General Ledger Upgrade Overview for existing GL Users

❑For existing General Ledger System users, before proceeding with the actual installation of the New GL:

➢Important: It is assumed that the Accounts Receivable, Accounts Payable and General Ledger; and if registered, the Inventory Tracking & Job Costing modules are fully implemented!

•If you have not already done so, please read the New General Ledger Features in STARK 35 chapter completely.

a.It covers the new Features and Transactional Changes that will (potentially) alter the way your Company is now doing some things within MKMS

b.Most specifically, this is because STARK 35 changes the way certain Financial Transactions are executed internally.

c.Links are provided to the chapters that explain in detail how and why these new Features and Transactional Changes have been designed, and how they are intended to be used.

•Read the "Getting Ready to install the new MKMS General Ledger System" discussion immediately below, which includes the associated tasks outlined in this General Ledger Upgrade Overview chapter.

Before installing the New GL

❑Getting Ready to install the new MKMS General Ledger System

•These preparatory steps are required when an existing MKMS General Ledger System ("Old GL") is currently operational

•These steps must be completed before your Company can install (and implement) this new MKMS General Ledger System ("New GL").

✓Therefore, read and complete the steps outlined below in the Old GL, before installing the New GL.

✓The links - highlighted below in this outline - provide the instructions for executing each of the steps.

✓The associated chapters in your previous Help Files may be used if the new STARK 35 Version of these Help Files are not yet installed (or ask an MKS Technician to download a copy of the new STARK 35 Version of these Help Files).

•The Outline presented below (A. - F.) is just that - an outline - that includes the decisions and steps that will be required to properly implement this new MKMS General Ledger System ("New GL").

A.Inventory - If your Company is using the Inventory Tracking and Job Costing System, and if you have not already done so, we strongly recommend that your Company converts the Inventory Valuation Method to the Average Inventory Cost valuation process (LIFO is no longer a preferred Inventory Valuation Method in the New GL).

❖For those Companies using the STARK 35 version of the General Ledger System, the required Inventory Valuation Method is the Average Cost of Inventory

▪The Average Inventory Cost method provides an automatic Inventory Revaluation when using the General Ledger System in conjunction with the Inventory Tracking System.

▪See the "An Analysis of the various Inventory Tracking System Processes" section in the Understanding how Inventory Values & Counts are Calculated, and also the Inventory Valuation Method chapters for more detailed information.

B.Check List - These are the Clean-up steps to help you find any "loose ends" that exist in the Old GL (and in its associated Accounts Receivable and Accounts Payable modules). This will reduce (and hopefully, virtually eliminate) the number and complexity of any General Journal Entries which might otherwise be required.

1.Print all Checks - created as Payments - which have not yet actually been printed for those Vendors

2.Post all Receipts received from Subscribers

3.Allocate all Receipts to the appropriate Invoices

4.Allocate all Credit Memos to Invoices

5.Allocate all Payments to Bills

6.Allocate all Vendor Credit Memos to Bills

7.Print the Unallocated Receipts/Credits Report to confirm the successful completion of steps 2. and 3. above.

8.Print the Unallocated Payments/Credits Report to confirm the successful completion of steps 5. and 6. above.

9.If Unallocated Receipts/Credits and/or Unallocated Payments/Credits are still reported, save those reports (General Journal Entries may be required after installing the New GL).

C.Review - Complete the steps below Before Installing the New GL to:

1.Determine which General Ledger Account and General Ledger Group Maintenance records will need to be added and/or updated within the Old GL, and

2.Determine what the Ending Date of the last Closed Period in your Company's General Ledger will be when this implementation process is actually started.

3.Then:

a.Close the Month in the Old GL: In your older version of the MKMS General Ledger, Close each month up to the most recently completed Accounting Period (that is practical to do, based on any special conditions in place at this time), and be sure to Automatically Distribute Profit or Loss for each Period in the older version of the MKMS General Ledger System.

i.When finished, the "Month Ending Date" of the Last Month that was Closed in the General Ledger, will identify the "Ending Date" which will be referred to frequently later in this, and other Upgrade related chapters.

ii.Also, be sure that those corresponding Accounting Periods are also Closed in the Accounts Receivable and Accounts Payable modules before you close the corresponding month in your older version of the MKMS General Ledger.

iii.If the Ending Date of the "Last Month that was Closed" is not the most recently completed Accounting Period, you may (and probably should) Close newer Months in the Accounts Receivable and Accounts Payable modules.

