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Sage 50 AccountingPremium 2014Level 1

MasterTrak Accounting Series

Courseware1615-1

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Sage 50 Premium Accounting 2014

Level 1

Lesson 1: Introduction Lesson Objectives The objective of this lesson is to introduce you to the basic operation of Sage 50 Accounting Premium 2014 (formerly this accounting program was released under the name Sage Simply Accounting). Upon successful completion of this lesson, you should know how to:

define what Sage 50 Accounting is

start and exit Sage 50 Accounting

identify the Sage 50 Accounting Home window

move around Sage 50 Accounting

use the Help system

understand the Chart of Accounts, how it works, differentiate between different account types, and print the Chart of Accounts

create, modify, find, edit and delete accounts

save changes to data files

find and amend the company information

work with the Session Date

input dates into Sage 50 Accounting

change to accounting terminology

review the General Module linked accounts

input, adjust, or reverse General Journal transactions

store and recall recurring transactions

produce a General Journal report

backup data files

Overview What is Sage 50 Premium Accounting 2014?

Sage 50 Premium Accounting 2014 is an integrated, modular accounting package suitable for most small to medium-sized businesses needing such accounting modules as the General Ledger, Accounts Payable, Accounts Receivable, Canadian Payroll, Inventory, Time and Billing and Project (Job) Costing.

Sage 50 Accounting is a popular program as it includes a variety of important and “user-friendly” features.

• When using the program, windows and data entry screens resemble their actual paper counterparts; for example, the Sales Journal screen resembles a paper invoice.

• The package is easy to learn, providing you with icons, menus and toolbars, as well as keyboard-activated commands.

• You can customize the package to your needs with such options as interest on overdue receivable accounts, using non-accounting terminology, varying the aging periods for Receivables and Payables.

• Payroll entry is quick and straightforward, eliminating the need for manual tax table searching with current payroll tables. (Additional fees apply.)

• You can track profitability by job or project to determine the most profitable areas of your business.

• You can keep accurate track of your inventory, including inventory turnover and minimum inventory levels.

• You can customize and print invoices, cheques and statements.

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Lesson 1 Sage 50 Premium Accounting 2014 – Level 1

• You can print professional reports and graphs without wasting time designing and formatting.

• In one easy report, you can track all Sales Taxes, (GST, HST and PST) paid or received on transactions processed using the Payables and Receivables modules.

• The program offers extensive help and on-line accounting advice, as well as assistance available from local Certified Consultants or Premier Advisors.

• You have the ability to use Purchase Orders, To Do Lists, Check Lists, Business Advice, Sage 50 Wizards and toolbar buttons.

• The bank reconciliation feature can be fully automated with downloaded statements from the Internet (discussed in the Level 2 courseware).

• This version enables you to export data to Microsoft Excel, Access or other programs, provides automatic advice, a credit card section, lets you update budget amounts, provides the ability to create quotes to customers or quotes from vendors, and keeps track of shipping information and management reports.

• It also provides automatic import of emailed invoices, orders and quotes. You can send emails to vendors and customers directly from the vendor and customer ledgers, and email invoices to customers.

• The software also provides for maintenance of accounts in foreign currency (discussed in the Level 2 courseware).

Starting Sage 50 Accounting There are a number of ways to start Sage 50 Accounting, depending on how it was installed on your system:

• Click Start, and then All Programs. Click Sage 50 Premium Accounting 2014 on the menu and then Sage 50 Premium Accounting (2014) on the submenu.

• Double-click the Sage 50 Premium Accounting 2014 icon on the desktop.

This courseware requires the data to be saved on a hard drive. Please see the Preface for instructions on how to download the data files from www.ccilearning.com and then expand the data files to a designated place, as directed by your instructor.

Learn the Skill In this exercise, you will learn how to start Sage 50 Accounting.

1 At the Windows desktop, click Start, All Programs.

2 Click Sage and then Sage 50 Premium Accounting on the submenu. (You may have to click Sage 50 Premium Accounting again on the next submenu.)

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Introduction Lesson 1

3 Leave this screen displayed for the next exercise to learn more about the Select Company window.

Selecting a Set of Data Files Every time you enter the Sage 50 Accounting environment, the opening screen or window asks you to select the company data files to use from existing data files stored on your computer or network. This enables you to have several companies’ accounting data files on your hard disk.

If you are just beginning to work with Sage 50 Accounting, you will not have any existing accounting data files and you will have to create them. You can create a new set of files from scratch by entering all of the General Ledger accounts. Alternatively, you can create a set of files by using the “starter” data file templates that come with Sage 50 Accounting.

In the Level 2 courseware, you will learn to create the accounting data files from scratch. Creating a company and preparing data files using one of Sage 50 Accounting’s pre-defined Chart of Accounts templates are covered in the Appendix of this courseware. For this courseware, you will work with a set of data files that have already been set up for you.

From the Sage 50 – Sage 50 Premium Accounting screen, you will see the following:

Open sample company

Use this feature as a tutorial and a learning tool to help you learn Sage 50 Accounting. This can also be very useful to review how the professionals completed some more complicated transactions.

Create a new company

When you are starting a new company, you can choose to start from scratch or select among the many Chart of Accounts templates provided by Sage 50 Accounting.

Restore from backup

Restore from your backup data in the event your current data is corrupt and you are unable to open it in Sage 50 Accounting.

Select an existing company

When you want to use one of the companies you worked on previously.

Open the last company you worked on:

Open the file for the last company you worked on. This option will not appear the first time you start Sage 50 Accounting.


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Do not show this Select Company window at startup

Select this option to bypass the Sage 50 – Sage 50 Premium Accounting window and take you directly to the Sage 50 Accounting Open Company window to select an existing data file. Except for experienced users, it is generally not a good idea to checkmark this box.

If you decide to store your company data files on your own hard disk, store these files within the Sage 50 Premium Accounting\blankdb folder (generally found in C:\Program Files). Sage 50 Accounting has created this folder for this purpose so that you can easily locate your company data file(s).

Throughout this courseware, the material assumes that the default drive for saving data files of information is your hard disk drive, usually Drive C. Check with your instructor to learn where you should save the files, or where they may be located on the network, for your course.

Learn the Skill In this exercise, you will open an existing company data file.

The download from CCI Learning is comprised of two sets of data files – Harmony House Music - Student.cab and United Building Supplies - Student.cab.

For Sage 50 Accounting to use these data files, they must be restored to the computer.

1 In the Sage 50 window select Restore from backup and click OK.

2 In the Restore from Backup dialog box click Next.

3 Click Browse to locate the Harmony House Music - Student.CAB file, select the file and click Open.

4 In the Select Backup File dialog box click Next.

5 In the Confirm Backup File dialog box click Next.

6 Browse to the folder where the restored data file is to be stored, and type: HHM Lesson 1 - <your name> in the File name field to replace the word New and click Save.

7 In the New File Name dialog box click Next, then Finish.

The data file will be restored and Sage 50 Accounting will proceed to open it.

If you are working with a later version of Sage 50 Accounting you may be asked to upgrade the data file to the more recent version. The data file for this course was created using Version A. In the event you need to upgrade accept all the prompts by clicking Next and finally Finish.

8 The Session date should be February 28, 2014 (02/28/2014). Click OK to accept the Session Date.

On the screen you may see several windows:

• Checklists

• Daily Business Manager

• BC PST Update Reminder (only shows up under some circumstances)


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• Product Enhancement Program window (only shows up under some circumstances).

9 If necessary, close the BC Provincial Sales Tax (PST) Changes Reminder and click OK in the Sage 50 – Warning screen.

Looking at the Getting Started Window The Getting Started window should appear in front of the Sage 50 Accounting Home window. If it does not, you may need to minimize the Home screen to see it. The purpose of this window is to assist in setting up your company and educating you on using the various modules (such as the General Ledger and Accounts Receivables for example) after the database has been created.

As you progress through the exercises in this course, you may occasionally note a variance in the image displayed on your computer screen to that shown in the manual. There are a number of reasons for that to occur. The version used to create this courseware is the Sage 50 Premium Accounting Education version. Sage 50 occasionally creates updates, which may contain slight enhancements and or changes. This will not affect the overall operation of the program.


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There are four parts to the window to make understanding the modules easier and more efficient, so you can utilize the program immediately; otherwise, if you are already familiar with the program, you can deselect the Show this window on start up option and go directly to the Sage 50 Accounting Home window the next time you start the program. If this option has been deselected, it can be brought back to the screen by selecting Getting Started Guide from the Setup menu.

Explore Sage 50

There are 12 quick start videos that vary in length and will assist you in learning the software. The videos include What’s New in Sage 50 Accounting, The Learning Centre, The Home Window, Setup Guide - Customers, Setup Guide - Vendors, Setup Guide - Employees, Setup Guide - Accounts, Reports, Record of Employment, Other Learning Opportunities, Sage 50 - Essentials and Sage 50 - Comprehensive.

Add Business Records

Allows you to directly open the various ledgers (Accounts, Customers, Suppliers, Employees, Inventory, and Divisions) without going through the Home window to access them. By clicking on the Open the Setup Guide option, the Setup Guide window appears and allows you to access the Customers, Suppliers, Employees, and Accounts in a spreadsheet format for easy addition, removal, or editing.

Customize Sage 50

This option allows you to go directly to the Settings window of the software. Currently the options are Set company preferences, Schedule data backups, Customize your invoices and other business forms.

Learn How To Provides a link to various topics in the Help feature of the software.

Learn the Skill This exercise displays ways of assisting you to make changes in various modules in Sage 50 Accounting without going through the Home window.

The Checklists and Daily Business Manager screens appear at start up or when changing the session date unless they are turned off in the Setup, User Preferences menu.


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1 Close the Checklists window. These two windows usually appear on top of one another.

2 Close the Daily Business Manager window, which may be hidden behind the Home window. Later in the courseware, the Daily Business Manager will be used.

3 In the Add Business Records area of the Getting Started window, click Open the Setup Guide.

4 Click the Customers option and the following window will be displayed:


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5 Locate H.G Palmer Secondary School. Click in the Telephone field, and enter the following phone number: 6044034325.

6 Find Deborah Mackie, and in the address area copy the address information from Street 2 to Street 1 and then delete the address from Street 2. The Telephone number for Deborah is incorrect, replace 569 with 403.

7 Similarly, copy the address for the School Board District #56 from Street 2 to Street 1 and clear the Street 2 field.

8 Enter the E-mail address for Pitt Meadows Elementary as follows: [email protected].

9 Click the Close button.

10 Click Close twice more to close the Setup Guide and Getting Started windows.

Looking at the Sage 50 Accounting Home Window

Sage 50 Premium Accounting now displays the Sage 50 Accounting – Home window. This is the window you see after you load the program. The view shown below is the Enhanced View for the Customers & Sales module. We will be using the Enhanced View throughout this courseware.

