details as follows.
Product Code
Up to 16 characters (including A-Z 0-9 /. but no spaces) can be used for the product code. Each product has to bear a unique code.
Description - Enter the product name or description.
Department - If you are using the departmental analysis facility you can assign the product to a department for reporting purposes.
Category - You can categorize your products into different product types for reporting purposes.
Location - Enter the location of the product item, e.g., a warehouse or bin number, using up to 16 characters.
Com Code
The Commodity Code is a tariff code for this product item, which is derived from the Intrastat Classification Nomenclature which identifies the item for the purposes of EC Intrastat or Supplementary Statistical Declaration (SSD) reporting.
Weight - You can record the weight of your product here for reporting purposes.
Nominal Code - This box is used to identify the nominal sales account to which the value of this item will be posted when you include the item on product invoices and credit notes.
Tax Code - Enter the VAT rate to be applied by default when you raise a product invoice or credit note using Sterling for Windows' Invoicing and when you create a sales or purchase order for this product.
Supplier A/C - Enter the account code for the supplier of this product.
Part No - You can enter a product reference number here, using up to 16 characters, for example a supplier's reference or part number.
Sales Price - This is the net selling price (i.e., excluding VAT) of the product, which will be used for sales orders, product invoices and credit notes.
Unit of Sale - You can use up to eight characters to describe the unit of sale, for example, each, `box', `10-pack', etc.
Ignore Product Levels
Select this check box (a cross appears when it is selected), if you don't want to keep a record of the stock levels for this product.
In Stock - The `In Stock' box shows the quantity of this product currently in stock.
Re-order Level - Enter here the quantity of stock at which fresh stock should be ordered.
Re-order Qty - Enter here the quantity of stock that you would normally re-order.
Stock Take Date - Enter the last stock date.
Stock Take Qty - Enter the stock quantity of this product at your last stock take and following information appears for the product record, but can't be edited:
Allocated
This figure shows the quantity of the product which has been partly or fully allocated on sales orders but has not been dispatched.
Free Stock - The free stock is the `In Stock' total minus the `Allocated' stock total.
On Order - The quantity of the product put `on order' using the Purchase Orders option and which is yet to be delivered.
Last Ord Qty - The quantity of stock ordered when the last purchase order for the product was put `on order'.
Last Ord Date - Shows the date of the last purchase order raised for the product, after it has been put `on order'.
Cost Price
The latest cost price for the product item, taken from the last entry made using either the Opening Balance option, Adjustments In option, POs order processing, or the option for Global Changes.
- To save your entries choose the Save button, or to clear any data you entered and start again, choose the Abandon button.
- To exit the product record and return to the Products window, choose the Close button. If you have amended the product record, Sterling asks you if you are sure you wish to exit.
Enter the following product codes as of 1st March 1998, and their opening quantities. Use the O/B button (next to in stock button) to record the opening quantities and Cost Price.
Product code | Description | Location | Nominal Code | Supplier code | Sales Price | Tax code | O/Bal | Cost price per Item |
PO01 | Tool kit | Show Room | Sales (4005) | SO01 | 1500 | T2 | 100 | 1000 |
PO02 | Spanner set | Assembly | Sales (4005) | SO02 | 10,000 | T3 | 150 | 8,500 |
PO03 | Spanner type a | Stores | Sales (4005) | SO03 | 800 | T2 | 90 | 500 |
PO04 | Spanner type b | Stores | Sales (4005) | SO04 | 5,000 | T0 | 103 | 4,500 |
Additional reading ERP as a Business Management Software