The document is a delivery receipt from Interstate Motor Freight System for a shipment from Velocity Sporting Goods in Pierre, South Dakota to Waren Sports Supply in Chicago, Illinois. It provides details of the shipment including the freight bill number, originating and destination cities and states, shipping details such as number of pieces and weight, applicable rates, and total charges of $483. The receipt confirms delivery of the property in good condition on December 23, 2013.

1. INTERSTATE
MOTOR FREIGHT SYSTEM
Document No. 19
4425 South Creyts Rd.
Chicago, IL 60617
DELIVERY RECEIPT
--=--=-C:-=-=-l
I 264251 FREIGHT BILL NO.
J
ADVANCE CARRIER INFORMATION
ACTUAL ORIGIN CITY s STATE
~IChi.
CONSIGNEE
WAREN SPORTS SUPPLY ]
1978 Michigan Ave.
Chicago, IL 60612
s
SHIPPER
VELOCITY SPORTING GOODS
1285 Colgrove Ave.
Pierre, SO 57501
BILL OF LADING NO.
~84J
RELEASED VALUE EXCL USE F.V.C. TEND AS T.L
WAREN SPORTS SUPPLY
1978 Michigan Ave.
Chicago, IL 60612
FINAL DEST. CITY & STATE
BEYOND ROUTING
INTERSTATE ADVANCE BEYOND liS REG
PIECES CONTAINERS HM DESCRIPTION, MARKINGS AND SPECIAL HANDLING INSTRUCTIONS WEIGHT RATE EXTENSION OTHER CHARGES ITEM
78 BULK PACKED SPORTING GOODS 3220 .15 483.00
TOTAL CHARGES
483.00
RECEiveD THE PROPERTY
DESCRIBED ABOVE IN GOOD
CONDITION EXCEPT AS NOTED
12-23-13 PoW.
DATE DELIVERED DRIVER
'1f/(J./WJ.Jf0=.J~COMPANY NAME

2. �t.··sl!!.g~First American
b;j~1( tlND TRUST C01>O'I''I''''
Chicago, lilinoi" 606QJ
"'-_. """'Ant Nn_ 19
Document No. 20
No. 1155
74-651/724
Date pee 222 1..(1),
n .1/ - SAMPLE - .
/(~ ,'K~a_
RECEIVED THE PROPERTY
DESCRIBED ABOVE IN GOOD
CONDITION EXCEPT AS NOTED
DOLLARS
TOTAL CHARGES
483.00
12-23-13
DATE DELIVERED
Pol,,). L__ L_l-_-lL _
DRIVERSIGNATURf<? p
i1/MbfJJ~.d~
COMPANY NAME

3. "/" h_ --~ '"
Route: -, r;'"n ..,""if
Document No.5
1978 Michigan Avenue' Chicago, IL 60612
312-349-0407
68913R
IVehicle I 7~
Number b'
No.
Shipping
Units
Kind of Packaging, Description of Articles,
Special Marks and Exceptions
Weight
(Subject to
Correction)
Rate CHARGES
/ (for Carrier use only)
A
trs,
REMIT
C.O.D. TO:
ADDRESS COD AMT:$
Note - Where the rate is dependent on value, shippers are re-
quired to state specifically in writing the agreed or declared value of
the property.
The agreed or declared value of the property is hereby specifically
stated by the shipper to be not exceeding.
Subject to Section 7 of the conditions, if
this shipment is to be delivered to the con-
signee without recourse on the consignor, the
consignor shall sign the following statement:
The carrier shall not make delivery of this
shipment without payment of freight and all
other lawful charges.
$, per _
(Signature of Consignor)
C.O.D. FEE:
PREPAID 0 $
COLLECT .81...
Total Charges $ 43.h'S
FREIGHT CHARGES
Check Appropriate Box:
D Freight prepaid ~Ollect
o Bill to Shipper
Received subject to the classifications and tariffs in effect on the date of the issue of this Bill of Lading, the property described above in
apparent good order, except as noted (contents and condition of contents of packages unknown), marked, consigned, and destined as in-
dicated above which said carrier (the word carrier being understood throughout this contract as meaning any person or corporation in
possession of the property under the contract) agrees to carry to its usual place of delivery at said destination, if on its route, otherwise to
deliver to another carrier on the route to said destination. It is mutually agreed as to each carrier of all or any of, said property over all or any
portion of said route to destination and as to each party at any time interested in all or any said property, that every service to be performed
hereunder shall be to all the bill of lading terms and conditions in the governing classification on the date or shipment.
Shipper hereby certifies that he is familiar with all the bill of lading terms and conditions in the governing classification and the said
terms and conditions are hereby agreed to by the shipper and accepted for himself and his assigns.
SHIPPER CARRIER
PER
Waren Sports Supply
PERt-{
(This Bill of Lading is to be signed by the s
and agent of the carrier issuing same.)
CONSIGNEE

4. CASH SALE INVOICE
""JlREMSPORTS SUPPI.~
• EST.2002'
1,978Michigan Avenue· Chicago, IL 60612
312-349-0407
sA~~o FJAMNAME ~
~A1t~~dn; .T ;fE00 ssss _ h I I VI
o ~51(11~ .1LL("(f
CI STATE
Document No.7
INVOICENO. C-30
SAMPLE
Invoice Date /,'2-/ 'J-+h-C>l~
Prepared By ~ t-ni.
Customer Purchase Order
Number ~1v
Date l ~ ~ I 'l;;J
SignedBY~
BO BO "" Back order - will be shipped shortly.
DO DO = Being shipped direct from factory.
NO NO= Not available - Item no longer stocked.
SO SO = Similar item substituted.
Shipment Date {'l-/~-4!-z..OI'}
Shipped Via J tt E
Bill of Lading No. (, ~ 9/ DR
IMPORTANT: ALL RETURNS MUST BE MADE WITHIN 10 DAYS AND ACCOM- TOTAL SALE
PANIED BY AN INVOICE COPY AND PACKED IN THE ORIGINAL CUSTOMER CHECK NO.
CARTON. f-----.:....~-~~-=..:.t---lq~~~
INVOICE
VERIFIED BY
CUSTOMER