Close Control Title Menu Journal Maximize Icon Bar Bar Toolbar Icons View Minimize

Module Icons Customize Shortcut Status Bar Current User


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Control Icon

Contains the Control Menu to select such options as Restore, Move, Size, Minimize, Maximize and Close. These options are standard Windows options available on most Control Menu icons.

Title Bar Contains the name of the program, followed by the name of the active data file, e.g., (HHM LESSON 1 – YOUR NAME).SAI.

Menu Bar Provides access to the main menus (File, Edit, View, Setup, Business Assistant, and so on). Each main menu contains a different set of commands or features to manipulate the data.

Toolbar Use the buttons on the toolbar in the Home window to perform various actions that are shortcuts for menu-activated functions. Hover the mouse pointer over a button for a description of the button’s function.

Journal Icons Access journals to enter transactions such as Accounts, Miscellaneous Transactions (General Journal), Account Reconciliation, Vendors, Purchases, Orders & Quotes, Payments, Customers, Sales, Orders & Quotes, Receipts, Employees, Paycheques, Payroll Cheque Run, Inventory & Services, Item Assembly, Inventory Adjustments and Project. If you point to a journal icon, a description of the icon’s function appears in the status bar at the bottom of the Home window (only in Classic View). Some icons have an arrow attached to them. This is an indication that menu choices are available. Clicking the arrow opens a drop-down menu of those choices. Clicking directly on the icon activates the default attached to that icon.

View Allows the user to switch from the Enhanced View to the Classic View depending on their preference and familiarity with the software. The Enhanced View feature is used to save time and enhance usability.

Minimize, Maximize/Restore or Close Buttons

Use these buttons to either (Minimize) the Sage 50 Accounting window to the taskbar, (Maximize) to the screen, (Restore Down) to the original window size, or (Close) the program.

Module Icons Accesses the data areas to manipulate items such as General Ledger, Suppliers & Purchases (Accounts Payable), Customers & Sales (Accounts Receivable), Employees & Payroll, Inventory & Services, Divisions (sometimes shown as Projects or Departments) and Banking. New since Sage 50 Accounting for 2013 is the Dashboard – a management tool to provide an instant snapshot of the business’ key performance indicators.

Customize Shortcut

Allows the user to create customizable shortcut lists to add links to the features most commonly used. A shortcut for the Getting Started Guide has been set up by default.

Status Bar In the Classic View the Status Bar displays help or status messages when you point to an icon or a field.

Current User Identifies the user currently logged into Sage 50 Accounting using these files. If using a single user copy (as in the case of this courseware), the user name will show as sysadmin until you set up individuals to use Sage 50 Accounting on this computer. On a network, the person designated as the Administrator will set up the user names and will require you to log in with a user name and password before you can open Sage 50 Accounting.


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Learn the Skill In this exercise you will view a report which will be added to your commonly viewed reports list.

1 Click the Payables module located on the left side of the Home window.

2 Move the mouse to point to the within the Suppliers heading on the right side of the window. Click

the and the list of Suppliers will disappear. This is known as “collapsing” the view.

3 Click the of the Suppliers heading to show the expanded view.

4 In the Reports area click the drop-down arrow, select the Supplier Aged Detail report, and click the button.

The report can be modified, exported, customized, etc. which will be discussed later in the course.

5 Click to close the report.

In the Recently viewed reports area, the last report viewed will appear. This feature saves you time when viewing common reports. Depending on the activity in the data file, the Recently viewed reports list may vary from one computer to the next.


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Moving Around Sage 50 Accounting supports both mouse and keyboard-activated commands.

To move around the Home window using the mouse or keyboard, do one of the following:

• Click on the Payables module on the left side of the screen. Press the arrow on the keyboard. Sage 50 Accounting moves to the next module (Inventory & Services). You can then continue by using arrow keys to navigate to the available module icons.

• When using the mouse, point to the icon or menu item you want, and then click the left mouse button.

To access commands from the menu bar, press the key and the associated underlined character that appears for each of the menu items. For example, press + to access the File menu or press + to access the Help menu.

Learn the Skill In this exercise, you will learn to hide a module icon that will not be used in the Receivables window. The use of Divisions (also known as Projects) and Time & Billing modules is covered in the Level 2 courseware.

1 Click the Receivables module. You will see the following in the Journal icons area:

2 From the Menu bar, click Setup, User Preferences, and then select View.

3 In the View tab, clear the check mark next to Time & Billing by clicking it, then click OK.


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Notice that the Time Slips icon no longer appears.

You should have the following view within the Tasks area:

You will now remove the Divisions module icon.

4 Click Setup, User Preferences, select View, and in the View tab, click to remove the checkmark from the Division option in the Pages section.

Both checkmarks under Pages and Icon Windows have been removed. All icons and windows

associated with Divisions are no longer available.

5 Click OK.

Both modules have been removed from view and can be restored to the view by repeating the process above, and placing a checkmark next to Division and Time & Billing.

Leave Division and Time & Billing hidden for the remainder of this lesson.

Help System Even though you have access to the Sage 50 Accounting manuals and this courseware, there will be times when you may require immediate help for a particular task or problem. To access the Help system, do one of the following:

• Click the Help menu, then Search Help.

In the Classic View two other options are available:

• Press to open the Help system.

• Click the (Help) button.


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This action places the user into the online Help system. As a result the contents of this window may change from time to time and may not be exactly as shown here.

The Help menu on the Home window provides the following options:

Use Online Help Click to activate. This will toggle between obtaining Help from within the program or opening the browser to connect directly to Sage 50 Accounting online.

Search Help Enter a search string to locate related Help topics.

See What’s New Opens the online help to see what’s new or what has changed in this version.

Open the Learning Centre

Provides video tutorials for various topics, training resources, go online to connect with peers, business partners, and support specialists.


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Open the Getting Started Guide

Opens the PDF version of the Getting Started Guide. Requires Adobe Acrobat Reader to view. The guide walks you through various topics such as Setting Up Your Company, Setting Up Customers & Vendors, Setting Up Items, Setting Up Payroll, Setting Up Projects, Reporting, and System Administration.

Open Knowledgebase & Online Assistance

Provides answers to various Sage 50 Accounting questions and issues. Some articles may require you to logon depending on what type of service plan you are using. The online assistance allows you to chat with a Customer Service or Support agent and is another medium to use other than calling in with your questions or issues.

Contact Sage Provides toll free phone numbers for contacting Sage 50 Accounting for Sales, Service or Support or to provide feedback on the software.

Upgrade your Sage 50 product…

You can upgrade your current version of the program to a higher version (Enterprise Edition) if you or your company requires more advanced features and functionality only offered in the higher versions of the software. An agent will be able to provide you with an upgrade price and key code to unlock the version from your current program to save you time from purchasing another CD.

Refer a Friend Allows you to send a link to Sage 50 Accounting to a friend by filling out a form and including a personal message. (Sage will not use the email addresses for any marketing purposes.)

About Product Enhancement Program

Allows users to participate in the collection of statistics by Sage as to the use of the software. Data collected includes the Sage product used, use of Sales window, operating system used on computer, product serial number, Payroll Service status.

About Sage 50 Premium Accounting

Displays information about this installation of Sage 50 Accounting, including registration information, serial numbers, key code and ID numbers, as well as the program release (version) number, and validity dates of the tax tables incorporated in the software.

The Learning Centre The Learning Centre allows you to view classroom courses being offered throughout Canada, view common FAQ’s (Frequently Asked Questions) from the Knowledgebase, and access the forum/blogs and view contact information if you require support. Any updates to the Learning Centre are automatically downloaded and updated to the program if you are connected to the internet. A green circle appears beside the You are online text if you are connected to the internet and a red circle appears if you are not connected. In addition to the Learning Centre, the video tutorials available in the Getting Started window can also be accessed here.

Your screen will not necessarily appear exactly as shown.


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Learn the Skill In this exercise, you will learn to access the Sage 50 Accounting General Forum and view the postings.

1 Click the Learning Centre module located on the left side of the Home window.

2 In the Learning Centre, click Sage 50 Online Community, then click the View full article link.

The program opens your default browser and places you into the full article with any responses. Often these forums will be monitored by Sage and technical responses provided.

3 Close the browser to return to the Sage 50 Accounting program.

Understanding the Chart of Accounts Before making entries within Sage 50 Accounting, you must first define a Chart of Accounts for your company. This Chart of Accounts works using five main account groups. These are:

Balance Sheet Income Statement

Assets Liabilities Equity Revenue Expense

The Chart of Accounts will contain accounts such as bank accounts, accounts receivable and payable, inventory accounts, equity accounts, revenue, and expense accounts. Your Chart of Accounts can be simple or complex but must adhere to the following guidelines:

For Balance Sheet accounts: • For Asset accounts, assign account numbers from 1000-1999. • For Liability accounts, assign account numbers from 2000-2999. • For Equity accounts, assign account numbers from 3000-3999.

For Income Statement accounts:

• For Revenue accounts, assign account numbers from 4000-4999. • For Expense accounts, assign account numbers from 5000-5999.


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The numbering system shown previously uses four digit account numbers. While this is standard and generally used by most companies, Sage 50 Accounting permits account numbers to vary from four to eight digits.

You should also adhere to the following recommended general ledger account structure:

• Leave plenty of room between account numbers to allow for future growth. For example, if you number accounts without any spaces or gaps between the numbers you assign, you may have a problem if you want to add an account within a particular range at a later date. Remember that you have 1000 account number spaces for each type of account (Assets, Liabilities, Equity, Revenue and Expenses).

• Place accounts in the order of liquidity. For example, when you are entering the current asset accounts, place your petty cash and bank account before your accounts receivable and inventory. This is a standard practice so that external readers of your financial statements can easily determine the “liquidity” of your balance sheet accounts (the relative ease that you can convert them into cash). Do the same for the liabilities—you should place them in order of timing of payment. For example, you pay accounts payable before making the current bank loan payment; therefore, list the accounts payable first.

Most business enterprises consult and are guided by the advice of an accountant when creating a Chart of Accounts. The accountant typically provides a suggested Chart of Accounts, as well as recommends a format and layout for the Balance Sheet and Income Statement. This is important, as it will determine the Account Type (see next topic) to be allocated in Sage 50 Accounting.

The Chart of Accounts has already been set up for you for the exercises in this courseware. You are going to make a few minor changes and additions to the Chart of Accounts.

Learn the Skill In this exercise, you will learn to access the Accounts window.

