Accounting software application (Peachtree Accounting software)

1. Creating a new company

Company Name -------------------------MK General Trading
Adress line -------------------------------Da-Raesi
City----------------------------------------Mekelle
Country -----------------------------------Ethiopia
Telephone--------------------------------+251 34235625
Business type ----------------------------Corporation
Web site; ----------------------------------www.mkgeneraltrading.com

The accounting Method------------------Accrual basis of accounting

Posting method----------------------------Real time
Accounting period------------------------12 month
Fiscal year starts on-----------------------January 2023.
2. Create chart of account

Account Description Type Beginning Balance

ID Debit Credit
1001 Cash on Hand Cash $285,000
1002 Accounts Receivable Accounts Receivable $500,000
1003 Allowance for Doubtful Accounts Receivable
Account
1004 Inventory Inventory $200,000
1005 Supplies Other Current Assets $50,000
1006 Furniture Fixed Assets $100,000
1007 Equipment Fixed Assets $38,738
1008 Vehicles Fixed Assets $500,000
1009 Buildings Fixed Assets $185,500
1010 Land Fixed Assets $26,500
1011 Accum. Depn-Furniture Accumulated Depreciation $20,000
1012 Accum. Depn-Equipment Accumulated Depreciation $5,000
1013 Accum. Depn-Vehicles Accumulated Depreciation $51,585
1014 Accum. Depn-Buildings Accumulated Depreciation $30,788
2001 Accounts Payable Accounts Payable $695,000
2002 Sales Tax Payable Other Current Liabilities
2003 Notes Payable-Noncurrent Long Term Liabilities $20,000
2004 Income tax payable Other Current Liabilities
3001 Common Stock Equity-does not close $1,000,000
3002 Retained Earnings Equity-Retained Earnings $63,365
3003 Dividend Equity-gets closed
4001 Sales Income
4002 Other Income Income
4003 Sales Returns and Allowances Income
4004 Sales Discounts Income
5001 Cost of Goods Sold Cost of Sales
5002 Purchase Discounts Cost of Sales
5003 Purchase Returns and Cost of Sales
Allowance
6001 Advertising Expense Expenses
6002 Supplies Expenses Expenses
6003 Bad Debt Expense Expenses
6004 Depreciation Expense Expenses
6005 Freight Expense Expenses
6006 Income Tax Expense Expenses
6007 Insurance Expense Expenses
6008 Maintenance Expense Expenses
6009 Payroll Tax Expense Expenses
6010 Rent Expense Expenses
6011 Salaries Expense Expenses
6012 Wages Expense Expenses
6013 Utilities Expense Expenses
Balance $1,885,738 $1,885,738

3. Setting up Customers Default

Mk General Trading’s accountants determined the Customers default information as
follow:
✓ Type of payment customers make: Due in number of days
✓ Net Due Days ________________________ 30
✓ Discount in Days _____________________ 10
✓ Discount Percent: 2%
✓ Credit Limit _________________________1,000,000
✓ Credit Status: Notify Over Limit
✓ G/L Sales Account ------------------------------ 4001 - Sales - Income
✓ Discount G/L Account: ------------------------ 4004 - Sales Discounts – Income
✓ Age Invoices By: Invoice Date
✓ Custom Fields: Un tick all fields
 4. Setting up Vendors Default
Mk General Trading’s accountants determined the Vendors default information as
follow:
• Type of payment customers make: Due in number of days
• Net Due Days ___________________________ 30
• Discount in Days _________________________ 10
• Discount Percent: 2%
• Credit Limit _____________________________1,000,000
• G/L Expense Account ------------------------------- 1004 - Inventory
• Discount G/L Account--------------------------------5002 - Purchase Discounts
• Age Invoices By: Due Date
• Custom Field: Un tick all fields
• 1099 Settings: Make all accounts ‘None’

5. Setting up inventory Item Defaults

Use the following data to set up inventory default information.