5. WAREN SPORTS SUPPLY
BALANCE SHEET
AT DECEMBER 31, 2013 AND 2012
ASSETS
CURRENT ASSETS
Cash
Accounts receivable - net
Inventory
Marketable securities
Total current assets 120,520.38
$108,942.44
42,891.05
198,296.00
24,000.00
374,12~49
$11,025.19
7,814.19
101,681.00
0.00
FIXED ASSETS· Net of
accumulated depreciation 215,921.00 239,105.50
Total assets $590,050.49 $359,625.88
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $8,767.15 $11,279.35
Payroll taxes withheld
and payable 4,057.23 3,284.54
Federal income taxes payable 52,184.99 29,797.00
Interest payable 197.26 0.00
Total current liabilities 65,206.63 44,360.89
NOTE PAYABLE 80,000.00 0.00
Total liabilities 145,206.63 44,360.89
STOCKHOLDERS' EQUITY
Common stock 225,000.00 225,000.00
Retained earnings 219,843.85 90,264.99
Total stockholders' equity 444,843.85 315,264.99
Total liabilities and
stockholders' equity $590,050.48 $359,625.88

6. RETAINED EARNINGS· End of year
WAREN SPORTS SUPPLY
STATEMENT OF INCOME AND RETAINED EARNINGS
FOR THE YEAR ENDED DECEMBER 31, 2013
REVENUE
Sales
Less: Sales returns and allowances
Sales discounts taken
Net sales
COST OF GOODS SOLD
Beginning inventory
Net purchases
Freight-in
Goods available for sale
Less: Ending inventory
Cost of goods sold
GROSS MARGIN
OPERATING EXPENSES
Rent expense
Advertising expense
Office supplies expense
Depreciation expense
Wages and salaries
Payroll taxes
Bad debt expense
Other operating expense
Total operating expenses
Operating income
OTHER INCOME - Miscellaneous income
OTHER EXPENSE· Interest expense
INCOME BEFORE TAXES
FEDERAL INCOME TAXES
NET INCOME
RETAINED EARNINGS - Beginning of year

7. -------------- ._-
WAREN SPORTS SUPPLY
STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED DECEMBER 31, 2013
CASH FLOWS FROM OPERATING ACTIVITIES
Net income
Adjustments to reconcile net income to net cash
from operating activities
Depreciation
(Increase) decrease in assets:
Accounts receivable
Inventory
Increase (decrease) in liabilities:
Accounts payable
Payroll taxes withheld and payable
Income taxes payable
Interest payable
Net cash provided by operating activities
,
CASH FLOWS FROM INVESTING ACTIVITIES
Cash payments for fixed assets
Purchase of marketable securities
Net cash used in investing activities
CASH FLOWS FROM FINANCING ACTIVITIES
Cash proceeds from loans
NET INCREASE IN CASH
CASH· Beginning of year
CASH· End of year
-'.
$129,578.86
35,109.50
-35,076.86
-96,615.00
-2,512.20
772.69
22,387.99
197.26
53,842.24
-11,925.00
-24,000.00
-35,925.00
80,000.00
97,917.24
11,025.19
$108,942.43

8. WAREN SPORTS SUPPLY
POST -CLOSING TRIAL BALANCE
December 31,2013
ACCT. NO. ACCOUNT TITLE DEBIT CREDIT
ASSETS
10100 Cash , 108,942.44
10200 Accounts receivable 45,522.00
10300 Allowance for doubtful accounts 2,630.95
10400 Inventorv 198,296.00
10600 Marketable securities 24,000.00
10800 Fixed assets 332,590.00
10900 Accumulated deoreciation 116669.00
LIABILITIES
20100 Accounts oavable 8,767.15
20300 Federal income taxes withheld 1,706.61
20400 State unemolovment taxes oavable 87.93
20500 Federal unemolovment taxes oavable 26.05
20600 F.I.CA taxes oavable 2,236.64
20700 Federal income taxes oavable 52,184.99
20900 Interest oavable 197.26
21000 Notes oavable 80,000.00
I
STOCKHOLDERS' EQUITY
26000 Common stock 225,000.00
29000 Retained earnings 219,843.85
TOTALS $709,350.44 $709350.43

9. WAREN SPORTS SUPPLY
Accounts Receivable Aged Trial Balance
December 31, 2013
Customer Amount Due Current 31-60 61-90 Over 90
Clayborn University $15,025.00 $15,025.00
Branch College $1,200.00 $1,200.00
Eastern WI University $29,297.00 $9,392.00 $19,905.00
Totals $45,522.00 $24,417.00 $19,905.00 $1,200.00 $0.00
Pf

10. WAREN SPORTS SUPPLY
Fixed Assets Trial Balance
December 31, 2013
Asset Cost Accum. Depree. Net Book Value
Delivery Trucks $69,255.00 $34,627.50 $34,627.50
Inventory Handling System $200,660.00 $30,099.00 $170,561.00
High-Speed Copier $7,367.00 $736.70 $6,630.30
Laptop Computer $4,558.00 $455.80 $4,102.20
,
Totals $281,840.00 $65,919.00 $215,921.00
J)Y

11. WAREN SPORTS SUPPLY
Accounts Payable ~rial Balance
December 31, 2013
Vendor No. Vendor Name Amount Payable
253 Chicago Office Supply $5,117.15
261 Gillett Consulting $3,650.00
Totals $8,767.15

