Adventist School Management Accounting

1 The Setting. Adventist School Management Accounting Tutorial-B Handling Deposits Bank Reconciliation with NSF Check Voided and Replacement Checks A/R Management Accounts Payable It is March 10, 2004. You have several checks to deposit that you have already receipted into ASM. You need to reconcile the checking account statement which you have received from the bank and replace a check that was run through the wash in someone s pocket. We will be setting up monthly billing for some piano lesson students and adding the accounting of a loan to ASM. 2 Start Up. This tutorial assumes that you have already loaded the software onto your computer. It also assumes that the tutorial has not been run previously. If it has, refer to Running the Tutorial Again on page 10 of this tutorial. a) Start ASM Accounting. b) If this is the first time to start ASM Accounting on this computer, you will be presented with a Setup window. Go to step 4. c) If a menu screen with a school name and date appears when ASM is started, data has already been entered which we will assume you do not want to lose. We will create a new Tutorial folder for our practice data. Continue to step 3. 3 Set Up Tutorial Files ASM Already In Use. We will change the working directory to a new directory for the tutorial. This will protect data already entered into the system. a) From the Main Menu, click on Utility Menu, then Change/Setup Working Directory. In the Directory Name field of the Select Directory window, change it to say C:\Program Files\NAD\Tutorial. Click on OK. b) If a Main Menu window appears with Tutor Adventist School or Sample Adventist School displayed near the top, the tutorial has already been run and needs to be reset. Follow the directions in Running the Tutorial Again on page 10 before proceeding. 1

c) If you are running the tutorial for the first time on this computer, you will be asked to confirm the creation of the new directory. Click Yes. d) When asked to confirm that you want this new directory to be a base directory for ASM Accounting data, click Yes. e) Make sure you know how to access the Sample-1.bka backup file. It may be downloaded to a floppy or on the CD on which you received this tutorial. f) In the Action to Take section of the next window, click on Restore a backup for the specified school year radio button. Since the data for the tutorial is 2003-2004 data, change the school year to the 2003-2004 year by clicking the down button to the right of the school year displayed. In the lower box, click on the Selected Directory radio button, then click OK. g) The program will look for the backup file on the floppy drive. If it is on a floppy, just double click on Sample-1.bka. If it is not on a floppy in Drive A, click on Cancel. A window will appear which allows you to browse to the backup file. Select the file and then click on Open. h) A Restore window opens asking you to confirm the selected backup file. Click OK. i) It is OK to have all current data deleted so click Yes. The message will then display that the data has been successfully restored. j) Click OK and then Main Menu. k) Go to Step 5. 4 Set Up Tutorial Files ASM Not Already in Use. a) In the Action to Take section of the next window, click on Restore a backup for the specified school year radio button. Since the data for the tutorial is 2003-2004 data, change the school year to the 2003-2004 year by clicking the down button to the right of the school year displayed. b) The program will look for the backup file on the floppy drive. If it is on a floppy, just double click on Sample-1.bka. If it is not on a floppy in Drive A, click on Cancel. A window will appear which allows you to browse to the backup file. Select the file and then click on Open. c) A Restore window opens asking you to confirm the selected backup file. Click OK. d) It is OK to have all current data deleted so click Yes. The message will then display that the data has been successfully restored. e) Click OK and then Main Menu. 2