1 Click the Company module from the left side of the window, and then click the Chart of Accounts icon (if you have clicked on the drop-down arrow, select View Accounts).

2 Click View, then Small Icon to change your view to look similar to the following:


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You can also click on one of the Display ( ) buttons on the toolbar to change the view.

The Accounts window displays the General Ledger accounts that have already been created. Along the top of the Accounts window, you can select from the following menu options:

File Offers options to open, create or remove a particular General Ledger account.

Edit Use to search for a particular General Ledger account.

View Change the view mode Sage 50 Accounting uses to display the General Ledger accounts in the Accounts window or bring the Home window to the front.

Journal Use to enter a transaction for the General Journal or a Reconciliation & Deposits Journal.

Reports Provides easy access to all General Ledger reports. This includes such reports as the Trial Balance, Balance Sheet, and Income Statement.

Help Provides easy access to the Help system.

3 Click each item on the menu bar. Familiarize yourself with each menu.

You can access the same functions described above by clicking the buttons on the toolbar.

4 Point to each button and identify them for future use.

Any button in colour on the toolbar means that particular item is active; a button that is greyed out indicates the feature is unavailable at this time.

5 When done, close the Accounts window to return to the Home window.

Account Types The Account Type field is a very important aspect of Sage 50 Accounting because it enables you to format the financial statements (Balance Sheet and Income Statement) presentation, as desired. Consider the following partial sample Balance Sheet:

City Computers Inc. Balance Sheet

January 31, 2014 Assets Bank Account $7,000.00 Petty Cash 250.00 Accounts Receivable 2,630.00 Prepaid Expense 1,200.00 Furniture & Fixtures 5,600.00 Accum. Depreciation - Furniture/Fixtures (1,425.00) Total Assets $15,255.00

While this Balance Sheet is correct, it does not display the accounts in an easy-to-read format. All the company’s assets are grouped together (current and fixed assets), and it is not easy to determine the total cash in this business. It is also difficult to determine the net value of the fixed assets (Furniture & Fixtures and Accum. Depreciation - Furniture/Fixtures).

The types of accounts you can choose when assigning a type to each account are:


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Section Heading Identifies the main sections of the balance sheet and income statement. The following Section Headings are used: ASSETS, LIABILITIES, EQUITY, REVENUE, and EXPENSE. These are automatically printed by the program in bold capital letters, and cannot be changed. The five headings and their appropriate account numbers were listed in the previous topic.

Group Heading (H) Use this to signal the start of a new group of accounts. You cannot assign or post any details (transactions or balances) to this account type; use it as a display header only, i.e., Current Assets.

Subgroup Account (A) Use this to have Sage 50 Accounting display an account in the left column in a financial statement. Balances will be subtotaled if you also use a Subgroup Total account type before going back to using the standard Group Account.

Subgroup Total (S) Use this in conjunction with the Subgroup Account type. You need this account type to display the subtotal of the left column accounts specified in the right column.

Group Account (G) Use this for all other accounts that Sage 50 Accounting does not display as Subgroup Account, Group Heading, or Group Total accounts. This is the default account type whenever you create a new General Ledger account. The account balance displays on its own in the right column of figures on financial statements.

Group Total (T) Use this in conjunction with a Group Heading account type to indicate you have reached the end of an account group (i.e., Current Assets) and want to total this account group (i.e., Total Current Assets).

Section Total A total that matches the main sections of the balance sheet and income statement. The following Section Totals are used: TOTAL ASSETS, TOTAL LIABILITIES, TOTAL EQUITY, LIABILITIES & EQUITY, TOTAL REVENUE, and TOTAL EXPENSE. The section totals add all block totals in the section together, and are automatically printed in bold capital letters. They cannot be changed.

Current Earnings (X) A system “X” account whose balance shows the net difference between the postable revenue account totals and the postable expense account totals. The program automatically recalculates the Current Earnings each time an entry is made that affects a revenue or expense account in order to balance the Balance Sheet. This is a system account that cannot be changed in any way or deleted—it is also not a postable account. As this account represents the balancing factor in the Balance Sheet, it will not be included in the figures shown on a Trial Balance.

The following general rules may be helpful:

• an H (Heading) account must always have a T (Total) account somewhere below it.

• a list of A (Subgroup) accounts must always have an S (Subtotal) account at the end.

• a G (Group) account cannot be placed in a list of A (Subgroup) accounts.

• a G (Group) account stands on its own in the right column of figures in the financial statements.


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Based on the characteristics of each account group, the previous partial Balance Sheet has been changed to incorporate the Account Groups along with Account Numbers, as shown in the partial sample in the following:

City Computers Inc. Balance Sheet

February 28, 2014 Assets 1000 - Current Assets Group Heading (H) 1020 - Bank Account 7,000.00 Subgroup Account (A) 1040 - Petty Cash 250.00 Subgroup Account (A) 1060 - Net: Cash 7,250.00 Subgroup Total (S) 1200 - Accounts Receivable 2,630.00 Subgroup Account (A) 1210 - Advances Receivable 0.00 Subgroup Account (A) 1220 - Net Receivable 2,630.00 Subgroup Total (S) 1300 - Prepaid Expense 1,200.00 Group Account (G) 1490 - Total Current Assets 11,080.00 Group Total (T) 1500 - Fixed Assets Group Heading (H) 1510 - Furniture/Fixtures 5,600.00 Subgroup Account (A) 1520 - Accum. Deprec-Furniture (1,425.00) Subgroup Account (A) 1530 - Net Furniture/Fixtures 4,175.00 Subgroup Total (S) 1590 - Total Fixed Assets 4,175.00 Group Total (T) Total Assets $15,255.00

Sage 50 Accounting is unable to generate financial statements unless the Chart of Accounts is correctly constructed. This can be checked by clicking (Check the validity of accounts) in the Accounts window. It is generally a good idea to check the validity of accounts after having added a few accounts. Even experienced Sage 50 Accounting users occasionally make mistakes.

The best way of viewing the Chart of Accounts is the Type view, as it not only shows the layout of the accounts, but provides additional information such as the current account balance.

Learn the Skill In this exercise, you will learn to check the validity of the chart of accounts, and to change the way the information in the Accounts window is displayed.

1 If necessary, select the Company module from the left side of the window. Open the Accounts window by clicking the Chart of Accounts icon. Check the validity of the accounts by clicking (Check the validity of accounts) in the Accounts window.

2 Click OK to close the Information window.

3 Click View in the menu bar, and select Type to change the way the accounts display. (Retain this method of viewing the accounts for the remainder of the course). If necessary, widen your window to display the balance of each account.

4 In the Search field, type the number: 1 to jump to 1000 Current Assets.


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5 Close the Accounts window to return to the Home window.

Creating Accounts From the Accounts window, there are two ways you can create new ledger accounts: using the Account Wizard to guide you through all the different steps of creating an account, or using the File, Create feature to present all information on one screen.

Learn the Skill In this exercise, you will create General Ledger accounts using the File, Create feature.

1 If necessary, click the Company module from the left side of the window. Click Chart of Accounts (if you clicked on the drop-down arrow, select Add Account and go to step 3).

2 From the Accounts window menu bar, click File, Create or click (Create) on the toolbar.

The General Ledger window opens.


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3 In the Account field, type: 1100 and press . In the second Account field, type: Guaranteed Investment Certificate.

Press the key or use the mouse to move between fields.

4 If necessary, in the Type area, click Group Account.

5 Skip the GIFI Code field. Please read the following:

Corporations must include financial statements when filing a T2 Corporate Tax Return. The General Index of Financial Information (GIFI) is a new method of filing this information. You can obtain a full list of all GIFI codes from the Canada Revenue Agency or from their Web site at www.cra-arc.gc.ca (use their search tool and enter GIFI as the keyword). When you use the built-in Setup Wizard to construct your initial set of accounts, Sage 50 Accounting will automatically insert the GIFI codes into these accounts for you. However, when you add new accounts or change the use of an account, you will have to find the correct GIFI code and enter it manually.

6 Skip Omit from Financial Statements if Balance is Zero.

This option will omit this account from the financial statements if its balance is zero.

7 Skip Allow Division Allocations.

The option to allocate amounts to divisions (also known as projects) or departments from this account will be covered in Level 2. Note that this applies only to Revenue and Expense accounts.

Under some circumstances the Allow Division Allocations may already be activated. If that is the case, remove the checkmark to deactivate the option.

Your screen will be similar to the following:

8 Click the Class Options tab. Change the Account Class to Cash Equivalents.

At this point, you have two choices in saving your information:

• Save and Close will save and close the Chart of Accounts Records window;

• Create Another will save and give you the option to input a new ledger account.


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9 Click Create Another.

You can cancel the creation of an account any time by clicking Close and then No.

10 Create the following new account:

Acct Account Name Account Type Class Options 5620 Bad Debt Group Account Bad Debt Expense

11 Click Save and Close. Leave the Accounts window open for the next exercise.

Modifying Accounts Within the Accounts window, you can access, modify, and delete previously entered General Ledger accounts.

Finding and Modifying an Account Sage 50 Accounting provides several methods to quickly and easily locate the required account.

• Select Edit from the menu, then Search. In the Search field type either the Number or the Name.

• With the Chart of Accounts window open, use the scroll bar at the right side of the Chart of Accounts, scroll until the required account is visible, then double-click to open the General Ledger for the account.

• Click the (Edit) button in the toolbar of the Chart of Accounts window.

Once the Chart of Accounts General Ledger window is open you can use the following to find the account you want to edit:

• Use the on the right of the Select field; or

• Click the down arrow beside the Select field and then use the vertical scroll bar.

Learn the Skill In this exercise, you will find and modify General Ledger accounts using the Edit, Search feature.

1 From the menu bar click Edit, Search or click (Search) on the toolbar.

2 In the Search field type: 1060, click OK or press .


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You can also double-click on the account in the list or click (Edit) from the toolbar to change an account.

3 In the second Account field, change the description from Chequing Account to: CIBC Chequing Account.

4 Click the Class Options tab and fill in as shown:

5 Click Save and Close.


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6 Following the previous steps, click Edit, Search and modify account 1055 Savings Account to 1055 CIBC Savings Account. Then modify the Class Options tab:

7 Click Save and Close to close the Chart of Accounts Records window. Leave the Accounts window

open for the next exercise.

Deleting Accounts To delete or remove an existing General Ledger account, you must first locate the account so that Sage 50 Accounting displays it within the General Ledger window. You can then delete the account.

Learn the Skill In this exercise you will delete various accounts not required for this data file.

1 If necessary, scroll to the top of the Accounts window, select 1030 Cash Draws ledger account as the account to be deleted.

