Advanced IFRS Based Peachtree Complete Accounting: Illustration

Instruction I:
ATO SEIFU FANTAHUN has been running a retail business named SEIFU Retail Company
(sole trade business). He has planned to computerize the accounting system of the business in
2020. Use the following information to complete the New Company Setup Wizard in Peachtree
Complete Accounting.
Company Name: SEIFU Retail Trade Company
Address Information:  AddisKetema sub-city, Wereda 17, House # 777
 P.O.BOX: 12483
 Telephone +251950150042
 Fax: +251950150088
 Addis Ababa, Ethiopia
 Web-Site: Http://www.Seifu .net/
 E-mail: Seifu @ethionet.et
Business Type: Sole Proprietorship
Chart of Accounts: Build Your Own Company
Method of Accounting: Accrual
Posting Method: Real Time
Accounting Period:  Number of accounting periods in a fiscal year – 12
 First fiscal year to start – January 2020
 First month to enter data – March 1,2020
 First year the payroll data will be entered – 2020
Note: Once you enter the Accounting Method, you cannot change it. If you wish to do this, you
must delete the company and re-enter it.
Instruction II:
Use the information below to setup chart of accounts, customers, vendors and inventory items
opening balance as of March 1, 2020. The post-closing trial balance, including accounts with
zero balances are given below as of March 1, 2020.
Account Account Account Beginning Balance
ID/ Code Description Type Debit Credit
1010 Petty Cash Cash 2,000.00
1020 Cash in Bank-saving Cash 18,000.00
1030 Cash in Bank-checking Cash 15,000.00
1100 Account Receivable A/receivable 1450.00
1150 Allowance for Uncollectible A/receivable 150.00
1200 Notes Receivable (Current) Other CA 1,000.00
1300 Loan to Employees Other CA 1,200.00
1400 Inventory Inventory 12,200.00
1600 Supplies Inventory 2,500.00
1700 Prepaid Insurance Other CA 1,400.00

Prepared by: Tadiwos Misganaw ([email protected]) Page 1

 Advanced IFRS Based Peachtree Complete Accounting: Illustration

1710 Prepaid Rent Other CA 400.00

1810 Equipment Fixed assets 48,000.00
1815 Accum. Deprecation-Equipment Accumulated depreciation 10,000.00
1820 Automobile Fixed assets 60,000.00
1825 Accum. Deprecation-Automobile Accumulated depreciation 11,200.00
1830 Furniture Fixed assets 38,600.00
1835 Accum. Deprecation- Furniture Accumulated depreciation 6,000.00
2000 Accounts payable A/Payable 2,160.00
2310 Accruals Other current liabilities
2320 Notes payable Other current liabilities 5,000.00
2330 Employee income tax payable Other current liabilities 100.00
2340 Turnover tax payable Other current liabilities
2350 Pension payable Other current liabilities
2360 Credit association payable Other current liabilities
2370 Union fee payable Other current liabilities
2400 Mortgage payable Long-term liability 14,000.00
3000 SEIFU -capital Equity not closed 144,340.00
3100 SEIFU -withdrawal Equity gets closed
3200 Retained earning Equity retained earnings 8,800.00
4000 Sales Income
4050 Sales returns and allowances Income
4051 Sales discounts Income
4100 Miscellaneous revenue Income
4200 Finance charge income Income
5000 Cost of goods sold Cost of sales
6000 Basic salary Expense
6010 Over time Expense
6020 Allowance taxable Expense
6030 Allowance- none taxable Expense
6100 Repair and maintenance expense Expense
6200 Income tax expense Expense
6300 Interest expense Expense
6500 Depreciation expense-equipment Expense
6510 Depreciation expense-automobile Expense
6520 Depreciation expense-furniture Expense
6600 Payroll tax expense Expense
6700 Purchase discount Cost of sales
6800 Rent expense Expense
6810 Insurance expense Expense
6820 Transportation expense Expense
6830 Supplies expense Expense
6840 Miscellaneous expense Expense
6850 Gain/loss on sale of Assets Expense
6900 Utilities expense Expense
Grand Total Br 201,750 Br 201,750