5 Prepare a Deposit. a) You just received a check $250.00 from Edward Jackson for their account. Enter the receipt information for this check. Use the default receipt number (814265) and the 10 th as the date. b) Three other receipts (#814262 814264) have already been entered into ASM for March which have not been deposited. Since checks should be deposited promptly, we will now prepare the deposit and take it to the bank. i) Prepare the deposit slip for the checks being deposited and note the total on the deposit slip. Note: ASM only allows receipts in consecutive order to be included in one deposit. If you have receipts that are not in consecutive order that need to be deposited, prepare a separate deposit for each range of consecutive receipts (voided receipts are OK since they are just considered a receipt with a $0.00 amount). Also, ASM will not allow a deposit to include receipts written in two different months. Again, prepare separate deposits for the receipts in each month. ii) After preparing the deposit slip, from the Main Menu select Bank Reconciliation Menu. Now select Assign Deposit Number. iii) The Assign Deposit Number window that opens allows you to select a range of receipts to be included in this deposit. Notice that the first unassigned receipt is indicated in the Starting Receipt Number field and the last receipt entered into ASM is in the Ending Receipt Number field. All receipts in this range will be included in this deposit; you cannot pick and choose individual receipts except to make each one a separate deposit. Since we want all four receipts to be included in this deposit, click on OK. iv) An information window pops up telling you that 4 receipts have been assigned deposit number 112 for a total deposit of $4,788.78. This total should match your deposit slip. If it does not, check for errors in your addition on the deposit slip. If this does not reveal the error, check that your receipt entries in ASM are correct for each item included in the deposit. Click on OK to close the information window. v) You will be returned to the Assign Deposit Number window. Since there are not other deposits to prepare, click on Cancel to return to the Bank Reconciliation Menu. vi) Do a Receipt Report to see an itemization of the receipts that were included in this deposit (or any other deposit). Select Receipt Report from the Report Menu. Now select All receipts for specified deposit in the upper right box. When you select this option, the deposit field opens to allow you to type a deposit number. Enter 112. Select View to have the report displayed on the screen. You will note that the receipts are itemized for your review. vii) You can also see what deposit number each individual receipt was assigned to by viewing the receipt details in the Receipt Entry window. Go to the Receipt Entry window and enter 814250 in the Receipt Number field. When you click OK you will notice that the Deposit Number assigned to this receipt is 109. The details are grayed out since this was receipt in a previous month. Now view receipt number 814265. You will see that it has been assigned to deposit number 112 and, since it is in the current month, changes could be made to the entry. 3

6 Reconcile Bank Statement. Bank statement reconciliation is done in two steps enter asset adjustments for interest credited and bank fees charged followed by checking off items that appear on the statement. We will first enter asset adjustments. a) From the Bank Reconciliation Menu choose Reconcile Bank Statement. The Reconcile Bank Statement window will appear. b) Enter the statement ending balance shown on the statement from the bank. Refer to the statement provided on page 11 at the end of this tutorial. This step could wait until after entering the asset adjustments, but it will be remembered for that step, so we will enter it right now. Enter 50569.32. Do not click on OK. If you already did, just click on Cancel in the following window to return to where you entered the ending balance. c) We notice on the statement that there was $6.88 of interest credited and $11.00 of fees charged. We will need an asset adjustment for each of these separately. The $150 charge back of the returned check will be handled separately. d) Click on Asset Adjustment. Accept the Reference Number suggested in the Asset Adjustment Entry window by clicking on OK. e) Select the checking account since this statement is for Sample Adventist School s checking account. If you were reconciling a savings account, you would select the appropriate savings account here. f) In the Credit/Charge Account field, select the 604000 Interest account. (Remember that 6xxx-xx accounts are income accounts) A common mistake is to select the checking account for this field. g) Select the Interest (or other credit) button. h) Enter a valid date in this case the 10 th. i) Enter 6.88 in the Amount field. j) Enter a description such as Feb Interest and then click OK. k) You are returned to the Asset Adjustment Entry window. Now enter the information for the $11.00 service fee charged on the statement. Use the 708100 Interest & Fees account and a description such as Feb Bank Fees. l) Click on Exit to return to the Reconcile Bank Statement window. Verify that the Statement Balance field contains the correct statement ending balance then click OK. m) The window now fills with checking account items which have not been marked as having cleared the bank. The statement has been reconciled when the difference listed in the upper right of the window is zero. In a systematic manner, begin checking the items in the list that also appear on the bank statement. Clicking anyplace on the line of each item will mark it. Clicking it again will uncheck it. If you click on OK before you have marked all the items on the statement, these items will disappear from the list when you return to complete 4