2 From the Accounts toolbar, click File, then Remove, or click (Remove) on the toolbar, or press .

3 Click Yes to confirm this action.

You can only delete those General Ledger accounts that do not have a current balance or a transaction history. Accounts that are “linked” (see later in this courseware) cannot be deleted.

4 Use one of the previous methods to delete the following Ledger account:

2640 Loans from Owners

5 From the Accounts window menu bar, click View, Small Icon. On the Accounts window menu bar, click View then select Re-sort Icons. Select View, and Type.

6 Close the Accounts window to return to the Home window.


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Saving Changes By default Sage 50 Accounting is set up so that all changes are saved automatically as they are made in the system.

Learn the Skill In this exercise you will check your accounts to ensure they are in order. If your accounts are not in order, you will not be able to print your financial statements until they are corrected.

1 In the Home window menu bar, click Setup, User Preferences.

2 Note the Automatically Save Changes to Supplier, Customer and Other Records option in the middle of

the window is selected. Click Cancel (because you have made no changes).

If the Automatically Save Changes to Supplier, Customer and Other Records option was unselected, Sage 50 Accounting automatically displays the button on any windows that require modifying (Chart of Accounts, Vendors, Customers, and so on).

3 Open the Accounts window.

4 Use (Check the validity of accounts) to verify that the accounts have been created correctly.

If so, you should receive the following response:

5 Click OK and close the Accounts window.


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Company Information This function displays important information for the company file you are using.

Learn the Skill In this exercise, you will modify the company information so that each student’s work can be identified when printed.

1 In the Home window, click Setup, Settings. Select Company and then click Information.

2 Fill in as follows, ensuring you change Harmony House Music (2014) - Your Name in the Name field to reflect your own name, such as Harmony House Music – Joe Smith.

Sage 50 Accounting automatically formats a postal code correctly, as well as entries for the telephone and fax numbers for vendors, customers, and employees (no brackets or hyphens required).

3 When done, click OK.

Printing the Chart of Accounts To ensure you have created the Chart of Accounts correctly, print a hard copy of it.

Learn the Skill In this exercise you will learn how to use the Report Centre.

1 From the Home window, click Report Centre.

2 Select Accounts, then click Chart of Accounts in the Select a report type pane to view a sample Chart of Accounts.


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3 Click Display.

4 Once Sage 50 Accounting displays the chart, you can maximize the window and move around the

Chart of Accounts window using the vertical scroll bar on the right.

5 To print the report, click File, Print or click on the toolbar.

6 Return to the Report Centre window by closing the Chart of Accounts report.

Now display the Balance Sheet.


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7 In the Report Centre window, select Financials, then click the next to Balance Sheet, select Standard and click Display. Your Balance Sheet should look similar to the following:

8 Close the Balance Sheet.

Now display the Income Statement.

9 In the Report Centre window, click the next to Income Statement, select Standard and click Display. Review the Income Statement.

10 When finished, close the Income Statement and the Report Centre window to return to the Home window.

Understanding the Session Date When you opened the data file for these exercises, Sage 50 Accounting displayed a Session Date of 02/28/2014. A session date will be displayed each time you enter the data file.

The purpose of the session date is to minimize date input errors by only allowing dates that are within a specific date range. Sage 50 Accounting gives you two options:

• enter transactions up to a certain session date,

• enter transactions anytime within the entire fiscal year (including ahead of the current date, up to the end of the fiscal year).

The way session dates work has changed in newer versions of Sage 50 Accounting. Transactions can be entered ahead of the session date provided the feature has been activated on the Setup, Settings, System tab. You are no longer tied to the session date as in the older versions of the software.

By entering a session date, you are making that date the default date or the date that appears when you enter transactions and generate reports.


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When working on your company’s accounting records or using Sage 50 Accounting on a daily basis, the session date should be the current date. However, if you enter your company’s transactions at the end of each month, the session date should be the last day of the current month.

Sage 50 Accounting recognizes the month in the date as the current operating month. If you attempt to post an entry dated in any prior month the following Confirmation message will appear.

Learn the Skill In the following exercise, you will advance the Session Date to March 31, 2014. This sets the financial period to March, allowing input of any entry dated during that month or previous months (with a warning) to the beginning of the current fiscal year (January 1, 2014 in this instance).

1 From the Home window menu bar, select Maintenance, Change Session Date.

2 Choose No if a backup data confirmation window appears.

3 Type: 033114 or 3/31/14 or 3-31-14 as the new date, or use the pop-up calendar to change the date to March 31, 2014 and click OK.

You can also click (Change session date) in the toolbar. (This option is only available in Classic View).

4 Click OK. If the Sage 50 Accounting Backup window appears, select No.

The Checklists and Daily Business Manager screens may appear on changing the session date.

5 Close the Checklists window and the Daily Business Manager window, which may be hidden behind the Home window.

6 In the Home window, click Setup, Settings on the menu bar.

7 If necessary click next to Company and then select System.


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8 Turn the Do not allow transactions dated before feature on and enter the date: 01/01/14 (the date when you set up the company in Sage 50 Accounting), then change the Warn if transactions are field to 7 days in the future.

You will usually change the date to the beginning of the current fiscal year.

Leave the Allow transactions in the future feature on.

A new feature in Sage 50 Accounting since 2013 allows General Journal & Payroll transactions to be posted into the next fiscal year.

9 Click OK to activate the changes.

Inputting Dates Sage 50 Accounting uses a 6-digit date format for its operations. This can be either in a mmddyy or ddmmyy format, as dictated by the settings in the Windows operating system. When a valid date is entered, Sage 50 Accounting will automatically insert date separators.

The following examples illustrate the various ways of keying in January 31, 2014 where Windows is set in mmddyy format:

013114 1/31/14 Jan 31 2014* 01/31/14 1-31-14 January 31 2014* 1/31/** Jan 31/14* January 31, 2014*

* the system will also recognize a lower case “j” in the word January. ** if no year is entered Sage 50 Accounting will assume the current year, in this case 2014.

You can also use the Pop-up Calendar feature to input dates into Sage 50 Accounting.


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Accounting / Non-Accounting Terminology The data files provided with this courseware have been set up using accounting terminology. Note the module titles used (Receivables, Payables). This can be changed as required.

Learn the Skill In this exercise, you will change the terminology.

1 If necessary, click Receivables in the left pane to view the Receivables Home window using accounting terms.

2 Click Setup, User Preferences on the menu bar.

3 Click Use Non-accounting Terms in the Terminology area, and click OK.

Observe that some of the titles on the left side have changed, such as Customers & Sales and Suppliers & Purchases.

4 Repeat step 3 to return the Terminology to Use Accounting Terms.

General Module Linked Accounts Sage 50 Accounting makes extensive use of linked accounts. This means that these accounts are automatically used when it processes most types of transactions without having to continuously prompt you. This structure saves time when entering transactions, prevents accidental use of the wrong accounts, and enables users with minimal accounting training to use Sage 50 Accounting without much difficulty.

When you initially set up your company data file, you will be asked to identify certain accounts that you normally use to perform various functions. If you have made changes to your Chart of Accounts, you can change the links to your modified accounts when necessary. This process should generally be left to a well versed user of Sage 50 Accounting. Incorrectly linked accounts can have disastrous results.

Learn the Skill In this exercise, you will view linked accounts.

1 Click Setup, Settings, on the Home window menu bar.


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2 Click next to the General (Accounts) then click Linked Accounts.

3 Make no changes and click Cancel to close the window. We will be reviewing the linked accounts for

all the different modules in each lesson.

General Journal Transactions You should always select the appropriate journal for a particular type of transaction. For example, use the Sales Journal to enter a sale, and use the Payments Journal to enter a payment to a vendor (supplier).

The General Journal is slightly different—you should use it only for transactions that do not fit into any of the other modules. Note that you must enter all purchases and sales into the Purchases Journal or the Sales Journal rather than the General Journal. Sage 50 Accounting does not normally track the GST/HST entered in the General Journal. When you enter purchases and sales into the appropriate journals, Sage 50 Accounting keeps accurate records of the GST/HST you have charged and paid, and creates accurate Customer and Vendor records.

The types of transactions that might be entered in the General Journal include:

• bank service charges and/or interest

• depreciation transactions

• accruals

• General Ledger adjustments

• transfers from one bank to another

• owner’s loans and changes to the capital structure of the business.

Learn the Skill In this exercise you will learn how to enter a transaction in the General Journal.

1 In the Home window, select the Company module on the left side of the window and click the General Journal icon.

2 In the Source field, type: Transfer, (the source document you will use to make the General Journal entry) and press twice. (The Source field must be completed. It can be a document number, memo from owner, something to identify why this entry was made. It cannot be left blank.)

3 In the Date field, type: 3/3/14 (or 030314 or 3-3-14) as the date for this General Journal entry and press twice.

4 In the Comment field, type: Transfer to GIC as a descriptive comment for this transaction and press .

5 In the Account field, type: 1100 (the General Ledger account you want to include in the General Journal entry: this should be the Guaranteed Investment Certificate account) and press .

6 Type: 10000 as the Debits and press .


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Sage 50 Accounting assumes that you are working with dollar amounts so when 10000 is entered, the program recognizes it as $10,000.00. You must only type a decimal point if there is a cent amount, e.g., $10.50 should be entered as 10.5 or 10.50.

To enter a credit for this account, press without any entry to move to the Credit column. If you do not know the General Ledger account number, press in the Account column, or click on the magnifying glass. Sage 50 Accounting displays a list of all the General Ledger accounts for selection.

7 Skip the Comment field and press .

You can insert a comment for each transaction on each line of the General Journal entry.

8 If necessary, skip the Allo (Allocation) field.

This field enables you to allocate a revenue or expense account to a particular project or department (Level 2).

9 Under 1100, type: 1060 as the second Account (CIBC Chequing account) and press .

Sage 50 Accounting now defaults to a $10,000.00 credit in order to try to balance this entry.

Your entry should be similar to the one shown:

10 Before you post this entry, select Report from the menu bar in this window, and then Display General

Journal Entry to review this entry for accuracy.

11 Close the General Journal Entry window.

12 Click Post.

13 Click Do not show this message again in the Transaction Confirmation window and click OK.

14 Do not close the General Journal window.


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Recurring Transactions Creating and Storing Recurring Transactions

When an entry is a standard entry that recurs on a regular basis, you can save time by creating a recurring transaction. This function lets you instruct Sage 50 Accounting to make a copy of the transaction for future use so that you will not have to rethink the bookkeeping entries or re-enter most of the information. Care should be taken to make any comments or descriptions as generic as possible to ensure they apply from one entry to the next without major re-write.

Learn the Skill In this exercise you will learn how to store a recurring transaction.