Prepared by: Tadiwos Misganaw ([email protected]) Page 2

 Advanced IFRS Based Peachtree Complete Accounting: Illustration

MAINTAINING CUSTOMERS RECORD

Seifu Retail Company
Customer Ledger Balance as of March 1, 2020
Customer Customer Name Address Invoice
Invoice Account
ID No Date Balance
C-001 Daniel Kidane Meskel Square - - -
C-002 Eden Mitiku Kaliti - - -
C-003 Getahun Mamo Balch Aba Nefso Avenue - - -
C-004 Nardos Dagmawi Arat-kilo CSI-042
02/04/13 Br 180.00
C-005 Rahel Mekonnen Ethio-China Road CSI-038
02/01/13 220.00
C-006 Robel Gizaw Gottera Area CSI-040
02/08/13 400.00
C-007 Ruth Abiy Megenagna Area CSI-039
02/25/13 230.00
C-008 Selam Alene Haile G.Selassie Road CSI-041
02/17/13 420.00
Total Br 1,450
Customers Default Information: Steps (Maintain Menu  Default Information  Customers)
 The company charges 10% simple interest on invoices 15 days over due on balances up to Br
2,000 but 15% for a balance above Br. 2,000 with a minimum charge of Br 5. It appears on
invoices and statements as “Late charge”. Print finance charge, warning message as “overdue
invoices are subject to late charges”. The aging reports are based on invoice date and
categorized as: 1st column, 0-15 days; 2nd column, 16-30 days; 3rd column, 31-45 days; and
4th column above 45 days.
 The company provides to majority of its credit customers a term of 2/10, n/30. A maximum
credit limit of Br 1,500 is given to fall customers, but specific decisions will be made
depending on circumstances requiring credit of more than this balance. The company’s credit
policy required that all customers who fail to act according to the agreement shall be able to
pay interest on all over due invoices.

MAINTAINING SALES TAX

 To company collects a turnover tax (TOT) of 2% on all products it sales. The sales tax is
remitted to the Ethiopian revenues and customs authority (ERCA).
Sales Tax Authority:

ID Description Tax payable to Sales tax GL account Tax rate (%)

ERCA_TOT Turnover Tax ERCA Turnover tax payable 2%
Tax Code:

Tax ID Description Tax Made up of Tax Freight

TOT_01 Turnover tax ERCA_TOT No

Prepared by: Tadiwos Misganaw ([email protected]) Page 3

 Advanced IFRS Based Peachtree Complete Accounting: Illustration

MAINTAINING VENDORS RECORD

Seifu Retail Company
Vendor Ledger Balance as of March 1, 2020
Vendor Vendor Name Address Purchase Invoice Account
ID Invoice No Date balance
V-001 BIRUK supply Co Ayere Tena 077 02/15/13 Br 200.00
V-002 Ichael & sons Co Africa Avenue 079 02/13/13 375.00
V-003 Philips Company Debrezeit Road 078 02/26/13 600.00
V-004 Rebecca company Wollo Sefer 074 02/22/13 360.00
V-005 Shalom & company Arat-killo 076 02/20/13 225.00
V-006 Valley company Merkato 075 02/24/13 400.00
V-007 ERCA Mexico - - -
Total - - - - Br. 2,160
Vendors Default Information: Steps (Maintain MenuDefault InformationVendors)
 Most of the vendors provide a credit term of 3/15, n/45. The vendors usually provide a credit
limit of Br 10,000.00 with certain transactions being able to go beyond this limit depending on
the circumstances. The aging reports are presented based on due date and the aging categories
being presented as follows: 1st column, 0-15 days; 2nd column, 16-30 days; 3rd column, 31-45
days; and 4th column, above 45 days.