the reconciliation process. For this reason it is recommended that you do not click on OK until every item on the statement has been marked and the difference is zero. However, if you mark off the items on the paper statement as you mark them in ASM, this is less important since you have a record of which items you marked and which remain to be marked. n) You will notice that we remain with a difference of $150.00. This is the amount of the returned check. Since we have checked with the family that wrote it and know the check is now good, we will be redepositing the same check (as a deposit by itself not mixed with other checks). We will ignore this difference for this month. Next month there will be a deposit of $150 on the statement which we will also ignore just we did the debit on this statement. The two will cancel each other making ASM and the bank statement reconcile. Note: If the check could not be redeposited, a transfer entry would need to be made to charge back to the family account the amount of the check. This entry would then be in ASM as an entry to be checked off in the bank reconciliation process and would bring the difference to zero. When a new check was written, it would have to be run through the receipt process like all other checks. 7 Voiding an Outstanding Check a) While reconciling the bank statement we noticed that a check written six months ago was never processed. We want to remove it from the system. We need to know the check number. Go to the Reconcile Bank Statement window and click OK. Don t worry about what figure is in the Statement Balance field. You will notice that check #8836 was written on September 15, 2003 and is still outstanding since it is in this list. b) We will create an asset adjustment entry to credit the check back to the account which it was originally charged to. View the original entry by selecting check #8836 in the Check Entry window. In the grayed-out fields, we can see that this check was charged to 707200 Technology. This same information could have been found by doing a Check Report for a Specified check. c) Now we can make the asset adjustment entry that puts $29.99 back into checking and credit the 707200 Technology account. There are several ways to get to the Asset Adjustment Entry window. Let s go through the Reconcile Bank Statement path. Click on Asset Adjustment Entry in the Reconcile Bank Statement window. Note: If the check had been expensed over more than one account, we would have had to use a transfer entry rather than an asset adjustment entry since only transfer entries allow for distribution over more than one account. d) Accept the default Reference Number. Choose the 101000 Checking account in the Asset Account field. Choose the 707200 Technology account in the Credit/Charge Account field. This transaction has the effect of being a credit so click the Interest (or other credit) field. The date is the 10 th, the amount is 29.99 and the description would be something like Check #8836 never cleared. 5

e) Exit back to the Reconcile Bank Statement window and click OK. You will see both the original check listed and the new asset adjustment. Click on both of these and the difference will end up remaining at $150.00. This will have the effect of voiding the check. Neither of these entries will show up in future reconciliations. If for some reason the check were to clear in the future, another asset adjustment would be needed to reconcile the system to the bank statement. 8 Replacing a Destroyed/Lost Check a) After laundering check #8942, Sue Dasher presented the remains and asked for a replacement. Before writing the check, you looked up the entry to see what it was charged to. You notice that this check, which totaled $23.96, was for more than one thing $9.18 for 703400 General Maintenance and $14.15 for 485000 Fundraiser Trust. However, since we are replacing the check, we can charge/credit it to any account we wish since the entries will cancel each other. We will use the 609003 Misc Income/Other account. b) You effectively void the check by making an asset adjustment entry between the 101000 Checking account and the 609003 Misc Income/Other account. This will be a credit done on the 10 th for $23.96. The Description field should say something like Destroyed ck #8942. c) Now write the replacement check for $23.96 and charge it to the same account, 609003 Misc Income/Other. d) Go to the Reconcile Bank Statement window. Make sure the Statement Balance still says 50569.32 and click on OK. Click on the original check entry and the adjustment entry. Don t confuse the original check entry with the new check (#8976) which should not be checked off. The difference posted in the upper right should remain at $150.00. 9 Managing A/R Accounts a) Setup Identical Transactions for Several Accounts. Sample Adventist School has made arrangements with a local piano teacher to come to the school and offer piano lessons. As a courtesy to the piano teacher, the school has agreed to bill the students taking lessons and to pass an agreed upon amount on to the piano teacher. The remainder of the funds will be kept for maintenance on the piano used for instruction. These charges are to begin in March and be charged monthly during the school year. i) We will first set up a trust fund to run all lesson income and expenses through so that any excess funds will be retained at the end of the year. Create a new trust fund with account number 482500 called Piano Lesson Fund. ii) Since all the piano students are already enrolled and have accounts in ASM, using Manage A/R Transactions is an efficient way to setup these charges. From the Maintenance Menu select Manage A/R Transactions. 6

