TO Bike Sharing Term Project Part 1 Note: the project document files that accompany this project contain

the information needed to complete the project
Preface
Bike sharing is growing in popularity as a means of public transportation, where a number of bikes are made available for shared use amongst individuals who do not own any of the bikes. Bike sharing programs are created for short trips because usage fees encourage frequent utilization for short periods of time. First, you have to subscribe or acquire a 24 or 72-hour access to use the service. Take out a bike as many times as you want for 30 minutes or less with no additional fees; usage fees for longer trips apply. As of December 2010, there were over 93 programs in approximately 137 cities around the world with an estimated 97,000 bikes on four continents and another 23 programs planned in 12 nations in 2010-2011. One of those programs is in Toronto.

Description of the origin of the business
Victor Meng, a BAS graduate of 2007, signed a contract to work for an Australian Winery in Melbourne that was advancing its strategic plan to export its products to the Canadian Market. After 2 years in Melbourne Victor decided to return to Toronto but besides looking for another job as a professional accountant he was decided to set up a company that would help Toronto to become greener and him to make some money. While at Melbourne he discovered and used heavily the Melbourne Bike Share program. For his mobility he used any of the 600 bikes locked in any of the 50 bike stations situated around the Melbourne CBD. There is a map on the web site showing all of the bike stations and bike facilities. Victor was able to take a bike out for a maximum of 24 hours; however Melbourne Bike Share is designed for short trips, which is why the first 30 minutes are free to subscribers. Trips longer than two hours can be expensive on Melbourne Bike Share.
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The Velib program has dramatically increased bicycle use in Paris almost overnight. Other North American cities are in the process of researching and developing similar programs.toronto. Regular users purchase a membership or “pass” for periods ranging from one month to one year. Perhaps the most significant and innovative cycling trend is the advent of technologically sophisticated public bicycle programs (also known as Bike Share).000 “shared bicycles” located all over Paris.pdf  1 on May 2011 from 2    . May 26th 2009. who accesses the system with a credit card.ca/legdocs/mmis/2009/pw/bgrd/backgroundfile-21587. Montreal developed their “BIXI” public bicycle system over the past two years and launched the system in May 2009 with 2. is the largest program and has received the most international attention. 20022011. which operates with 20. Downloaded http://www.”1 Immediately Victor started to contact people at the Transportation Services office of the Toronto Municipality as well as some members of the City Council. Victor was informed the the Toronto Bike Plan was adopted by City Council in July. Registered members use their membership card at any of the fully automated bicycle parking stations to sign out a bicycle. For registered members there is no trip fee if the bicycle is returned to a bicycle parking station within 30 minutes. 2001 “as the strategic plan for implementing cycling policies. In order for the program to be successful. Bicycles can be picked up and dropped off at any bicycle parking station in the system. Many other European cities have also launched public bicycle systems or are in the process of developing a system. programs and infrastructure improvements over the 10 year period. there must always be a bicycle available for                                                                Staff Report to City Council. The bicycles are intended to be used for one way trips of less than 30 minutes in duration. the number of bicycles and bicycle parking stations provided must exceed the demand.Before moving back to Toronto. The Paris Velib public bicycle system.400 bicycles located around the city. A rental fee is charged for any trip longer than 30 minutes or for any trip by an unregistered user. Public bicycle systems generally operate more like an extension of the public transit system than like a bicycle rental system. His initiative was well received by some councilors and in one session the following was presented: A number of new cycling infrastructure trends and opportunities have emerged since the Bike Plan was adopted by City Council in 2001.

500 "bicycle parking spaces" would be required to service this start-up area. This initiative will cost nothing to the City. Approximately 8 stations with 50 bikes and 25 bicycle parking spaced would be required to launch the service (see map below with proposed locations). The proposed start-up service area will cover from the Bata Shoe Museum (north west) to Bloor & Church (North East) until Lake Ontario in the south. Station 1: Bloor & Spadina Station 8: Bloor & Church Station 2: University & Gerrard Station 7: Dundas Square Station 3: Art Gallery of Ontario and OCAD Station 6: King & Jarvis Station 4: Rogers Center (Roundhouse Station 5: Bay & Queens Quay 3    . generally no more than 250-300 metres apart. however the City would have to facilitate to this program the place where to install the stations. The bicycle parking stations must be closely spaced. The ideal service area would be bounded approximately by High Park in the west.pick up and an available parking space to drop off the bicycle at the end of the trip. A Toronto public bicycle system is being planned for launch in Spring 2010. Bloor Street in the north and Lake Ontario to the south. Broadview Avenue in the east.000 bicycles and 4. Approximately 3. to provide maximum convenience for users. The service area and the number of bicycles and bicycle parking stations would be expanded yearby-year based on customer demand.