MAINTAINING INVENTORY RECORD

Seifu Retail Company
Inventory Item Balance as of March 1, 2020
Item Products Measurement Quantity Unit Selling Location
ID on Hand Cost Price
Stock Items:
1-001 Product - A Case 40 20 30 W-1
1-002 Product - B Case 50 50 80 W-1
1-003 Product - C Case 100 10 20 W-1
1-004 Product - D Case 120 30 50 W-1
Master Stock:
1-005 Beverage
001-001 Coca-Cola, 500 ml Bottle 125 5.00 6.00 W-2
001-002 Coca-Cola, 300 ml Bottle 250 2.50 3.00 W-2
002-001 Pepsi-Cola, 500 ml Bottle 125 5.00 6.00 W-2
002-002 Pepsi-Cola, 300 ml Bottle 250 2.50 3.00 W-2
003-001 Beer, 500 ml Bottle 90 8.00 10.00 W-2
003-002 Beer, 300 ml Bottle 240 4.50 6.00 W-2

Prepared by: Tadiwos Misganaw ([email protected]) Page 4

 Advanced IFRS Based Peachtree Complete Accounting: Illustration

Inventory Default Information: Steps (Maintain Menu  Default Information  Inventory)

 The company has two price levels for all its products: Price Level 1, Retail Price and Price
Level 2, wholesale Price. Whole sale price is 10% less than retail price on all products. A
minimum quantity of one dozen (12 units) vending of any inventory item is considered as
whole sale; any quantity less than 12 units is a retail sale. In addition, it uses average cost
method to value all inventory items.

INSTRUCTION III:
RECORD TRANSACTIONS OF THE MONTH MARCH 2020
The following transactions have been undertaken during the month March 2020. The company
deposits cash collection on a daily basis.
1. Sales and Accounts Receivable Transactions
 Sales / Invoicing: Direct
Mar. 01: Sold 5 units of Product –A to Eden Mitiku on account and issued Sales Invoice #
CSI-043.
Mar. 06: Sold 10 units of Product –B on account to SELAM ALENE and issued sales invoice
CSI-044.
Mar. 15: Sold 4 units of Product –A to GETAHUN MAMO on account and issued Sales
Invoice number, CSI-045.
Mar. 27: Sold 30 units of Product–D to NARDOS DAGMAWI on account and issued Sales
Invoice # CSI-047.
Mar. 28: Sold 9 units of Product–C to ROBEL GIZAW on account and issued Sales Invoice #
CSI-048.
 Sales Orders
Mar. 04. Customer Purchase Order (PO-125) has been received from Eden Mitiku for 5 units
of Product-A at Br 30 each. Sales Order # SO-014 is issued to Eden. The goods are
expected to be delivered on March 15.
 Sales/ Invoicing: From Purchase Order
Mar. 16: Shipped the order made on March 4 to EDEN MITIKU and issued sales invoice
number, CSI-046. Customer PO # PO-125.

Prepared by: Tadiwos Misganaw ([email protected]) Page 5

 Advanced IFRS Based Peachtree Complete Accounting: Illustration

 Credit Memo
Mar. 21: Issued Credit Memo # 20 for 1 units of defective product B returned by SELAM
ALENE. Sales invoice # CSI-044
 Cash Receipts: Credit Collection
Mar. 02: Received on account from Rahel Mekonnen for sales invoice # CS11-038. Received
Check # 578. Cash receipt # CR-2300 deposit Ticket # 001.
Mar. 03: Received on account from Ruth Abiy for sales Invoice # CSI-039. Received check #
295 and issued Cash receipt # CR-231. Deposit ticket # 002.
Mar. 07: Received on account from SELAM ALENE, Br 420 for sales invoices # CSI-041.
received check # 455. Cash receipt # CR-233. Deposit ticket # 004.
Mar. 10: Received on account from EDEN MITIKU, for sales invoice # CSI-043. Received
check # 443 AND ISSUED CASH RECEIPT # cr-238. DEPOSIT TICKET # 006.
Mar. 18: Received on account from NARDOS DAGMAWI, Br 180. Sales Invoice # CSI-042.
Received check # 765 . cash receipt reference number # CR-237. Deposit ticket #
009.
 Cash Receipts: Cash Sale
Mar. 10: Sold the following items for cash: (received check # 235 and issued cash receipt
reference # CR-234. Deposit Ticket # 005)
 Coca-Cola, 500ml: 60 bottles
 Coca-Cola, 300ml: 100 bottles
 Pepsi-Cola, 500ml: 60 bottles
 Pepsi-Cola, 300ml: 100 bottles
 Beer, 500 ml: 40 bottles
 Beer, 300ml: 100 bottles
Mar. 14: Sold 15 units of product-A for cash. Received check # 787. Issued cash receipt # CR-
236. Deposit ticket # 008.
Mar. 24: sold 20 units of product –B for cash. Cash receipt # CR-239. Deposit ticket # 010.