iii) Select 482500 Piano Lesson Fund in the Select Account field. Enter 75.00 in the Amount field. iv) The following students are to be billed: AC Bigger Billy Etchell Randi Greene Tony Jones Alek Kellogg Briana Larson Dustin Richards Tristan Richards v) Move the students from the left window to the right by doing one of the following: (1) Hold the Ctrl key while selecting the students by clicking on them one at a time until all eight have been highlighted. If you click on the wrong name, just Ctrl click on it again and it will be deselected. When you are satisfied with the highlighted list, click the > button to move the list to the right window; or (2) Click on a student and then click the > button to move it to the right window one at a time; or (3) Click and hold then drag the mouse to highlight a consecutive band of students. Then click the > button to move them. vi) Check to see if the entries were done correctly by looking at an individual student s account in Identity Maintenance. b) Delete Non-current Students with No Balance. There are four accounts that are not longer enrolled and have no outstanding balance. These need to be deleted. The accounts are Ham, Hodge, Oglethorpe, and Streeter. i) Before these accounts can be deleted they must have all the students within the account deleted or at least marked for deletion. In the Identity Maintenance window, select the Ham account. Note that the box for deleting William has been checked. Click on the Delete Account button and note the red message that shows up at the bottom of the screen which alerts you that the account has been marked for deletion, but cannot be deleted at this time. The account will automatically be deleted at the close of the fiscal year. ii) Select the Ham account again and note the confirmation message that pops up stating that this account has been marked for deletion. If you wanted to reactivate it, you would click Yes. However, we do not want to so we will click No. iii) Do the same for the Hodge and Oglethorpe accounts which have already had the students marked for deletion. iv) The Streeter account has not had the students marked for deletion. Select this account and click on the deletion boxes by each of the two students. Note that the Delete Account button is not available. Click on Save Changes. v) Reopen the Streeter account and click on Delete Account which is now available. c) Assign New Account Number to a Student Who Withdraws. The Solomon account has a balance, but the student has withdrawn so should no longer be in the section of A/R accounts reserved for current students 2000-xx 2699-xx). The Solomon account is currently assigned #2013-xx. We need to 7

assign it a new number in the 2700-xx to 2999-xx range which is reserved for non-current students. When this is done, the balance owed on this account will be reported with the rest of the non-current accounts instead of with the current students. i) First we find an account number in this range that is not currently assigned. Look at the Trial Balance and note that only two accounts are in this range 2700-xx Baxter and 2701-xx Stewart. We will use 2702-xx for the Solomon account. ii) Go to the Utility Menu and click on Change Account Number. Select the 201300 Solomon account. Do not select just the student account. This process will reassign all sub-accounts along with the main account (all the -xx accounts will be reassigned along with the -00 account). iii) In the Change to Account Number field, enter 270200. Click OK. iv) Look again at the Trial Balance and note that the Solomon account now is account number 2702-00. 10 Set Up and Maintain Accounts Payable. Accounts Payable (A/P) are accounts owed by the school which are not paid in full from month to month. There is no need for a small schools to set up accounts payable unless they have a loan from a bank or the union revolving fund or have a back due balance at the conference office. Setting up and maintaining A/P accounts takes additional time each month, but the Balance Sheet report cannot accurately present the financial position of the school if they are not included. We will work with a new set of data which will be installed by doing a Restore of the file called Sample-2.bka which should be on the CD supplied or from the web at www.alaskaconference.org/pubs/general/ in the ASM Accounting folder. a) From the Utility Menu select Restore. Browse to the Sample-2.bka file and double click on it. Click on OK to confirm the file to restore. Yes you want to lose the current data and restore the data from the file. Click OK on the Information window. You should now see Sample-2 Adventist School displayed as the school name. b) View the Balance Sheet. You will notice that the Fund Balance shows $28,473.95. This means that if the school were to collect all that is owed to it and paid all of its obligations, there would be $28,473.95 left over. However, while Sample-2 Adventist School is currently doing very well, it owes the conference $23,395.78 from a bad year two years ago. The conference has agreed to a plan that schedules the school to pay $1,000.00 per month until the account is cleared. They are charging 0.4% per month interest on the outstanding balance. We will now set up the account in ASM. i) ASM comes with a Conference/Accounts Payable already created. View the Chart of Accounts (from the Report Menu) to find out the account number. Note: All accounts payable should be given a 42xx-xx account number. Bank or revolving fund loans are given a 44xx-xx account number and are treated identically to A/P accounts. 8