12. 27.50
Warren Sports Supply
Bank Reconciliation
12/31/13
Bank Statement General Ledger
Unadjusted Balance, 12-31-13 $ 123,414.03 108,984.05
Add:
Deposits in transit
12/24/13
12/24/13
Total
Amount:
9000
9165
/
18,165.00
Deduct:
Outstanding Checks
#1155
#1152
#1154
#1153
#1156
#1157
(483.00)
(17,973.20)
(1,100.00)
(2,857.93)
(1,851.42)
(1,571.72)
Adjustments:
Check #1118 not deducted
Rent check not deducted
Bank Service Charge
(1,985.21)
(4,800.00)
(27.50)
Adjusted Balance, 12-31-13 108,956.55 108,956.55
Journal Entry, 12-31-13
Account No. Debit Credit
41000
10100
Other Operating Expense
Cash
27.50

13. Document No. 22
Waren Sports Supply
Bank Reconciliation
November, 2013
Bank General
Statement Ledger
Unadjusted balance, 11-30-13 $ 80,454.64 $ 73,195.28
Add:
Deposits in transit 0.00
Deduct:
Outstanding checks
#1118 1,985.21
#1137 2,790.54
#1138 1,590.06
#1139 914.55
(7,280.36)
Adjustments:
Bank service charge (21.00)
Adjusted balance, 11-30-13 $ 73,174.28 $ 73,174.28
Journal Entry, 11-30-13
Account No. Debit Credit
41000
10100
Other operating expense
Cash
$ 21.00
$ 21.00

14. Document No. 23
Waren Sports Supply
1978 Michigan Avenue
Chicago, Illinois 60612
First American
D I --~
4Nl( AND TRUST coM'~
Chicago, Illinois 60603
Statement
of Account
FOR ASSISTANCE:
CALL 1-800-FAB-2864
OR WRITE:
CUSTOMER SERVICE
PO. BOX 28914
CHICAGO, ILLINOIS 60610
96,779.25 14
CHECKING ACCOUNT ENTRIES
2-Dec 914.55 ~
5-Dec 2,790.54
9-Dec
12-Dec J 2,575.00
13-Dec
J16-Dec ;7,367.00
~360.25
19-Dec 778.75
23-Dec .; 3,523.23
24-Dec J 50.03
1,488.85
26-Dec 2,790.54
31-Dec SC 27.50
NF - NSF Fees
OM - Debit Memo
eM - Credit Memo
LS - Listing Total
00 - Overdrawn Balance
RT - Returned Item
SC - Service Charge
Me - Maintenance Fee
MP - Money-Matic Payment
CO - Check Order Charge
DATE CHECKS/DEBITS CHECKS/DEBITS DEPOSITS/CREDITS BALANCE
TRANSACTION CODE LEGEND READY TELLER TRANSACTIONS
November 30,2013 Balance Forward 80,454.64
1,590.06 ... 77,950.03
J
75,159.49
5,891.00 81,050.49
,/
4,090.52 82,566.01
J 5,306.00 87,872.01
II .;
35,392.70 7,931.96
..; 51,684.02
J 14.82
80,000.00 130,905.27
127,367.22
1,219.15 It
j 124,609.19
1,622.88 123,441.53
l}%~ 1
123,414.03
2.
December 31 , 2013 Ending Balance 123,414.03
DP - Direct Payment
AT - Check-Save Deposit
CD - CD Interest Deposit
PR - Payroll Deposit
DO - Direct Deposit
RA - Credit Card Advance
RD - Envelope Deposit
RC - Credit Card Payment
RM - Mortgage Loan Pmt
RL - Money-Mafic Loan
RI - Installment Loan Pmt
RO - Other Payment
RW - Cash Withdrawal
RS - Transfer 10 Savings
RF - Transfer From Savings

15. Document No. 24
WAREN SPORTS SUPPLY
LIST OF ITEMS CLEARING
WITH BANK STATEMENT
DECEMBER, 2013
CHECKS
Check Date Date
Number Written Cleared Payee Amount
1137 11129 12/5 Ray Kramer 2,790.54
1138 11129 12/2 Jim Adams 1,590.06
1139 11/29 12/2 Nancy Ford 914.55
1140 12/7 12/12 First Security Insurance 2,575.00
1141 12/12 12/16 Chicago Office Supply 7,367.00
f'.-
1 ) 1142 12/13 12/16 Velocity Sporting Goods 35,392.70
y}t' 1144 12/13 12/16 Board of Water and Light 1,360.25
1145 12/13 12/19 Interstate Motor Freight 778.75
1146 12/13 12/23 Internal Revenue Service 3,523.23
1147 12/13 12/23 Internal Revenue Service 14.82
1148 12/13 12/24 State of lllinois 50.03
1149 12/13 12/26 Ray Kramer 2,790.54
l150 12/13 12/24 Jim Adams 1,488.85
1151 12/13 12/24 Nancy Ford 1,219.15
DEPOSITS
Date
Date Recorded
Deposited by Bank Amount
12/6 12/9 5,891.00
12/9 12/12 4,090.52
12/12 12/13 5,306.00
12/14 12/16 7,931.96
12/16 12/19 80,000.00
12/23 12/26 1,622.88