1 Enter the following General Journal transaction, but do not post.

2 In the General Journal window, click (Store as recurring transaction).

You may enter your own title for the transaction, or you can accept the suggestion from Sage 50 Accounting as a recurring entry.

3 Press to accept the default Recurring Transaction name.

4 Click the Frequency drop-down arrow and select Semi-Monthly.

5 Click OK to return to the General Journal window. Click Post.

Notice how the (Recall recurring transaction) button is now available.

6 Close the General Journal window.


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Recalling Stored Recurring Transactions You have created a recurring transaction for the Semi-monthly Loan Payment. Now you can reuse this transaction without having to re-enter any of the information with Sage 50 Accounting inserting the next due date for you.

Learn the Skill In this exercise, you will recall a recurring transaction.

1 Click the General Journal icon. In the General Journal ledger, click (Recall recurring transaction).

The Recall Recurring Transaction window displays the recurring transaction, as well as such information as the date last posted and the next due date.

2 Because there is only one recurring entry and it is highlighted, click Select.

Sage 50 Accounting now loads the recurring transaction, and enables you to modify any of the applicable fields. Notice that the General Journal title bar indicates Using recurring transaction Semi-monthly Loan Payment.

3 Accept the date of 03/17/2014 and press .

4 Press + to Post this entry.

5 Close the General Journal window to return to the Home window.

Reversing General Journal Entries To delete a general journal entry that has already been posted, input and post a new entry to reverse it. Transactions cannot be deleted in Sage 50 Accounting.

The important thing to remember in all Corrections or Reversals, including General Journal transactions, is to use the same journal window in which the original entry was created.

Learn the Skill You have renegotiated a loan with the bank. You would like to cancel the second Semi-monthly loan payment created and generated on March 17, 2014.

1 In the Home window, select the Company module if necessary and click the General Journal icon.

2 Click (Adjust a previously posted entry) on the toolbar.


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3 In the Search window, ensure the Start and Finish dates are displayed as shown above and click OK.

To find a specific entry you can also use the source number, journal entry number or the amount (if known).

The Semi-monthly Loan Payment that was made on 03/17/14 (Journal Entry 72) is highlighted.

4 Click Select.

5 In the General Journal toolbar click on the (Reverse entry) button.

6 In the Confirmation window, click Yes.

7 Close the General Journal.


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The General Journal Report

Learn the Skill In this exercise, you will learn how to generate a General Journal report, review the entries that have been posted, and check that Sage 50 Accounting has made the necessary adjustments for the correction shown previously.

1 In the Home window, from the menu bar, click Reports, Journal Entries, then General.

2 In the General Journal – Modify Report window, ensure the Date option button is selected, change the Start date to 03/01/14 and the Finish date to 03/31/14, and then click to turn on the Corrections check box.

3 Click OK.

If a hard copy of this report is desired click the button to print the displayed General Journal report.

4 Compare your display with the following report:

Review journal entry 72 which was the original loan payment entry and reversed by journal entry 73.

5 Close any open windows to return to the Home window.


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Practice the Skill The following additional exercises cover many of the items covered in Lesson 1. They are included here as extra practice and may be completed by the students in class or on their own. Omission of these exercises will not affect future lessons.

1 Use the method outlined previously to select and modify the following accounts: Acct Account Name New Account Name 2240 Deduction 1 Payable AD & D Payable 2250 Deduction 2 Payable Medical Payable 3010 Owners Contribution Your Name, Capital 3015 Owners Withdrawals Your Name, Withdrawals

2 Use one of the previous methods to delete the following Ledger accounts: Acct Account Name 1605 Other Assets 1610 Goodwill 1620 Accum. Amort. – Goodwill 1630 Goodwill Net 1690 Total Other Assets 4450 Training

3 Complete the following General Journal transactions dated March 4, 2014:

Transfer the funds currently in the Insurance Expense account (5685) to the Prepaid Expenses account (1320). Open the Chart of Accounts in the Company module to look up the balance of the account. Use Correction for the Source field.

Complete a recurring entry to set up and post a monthly transfer of 1/12th of the total insurance amount from the Prepaid Expenses account to the Insurance Expense account (1,680.00/12 = 140.00). View the recurring entry to ensure it is included in the list of Recurring entries. Make up a logical name for the recurring transaction name.

4 Add a CIBC Payroll account (1070) to the Chart of Accounts (Subgroup Account, Main Branch, account number 369852, Account type: Chequing). Transfer $5,000 into it from the CIBC Chequing Account, effective March 5, 2014.

5 Display your Chart of Accounts and check the validity of your accounts.

Backing Up Sage 50 Accounting Data Files Backups should be made every time you complete a work session in which you have made changes to the Sage 50 Accounting data.

The importance of backups cannot be over-stated. Hard disk drives do fail and data files can become corrupted. Imagine having to re-enter a year’s worth of work because a backup was not made!

Using Sage 50 Backup enables you to continue to work with the original file rather than using Save As, which saves the data as a new file.

Learn the Skill In this exercise you will learn how to complete a backup.

1 Select File, Backup from the Home window menu bar, or click from the toolbar.

The Online Backup window will open.


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With today’s technology, a backup is best put on a CD or USB memory key/drive, and stored away from the company’s location. In the example shown we are saving the backup to the student data files folder. Refer to your instructor if you are using another medium or location to backup your files.

2 Replace the File Name with: HHM Lesson 1 backup and then navigate to the location of the student data files or check with the instructor to find the correct procedure or location for backup of files. Enter the Comment as shown:

When backing up for the first time, the default File Name is “Backup”. ALWAYS change the file name to the corresponding file, in this case Harmony House. It is also a good habit to include the day, month and year of the backup after the file name in case you have multiple backup files. (Do not include dashes or slashes in the date). You can then select the correct file and restore the backup if required.

3 Ensure Compact data before backing up to save disk space is selected and click OK.

The backup starts, and when it is complete, the following message appears:

4 Click OK to acknowledge that the backup is complete.

Backup files are compressed before they are copied, so they take less space on your disk. If you wish to use your backup file, go to the Home window, click File, then Restore or choose Restore from backup in the Sage 50 Accounting Open/Welcome window and follow the steps indicated in the Restore windows.

Exiting Sage 50 Accounting To exit from the Sage 50 Accounting program, make sure that you have returned to the Home window.

Learn the Skill In this exercise, you will exit from Sage 50 Accounting.

1 From the Home window menu bar, click File and then click Exit.

2 If necessary, click No to backup and then click OK.

You can also press + , or click (Close) in the Home window.


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Lesson Summary In this lesson, you learned about the basic functions and features of Sage 50 Accounting. In particular, you learned how to:

define what Sage 50 Accounting is

start and exit Sage 50 Accounting

identify the Sage 50 Accounting Home window

move around Sage 50 Accounting

use the Help system

understand the Chart of Accounts

create, modify, find, edit and delete accounts

save changes to data files

find and amend the company information

work with the Session Date

input dates into Sage 50 Accounting

change to accounting terminology

review the General Module linked accounts

input, adjust, or reverse General Journal transactions

store and recall recurring transactions

produce a General Journal report

backup data files

Review Questions 1. How do you open an existing set of data files?

2. Which menu do you access to change your company’s address, or name?

3. What are the account number ranges for the following categories of accounts?

Assets ___________ to _____________

Liability ___________ to _____________

Equity ___________ to _____________

Revenue ___________ to _____________

Expense ___________ to _____________

4. A list of the different account types follows. What is the code letter used for each and what is the purpose of each one?

Type Code Purpose

Group Heading

Group Total

Group Account

Subgroup Account

Subgroup Total

5. Which of the account types, listed in question 4 above, are non-postable accounts?

6. What are the two different ways of creating accounts in Sage 50 Accounting?

7. What conditions must exist before you can delete an account in Sage 50 Accounting?

8. What does the Session Date do?


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9. The General Journal is used to input bookkeeping transactions that do not obviously fit into one of the other modules.

a. True b. False

10. What is the purpose of a Recurring Transaction?

11. Once you have posted a General Journal entry, the only way to adjust it is by reversing the original entry, and then reposting it.

a. True b. False

12. What report is used to print the General Journal transactions posted between specific dates?


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Sage 50 AccountingPremium 2014Level 2

MasterTrak Accounting Series

Courseware1616-1

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Sage 50 Premium Accounting 2014

Level 2

Lesson 2: Banking and Credit Cards Lesson Objectives In this lesson, you will learn how to set up and use the bank reconciliation feature in Sage 50 Accounting. You will also work with credit cards for sales and purchases and reconcile credit card statements. Upon successful completion of this lesson, you will be able to:

use the Deposit feature

set up the bank reconciliation

reconcile a bank account

produce bank reconciliation reports

create credit card accounts

set up credit cards for sales and purchases

account for sales on credit card

account for purchases on credit card

reconcile credit card statements

make credit card payments

reconcile Petty Cash

use a debit card

This courseware requires the data to be saved to a hard drive or network drive. If you have not done so already, please see the Preface for instructions on how to download the data files from www.ccilearning.com and then expand the data files to a designated place on a local or network drive, as directed by your instructor.

Restoring the House of Dee – Student.cab File 1. Start Sage 50 Accounting and in the Sage 50 window select Restore from backup and click OK.

2. In the Restore from Backup dialog box click Next.

3. In the Select Backup File dialog box click Browse to locate the House of Dee - Student.cab file, select the file and click Open (or double-click the file).

4. The Select Backup File dialog box shows the Cab file to be opened. Click Next.

5. In the Confirm Backup File dialog box click Next.

6. In the New File Name box browse to the folder where the restored data file is to be stored, and type: HD Lesson 2 – Student Name (using your own name in place of “Student Name”) in the File name field to replace the word New and click Save.

7. In the New File Name dialog box click Next, then Finish.

The data file will be restored and Sage 50 Accounting will proceed to open it.

8. Accept the Session Date of 02/28/2014 and click OK. If necessary, close the Getting Started window.


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Making a Bank Deposit Counter sales often take the form of cash or cheques from the customer (credit and debit cards are dealt with differently) without the necessity of adding the customer’s name into the bookkeeping system. Instead, many businesses create a customer name such as “Cash Drawer” or “Cash for Deposit”. As sales occur they are posted using this customer name.

The funds received in these transactions (usually in the form of cheques or cash) are then placed into a cash drawer in the business, pending the actual deposit to be taken to the bank on a periodic basis.

Certain steps need to be taken to create a deposit slip from the “Cash to be deposited” account.

Learn the Skill In this exercise, you will learn to create a Deposit Slip.