ii) Since this condition was from a prior year, we must use a Transfer Entry to get it into ASM. From the Transfer Entry screen, select the 501000 Unallocated account in the From Account field. Note: The Unallocated account should almost never be accessed. We only access this account now because it should have been done when ASM was originally set up. iii) Choose any date. Enter 23395.78 in the Total of Transfer field. In the next field select the 422000 Conference/Accounts Payable account. Click on OK. iv) View the Balance Sheet again. Now it shows that there is a payable of $23,395.78 and the Fund Balance is reduced to $5,078.17. This is a much more accurate financial picture of the school. c) On February 3 you write the check for $1,000.00 to the conference to be applied on the balance owed. Enter the check as follows: i) Accept the default check number and the 101000 Checking B of A account. Enter Upper Columbia Conference as the Payee and 1000 in the Total of Check field. ii) Select the 422000 Conference/Accounts Payable account in the next field and click OK. iii) View the Balance Sheet and notice that the Accounts Payable section has been reduced by the $1000.00 just paid to the conference. d) Each month we get a statement from the conference which itemizes payments and charges to the account. We received that statement on February 15. It shows a beginning balance of $23,395.78 with a credit of $1,000.00 and an interest charge of $93.58. The closing balance owed is 22,489.36. We need to reconcile this statement to ASM s records. i) We need to create a Transfer Entry to post the interest charge in ASM. Accept the default Reference Number. Select 422000 Conference/Accounts Payable in the From Account field. Enter -93.58 in the Total of Transfer field. Note: When making transfer entries, it is difficult to know when to make the entry negative and when not to. It is always best to enter it one way and then check the reports to see if the first try was correct. If not, simply return to the transfer entry and change the signs of the entries. ii) Select the 701500 Interest account in the next field. Be careful not to select the 604000 Interest account by mistake. Remember that 6xxx-xx accounts are income accounts and 7xxx-xx accounts are expense accounts. Click on OK. iii) View the Balance Sheet. The Accounts Payable section should now report $22,489.36. iv) This procedure needs to be followed each month. 9

Running the Tutorial Again The tutorial data files must be purged in order to run the tutorial a second, third, or time. Before beginning, be sure you have the Sample-1.bka data file available. 1 Move to the Tutor (or Sample) Adventist School data. (If the top of your ASM Accounting window shows that you are already in the Tutor Adventist School or Sample Adventist School data, skip to Step 2.) a) From the Main Menu, click on the Utility Menu. b) Select Change/Setup Working Directory. c) In the left Directories: section of the window, double-click on the NAD folder. d) Double-click on the Tutorial folder that should now be visible. e) It should now say C:\Program Files\NAD\Tutorial in the Directory Name: field. Click on OK. 2 Tutor Adventist School or Sample Adventist School should now be displayed at the top of the ASM Accounting title banner on the screen. a) Click on Utility Menu. b) The software will not allow deletion of data without doing a backup. We will do the backup, but will not worry about keeping it. Click on Backup. c) Accept the default backup name and location by clicking OK on the window that pops up. Make sure you have a floppy disc in the drive. d) Click OK to acknowledge that the backup was successful. You will be returned to the Utility Menu. e) Click on Initialize Data Files. A bold warning window will appear. Type yes in the box provided and click on OK. f) ASM Accounting will erase all tutorial data files and close the program. g) Re-start ASM Accounting. h) Return to Step 2 on page 1 to proceed with the tutorial. - - - - - - - - John Kriegelstein Alaska Conference of Seventh-day Adventists 6100 O Malley Rd Anchorage, AK 99507 907-346-1004 10

ABC Bank of Alaska 1000 Bankruptcy Way Anchorage, AK 99511 Sample Adventist School 1844 Education Drive Anchorage, AK 99501 Accnt #1234567890 Statement Date: February 29, 2004 Beginning Balance 40,381.55 Credits: 13,764.53 Debits: 3,576.76 Ending Balance: 50,569.32 Credits: Deposits: Interest: 2/8/2004 2,580.00 2/17/2004 2,225.00 2/25/2004 8,952.65 2/29/2004 6.88 Debits: Checks: #8961 2/3/2004 10.28 #8965 2/6/2004 537.89 #8969 2/25/2004 159.89 #8962 2/5/2004 634.06 #8966 2/19/2004 85.71 #8970 2/25/2004 25.63 #8963 2/6/2004 95.45 #8967 2/20/2004 145.00 #8964 2/8/2004 1,684.85 #8968 2/18/2004 37.00 Fees: Other: 2/8/2004 10.00 NSF Charge 2/29/2004 1.00 Image Statement Charge 2/8/2004 150.00 Returned NSF Check