16. Document No.9
WAREN SPORTS SUPPLY
CASH RECEIPTS PRELIST
MONTH De£.ember
Purpose
Bank
Date Description Cash AIR Other
Check Invoice Amount of Amount
Rec
Sale ccuec. Number Number Invoice Received
em
1 De£.. u Gtatef> Univerf>it'i to! 1411'5 C--2B '5B q 1 00 '5B ql 00 I
2 De£.. q 2-of>emont Univerf>it'l to! 1"3'501- 121 41 1400 40 qo '52 v
3 De£.. 12 Han£.O£.K C-olleae to! 2Mqu C--2q '5"3Ou 00 '5"3Ou 00 V
4 Dec.. 14 c.la'lborn Univerf>it'j to! 241"3 12B 12 '52 00 11 Ou qu V
5 De£.. 14 A.t"'ood Brotherf> to! 124 NIp.. ~ i Biz '500 ./
1~c.lb rif). A.v~ ...... ?4S I/L/A ~J
I
I'lz;Ie ():J v'6 'I + 00
7
ItlPC 1.> ~V"~~ t-ptD.J.;(, I 7:1/5(/1 110 t(, (:, , 00 1'- t1 M v..-
8
~ A ,<-o-<;!"'f} [,)t 'JIIUJI J 491~(1-'1 t I R1';.60 ~o0't» lJ
9 l17ee'L4 A.,.~ r 1" ~ •• -t: J 1403 C>?6 9 10~C;e) 19 I f:, 5t.b '...,.-
10
11 ~
12
13
14
15
16
17
18
19
20
21
22
23
24

17. ,;;
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o
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Document No. 17 Document No. 16
PURCHASE ORDER
No. 328
NO. 74 THIS NUMBER MUST APPEAR ON ALL
. CORRESPONDENCE INVOICES,
.: SHIPPING PAPERS AND PACKAGES.
D·U-N-S 622-7656
I .__ .t".
I
C
-
RD~ NO. OR RETURN REQUEST NO. T , eli'-.. (. i.-
PREPAID
COLLECT
DV. ALLOWANCE SPECIAL ALLOWANCE
C •
(
<
COSTEACH I
-e- ~4.()OION ,
,
~ ~{JJ;-
s:<- "C).eo
f'-"L oo.""""'If
~
?/)J)()
U')(;:;{f .
,
SAMPLE
y packed.
~st appear on all invoice packages &
IDO
_.~ {/, -"£1' N I
{
/ 1/..---,
CHASING~NT
II
oo
o
c:
3
CD
::s
-

18. NO. 74
fv~t-
Document No. 16
PURCHASE ORDER
No. 328
THIS NUMBER MUST APPEAR ON ALL
. CORRESPONDENCE INVOICES
e: SHIPPING PAPERS AND PACKAGES.
D-U-N-S 622-7656
I . .,-,1'. ,
c -
/T, rff-.. - ./ ..
ADV. ALLOWANCE SPECIAL ALLOWANCE
,
- <,
COST EACH
-e- 94.dO
J ~ ~£6
~ b9.bO
<E- ?f)ro
.
,
SAMPLE
Iy packed.
ust appear on all invoice packages &
1'/____
CHASING~NT
II
RECEIVING REPORT
Document No. 17
1978 Michigan Avenue' Chicaqo, IL 60612
312-349-0407
RECEIVED FROM
(J,~ PREPAID
COLLECT
DATE 20 'J PURC~SE ORD~~ NO.OR RETURN REQUESTNO.
o z,. ~
QUANTITY ITEM NO. DESCRIPTION
1.
100 I7PJC! l~ 1>5 V,/.J2- fJyJ
2.
foD l{ill, t})8 f)F> .
3 ,0 11~b~S 1h 1:-"" ~~,jJ,7'f1<d'-L f:4,..""""
4. , p7J 11WJ su: -r.~- . . ~ 6;,t)(;;( {
5.
V
6.
7.
••
9.
10.
11.
12.
REMARKS; CONDITIONS, ETC.
f),A of Ife'; 'I2f.<'..te 7~ lIfl,., .. -A IDO
RECEIVED BY (J'l-l1 0.." TDELIVERED TO 0
~A'to' ""h.J 'A -~ 'A, Tl.llJl - .•~ ~"J
-/ t (~~URETO "'T r , /
MAKE THIS RECORD
ACCURATE AND COMPLETE

19. RETURNS POLICY
Prior approval must be obtained for all returned goods. Approval numbers must be clearly identified on the outside of returned goods.
Document No. 17
RECEIVING REPORT
NO. 76
1978 Michigan Avenue' Chicago, IL 60612
312-349-0407
DATE / '2---
0, 20 l)
PURCHASE~D~~R RETURNREQUESTNO.
RECEIVED FRO
ril . r)/1'_ .,,/>~ PREPAID;! I/AL .. ' _.r.- '-(C-
AD RESS, 1 /7 fl ~I p[i .. -/( b6tot COLL'ITV / I
LiI r.; lJ :,. ;
FilfIGHTCARRI~t), ,0-, "'- FREIGHT B1
A:../4-J~ ,I,.,,, '!I".
"-'r
,~ ,
QUANTITY ITEM NO. DESCRIPTION
'l.- 1"-)01.- 1-.:::r-- (' "'" ----t.
c !L?.--
2.
(
3.
4.
5.
6.
T.
B.
9.
10.
11.
12.
REMA~KS: CONDITIONS, ETC.
(J~ - • 0 £>-0 /1. tbv C-c:" cz:»:RECEIVED AJ~ f DELIVEREOTt) ~ (1~, z~CFv C/o' J.....-:-~nc
/ / BE SURETO v "I I
MAKE THIS RECORD
ACCURATE AND COMPLETE
Document No. 16
PURCHASE ORDER
No. 325
):
THIS NUMBER MUST APPEAR ON ALL
CORRESPONDENCE INVOICES,
SHIPPING PAPERS AND PACKAGES.
D-U-N-$ 622-7656
1978 MICHIGAN AVE.
CHICAGO, IL 60612
AOV. ALLOWANCE SPECIAL ALLOWANCE
NONE NONE
COST EACH
$2,150.00
J6~
SAMPLE
311y packed.
must appear on all invoice packages &
JRCHASING AGENT
TAX 10 #52-8631743
CUSTOMER