Normally any cash or cheques received by the business during the course of the day would be deposited at the end of the day or certainly every few days to ensure the funds are safe and available for the issuance of cheques. For the purpose of this courseware cash and cheques coming into the business during the month of February have instead been left in the Cash for Deposit account, to allow students to practice the process of making a bank deposit. Two Deposits will be made; one on February 17, 2014 covering the first half of the month and the second on February 28, 2014.

1 If necessary, start Sage 50 Accounting and open the House of Dee data file provided with this courseware. Accept the session date of February 28, 2014. Close the Getting Started window.

2 In the Home window, click Setup, Settings, Company, Information. Replace the words Your Name with your own name. This will ensure that you can identify your printouts during the course.

3 Click OK to close the window.

You will now determine how much is currently in our Cash for Deposit account effective February 15, 2014.

4 In the Home window, select the Reports menu, then Financials and General Ledger.

5 Select account 1070 Cash for Deposit.

6 Select a Start date of Feb 1, 2014 and a Finish date of Feb 15, 2014.

7 In the Sort By area select Date.


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Banking and Credit Cards Lesson 2

8 Click OK to generate the report.

As of Feb 15, 2014 our cash drawer (Cash for Deposit account) contained two cheques and two cash entries for $688.17 and 575.17 respectively. You will be making a total deposit of $6,574.34.

9 Close the General Ledger Report.

10 In the Home window, click Banking in the navigation pane.

11 In the Tasks pane, click Make Deposit to open the Reconciliation & Deposits window.

12 In the Transaction field make sure Deposit Slip is selected. The other option is Account Reconciliation.

13 In the Account field select the 1080 RBC Chequing Account, the account which is to receive the deposit.

14 Change the date to Feb 17, 2014 (the date the deposit is to take place).


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The screen is divided into two sections: The left side is used to select cheques to be deposited; the right

side will be used to record actual cash.

15 In the Cheques area click the Select button.

16 In the From account field make sure 1070 Cash for Deposit is selected.

17 In the On or After field enter: 02/01/2014 or use the calendar button to select the date.

All cheques collected since Feb 1, 2014 will be displayed. You will now select only the cheques we identified as having been in the cash drawer on Feb 15, 2014.

18 Click cheque 325 from <One-time customer> to select it, and then click the Add button.

Selecting the Add All button would place the entire list of cheques which have been collected since the last deposit into the Cheques on Deposit Slip area. Making individual selection of cheques allows you to cater to a customer’s wishes that a cheque be held until a specific agreed upon date for deposit is reached.

The cheque will now appear in the Cheques on Deposit Slip field.

19 Repeat the process for the next cheque which had been received in the specified time period:

Cheque No. Description Amount 1548 <One-time customer> 2,768.50


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The other cheques shown in the upper section of the Reconciliation & Deposits window will be dealt with in the next deposit.

20 Click OK to return to the Reconciliation & Deposits window.

21 In the Cash area click the Select button.

Selecting cash to be deposited usually depends on what denominations customers paid the business in. Most businesses deposit all cash in excess of the daily float amount.

22 Complete the top portion as shown below:

As displayed in the General Ledger Report in step 8 above, House of Dee had collected $1,263.34 from Weekly Cash Sales.

23 Click Apply to Deposit Slip to transfer the breakdown of currency to the Cash on Deposit Slip portion.

24 Click OK to return to the Reconciliation & Deposits window.

25 In the Deposit Slip No field enter 2.


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26 In the menu bar on the Reconciliation & Deposits window select Report, then Display Deposit Slip

Journal Entry.

Sage 50 Accounting will keep track of the individual amounts which make up this deposit, although in the Bank Reconciliation screen you will note that only the total deposit of $6,574.34 will be shown in order to match this amount with the amount the bank received and will subsequently display in the Bank Statement.

27 Review the entry, and then close the journal entry.

28 Click Post.

29 Close the Reconciliation & Deposits window.

30 Using the above steps 4 to 9, look up how much cash is available for deposit covering the period Feb 17 to Feb 28, 2014. The total should be $14,669.15, comprised of one Cash entry amounting to $123.17 and nine cheques totalling $14,545.98.

31 Complete steps 10 to 25 to make Deposit 3 effective Feb 28, 2014. It is not always necessary to deposit all Cash received from customers, but it is generally good practice to do so.

Your deposit slip should show the following amounts:

Cheques 14,545.98 Cash 123.17

32 Post the deposit, then close the Reconciliation & Deposits window.


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33 Display the General Ledger Report for the 1070 Cash for Deposit account for the period of Feb 1 through Feb 28, sorted by Date. Compare your report to the following:

The Cash for Deposit account should show a zero balance as at Feb 28, 2014.

34 Close the report to return to the Home screen.

Setting Up the Bank Reconciliation The task of reconciling bank statements is typically tedious, but very necessary. Sage 50 Accounting has a built-in reconciliation function that makes the task much easier to perform. As you enter transactions that affect the bank account Sage 50 Accounting recognizes and identifies them for future reference.

Sage 50 Accounting helps you reconcile your bank statement to the transactions recorded in the system. To use this reconciliation facility, any account to be reconciled needs to be set up for this purpose. This is accomplished only once for any account to be reconciled.

Your bank will most likely offer you the ability to access your accounts online and download your monthly statement to your computer. As long as your bank uses the standard Open Financial Exchange (OFX) data format, you will be able to load this data directly into Sage 50 Accounting and streamline your bank statement reconciliation process even more.

This function will not be replicated in this courseware as it would require linking to an actual bank account.

Setting Up an Account for Reconciliation Typically the accounts that are reconciled are:

• Bank accounts – These are usually accounts containing cash belonging to the business, which are accessed by others.

For example, for bank service charges, bank interest payments, or loan payments coming directly from the account without further consultation to the owner of the account.


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• Credit card accounts

– Credit card statements are prepared by the credit card company. Verification is required that all charges match the company’s data file, that payments are recorded correctly, and that other charges (interest and fees) are legitimate.

Account Reconciliations can be completed manually or on the computer using the Reconciliation & Deposits option.

You may want to make a backup of your data file before proceeding with this exercise.

Learn the Skill In this exercise, you will learn to set up a bank account to perform account reconciliations.

You will now set up the RBC Chequing Account so that you can use the account reconciliation feature.

1 In the Home window, select the Company option in the navigation pane. Click Chart of Accounts, and then double-click 1080 RBC Chequing Account.

2 When the General Ledger window opens, select the Reconciliation & Deposits tab.

3 Click to select the Save Transactions for Account Reconciliation check box.

4 Click Set Up.


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5 Complete the Account Reconciliation Linked Accounts window as shown in the following:

6 Click OK to implement the changes.

7 Repeat steps 2 through 7 using account 1090 RBC Payroll Account

8 Close all open windows to return to the Home window.

Reconciling an Account for the First Time Find the most recent statement for the bank or credit card account you want to reconcile. If you have never reconciled this account, find all the statements you have received for it. It is a good habit to produce a General Ledger Report of the account you want to reconcile.

Learn the Skill In this exercise, you will learn to reconcile an account for the first time.

1 From the Home window menu bar, click Reports, Financials, General Ledger and select only 1080 RBC Chequing Account; make sure the Start date is 01/01/2014 and the Finish date is 01/31/2014. Ensure the Sort By Date is selected, then click OK.


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This ledger displays the entries we made into our system for the month of January 2014. The purpose of the Bank Reconciliation is to verify that all of these entries and only these entries have cleared the Bank.

2 Close the General Ledger Report window.

3 In the Home window, click Banking in the navigation pane, then click the Reconcile Accounts icon.

4 The Transaction drop-down field should show Account Reconciliation.

5 From the Account field list, select 1080 RBC Chequing Account.

The First Reconciliation screen opens.

The Transactions tab displays instructions for reconciling an account for the first time. These instructions will not show in subsequent reconciliations for this account.

6 Change the dates to appear as follows:

Statement Start Date: 01/01/2014 Statement End Date: 01/31/2014 Reconciliation Date: 01/31/2014

At this time we are reconciling this account only for the month of January 2014. Normally the reconciliation should take place as early as possible after receipt of the bank statement. The reconciliation should usually be dated into the month of the reconciliation. This will allow any entries completed by the bank automatically, such as service charges to be posted into the month to which they apply.

7 Click Add Prior Outstanding. Accept the confirmation message if it appears.

8 At this time, we are only interested in January 2014 entries. Click OK to bypass the Add Outstanding Transactions window.


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Observe the Unresolved and the Discrepancy of 31,703.50. By the end of the reconciliation process, these two amounts must be displaying zero balances.

9 Click to place a check mark in the Do not show corrections check box.

The Bank Statement that we have just received from RBC shows us different figures as indicated below:

Let’s compare our reconciliation screen to the Bank Statement.

10 Leave the Dates as entered in the previous window.


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11 Complete the Opening Balance and End Balance from the Bank Statement:

Opening Balance: 31,703.50 End Balance: 33,265.52

Note how the Outstanding and Unresolved and Discrepancy amounts change as changes are made to the Reconciliation screen.

12 Type a comment: Bank Rec. for January 2014.

13 Beginning with the first entry on the Bank Statement (cheque 282 for $4,788.94), locate this entry on the

Bank Reconciliation screen and, once found, place a check mark in the Reconciled column ( ). Also place a pencil mark next to this cheque on your Bank Statement to indicate that this item has cleared the bank.

If corrections or adjustments were made involving the bank account there may be offsetting Deposits and Withdrawals displayed in this window. While these may not affect the ending bank balance they should be removed from the system.

14 Continue this process with all entries, working your way down the Bank Statement one item at a time. Keep in mind that dates will usually vary from those in your Bank Reconciliation screen.

15 When you have worked your way to the bottom of the Bank Statement, excluding the Bank Interest (37.62) and the Service Charges ($65.50), you will have four items remaining unchecked on your Bank Reconciliation screen.

These items have not yet been presented to the bank for processing and will be dealt with as part of next month’s Bank Reconciliation.

Note the Unresolved at this time reads: -27.88. This will be taken care of in the next steps.

16 Click the Income tab, in Interest Income, type: Bk Stmt in the Source No. field, and 37.62 into the Amount field.

Notice that the Unresolved changed from -27.88 to -65.50.


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17 Click the Expense tab and make the changes as indicated in the following:

You have done it correctly if the Unresolved and the Discrepancy are both 0.00.

18 From the menu bar, click Report, Display Account Reconciliation Journal Entry.

19 The bank interest income and the bank charges will now be journalized in your General Journal. Close this window.

20 Click Post to complete the Bank Reconciliation. If the following window appears:

21 Click Yes.


Reconciling an Account Once you have reconciled each bank statement for the first time, the process is quite easy.

