Intermediate Accounting

CASE STUDY Product SAP ERP GBI Release 6.04 Level Undergraduate Graduate Beginner Focus Accounting Entries in Manual and Automated Systems Integration of Accounting Journals Authors Jim Mensching Nancy Jones Contributors Patti Brown Version 1.0 MOTIVATION This assignment is a review of general financial accounting principles and procedures. In the first part of the assignment, you will create general journal entries for a series of transactions in Excel. For the last part of the assignment you will enter your “manual” journal entries into the SAP ERP system. The SAP system will then be used to produce a set of financial statements (balance sheet and income statement). Primary learning objectives are:  Review the concepts of the beginning financial accounting course  Review the accounting cycle  Work with a manual accounting information system Secondary learning objective:  Review basic Excel skills PREREQUISITES Before you use this case study, you should be familiar with navigation in the SAP system. You should also be familiar with Excel or other spreadsheet programs. Prior completion of the sample problem provided with this assignment is also recommended. . NOTES This case study uses the Global Bike Inc. (GBI) data set, which has exclusively been created for SAP UA global curricula. © SAP AG Journal Entries in an ERP This assignment reviews basic accounting entries for a series of transactions, emphasizes the integration of journals to the financial statements, and introduces students to these journal entries in SAP ERP CASE STUDY Assignment Overview This assignment is a review of general financial accounting principles and procedures. In this assignment you will create general journal entries for a series of transactions. You will also show the impact of these transactions on a set of t-accounts and create a trial balance and adjusted trial balance. You will then close out the income statement accounts as you would at year end. For the last part of the assignment you will explore how your journal entries might be created in an automated system by entering your “manual” journal entries into the SAP ERP system. The SAP system will then be used to produce a set of financial statements (balance sheet and income statement). Global Bike Inc. (GBI) We will be working with a company called Global Bike Inc., (GBI). You may have seen GBI in other classes if you have completed other SAP assignments. Information regarding GBI follows. Company History Global Bike Inc. has a pragmatic design philosophy that comes from its deep roots in both the off- road trail racing and long-distance road racing sports. Nearly 20 years ago, its founders designed their first bikes out of necessity—they had races to win and the bikes that were available at the time did not perform to their extremely high standards. So, they took matters into their own hands and built legendary bikes that would outlast and outperform the competition. From these humble origins, Global Bike Incorporated was born and continues to deliver innovative high-performance bicycles to the world’s most demanding riders. This heritage of entrepreneurial spirit and quest for design perfection is still the cornerstone of GBI’s corporate philosophy. GBI produces bikes for the most demanding competitors—whether the competition is on pavement or dirt, for money, fame or just bragging rights. John Davis earned his racing scars in the mountain racing circuit in America, where he won numerous downhill and cross-country championships. Early on, John realized that the mass-produced bicycles available were inadequate in many ways for the type of racing he was doing. So, John stripped four of his old bikes down to the bare metal and rebuilt them into a single “Frankenstein” bike that he rode to win the national championship. Once news of his Frankenstein bike got out, John’s friends and even his competitors began asking him to build them a Frankenstein bike too. While recovering from an injury in 1990, John started producing the first series of Frankenstein bikes in his garage—each one custom-built from cannibalized parts from other bikes. As more and more orders came in, John successfully expanded Frankenstein Bikes from his garage operations into a full-blown manufacturing facility in Dallas and began producing custom trail bikes which he sold through a network of specialized bike dealers throughout the country. At nearly the same time, halfway around the world in Heidelberg, Germany, Peter Schwarz was studying engineering and competing in regional touring races on weekends. In between his races and studies, Peter worked at a bike shop in Heidelberg, fixing student bikes and tuning the touring bikes that he and his friends rode for competitions. As Peter’s reputation as a fierce competitor and mechanical wizard grew, he also began to design and build road bikes based on an ultra-light composite frame that he had created for one of his engineering courses. Peter’s innovative use of carbon composite materials allowed him to build a frame that was significantly stronger and one tenth the weight of competing frames. As a student, Peter did not have a great deal of financial resources, © SAP AG Page 2

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