20. Document NO.1
Transactions List
December 16-31, 2013
Complete each of the following transactions in accordance with the seven-step process on pages 11-12
of the Instructions, Flowcharts, and Ledgers book (step 5). Remember the importance of the systems
flowcharts on pages 18-24 for details as to (a) documents to prepare, (b) approvals and other internal
control procedures, (c) accounting entries, and (d) filing. Also, remember from the requirements that
some of the following events require the preparation or modification of systems documents and some
do not. You are to perform the roles of Ray Kramer, Nancy Ford, and Jim Adams.
December
,/
16
• Hints are provided in boxed areas like this.
j
16
Received validated deposit receipt (Doc. No. 11) from the bank for $7,931.96 for
deposit made December 14.
!;. Follow flowchart on page 21. No recording occurs at this time.
j. Cash receipts prelist is Doc. No.9.
• File Doc. No.9 and Doc. No. 11 in the Temporary file tab.
Ordered the following inventory on account from Velocity Sporting Goods, using
purchase order No. 328 (Doc. No. 16).
Units
115
60
70
85
Description
Basketball pole pad
Basketball bag
Portable inflation pump
Trainer's first aid kit
Vendor address:
Freight carrier:
Freight charges:
Allowances:
1285 Colgrove Ave., Pierre, SO 57501
Interstate Motor Freight
Collect (i.e., paid by Waren Sports Supply)
None
• Follow flowchart on page 22.
• Use purchase order No. 325 (Doc. No. 16) as a guide.
• Use the price list (Doc. No.3).
• No receiving or recording occurs at this point for this transaction.
• Tear document apart and file, following the flowchart guidance.