1. In the Home window, select Banking and then click the Reconcile Accounts icon.

2. Choose the account you want to reconcile.

3. Enter the Statement Start and End Dates, the Reconciliation Date, and the Statement End Balance. Also, add a comment, such as “Sept 30 account reconciliation”.

4. On the Income tab, enter interest earned and any other income from the bank or credit card company.

5. On the Expense tab, enter bank charges and other expenses from the bank or credit card company.

6. On the Transactions tab, if the transaction has cleared the bank or credit card company, mark it cleared (click beside it in the Cleared column); if a transaction has not yet cleared the bank, leave its status as Outstanding.


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Adjustments made may show as both deposit and withdrawal amounts on the screen. Where these amounts agree, both may be cleared to remove them from the reconciliation after it is complete and posted.

7. Use the Worksheet tab to check the details of your bank and other accounts.

You should always work towards an Unresolved amount of zero when processing the bank reconciliation. Only make an adjustment to balance the reconciliation as a last resort. If the unresolved amount is not zero, the program asks you to enter an account to which you wish to charge an adjustment for the unresolved amount. Many Sage 50 Accounting users create an account called Cash Over (Short) in the Expense area.

8. Click Post.

Learn the Skill In this exercise, you will reconcile the 1090 RBC Payroll Account for the first time for the month of January 2014.

1 On the Home window menu bar, click Reports, Financials, and General Ledger, select only 1090 RBC Payroll Account, change the dates to Start on 01/01/2014 and Finish on 01/31/2014 and then click OK.

These are the entries made into the system, to be compared to entries processed through our account at the bank.

2 Close the General Ledger Report window.

3 In the Home window, click Reconcile Accounts.

4 Repeat the acccount reconciliation steps from the previous exercise using the 1090 RBC Payroll Account and the following Bank Statement.

Note the Opening Balance is 9,568.55 and the Closing Balance is 6,540.86.


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5 Follow the step by step procedure clearing one entry at a time from the Bank Statement. Cheques issued at or near the end of the month may not yet have been presented to the bank and will therefore remain outstanding until the February statement is received.

When you have made all the changes, notice the Outstanding of -976.67 and the Unresolved of -13.61.

6 Using the Income and Expense tabs, enter the Interest earned of 11.39 and the Bank charges of 25.00.

If completed correctly the Outstanding will be -976.67 (representing one cheque which was written but has not yet been presented to the bank for payment), the Unresolved and the Discrepancy are both 0.00.

7 To view the Journal Entry, from the menu bar, click Report, Display Account Reconciliation Journal Entry.

8 The bank interest income and the bank charges will now be journalized in your General Journal. Close

this window.

9 Click Post to complete the Bank Reconciliation. If a warning message(s) appears, select Yes.


Printing the Bank Reconciliation Report It is a good practice to keep a hard copy of the Bank Reconciliation. Later on you might have to check some data or pertinent information.

Learn the Skill In this exercise you will learn how to print a Bank Reconciliation Report.

1 In the Home window, click Reports, Banking, and Account Reconciliation Report.

2 In the Account Reconciliation Modify Report window ensure the Report Type is Summary, then, if necessary, select 1080 RBC Chequing Account from the Account drop-down list.

3 If the Show transactions entered after reconciliation checkbox is ticked, remove the checkmark.


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4 Change the dates to reflect Start: 01/01/2014 and Finish: 01/31/2014.

5 Click OK.

You may need to scroll down to view the entire report.

6 View the report and then close it.

Next produce an Account Reconciliation Transaction Report.


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7 In the Home window, click Reports, Banking, and Account Reconciliation Transaction Report. Make sure that Report Options is selected in the left pane, click 1080 RBC Chequing Account, and change the dates to reflect 01/01/2014 to 01/31/2014. Accept the default in the Select Transactions to Report area. Click OK to produce the report.

8 Review the report, and then close it to return to the Home window.

Working with Credit/Debit Card Transactions To remain competitive in today’s business world, businesses selling goods and services to customers are obliged to accept credit or debit cards for payments from their customers.

This is done by entering into an agreement with a credit card processing company (for example, Global or Moneris). In most instances, a card processing terminal is set up on the business’ premises, and the customers’ cards are swiped through this terminal. When the credit card sale has been approved by the automated system, the amount is saved in a batch, and the batch total is posted periodically to the merchant’s bank account. This time frame can vary from daily to every three or four days, depending on the agreement entered into between the credit card processing company and the merchant.

It is advisable to open a separate bank account for the deposit of credit card sales.

The credit card processing company charges a fee for this service in the form of a percentage discount, calculated on the amount of each sales transaction. A monthly rental is also charged for the processing terminal. These charges are itemized on the monthly statement received from the credit card processing company.

For the purposes of the exercises in this manual, we will assume that that each individual entry is posted to the merchant’s bank account upon approval of the transaction by the credit card processing company, less the negotiated discount percentage for each transaction.


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Learn the Skill In this exercise, you will learn to create credit card information in Sage 50 Accounting.

1 In the Company module open the Chart of Accounts and create the following three Accounts:

– 1100 – Credit Card Receivable, a Group account. On the Class Options tab, select Credit Card Receivable and fill in according to the following:

– 2140 – Visa Card Payable, Group account, Class: Credit Card Payable

– 5190 – Credit Card Charges, Group account, Class: General & Admin Expense

2 Close the General Ledger and the Accounts list.

3 In the Home window, click Setup, Settings, click Company, click Credit Cards, then click Accepted to enter the names of the credit cards you accept from customers; the fee (percentage) the credit card company charges you, and the accounts you want to use to keep track of the fees charged.

4 Make sure you are working in the Credit Cards Accepted screen, and complete the Credit Card Information window as shown below:

5 Click OK to save the credit card information.

Entering Customer Sales on Credit Card Once the credit card information has been set up in Sage 50 Accounting, you can begin to make sales to customers who wish to pay immediately by credit card.


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Learn the Skill In this exercise, you will learn how to post sales transactions with immediate payment by credit card.

1 From the Home window, select the Receivables option in the navigation pane, then click Sales Invoices.

2 From the Payment Method field list, select Visa.

3 Create the following sales invoice, to a new customer by the name of Isaac Varley, not currently on your Customers List.

After entering the name into the Customer field, press and the following message will display:

4 Click OK to accept Continue – This is a one-time customer.

This will give a different display in the General Journal display rather than using the <one-time customer> option, as explained in step 8 below.

5 Complete the invoice as shown:

6 Review the bookkeeping for the entry. Click Report, Display Sales Journal Entry.

Notice the debit to the Credit Card Receivable account as well as the debit to the Credit Card Charges account for the discount fee.


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7 Close the Display and click Post to complete the entry. Close the Sales Journal – Sales Invoice window.

The following window advertising an additional service by Sage may open. If necessary, click Do Not Show Me Again.

Let’s review the entry in another way.

8 From the Home window open the Reports menu and select Journal Entries, All. Change the Start Date and the End Date to 02/11/2014 and click OK. Review the entry.

The Journal will incorporate the name of the customer in the entry. This is a very useful method to complete a review/audit at a later date, rather than looking at a long list of customers in a General Journal all identified as <one-time customer>.

9 Close the All Journal Entries Display.

10 Create a Sales Invoice paid by MasterCard and give this customer a 3% discount.


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11 Click Report, Display Sales Journal Entry.

Note the 3% Discount is debited to the Sales Discount account, increasing the balance in this Expense account, at the same time the Credit Card Receivable account is reduced by a similar amount.

12 Close the Display Sales Journal Entry and click Post to complete the entry. Close the Sales Journal – Sales Invoice window.

Let’s review the sales with credit cards.

13 From the Home window menu bar, click Reports, Financials, and General Ledger. Change the dates to reflect 02/01/2014 to 02/28/2014, and select 1100 Credit Card Receivable as the account, sort by Date then click OK.

14 Close the General Ledger Report to return to the Home window.


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Reconciling the Credit Card Account As the proceeds of the credit card sales are deposited into a bank account, on receipt of the bank statement, this is reconciled in the normal way.

If there are large numbers of daily transactions grouped into daily batch totals for each type of credit/debit card, this may become fairly complex and each situation will require the bookkeeper to set up systems for handling these transactions. This is why a separate bank account is recommended. The reconciliation of the credit card receivable account will be completed later on.

Creating and Setting Up Credit Cards for Purchases

Purchases may be made using a credit card issued in the name of the business.

Learn the Skill In this exercise, you will learn to set up Sage 50 Accounting to allow you to make purchases using a credit card.

1 In the Home window, click Setup, Settings; Company, Credit Cards, then click Used.

2 Complete the window as shown:

3 Click OK to record the changes.

Enter Supplier Purchases on Credit Card Once the credit card information has been set up in Sage 50 Accounting, you can begin to make purchases from vendors using the business’ credit card.

Learn the Skill In this exercise, you will input and post purchases using the CIBC Visa credit card.

1 From the Home window, select the Payables option in the navigation pane, and then click Purchase Invoices.

2 From the drop-down list in the Payment Method field, select Visa.

3 Enter the following purchase transaction. Use Quick Add to add Toronto Sun to the supplier’s list.


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4 Review the Purchases Journal Entry.

Notice the credit to the Visa Card Payable account.

5 Close the Purchases Journal display. Click Post to complete the transaction.

6 Input one more purchase transaction from a new vendor: Eureka Furnishings Tel: (852) 281-4200

46 Wyndham Street Web: www.eurekafurnishings.com Hong Kong Supplier Since: 2/18/2014


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7 Review the purchases journal entry. Click Report, Display Purchases Journal Entry.

8 Close the Purchases Journal display. Click Post to complete the transaction.

9 Close the Purchases Journal – Creating an Invoice window.

Let’s review the transactions paid with credit cards.

10 On the Home window menu bar, click Reports, Financials, and General Ledger. Use a Start date of 02/01/2014 and Finish date of 02/28/2014. Select 2140 Visa Card Payable and click OK.

11 Close the General Ledger Report to return to the Home window.

Reconciling the Credit Card Statement The reconciliation of the credit card payable account works similar to reconciling a bank account, except that the transactions are matched to those listed on the credit card statement.

Learn the Skill In this exercise, you will learn how to reconcile the credit card payable account.

1 Open the Chart of Accounts window, double-click the account record for account 2140 Visa Card Payable, click the Reconciliation & Deposits tab and select the Save Transactions for Account Reconciliation option.

2 Click Set Up, and enter the following:

Interest Income: 4100 Interest Earned Adjustment: 5190 Credit Card Charges Bank Charges: 5190 Credit Card Charges Interest Expense: 5190 Credit Card Charges

3 Click OK and close the General Ledger and Accounts windows.

4 In the Home window, select the Banking option and click Reconcile Accounts.

5 From the Transaction field drop-down list, select Account Reconciliation.

6 From the Account field, select 2140 Visa Card Payable.

The Transactions tab displays instructions for reconciling an account for the first time.