❖However, Do Not Close the current Month in any module.

b.Once step 3., a. (i. - iii.) above is completed, confirm the status of your Company's existing Mandatory Accounts using this list as a guide:

i.Current Earnings - An Equity Account Type numbered between 3000 and 3999 (No addition or change required)

ii.Retained Earnings - An Equity Account Type numbered between 3000 and 3999 (No addition or change required).

iii.Earnings Posting - An Expense Account Type numbered 9999 (Modify the Title to read Earnings Posting).

iv.Accounts Receivable - An Asset Account Type numbered between 1000 and 1999 (No addition or change required).

v.Accounts Payable - A Liability Account Type numbered between 2000 and 2999 (No addition or change required).

vi.Undeposited Funds - An Asset Account Type numbered between 1000 and 1999 for Receipts which haven't been deposited into the Bank.

vii.Inventory - An Asset Account Type numbered between 1000 and 1999 (No addition or change required but a General Journal Entry may be needed later).

viii.Inventory Adjustments - An Expense Account Type numbered between 5000 and 9998 (No addition or change required but a General Journal Entry may be needed later).

ix.WIP Inventory - An Asset Account Type numbered between 1000 and 1999 for the Inventory Items that have been identified as part of a Work In Progress.

x.Inventory Purchases - A Liability Account Type numbered between 2000 and 2999 (No addition or change required but a General Journal Entry may be needed later).

xi.COGS (Cost of Goods Sold) - An Expense Account Type numbered between 5000 and 9998 (No addition or change required but a General Journal Entry may be needed later).

xii.Local Tax (Liability) - A Liability Account Type numbered between 2000 and 2999 (No addition or change required).

xiii.National Tax (Liability) - A Liability Account Type numbered between 2000 and 2999 (No addition or change required).

xiv.Customer Deposit (Liab) - A Liability Account Type numbered between 2000 and 2999 (Modify the existing Title to read Customer Deposit (Liab) and General Journal Entries may be required).

Canada Tax:

xv.HST/GST (Asset) - Only required when the CanadaTax option is set to True ("T") in the Company Settings list, this field must be the Asset Account designated for HST/GST tax collections.

xvi.PST (Expenses) - Only required when the CanadaTax option is set to True ("T") in the Company Settings list, this field must be the Expense Account designated for PST tax charges.

c.Create new General Ledger Accounts (or simply change the Title of existing ones, as appropriate) with the Titles described in the list below:

❖Create, and/or modify any of the General Ledger Account(s) - see i. ti x. below - which will be designated as Mandatory Accounts in the New GL - that do not currently exist (exactly as such) in the Old GL

a)A General Ledger Account Group assignment to each General Ledger Account is mandatory and must be based on what Primary Account Division (i.e., Assets, Liabilities, Equity, Sales, Expenses ) each Group is a member of, and represents within the General Ledger (e.g., a Group for "Cash" would represent the Primary Account Division of Assets, Group "Recurring Revenue" would represent the Primary Account Division of Sales).

b)All General Ledger Accounts - whether or not they were, are, or will be designated as Mandatory Accounts - must be assigned to a Group.

c)These required Mandatory Accounts, along with the existing and corresponding Accounts whose Title may need to be modified, are shown in the list below.

❖Be sure to assign the appropriate General Ledger Group to All the new, and All of the existing General Ledger Accounts in the Old GL

i.Earnings Posting - This should be an existing Account (probably '9999') that was originally created as the Special Account for Posting Earnings.

a)Modify that existing Title to read "Earnings Posting"

b)No General Journal Entries are required.

ii.Undeposited Funds - This will be a new Account and must be created as the Asset Account representing Receipts which have not yet been deposited (i.e., any monies which have not actually been deposited into a Bank Account - which of course, there should be none).

❖In the New GL, Bank Deposits are specifically recorded and tracked, so a set of General Journal Entries may be required later in the New GL when and only if:

▪There are any Customer Monies on hand which have not been entered in the Old GL (so post and deposit those Receipts now).

▪There are Receipts on hand which have not yet actually been deposited in the Bank (so deposit those Receipts now to avoid having to make General Journal Entries later).