21. Decembejt'
~ 16 Borrowed $80,000 from First American Bank and Trust by issuing a two-year note
payable (Doc. No. 14) with a stated annual interest rate of 6%. Check No. 545 (Doc.
No.8) for $80,000 was received from the bank and deposited. Reviewed the terms and
~ G& conditions of the note and signed it (Ray Kramer) as the borrower.
~~~~.
J.
/19
/
~ 20
Restrictively endorse means to write the following on the back of the check:
"For deposit only. Waren Sports Supply."
See flowchart, page 21, for recording and depositing.
• Detach the bottom portion of the check and file in the Shipping/Banking me
tab.
". File the note in the Shipping/Banking file tab.
Received customer purchase order No. ST3107 (Doc. No.4) in the mail from Clayborn
University, approved their credit and shipped the goods. All goods ordered were
shipped, except that only 45 shoulder pad sets were available for shipment.·,
Carrier & number:
Freight charges:
Route:
Truck & driver:
Freight rate:
Shipment:
Allied Trucking; Carrier number 2154
FOB shipping point; Billed to buyer (i.e., paid by Clayborn)
Express
Truck 2961XZ, Linda Arensmeier
$15.00 per 100 1bs.
3 cartons/goal and rim sets @ 26 lbs./carton
6 cartons/backboards @ 125 lbs.lcarton
5 cartons/shoulder pad sets @ 40 lbs.lcarton
4 cartons/football helmets @ 24 lbs.lcarton
jl~/.--------------
See flowchart, pages 18 and 19; follow all steps carefully.
/1; You will use several documents and record an entry in the sales journal and
the accounts receivable subsidiary ledger for this transaction.
J. For guidance in preparing the bill of lading, see pages 35-36 of the Reference
book.
Received sales return request No. R8034 (Doc. No. 12) in the mail from Eastern
Wisconsin University (EWU). The request was approved and the acknowledgment copy
mailed to EWU.
I. Follow the flowchart steps on page 20.
2

22. Decembe~
[§J ;20 / Increased employee pay rates, and employees changed their federal income tax
L/ withholding amounts, both effective December 16. There were no changes in filing
status or withholding allowances.
I~ 23 Received check No. 28564 (Doc. No.8) from Branch College for payment in full for
charge invoice No. 730, and deposited the check.
Ray Kramer
Jim Adams
Nancy Ford
New Pay Rate
$3,600.00 semimonthly
$22.00 per hour
$18.00 per hour
New Federal Income Tax
Withholding Amt.
$466.71
$365.06
$136.90
• No accounting entries are necessary, but you must update the pay rate history
information in the Employee Earnings Subsidiary Ledger.
Received merchandise from Velocity Sporting Goods as listed on purchase order No.
328. All merchandise listed on the purchase order was delivered in good condition and
in the quantities ordered, except that only 100 basketball pole pads (Item No. BB-019)
were received. The goods were placed immediately in the inventory warehouse.
Freight carrier:
Freight bill:
Interstate Motor Freight
No. 26425 (Doc. No. 19), received with shipment
• Remember to follow the flowchart on page 22. You can't record a purchase
yet because the invoice hasn't been received.
,/
23 Received legal notification from Benson, Rosenbrook, and Martinson, P. c., attorneys
at law, that Stevenson College had filed bankruptcy and will be unable to pay any of its
outstanding debts to its suppliers. Write off the account as a bad debt.
• Remember that Waren Sports Supply uses the "Allowance" method rather than
"Direct write-off" for accounting for bad debts.
I24 Received all goods that Waren had authorized Eastern Wisconsin University (EWU) to
return on EWU's return request No. R8034 for credit against their account balance .
.. I-..
I~ 24 Received check No. 49326 (Doc. No.8) for $9,000 from Eastern Wisconsin University
in partial payment of the remaining amount (after sales return) on charge invoice No.
729, and deposited the check.
• Process and record the sales return now.
• Do not finalize a deposit slip until you determine whether there are other cash
receipts on the same day.
3

23. December
.I
~ 24 Received vendor invoice No. 34719 (Doc. No. 18) from Velocity Sporting Goods for
goods ordered December 16 and received December 23.
• Follow the flowchart steps on page 22.
• Upon receiving the invoice, you can now record the purchase using the date on
which Waren incurred the liability for the goods, December 23.
1/
24 Issued check (Doc. No. 20) to Interstate Motor Freight for the amount of the freight bill
(Doc. No. 19) for the Velocity Sporting Goods shipment received December 23.
[. Follow the flowchart steps on page 23 .
.;
24 Received check No. 7403 (Doc. No.8) for $9,165 and customer purchase order No.
94772 (Doc. No.4) in the mail from Andover University for a cash sale. All goods
ordered were shipped and the cash sale was processed and recorded.
Carrier & number:
Freight charges:
Route:
Truck & driver:
Freight rate:
Shipment:
Interstate Motor Freight; Carrier number 62XY 404
Collect (i.e., paid by Andover University)
Direct
Truck 64, Dale Hoch
$15.00 per 100 lbs.
5 cartons/basketballs @ 23 lbs.zcarton
4 cartons/hip, tail, arm pad sets @ 36 lbs.lcarton
2 cartons/footballs @ 16 lbs.lcarton
I
I. Start with the flowchart on page 21.
26 Received office supplies from Chicago Office Supply as listed on purchase order No. 327
(Doc. No. 16), a copy of which is being held in accounting. Chicago Office Supply's
vendor invoice No. 2378 (Doc. No. 18) was received with the goods. All supplies
ordered were received in good condition and taken directly to the office, but the invoice
j was not paid.
30 Issued check (Doc. No. 20) to Velocity Sporting Goods for payment in full of their
invoice No. 34719 for goods received December 23.
• Consider the credit terms before making the payment.
31 Received payroll time cards (Doc. No. 21) from Ford and Adams for the time period
ended December 31 and prepared the payroll for all three employees, including paychecks.
• Paychecks are considered "Mailed/Given to Outsiders."
• Timecards are filed in the "Accounting" file tab.
• Recall that federal income tax withholding amounts were listed earlier with
employee pay rate increases.
4

24. December
~ 31 Received the laptop computers ordered on Waren's purchase order No. 325 (Doc. No.
16) and vendor invoice No. 2423 (Doc. No. 18) from Chicago Office Supply. The
computers were received in new and undamaged condition and taken directly to the
office. The estimated useful life is 5 years with no salvage value.
~ 31 Received vendor invoice No. 72654 (Doc. No. 18) from University Athletic News for
advertisements Waren ran during the Christmas season and immediately issued a check
(Doc. No. 20) for payment in full.
The project is now complete. Good work! Review your materials to make
certain everything is finalized. Complete the filing of documents, records, and
working papers using the file tabs and the envelope in which the Aid is
packaged. File all materials as indicated in the flowcharts.
• Purchase orders are not issued for services that Waren purchases.
MONTH-END PROCEDURES - After you have recorded all the transactions, go to page 12 of the
Instructions, Flowcharts, and Ledgers book and complete all the month-end procedures. An additional
month-end requirement for this project is:
~ Monthly Statement -
YEAR-END PROCEDURES - After completing all the month-end procedures, go to page 14 of the
Instructions, Flowcharts, and Ledgers book and complete all the year-end procedures. Additional
information for the year-end procedures is:
Prepare a monthly statement (Doc. No. IS) for Clayborn University.
Ending Inventory - A physical inventory was taken 1/1/14, before business began for
the new year. Merchandise on hand cost $198,296.00.
Bad Debt Expense - The expense for bad debts is estimated at the end of the year as
one-quarter of one percent (0.0025) of net sales.
Marketable Securities - At December 31, 2013, the market value of marketable securities
held by Waren approximated the cost of the securities.
5

25. III. Requirements
RECORDING MONTHLY TRANSACTIONS
This section includes fiveparts that you must understand before recording the first transaction.