 Cash Receipts: Advance Collection

Mar. 11: Received prepayment of Br 408.00 from ROBEL GIZAW to sell 5 units of Product –
B. received check # 585 and issued cash receipt # CR-235. Deposit Ticket # 007.

Prepared by: Tadiwos Misganaw ([email protected]) Page 6

 Advanced IFRS Based Peachtree Complete Accounting: Illustration

2. Purchase and Accounts Payable Transactions

 Purchase Order
Mar. 22: Send purchase order to REBECCA COMPANY for the purchase of 15 units of Product-A
Purchase order number PO-025. Good through April 01, 2020.
 Purchases/ Receive inventory
Mar. 20: Purchase 20 units of Product-D on account from Valley Company Br 30 each.
Purchase Invoice # 240.
 Payments: Cash Purchases
Mar. 12: Bought the following items from St. George Brewery factory on cash and issued
check # 101.
 Beer, 500 ml: 125 bottles
 Beer, 300 ml: 100 bottles
Mar. 19: Purchase 20 units of Product-C from Valley Company on cash and issued check #
103.
Mar. 22: Bought Coca-Cola from East African Bottling Company on cash and issued check #
104.
 Coca-Cola, 500 ml: 100 bottles
 Coca-Cola, 300 ml: 100 bottles
Mar. 23: Bought Pepsi cola from MOHA soft drinking’s Co. on cash and issued check # 105.

 Pepsi-Cola, 500 ml: 100 bottles

 Pepsi -Cola, 300 ml: 100 bottles
 Payments: Credit Purchases
Mar. 09: Paid Br 600 accounts payable to Philips Company for purchase invoice #078 and
issued check # 100.
Mar. 17: Paid on account to Valley Company for purchase invoice # 075. Issued check # 102.
 Write Checks
Mar. 31: Paid Br 600 from petty cash. Br 300 is for utilities expense and remaining for
miscellaneous expense. PCV # 025 (Use the write check window)
 Vendor /supplier) credit Memo
Mar. 25: Returned 5 units of defective product D bought on purchase invoice # 240 to
valley co. supplier credit memo #CM 66 (the company records purchase returns using the
inventory account).

Prepared by: Tadiwos Misganaw ([email protected]) Page 7

 Advanced IFRS Based Peachtree Complete Accounting: Illustration

3. Additional Transactions
Mar. 05: Received cash from the owner SEIFU FANTAHUN, as an additional investment in
the business, Br 20,000. Cash receipt No, CR-232. Deposit Ticket # 003.
Mar. 23: Bought supplies on account from BIRUK Supply Company Br. 300, purchase invoice
No. 056
Mar. 25: Bought supplies for cash from BIRUK Supply Company Br 300, check # 106.
Mar. 31: Settled monthly principal payment of Br 2,000 and interest of Br 150 on Mortgage
Loan. Issued check # 107 to construction and business bank.
Mar. 31: The following are general journal transaction for the month. Reference # AE-800.
(Use Memorize Transactions)
 Supplies expense ………………………………………. 120.00
 Rent expense …………………………………………... 50.00
 Insurance expense ……………………………………... 100.00
 Depreciation expense-equipment …………………….. 150.00
 Depreciation expense-automobile …………………….. 100.00
 Depreciation expense-office furniture …..…………….. 50.00
RECORD TRANSACTIONS OF THE MONTH APRIL 2020
The following transactions have been undertaken during the Month April 2020. The company
decides to deposit its cash collection on the 10th, 20th and 30th of the month beginning April
2020.
Apr. 01: Received the purchase order (PO-025) from Rebecca Company, purchase invoice #
081.
Apr. 02: Received 5 units of product–D that are sold to NARDOS DAGMAWI on sales
invoice CSI-047. The items do not meet the specification required. Issued credit
Memo # 21.
Apr. 03: Sold the following items for cash received check # 2345 and issued cash receipt
reference # CR- 241.
 Coca-Cola, 500 ml: 120 bottles
 Coca-Cola, 300 ml: 200 bottles
 Pepsi-Cola, 500 ml: 75 bottles
 Pepsi -Cola, 300 ml: 100 bottles