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7 Click Add Prior Outstanding and note that there are no prior transactions shown in the Add Outstanding Transactions window

8 Click OK to complete this step of the process.

Ensure the dates show 02/01/2014 and 02/28/2014. Reconciliation Date should be 02/28/2014.

The RBC Visa Account statement for February 28, 2014 has arrived and you are ready to complete the reconciliation for February. It shows a balance of $2,080.45 (entries of 525.45 and 1,511.00, plus 44.00 service charge).

9 On the Transactions tab add a Comment, enter the Statement End Balance of 2080.45 and clear the two entries.


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10 Click the Expense tab, and complete the window as shown:

The Outstanding is 0.00, the Unresolved is 0.00 and there is no Discrepancy. Good Work!

11 Review the Account Reconciliation Journal Entry.

12 Close the Journal Display and click Post. Close the Reconciliation & Deposits window.

Learn the Skill In this exercise, you will learn how to reconcile the 1100 CIBC Credit Card Receivable account.

1 Open the Chart of Accounts window, double-click the account record for account 1100 Credit Card Receivable, click the Reconciliation & Deposits tab and select the Save Transactions for Account Reconciliation option.

2 Click Set Up, and enter the following:

3 Click OK and close the General Ledger and Accounts windows.

4 In the Home window, select Banking, click Reconcile Accounts, and select account 1100 Credit Card Receivable from the Account drop-down list. If necessary change the dates to: 02/01/2014 and 02/28/2014. Reconciliation date is 02/28/2014.


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5 Click Add Prior Outstanding and note that there are no prior transactions shown in the Add Outstanding Transactions window.

6 Click OK to complete this step of the process.

The Reconciliation & Deposits window appears, and you are ready to do the first reconciliation.

The RBC Visa and Master Card Account statements for February 28 have arrived, and you are ready to complete the reconciliation for February. It shows a balance of $1,956.49 (entries of 445.22 and 1,510.44, plus .83 of interest income).

7 On the Transactions tab fill in according to the following:

8 Click the Income tab, and complete the window as shown:

The Outstanding is 0.00, the Unresolved is 0.00 and there is no Discrepancy. Good Work!

9 Review the Account Reconciliation Journal Entry.

10 Close the Account Reconciliation Journal Entry.

11 Click Post. Close the Reconciliation & Deposits window.


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Learn the Skill In this exercise, you will review what was done in the credit card reconciliations.

1 On the Home window, click Reports, Journal Entries, Account Reconciliation, Report By Date. Accept the default dates of 01/01/2014 and 02/28/2014 and then click OK.

Note: Your Journal numbers may not match the above display. Ignore such variance.

2 Close the Account Reconciliation Journal Display.

Making Credit Card Payments When a business uses a credit card to make purchases, it will be necessary on a periodic basis to make payment towards this liability either in full or as a partial payment. This is usually completed once a month when the credit card statement is received.

Learn the Skill In this exercise, you will learn how to make a payment towards your Visa credit card account.

1 From the Home window, select the Payables option in the navigation pane, then click the Payments icon.

2 Change the first field to Pay Credit Card Bill.

3 In the Pay To the Order of field select Visa.

The balance of your Visa account is displayed


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4 Enter: 2080.45 into the Payment Amount field.

5 Select Report in the menu and Display Payments Journal Entry.

6 Close the Journal display and Post the entry.

7 Close the Payments Journal.

Handling Petty Cash Most businesses maintain a Petty Cash fund to handle minor daily purchases, where it is impractical to create a Payable account or to use a cheque. Examples of this could be small purchases of office supplies, a cake, or a birthday card for an employee, flowers, a pizza for the staff for the month end inventory count after hours.

The amount of the Petty Cash fund may vary from $50.00 to several hundred dollars, depending on need. It would be impractical for a business to have a $100.00 Petty Cash, when average purchases from the fund may run into $50 or more.

The Petty Cash fund is generally under the control of one staff member, the bookkeeper, or someone else who has some cash handling experience.

Once the Petty Cash Account is set up for a specific amount the account will remain static for this set amount. A Petty Cash Account will ever only be accessed under three conditions in a bookkeeping entry:

• To set up the Petty Cash fund.

• To revise the amount of the fund up or down.

• To close the fund because it is no longer needed.


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Learn the Skill In this exercise, you will learn how to set up the Petty Cash fund.

Mark Polsen will be looking after the Petty Cash fund. It will be necessary to add his name to the supplier’s list.

1 Select Payables then click the Suppliers icon.

2 Click the Create button and add Mark Polsen to the Payables Ledger as of Feb 1, 2014.

3 Save and close all screens to return to the Home window

4 In Payables, click the Payments icon.

5 In the first field select Make Other Payment, and then select Mark Polsen in the To the Order of field.

6 Change the date to: 02/18/2014.

7 Complete the window as shown. Enter the cheque number into the Invoice/Ref field.

8 Review the bookkeeping entry.


10 Close the Payments Journal to return to the Home screen.

This cheque is taken to the bank by the Petty Cash Custodian and cashed. The money is usually retained in a small cash box and kept in a safe place in the business. As small purchases are made from this fund a cash receipt is retained in exchange for the money being paid out to an employee who made a legitimate purchase.


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The Petty Cash box should always contain the amount of the fund ($200.00 in this case) by way of Cash and total receipts. When the Cash on hand is getting close to depletion it will be necessary to replenish this fund with a new cheque being issued to the custodian for the amount of the receipts on hand, and an entry being recorded dividing up the various expenses into appropriate expense accounts.

The Petty Cash custodian empties the receipts from the Petty Cash box and sorts them into Expense accounts as per the following example. Items being charged to the same account may be combined into one entry in the Journal.

Learn the Skill In this exercise, you will learn how to replenish the Petty Cash fund.

1 In the Payables module, click the Payments icon.

2 In the first field select Make Other Payment, then select Mark Polsen in the To the Order of field.

3 Complete the journal as shown. Enter the cheque number as an Invoice/Ref.

You will occasionally run into rounding up or down situations as shown here. In that case it is common practice to adjust one of the tax amounts in the journal entry to reflect the correct amount from the receipt.


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In our example we have purposely left the one cent variance in place to demonstrate that rounding differences can occur when dealing with percentages.

4 Review the bookkeeping entry.


6 Close the Payments Journal to return to the Home screen.

Mark Polsen will take this cheque to the Bank, cash it and place the funds into the Petty Cash box. This fund should now be back to $200.00.

Using Debit Cards Debit cards have become an everyday tool to make purchases and avoid having to carry large amounts of cash. Whether the purchase is small or large, a debit card is now accepted by almost all businesses.

Using a Debit Card to Make a Purchase A debit card used by the business to make a purchase will most likely be tied to the business chequing account. In that case, the entry will be no different than if cash had been taken out of the chequing account for the exact amount of the purchase and will be handled like any other cash purchase.

Using a Debit Card to Make a Sale When a customer offers his debit card to the business to pay for a purchase, the transaction will be handled as if it were a cash sale with some very important differences.

The business has a contract with a financial institution to handle their debit card as well as credit card transactions. The equipment to handle the transactions is rented by the business on a monthly basis for a fee which can vary from the inexpensive $30.00 to $40.00 per month to the wireless which can run as high $50.00 to $60.00 per month.

In addition to the monthly rental, the financial institution levies a transaction fee of $0.08 to $0.15 per transaction. The net amount of the transaction is deposited into an account controlled by the financial institution. The business has the opportunity on a daily basis to view a transaction statement. The funds less the transaction fee are automatically deposited to the business bank account every three or four days.

The financial institution issues a monthly statement outlining all transactions and fees collected.


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Backing Up Sage 50 Accounting Data Files At the end of each lesson complete a backup of the lesson data file using a name such as HD Lesson 2 end.

Learn the Skill In this exercise, you will learn how to create a Backup of your data file.

1 Select File, Backup from the Home window menu bar, or click (Backup) from the toolbar.

The Backup window will open.

2 Replace the File Name with: HD Lesson 2 end.

If necessary, check with the instructor to find the correct procedure or location for backup of files.

3 Ensure Compact data before backing up to save disk space is selected and click OK.

4 Click OK to acknowledge that the backup is complete.

5 Close Sage 50 Accounting.

Backup files are compressed before they are copied, so they take less space on your disk. If you wish to use your backup file, go to the Home window, click File, then Restore or choose Restore from backup in the Sage 50 Accounting Open/Welcome window and follow the steps indicated in the Restore windows.

Lesson Summary In this lesson, you learned how to set up and use the bank reconciliation feature. You have also worked with credit cards for sales and purchases, and reconciled credit card statements. Now that you have completed this lesson, you should know how to:

use the deposit feature

set up the bank reconciliation

reconcile a bank account

produce bank reconciliation reports

create credit card accounts

set up credit cards for sales and purchases

account for sales on credit card

account for purchases on credit card

reconcile credit card statements

make credit card payments

reconcile Petty Cash

use a debit card


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Review Questions 1. The bank reconciliation is extremely important, as it is the only source of external audit to verify your

day-to-day bookkeeping.

a. True b. False

2. The Cash Deposit amount must always be equal to the total of cash sales during the period.

a. True b. False

3. When you are setting up the bank reconciliation in Sage 50 Accounting for the first time, you must work from your last balanced reconciliation (either manual or from another accounting system).

a. True b. False

4. Outstanding entries from the last balanced reconciliation may be manually keyed in to the bank reconciliation system.

a. True b. False

5. Entries for bank service charges and interest must be entered through the bank reconciliation.

a. True b. False

6. If you are unable to balance your bank reconciliation, it is acceptable to post an adjustment and move on.

a. True b. False

7. An Unresolved amount of anything but 0.00 means that the bank reconciliation is not balanced.

a. True b. False

8. Where adjusting entries have been made and there are matching Deposit and Withdrawal amounts in the Reconciliation, these may be cleared.

a. True b. False

9. Credit cards used for sales to customers can be set up so that a discount is calculated and deducted from each transaction.

a. True b. False

10. Invoices for sales to customers on credit card are all “Pay Later” invoices.

a. True b. False

11. Proceeds from credit card sales are normally deposited to a bank account in the name of the merchant.

a. True b. False

12. A liability account is needed in the Chart of Accounts to record purchases made on a credit card.

a. True b. False

13. The account used for purchases on credit card has to be reconciled in the same way as a regular bank account.

a. True b. False

14. To purchase small items for cash, it is alright to use the Petty Cash account in a General Journal.

a. True b. False


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