➢Note: The goal is to avoid future General Journal Entries by doing both of these before installing the New GL.

iii.Inventory - This should be an existing Asset Account originally created and currently being used as the General Ledger Asset Account for the Value of your Company's Inventory and should contain the correct Current Value of that Inventory.

a)If the Current Value of your Company's Inventory is correct in the existing General Ledger, no General Journal Entries will be needed.

b)However, if that is not the case, some General Journal Entries may be required.

❖See the "Re-balancing your Company's Inventory Values in the existing General Ledger" discussion below for those instructions.

iv.Inventory Adjustments - This should be an existing Account originally created as the Expense Account for recording Inventory Adjustments.

a)If the Value in the Inventory Adjustments Account is correct in the existing General Ledger, no General Journal Entries will be needed.

b)However, if that is not the case, some General Journal Entries may be required.

❖ See the "Re-balancing your Company's Inventory Values in the existing General Ledger" discussion below for those instructions.

v.Inventory Purchases - This may be an existing Account originally created as the General Ledger Liability Account for temporarily storing Inventory Purchases.

a)If the Value in the Inventory Purchases Account is correct in the existing General Ledger, no General Journal Entries will be needed.

b)However, if that is not the case, some General Journal Entries may be required.

❖See the "Re-balancing your Company's Inventory Values in the existing General Ledger" discussion below for those instructions.

vi.COGS (Cost of Goods Sold) - This may be an existing Account originally created as the General Ledger Expense Account for recording the Cost of Goods Sold.

a)If the Value in the COGS Account is correct in the existing General Ledger, no General Journal Entries will be needed.

b)However, if that is not the case, some General Journal Entries may be required.

❖See the "Re-balancing your Company's Inventory Values in the existing General Ledger" discussion below for those instructions.

vii.Customer Deposit (Liab) - This should be an existing Account originally created as the Liability Account for Advance Deposits (formerly Titled Deposit Liability).

a)Modify the existing Title to read "Customer Deposit (Liab)"

b)Otherwise, no General Journal Entries are required.

viii.Local Tax Expense - Because this Account is being eliminated, General Journal Entries will be required if Local Sales Tax Expense Account currently has a Balance.

a)The Local Tax Expense Balance in this Account must be transferred to a different Expense Account.

1)Credit (subtract) the Balance from Local Tax Expense and

2)Debit (add) that Balance to the appropriate Expense Account (e.g., Other Expenses) .

➢Note: If your Company is being charged PST (i.e., Provincial Sales Tax), this Local Tax Expense may be re-Titled re-Purposed for that requirement because the New GL now manages this PST Tax Payment and Credit automatically and completely.

ix.National Tax Expense - Because this Account is being eliminated, General Journal Entries will be required if it currently has a Balance.

a)The Balance in this National Tax Expense Account, if any, must be transferred to another Expense Account as you did in step viii. above.

b)If your Company is being charged either HST (i.e., Harmonized Sales Tax) or GST (i.e., Goods & Services Tax) Canada Sales Tax: a new HST/GST Asset Account - which is designated as one of the Mandatory Accounts - will be required.

x.Deposit On Account - Because this Asset Account is being eliminated, General Journal Entries may be required if this Account currently has a Balance.

a)The Balance in this Deposit On Account Asset Account, if any, must be transferred to the Accounts Payable Liability Account.

1)Credit (subtract) the Balance from Deposit On Account and

2)Debit (subtract) the Balance from Accounts Payable Liability Account.

D.Post - Create these General Journal Entries in the Old GL, as outlined above,

1.Some Users may/will need to Transfer Account Balances from certain Old GL Accounts to the new Accounts which they replace, or change the Title (i.e., purpose) of an existing General Ledger Account

2.Some Users may/will need to adjust Inventory Values (See the "Re-balancing your Company's Inventory Values in the existing General Ledger" discussion below for those instructions)

3.Remember, the Transaction Date of these General Journal Entries should be the Ending Date of the last Closed Accounting Period in the Old GL

4.When these General Journal Entries are completed: the last Closed Accounting Period in the Old GL should be Closed Again (be sure to Automatically Distribute Profit or Loss).

5.Print the final Balance Sheet, Trial Balance, and Income Statement for the Old GL to confirm that your Company's General Ledger is currently "in balance".

E.Starting the New GL

1.Install the MKMS STARK 35 Upgrade.

2.Confirm that the Financial data has been moved to (imported properly into) the new system

3.Using the Account Declaration Form (as documented in the Re-Declare the Mandatory Accounts chapter of the new STARK 35 Version of these Help Files), enter (confirm) that the correct General Ledger Account Numbers have been assigned, and are assigned to the appropriate fields.