Prepared by: Tadiwos Misganaw ([email protected]) Page 8

 Advanced IFRS Based Peachtree Complete Accounting: Illustration

 Beer, 500 ml: 100 bottles

 Beer , 300 ml: 200 bottles
Apr. 04: Purchase 40 units of Product-C on account from Philips Company Br 400.
Purchase Invoice # 083.
Apr. 05: collected Br 1,200 from loans given to employees. Cash receipt reference # CR- 242.
Apr. 06: sold 4 units of product –C to RAHEL MEKONNEN on account and issued sales
invoice # CSI-049
Apr. 07: received a supplier credit memo #44 from Rebecca company for purchase allowance
of Br 50 for poor quality of Item –A received on invoice No. 081. The items are not
returned to the company. (The company records purchase allowances using the cost
of goods sold account)
Apr. 09: sold 10 units of Product-D on cash and issued cash receipt reference number CR-246.
Apr. 10: Received on account from ROBEL GIZAW for sales invoice CSI-048. Received
check # 448 and issued cash receipt # CR-243.
Apr. 10: The cash collected from April 1 to 10, 2020 is deposited. Deposit Ticket # 011. (Use
select for deposit window)
Apr. 11: Paid cash for taking a client to dinner br. 120 and issued check # 108 to Abyssinia
hotel.
Apr. 12: sold 10 units of Product-D to SELAM ALENE on account and issued sales invoice #
CSI-052.
Apr. 14: Purchase computers and printers (equipment) from PC house for Br 6,000 and issued
check # 109.
Apr. 15: received on account from Getahum Mamo for sales invoice CSI-045. Received check
# 248. Issued cash receipt # CR- 240.
Apr. 16: sold 3 units of product –B on account to DANIEL KEDIANE from Br 240 and issued
sales invoice # CSI-050.
Apr. 17: Paid delivery expense Br 120 and issued check # 110 to TANA Transport PLC
Apr. 18: Purchase 10 units of Product-D on account from Shalom &Company. Purchase
Invoice # 084.
Apr. 19: Paid on account to BIRUK Supply Company for Purchase invoice # 077 and Issued
Check # 111.

Prepared by: Tadiwos Misganaw ([email protected]) Page 9

 Advanced IFRS Based Peachtree Complete Accounting: Illustration

Apr. 20: Sold 30 units of Product-C on cash and issued Cash Receipt # CR-244.
Apr. 20: The cash collected from April 11-20, 2020 is deposited. Deposit Ticket # 012.
(Use Select for Deposit Window)
Apr. 22: Purchase 10 units of Product-A on account from Rebecca Company. Purchase Invoice
# 095.
Apr. 22: SEIFU withdraws Br 2000 for personal use. Check # 112
Apr. 23: Sold 5 units of Product-A on account to Eden Mitiku for Br 150 and issued Sales
Invoice # CSI-051.
Apr. 23: Paid on account to Rebecca Company for Purchase Invoice # 081. Issued check #
113.
Apr. 24: Received cash on sales of Office Furniture Br 200. Received check #258 and issued
Cash Receipt # CR-245. The Office Furniture has an original value of Br 420 and
Accumulated Depreciation of Br 180.
Apr. 25: Received on account from SELAM ALENE for Sales Invoice # CSI-044 including
interest Br 80 and Finance charge Br 5. Received check # 448 and issued cash receipt
# CR-243.
Apr. 25: Purchase Office Furniture from 3F Br 2,000. Issued check # 114.
Apr. 27: Paid Br 600 from petty cash. Br 300 is for utilities expense and the remaining for
miscellaneous expense. PCV # 026 (Use the Write Check Window)
Apr. 28: Paid a 60-day notes payable Br 5,000 including interest Br 65.93. Issued Check # 115
to Awash International Bank.
Apr. 30: The cash collected from April 21 – 30, 2020 is deposited. Deposit Ticket # 013.
(Use select for deposit window)
Apr. 30: The following are general journal transactions for the month. Reference AE-801:
 Supplies Expense ……………………………… 120.00
 Rent Expense …………………………………. 50.00
 Insurance Expense …………………………….. 100.00
 Depreciation Expense-Equipment ……………. 150.00
 Depreciation Expense-Automobile …………… 100.00
 Depreciation Expense-Office Furniture ………. 50.00