1. Locate the transactions list (Document No.1) and keep it iu front of you. This list
includes all the accounting activity of Waren Sports Supply for the last semimonthly
period of 2013. Be sure to select the appropriate Document No. 1. There are two
documents with the number 1 included with your project, each with different types of
transactions. One of these two documents is printed on blue paper and has an "A" in
the bottom left corner. The other is printed on green paper and has a "B" in the bottom
left corner. You will use one, but not both, of these documents depending upon your
instructor's preferences.
If your instructor does not specify which one to use, select the Document No. 1 with
an "A" in the bottom left corner and destroy the other one. If your instructor specifies
the one with a "B" in the bottom left corner, use that one and destroy the other one.
2. Select recording option 1 or 2. There are two recording options for you in working
through the transactions list. Consult your instructor's assignment schedule to determine
which option you are to follow. The two options are:
Option 1. Associate each transaction with a cycle of related transactions and
record by cycle. This method of recording transactions is consistent with
larger businesses that separate duties within the accounting department. For
this option, go through the transactions list and classify each transaction
according to the following three-cycle framework.
• Sales and cash receipts. Sales give rise to accounts receivable,
which are later collected. Sales returns, bank deposits, and bad debts
are other activities related to this transactions cycle. (Sales and sales
returns -7 accounts receivable and bad debts -7 cash receipts and
bank deposits).
• Purchases and cash disbursements. Purchases and purchases
returns activity give rise to accounts payable, which later must be
paid. (Purchases and purchases returns -7 accounts payable -7 cash
disbursements).
• Payroll. Payroll transactions are usually considered a separate
trausactions cycle. The payroll check disbursements in this cycle are
a separate type from those in the purchases and cash disbursements
cycle.
If your instructor assigns this option, you will record each transaction in
a cycle following the seven-step process described on pages 11 and 12.
Do this for each transaction cycle, in turn. You may be asked to complete
the month-end and year-end procedures related to each transaction cycle
10

26. 11
immediately after recording and posting all the transactions of that cycle.
You will then go on to the transactions in the next cycle assigned and
repeat this process until the project is completed.
~Record each transaction in chronological date sequence. This method
~. ~f recording transactions is common in smaller businesses with fewer
transactions where separated accounting duties are not as feasible as in
option 1. Following option 2, complete all transactions in the transactions
list following the seven-step process described below and on page 12 before
beginning any month-end procedures.
3. Understand the two symbols on Document No. 1. Each event on the transactions
list includes one of two symbols, which determine whether documents from the loose
document set in the project must be prepared or used:
You are required to prepare or modify documents from the loose
document set for this event. An accounting entry mayor may not be
required.
You are not required to prepare or modify documents from the loose
document set for the event. An accounting entry is required, with one
exception; the December 16 change in wage rates.
4. Identify which transactions require an acconnting entry. Some transactions require
only the preparation or modification of documents, others require only an accounting
entry in one of the six journals, and still others require both. You should carefully read
each transaction on the transactions list (Document No. I) and clearly indicate which
ones require an accounting entry.
5. Follow the seven-step process for recording a transaction. You should now begin
processing the first transaction. Carefully apply the following instructions to each
transaction, in sequence (using recording option I or 2 as specified by your instructor).
I. Read and analyze the transaction on the transactions list (Document No. I).
11. Find the appropriate flowchart or flowcharts on pages 18-24 of this book and
study Waren's system to learn the procedures to follow. The flowchart specifies
the details as to documents to prepare, approvals and other internal control
procedures, accounting entries, and filing.
111. Locate and prepare appropriate documents if any are necessary for this
transaction. Be sure that each document is filled out completely and that all
procedures indicated in the flowcharts are performed (such as initialing for
approval, canceling after payment, etc.). You are to perform the roles of Ray
Kramer, Nancy Ford, and Jim Adams. Parts of their roles as described in the
flowcharts may have already been done.
IV. Record the transaction in the appropriate journal if an entry is necessary for this
transaction. Use the general journal only when no other journal is appropriate.

27. v. Post individual items to subsidiary ledgers if necessary for this transaction.
Then, place a check mark [ .I ] in the post reference columns to indicate that
journal items have been posted.
VI. File documents in the appropriate file tab in the envelope in accordance with
the flowchart description. See pages 5 and 6 of this book for additional filing
guidance.
VII. Proceed to the next transaction. Repeat this process until you have completed all
transactions on the transactions list (Document No. I), except month-end and
year-end procedures.
WAREN'S MONTH-END PROCEDURES
Following are the procedures performed at the end of each month by Waren's employees after
all transactions are recorded in the journals and subsidiary ledgers. You are to assume the roles of
Ray Kramer, Nancy Ford, and Jim Adams and perform each of these month-end procedures for
December. The only materials needed are this list of seven month-end procedures, all journals
and ledgers, and four items from the loose document set: blank monthly statement (Doc. No. 15),
bank reconciliation for November (Doc. No. 22), December bank statement (Doc. No. 23), and the
list of items clearing with the bank statement (Doc. No. 24). Set all other documents and records
temporarily aside.
I. Jim Adams foots and crossfoots each of the five special journals (sales, cash receipts,
purchases, cash disbursements, and payroll).
2. Jim Adams posts the column totals and individual transactions in "Other" columns
to the appropriate general ledger account and updates each general ledger account
balance. He places a posting reference check mark [ .I ] under each column total in
the journals and by each of the individual transactions in the "Other" columns to show
that the numbers have been posted.
3. Ray Kramer prepares a bank reconciliation on a separate working paper (not provided).
After receiving the bank statement (Doc. No. 23) and list of items clearing with the
bank statement (Doc. No. 24) from the bank, he performs the following procedures:
a. Foots that month's cash receipts and cash disbursements journals and places his
initials beside the cash column total in each journal.
b. Compares each entry in the cash receipts prelist (Doc. No.9) to the cash receipts
journal for name, date, and amount, and puts a check mark [ .I ] by each entry
in the prelist.
c. Prepares a bank reconciliation using the procedures outlined in the Systems
Understanding Aid Reference book on pages 62-65. You can also use November's
bank reconciliation (Doc. No. 22) as a model. Deposits in transit and outstanding
checks at November 30 are listed there.
12

28. d. Adjusts the cash general ledger account using the general journal, regardless of
materiality, for all reconciling items requiring an adjustment.
e. Attaches together and files the bank reconciliation, bank statement, list of items