obtain a business number. Victor acquired 15 shares in cash and contributed a pickup truck valued at $10. advertise its services.000 each. Victor contacted the manufacturers of the bicycles. all on April 1st 2011. Stations.ca/cycling/bixi/pdf/council_decision.toronto.800. residual value $2. Victor opened a bank account for TO Bike Sharing and deposited $40.000 (useful life 120. Victor and Sam decided the business should be incorporated.Victor was informed that the Council has approved his idea in principle on a meeting during May 2010 but the detailed approval would not come before November 2010 therefore he could plan to launch the service in the Spring of 20112. acquired the other 25 shares in cash. begin operations.000. receive payment for the first subscriptions and rent the first bikes. negotiate insurance. As could only happen in a fictional term project. Bicycles and Keys TO Bike Sharing purchased a set of 8 stations. each bike has a cost of $550 and each key has a cost of $2. The capital stock of TO Bike Sharing consisted on 100 shares of $1. To reduce energy consumption to a minimum. 48 bikes and 1. His uncle. To his surprise Melbourne Bike Share program offered him to participate in their purchase from a Chinese supplier who would make an interesting discount if he ordered a set of 48 bikes with 8 stations together with Melbourne’s order for 100 bikes and 10 stations. The invoice details that each station installed in its location has a cost of $4. Sam. Downloaded on May 2011 from http://www. Victor contacted his uncle Sam who has an import-export business in Markham and asked if he would be interested in participating. Share Capital For various tax and liability reasons.000 kilometers.000). TO Bike Sharing managed to become incorporated. for a total of $68. all station components go automatically into "sleep" mode when not in use.200 keys from Sam Import-Export Inc.pdf  2 4    . stations and software providers to place the orders. So while still in Melbourne. The 8 TO Bike Sharing stations are made up of bike docks and a pay station equipped with solar panels that power the entire station. set up and equip the 8 stations.950. 2010. The uncle agreed and informed Victor that he would place the order for the bikes and stations and then he would sell them to the new company that they will form to operate the bike sharing program in Toronto. On April 1st 2011.                                                               Council Decision Summary of May 11th and 12th.

or if TO Bike Sharing has been notified that the bike is defective. The light turns yellow (during processing) and then turns green to indicate that the bike is unlocked (when taking a bike) or properly locked in (when returning a bike). The user has 30 seconds to identify a damaged bike when returning the bike. 5    . The bike dock is equipped with a button that allows the user to notify TO Bike Sharing that a bike is damaged. touch the screen and follow the instructions. Bike docks are the supports for the locking mechanism of the bikes. by entering the five-digit code obtained at the pay station by 24-hour or 72-hour access users.The stations can be ‘waked up’ by touching the screen of the pay station. The pay station is the payment terminal for 24-hour or 72-hour access as well as serving many other practical functions. The light turns red if the code or the key is invalid. entering the users’ code on the keypad of the bike dock or simply by inserting the key into the reader. You can unlock bikes in two ways: by inserting the subscriber TO Bike Sharing key into the reader. To start.

Victor negotiated with the software provider of Melbourne Bike Share to use the same system while the adaptations to local circumstances and maintenance was to be made by a local software engineer who also provided the web hosting service. with RiskIt Insurance. The fee has been set at $260 per bike per year with quarterly payments of $3. The contract signed by TO Bike Sharing with BS Software Solutions is for a minimum of 3 years renewable on annual basis. The note was for a one year term and both the principal and interest. while the bikes could be used for 3 years and then sold for $175. at 12% per annum. July 1st. TO Bike Sharing would charge $1. one-year insurance policy. 2011. Phone System and Mailing address Victor had a 1-800 phone line with voicemail installed at Sam’s home. Victor used this phone number and his uncle’s home address for all TO Bike Sharing business. were due at the end of the year. Sam indicated that he might be willing to renew the note for a further one year term after revising TO Bike Sharing financial statements and determine that it was likely the principal and interest would all eventually be paid. Even though covered by insurance. October 1st and January 1st of each year. website and credit card companies. Insurance Victor negotiated an all perils. The keys are given to the subscribers within 10 days of making the payment. Victor expected that the Stations would last for 10 years.000 to the customer’s credit card in case the bike was not returned within 24 hours. effective twelve months per year beginning April 1. but it also agreed to accept a note payable instead of immediate payment. bikes. Sam’s house had internet service therefore Victor planned to use his personal laptop to monitor TO Bike Sharing operations. With the same company but in a different policy. Victor insured the pickup truck for third party liabilities and other mandatory liabilities for commercial vehicles. Victor authorized the bank to make an automatic withdrawal from TO Bike Sharing’s bank account to pay the phone company when amounts were due.Not only Sam Import-Export did an excellent job in installing the stations and locking the bikes.120 due on April 1st. Software Bike sharing programs around the world rely heavily on software that links its stations. Each person that subscribes to TO Bike Sharing received a brochure with detailed information on how to operate the system and an electronic key that allows to unlock 6    .