Prepared by: Tadiwos Misganaw ([email protected]) Page 10

 Advanced IFRS Based Peachtree Complete Accounting: Illustration

Apr. 30: Actual physical count as of this date revealed that there is a discrepancy in quantity
between quantities on hand and book for Product-B and Product-D. You are required
to pass inventory adjustment entry for these two products. Use inventory counting
sheet number ICS-102 as reference.
 Three units of Product-C are spoiled
 Two units of Product-D are missing from the warehouse
PAYROLL DATA
The company begins Peachtree payroll during April 2020. The company has four employees.
The company contributes 9% and the employees contribute 7% of the basic salary for the
pension fund. The company expects employees to work 40 hours per week. The data for the
month of April are presented as shown below. All employees worked what is expected of them
during the month.

ID Name Basic *TA **NTA OT Hours Worked

Salary
K-001 Kelbesa Gemechu Br 8200 Br 3000 Br 2000 8 Hours (Rest Days)
S-002 Selam Abebe 14000 5000 3000 10 Hours (Day)***
T-003 Tsehay Alemu 6600 2200 1500 6 Hours (Holidays)
Z-004 Zenebe Kebede 2400 1200 1250 8 Hours(Night)****

* TA = Taxable Allowance, **NTA = Non-Taxable Allowance, *** Day = 6:00 Am-10:00 PM,
and **** Night = 10PM-6AM

Additional Information:
 Tsehay is not permanent employees
 Union Fee of Br 10 is deducted from permanent employees beginning from April
 Br 300 is deducted from SELAM as a monthly saving for the credit association

INSTRUCTION IV:
A. Record the payment of salary as of April 30, 2020. Issued Check No. 116
B. Prepare Payroll Register as of April 30

Prepared by: Tadiwos Misganaw ([email protected]) Page 11

 Advanced IFRS Based Peachtree Complete Accounting: Illustration

ACCOUNT RECONCILIATION
Assume SEIFU Retail Company’s Checking account is in SENGA TERA Branch of Commercial
Bank of Ethiopia. The branch sends the following bank statement on April 30, 2020. The
statement includes data for March and April.
Date Deposit Deposits: Date: Check # Checks Balance
Ticket # paid
March 1, 2020
March 2,2020 001 Br 220.00 March 100 Br 600.00
8,2020
3 002 230.00 12 101 1479/00
5 003 20,000.00 16 102 400.00
7 004 420.00 18 103 200.00
9 005 2,366.40 22 104 750.00
10 006 149.94 23 105 750.00
11 007 408.00 26 106 300.00
13 008 459.00 31 107 2,150.00
17 009 180.00 10 108 120.00
25 010 1,632.00 12 109 6,000.00
April 10, 2020 011 6,092.33 16 110 1,200.00
20 012 734.40 18 111 200.00
25 CM # 75* 1,000.00 21 112 2,000.00
23 113 250.00
30 DM#225** 150.00
April 30,2020 32,343.07
* Credit Memo # 75 is a Note Receivable collected by bank from customer of SEIFU Retail
company, and ** Debit Memo #225 is a bank service charge. The bank statement did not include
the following deposits and payments.
 Deposit in Transit: Br 1,102.60
 Outstanding Checks: (i) Check # 114, Br 2000; (ii) Check # 115, Br 5,065.93; and (iii)
Check # 116, Br 10,737.25
 Bank Error: Check No 110 is issued for a payment of Br 120. But the bank debited the
account of the SEIFU retail company for Br 1200. The company recorded it correctly.
INSTRUCTION V:
A. Prepare bank reconciliation as of April 30, 2020
B. Record the necessary adjustments.

Prepared by: Tadiwos Misganaw ([email protected]) Page 12