4.Review the General Ledger Maintenance chapters to ensure that information is entered as required, particularly that a General Ledger Group has been assigned to EVERY General Ledger Account.

5.Ensure that you have assigned a General Ledger Account Number (and optionally a Department number) to every Sale-Purchase Item record.

6.Ensure that you have identified the appropriate Asset General Ledger Account Number for every Bank Account record.

7.Print the same month's Balance Sheet and Income Statement in the New GL using the Ending Date of most recently Closed Month's Accounting Period to confirm that the General Ledger Group assignments have positioned (formatted) the reported data properly.

8.Print the Trial Balance report to confirm that your Company's General Ledger is still "in balance".

9.Create any additional General Journal Entries in the New GL using a Transaction Date that is on or after the first day of the Accounting Period immediately following the Ending Date that represents the most recently Closed Month's Accounting Period in the Old GL.

F.Proceed - If the results of the Balance Sheet and Income Statement (printed in step E., 7. above), and the Trial Balance report (printed in step E., 8. above) are satisfactory, the installation of the New GL has been completed.

1.Otherwise, some additional General Journal Entries may be required (e.g., if any additional Inventory Value Adjustments are required, follow the instructions in the "Re-balancing your Company's Inventory Values in the existing General Ledger existing Old GL" discussion below; if any General Ledger Account that is being phased out still has an Account Balance on the Trial Balance report such as the Local or National Tax Expense those need to be moved).

2.Move any General Ledger Account Balances used in the Old GL but no longer used in the New GL to the appropriate General Ledger Accounts in the New GL using the General Journal, then once that month is closed, in the General Ledger Account Form mark those Old GL Accounts as Inactive.

❑Re-balancing your Company's Inventory Values in the existing Old GL

•After reviewing the four (4) situations outlined below, enter the appropriate General Journal Entries, as needed:

1.Inventory - Because this is the Mandatory Account representing the Value of your Company's Company's Inventory, if the actual Value of your Company's Inventory is greater than (or less than) the Amount (Value) of Inventory that existed in the Old GL, one of these (sets) of General Journal Entries will be required:

a.If the actual Inventory Value is greater: Debit (add to) this Inventory Asset Account and Credit (subtract from) the COGS Expense Account.

b.If the actual Inventory Value less: Credit (subtract from) this Inventory Asset Account and Debit (add to) the COGS Expense Account.

2.Inventory Adjustments - Because this is the Mandatory Account representing previously entered manual Inventory Adjustments made to your Company's Inventory Value, if the Value in the Inventory Adjustments Account should be greater than (or less than) the Value that was stored in the Old GL, one of these (sets) of General Journal Entries will be required:

a.If the actual Inventory Adjustments Value should be greater: Debit (add to) this Inventory Adjustments Expense Account and Credit (add to) the Inventory Purchases Liability Account.

b.If the actual Inventory Adjustments Value should be less: Debit (subtract from) the Inventory Purchases Liability Account and Credit (subtract from) the Inventory Purchases Expense Account.

3.COGS - See 1., a. and b. above.

4.Inventory Purchases - See 2., a. and b. immediately above.

❑What's Next?

•Review the New General Ledger Features in STARK 35 chapter to learn about, and how to use, all of those new features (a sampling of four of these new features are listed below) that are now available for Users of your Company's General Ledger System.

1.Account Register Form - Has been added to provide some special capabilities (i.e., a list of All, or a Filtered list of, the Financial Transactions which were posted to one User specified General Ledger Account within a specified Date Range.

2.Transaction File - Depending on what previous version of the Old GL that your Company is currently using, you may or may not currently have a Transaction File (report) but this New GL does - and it's amazing. The Transaction File dialog makes available a List of every Debit and Credit Financial Transaction that was posted to the General Ledger System - within a User Specified Date Range. It may be filtered by User specified Account(s), Division(s), Department(s), and/or Document Type(s).

3.General Journal Checkpoints - A Date and Time Stamped snapshot of the status (Account Balances) of all General Ledger Accounts may be created at any time (and is created automatically each hour).

4.General Journal Notifications - Any designated Employee, when first starting the MKMS STARK 35 application, will be notified of any recently created Checkpoints of Period Closing events.

5.Period Closing Procedures - The Month and Fiscal Year closing procedure has been dramatically changed for the better.