The 72-hour pass is available at the pay station of every TO Bike Sharing station. The 30-day subscription is valid for the month of the activation of the TO Bike Sharing key. and is kept for 10 days.  Usage and Other Fees. 7    . For example. if you activate your key on June 15.the bikes at the stations. 72-HOUR PASS $12 (taxes not included). if the first trip starts on Monday at 10 am. A deposit of $250 per bike is validated on the credit card the moment the subscription in requested. To minimize costs. Three different formulas are available: 30-DAY SUBSCRIPTION $40 (taxes not included). MasterCard or AMEX with a maximum of 2 bikes per credit card. For example.50 per trip 61-90 minutes add $4 per trip Every additional half hour $8 per trip Payment Modes There are two types of fees related to the use of the TO Bike sharing network:  System Access Fees. the 72-hour access expires on Thursday at 10 am. The 72-hour access starts with the first bike rental and is calculated according to departure time (returns can be made after the 72-hour period is over). purchased in a single payment – includes a TO Bike Sharing key. All fees can be paid by credit card: VISA. The current price scheme of TO Bike Sharing is as follows:  $40 for a 30 days subscription  $12 for 72hours access plus $250 security deposit during 10 days  $5 for 24 hours access plus $250 security deposit during 10 days  Fees: up to 30 minutes included 31 to 60 minutes add $1. your subscription will expire on June 30. Up to two (2) 72-hour accesses can be purchased by credit card. System Access Fees Users must first subscribe or purchase a 24-hour 72-hour access to gain access to the TO Bike Sharing network and use its services. The subscriber has 60 days to activate his key.   Pricing Victor has decided that TO Bike Sharing would start offering monthly subscriptions during 2011 and starting in January 2012 the 1 year subscriptions would be added. The credit card serves to identify the user. Victor decided that he would personally deliver the envelopes to the new subscribers as long as their mailing addresses were in the GTA area.

if the first trip starts on Monday at 10 am. or when the bike is returned after the 24hour limit. The credit card serves to identify the user.  4th and any subsequent 30-minute periods: + $8 each. As an example.50 + $8 = $21.  3rd 30-minute period: + $4. The 24-hour access is available at the pay station of every TO Bike Sharing station.50 extra from the system access fees.a trip lasting between 31 and 60 minutes would cost $1.a trip lasting between 2 hrs 01 min and 2 hrs 30 min would cost $13. fees would be charged to the credit card account for two periods. from April 8 to April 24 and from April 24 to April 30 8    .a trip lasting between 1 hr 31 min and 2 hours would cost $5. The 24-hour access starts with the first bike rental and is calculated according to the departure time (returns can be made after the 24-hour access period is over). . usage fees will be charged.50. 24-HOUR ACCESS $5 (taxes not included). The first 15 extra minutes represents the 1st charged period.50 extra from the system access fees. Usage fees are charged to the user credit card as follows:  On the 24 day of each month for 30-day subscriptions. . .50 + $8 = $13.50 extra from the system access fees. you must wait two (2) minutes after returning the bike for the counter to reset to zero. or when the bike is returned after the 24hour limit. A $250 deposit per bike is validated on the credit card the moment the subscription is requested.50 extra from the system access fees. as well as usage fees for trips longer than 30 minutes.and so on.The $12 fees. the 24hour access expires on Tuesday at 10 am. . the first 30 minutes of usage are included. charges apply for each subsequent 30-minute period:  1st 30-minute period: included. as well as usage fees for trips longer than 30 minutes. for a subscription valid from April 8 to April 30. are charged to the credit card at the end of the 72-hour period. At the end of a trip.50 + $4 = $5. Beyond that period. The $5 fees.a trip lasting 30 minutes or less would be included in your access fees.a trip lasting between 1 hr 01 min and 1 hr 30 min would cost $1. are charged to the credit card at the end of the 24-hour period. For example. *Taxes are not included Thus: . Up to two (2) 24-hour accesses can be purchased by a single credit card. Beyond that. USAGE AND OTHER FEES For each trip. .  2nd 30-minute period: + $1. and is kept for 10 days.