clearing with bank statement, and the cash receipts prelist in the file labeled
"Shipping/Banking."
4. Jim Adams calculates and records the unemployment taxes paid by employers, and
Waren's portion of the F.l.C.A. payroll tax. These payroll taxes are calculated at the
end of the month on gross payroll and recorded in the general journal. The taxes are
paid the following month.
Unemployment taxes are imposed on the first $7,000 of wages paid to covered employees
in 2013. Thus, a review of the employee earnings subsidiary ledger on pages 40 and 41
of this book indicates that only one of Waren's employees remains subject to this tax
(i.e., has not yet exceeded the wage base maximum). The same wage base maximum
is used in the project for both federal and state unemployment taxes to simplify the
calculations.
The state unemployment tax (SUTA) rate is 2.7 percent. Because employers are allowed
credits against the federal unemployment tax (FUTA) rate for participation in state
unemployment programs, the net FUTA rate is 0.8 percent.
5. Jim Adams posts transactions from the general journal to the general ledger (and
subsidiary if applicable), places a posting reference check mark [ .I ] in the general
journal post reference column for each item posted, and updates each general ledger
balance.
6. Nancy Ford fOOlSthe balances of each subsidiary for the accounts receivable, accounts
payable, employee earnings, and fixed assets subsidiaries, and compares the total to
the appropriate general ledger control account (G/L accounts 10200, 20100, 40500,
10800, and 10900, respectively). She initials each general ledger control account to
indicate that she has made the comparison.
7. Jim Adams prepares a monthly statement (Doc. No. 15) for each customer with a
balance. He includes information about each unpaid invoice including its aging status.
Aging totals and the total amount due are shown at the bottom. He completes the
remittance advice (attached to the monthly statement) in a similar fashion except that
no aging is included. Ray Kramer reviews each statement and initials it before it
is mailed to the customer. In this project, you are to prepare a December monthly
statement for only one customer and file it in the "Mailed to Outsiders" file tab. The
name of the selected customer is stated in the transactions list (Doc. No. I) provided
with your loose document set in this package.
13
After completing all seven month-end procedures for December, continue to the next section
and perform Waren's year-end procedures.

29. $
WAREN'S YEAR-END PROCEDURES
Below are the procedures followed at the end of each year by Waren Sports Supply's
employees. You are to assume the roles of Ray Kramer, Nancy Ford, and Jim Adams and perform
each of these year-end procedures for 2013. The only materials needed are Waren's list of year-end
procedures, general journal, ledgers, year-end worksheet (Doc. No. 25), and post-closing trial
balance (Doc. No. 26). All other items can be permanently filed in the envelope. All December
month-end procedures must be completed before the year-end procedures are done.
1. Jim Adams prepares an unadjusted trial balance as of December 31 using the year-end
worksheet (Doc. No. 25) provided in your loose document set. Be sure to include the
December month-end general journal transactions in the 12-31-13 unadjusted trial
balance.
2. Jim Adams prepares year-end adjusting entries and posts each entry to the worksheet.
Below are the normal adjusting entries. Refer to your Systems Understanding Aid
Reference book for further help in preparing appropriate adjusting entries.
Hint: Be sure to number each adjusting entry on the year-end worksheet to
make it easier to complete year-end procedure 7 later.
a. Monthly Adjustments. You should already have recorded and posted payroll
F.I.C.A. and unemployment taxes, and the bank service charge as part of
December month-end procedures.
b. Depreciation Expense. Depreciation expense is calculated once annually at the
end of each year and recorded in the general journal as of December 31. The
depreciation methods, estimated lives, and salvage values are documented in
the fixed asset subsidiary ledger. Depreciation in the year of sale or acquisition
is calculated following a half-year convention, which means that six months of
depreciation is taken regardless of the amount of time the assets were actually
owned during these years.
c. Interest Expense. Interest on loans is paid annually on the anniversary of the
note. Interest accruals are calculated using a 365-day year with the day after the
note was made counting as the first day.
d. Bad Debt Expense. Bad debt expense is estimated once annually at the end
of each year as a percent of net sales and is recorded as of December 31 in the
general journal. The percentage estimate for 2013 is stated in the transactions list
(Document No.1). Waren uses the allowance method for recording the estimate
of bad debts.
e. Ending Inventory. A physical inventory is taken on New Year's Day before
business begins for the new year. The December 31, 2013 ending inventory
as counted and priced by Waren's employees is stated in the transactions list
(Document No.1). For an illustration of procedures used to record cost of goods
sold and adjust the inventory balance for the year-end physical count, see
pages 77 through 79 of the Systems Understanding Aid Reference book.
14

30. © © ©
f. Federal Income Tax Expense. The adjusting entry for federal income tax
expense must be saved until last, after the pre-tax net income has been calculated
from the worksheet. This entry will be done later, as year-end procedure 4. The
2013 corporate income tax rates are provided there.
3. Jim Adams completes the year-end worksheet through the income statement and balance
sheet columns. See page 18 of the Reference book for an example of a completed year-
end worksheet.
4. Jim Adams calculates federal income tax expense from the income statement column
on the year-end worksheet, enters it in the adjustments column of the worksheet, and
extends the expense and liability amounts to their respective income statement and
balance sheet columns. Corporate income tax rates are subject to change annually, but
for 2013, assume they are 15 percent of the first $50,000 of net income, plus 25 percent
of the next $25,000 plus 36 percent of all income over $75,000.
5. Jim Adams prepares financial statements in good form: statement of income and
retained earnings, comparative balance sheet, and statement of cash flows (indirect
method). He uses the formats suggested in the Systems Understanding Aid Reference
book.
6. Nancy Ford prepares three supplementary trial balances as of December 31, which will
serve as valuable information for management and the external auditors: an aged trial
balance of accounts receivable, a trial balance of accounts payable, and a trial balance
of fixed assets. (See pages 45 and 61 of the Systems Understanding Aid Reference
book for information to help you prepare these trial balances.) She reconciles each
of these trial balances to the general ledger. She indicates that she has performed the
reconciliations by putting her initials to the right of the total on each trial balance.
7. Jim Adams posts the adjusting entries from the general journal to the general ledger.
Next, he prepares and records the appropriate closing entries in the general journal
and posts them to the general ledger. Finally, he prepares a post-closing trial balance
(Doc. No. 26). Kramer compares the account balances on the post-closing trial
balance to the year-end worksheet and initials the trial balance on the bottom right
corner to document his control procedure. (See pages 20 through 24 of the Systems
Understanding Aid Reference book for guidance.)
WRAPPING UP
The project is now complete. Good Work! Review your materials to make certain
everything is finalized. Complete the filing of documents, records, and working
papers using the file tabs and the envelope in which the Aid is packaged. File all
materials as indicated in the flowcharts.
15