✓ General Tab: make the Default Item Class field to: Stock items
✓ Ordering Tab: leave the fields as it is
✓ Tax/shipping tab; tick only the first field
✓ Custom field tab; don’t tick all fields
✓ Price level tabs; tick only the first field
✓ GL Accts/Costing Tab: Select the followings:

Item Class GL Sales/Inc GL Invtry/Wage GL Cost Sales Costing

Stock item 4001 1004 5001 FIFO
GL Freight Account: 6005

6. Maintaining Customers/Prospects
Enter the following data in the Customers/Prospects window. Generally, Mk General
Trading’s has five customers and it has beginning balances with them.

Customer Name Contact Type Telephone 1 Invoice Date Beginning A/R

ID Number Balance Account
ALDER Alder Comp Alex Customer +251911079 3333 Jan/2/2022 50,000 1002
ARCHER Archer Limited Naom Customer +251911080 3334 Feb/4/2022 150,000 1002
CAN Cannon Trading Zing Customer +251911081 3335 Mar/2/2022 200,000 1002
CHAP Chaplet Enterp Chang Customer +251911082 3336 Aug/9/2022 40,000 1002
KURT Kurtu PLC Has Customer +251911083 3337 Dec/3/2022 60,000 1002
 7. Maintaining Vendors
Enter the following table data in the Maintain Vendors window. Generally, Mk
General Trading’s has five vendors and it owe balances with them.

Vendor Name Contact Telephone 1 Type Invoice Date Beginning A/P

ID Number Balance Account
BRT Brtu Enterp. Daniel +251913158 Vendor 2123 Jan/5/2022 200,000 2001
GASH Gashy PLC Mohes +251913157 Vendor 2124 July/ 3/2022 200,000 2001
LULE Lules Trading Aster +251913159 Vendor 2125 Sep/3/2022 50,000 2001
NAE Nae Company Solomon +251913156 Vendor 2126 Nov/2/2022 150,000 2001
TURU Turu Exporter Eskindr +251913160 Vendor 2127 Dec/4/2022 95,000 2001

8. Maintain Inventory Items

Use the following data to maintain inventories with their beginning balances.
G/L Sales Account: 4001
G/L Inventory Account: 1004
G/L Cost of Sales Account: 5001
Item Tax Type: 1
Item ID Description Item Class Cost Beginning Balance
Method Quantity Unit Cost Total Cost
AC Air Conditioner Stock item FIFO 2 10,000 $20,000
DC Digital Camera Stock item FIFO 50 1,000 $50,000
DTC Desktop Computer Stock item FIFO 10 4,000 $40,000
LAP Laptop Stock item FIFO 4 10,000 $40,000
TV Television Stock item FIFO 20 2,500 $50,000
9. Setting-Up Sales Taxes
Mk General Trading has been registered to collect Value Added Tax (VAT) by
Inland Revenue of Ethiopia. In addition, the company has the responsibility to collect
Turn Over Tax (TOT) on those products which are VAT exempted. Data in the
following table used to set up sales tax:
Fields to be Filled in the Wizard Tax Type 1 (VAT) Turn Type 2 (TOT)
Total Rate……………………………... 15 2
Number of Total Rate…………………. 1 1
Sales Tax Agency ID.............................. FED Tig
Sales Tax Agency Name……………… Inland Revenue Authority Tigray Region
Vender **..…..…………….................. INLANDREVENUE REGION 1
Sales Tax Calculation………................. By Single Rate By Single Rate
Rate……………………………………. 15% 2%
Sales Tax Account ……………………. 2005 - VAT Payable 2002, Sales Tax Payable
Sales Tax ID………………................... VAT17 TOT17
Sales Tax Name…………….................. Value Added Tax Turn Over Tax
**Here you must have to maintain new vendor to receive VAT and TOT
collected from customers. Thus, set up a new vendor using the following data:

For Tax Type 1 (VAT): Vendor ID: INLANDREVENUE

Name: Inland Revenue Authority

Vendor Type: Tax

Expense Account: 2005, VAT Payable, Other Current

Liabilities

For Tax Type 2 (TOT): Vendor ID: Tig

Name: Tigray Region
Vendor Type: Tax

Expense Account: 2002, Sales Tax Payable

10.Transactions