Victor prepared a print out of the following modules (a sample of each document is included in the project documents): 1) bikes released from each station 2) credit card transactions made from the stations (24 hours access. 72 hours pass and additional usage fees for exceeding the 30 minutes) 9    . the more he realized that without well thought out systems he would not be able to assure uncle Sam that the financial statements he prepared were a reliable reporting of TO Bike sharing’s financial position. Victor realized he would eventually need a computer system tailored to TO Bike Sharing’s operations. but he decided that it was best to begin with a non-computerized system. Bank Deposits Weekly (on Wednesdays).000).  Fees for theft or for not returning a bike within the maximum continuous usage period of 24 hours (maximum penalty: $1. all bikes were operational all rentals were paid for all rental payments were deposited in the bank commitments for subscriptions paid for but keys not distributed yet.  Penalty fees for bike damage attributable to user (penalty fees will vary by case). Need for an information system Victor as a BAS graduate was sure that financial statement preparation was the least of his record-keeping worries. At the end of the 24-hour period or at the end of last trip past the 24-hour period in the case of a 24-hour access. Other variable fees can be charged in addition to usage fees:  $5 fee for a new replacement TO Bike Sharing key. were known former subscribers were called to see if they were interested in renewing their monthly subscription interest and supplier payments were made on time The more Victor thought about it.  At the end of the 72-hour period or at the end of the last trip past the 72-hour period in the case of a 72-hour access. He knew he needed a system of recordkeeping and operating procedures that would assist him in ensuring:        All stations were up and running releasing bikes that have been paid for. results of operations and cash flow. Once TO Bike Sharing had been operating longer it would be easier to define the system needs of the business.

3) credit card transactions made from the web site (monthly subscriptions) Additionally he also gathered the following documents: 1) Master Card. Victor reconciled the statements to the weekly print outs of credit card transactions. He kept the duplicate copy of each cheque as a record of the payment. 4) A print out of the bikes reported as damaged. Victor kept all the supplier invoices in a file folder. 3) The list of monthly subscriptions not activated by the end of the month. Victor reconciled the statement to the copies of the bank deposits made and cheques written. 10    . [A copy of this Prepaid Subscriptions List is included with the project documents]. [a copy of the April statement is included with the project documents]. Visa and American Express deposits on TO Bike Sharing bank account after deducting the 3% of credit card fee for small merchants (payments are consolidated and one deposit is made on every Thursday). Victor printed out a report from the system where all subscribers that haven’t activated the key were listed. He also estimated the worth of the remaining office supplies and wrote the value of the unused supplies on the bottom of the original invoice. 2) The list of monthly subscriptions that were delivered by Victor and those mailed.] When an invoice was paid. the daily log of his round to check the status of the eight stations and the repairs done. He reviewed the file folder weekly and prepared cheques when payment was due using pre-numbered cheques. the date of payment and the cheque number were written on the supplier invoice to cross-reference payments and supplier invoices. this represented the amount of money collected in advance for subscriptions to be activated in future months. As soon as he received the bank statement from the bank. As soon as he received the credit card statements [sample copies of the April statements are included with the project documents]. [Copies of all supplier invoices and the cheques written during April are included with the project documents. Month-end procedures On the last day of the month.

As Victor prepared TO Bike Sharing’s trial balance and financial statements. he congratulated himself: all his careful planning and systems design had paid off. To prepare adjusting entries to recognize revenue in the proper accounting period and achieve a proper matching of costs and expenses with revenue 6.General Ledger Postings and Financial Statement Preparation Victor had studied introductory accounting in university. REQUIRED: Note: this task is based on the analysis of very extensive narrative and detailed project documents. Objectives: 1. Please check the password protected course website for announcements of any errors. He not only had the information he needed to prepare the statements in accordance with the generally accepted accounting principles. When he was finished. To record accounting transactions 5. but he also felt confident that the statements could be relied up when making financial decisions.300 for April. To recognize information of accounting significance 2. omissions and clarifications to the term project description or project documents. assume the role of Victor Meng and complete the following: 11    . he set-up the general ledger accounts he thought would be needed for TO Bike Sharing and posted the transactions and adjusting entries for April. To prepare simple financial statements Read carefully the information and project documents provided for TO Bike Sharing. Victor estimated TO Bike Sharing owed income taxes of $1. To prepare a bank reconciliation 3. [Harmonized Sales Tax (HST) has been ignored to simplify this term project]. He dusted off his old course materials and completed a textbook exercise to test his memory of simple financial statement preparation. To set-up a chart of accounts appropriate for a small business 4.

2011 12    . 201 – Note: the Adjusting Entries need to be written out in full in journal entry (DR CR) format. Simply posting adjusting entries to T-accounts will not satisfy the requirements of this task.a) Decide on an appropriate chart of accounts for TO Bike Sharing . e) Prepare a trial balance at April 30th. provided the choice is appropriate for the classification of the TO Bike Sharing transactions and facilities efficient preparation of the financial statements b) Set-up T-accounts based on the chart of accounts c) Post all transactions to the T-accounts d) Prepare and post the adjusting entries required at April 30th. 2011 f) Prepare an Income Statement and Statement of Retained Earnings for the month of April g) Prepare a Balance Sheet as at April 30th.variations in the choice of accounts is acceptable.

. (See Module 01 course materials for locating annual reports.e. for a company of your choice.] f) When was the auditor's report dated? g) Who was the Chair of the Board of Directors at the time the annual report was issued? 13    . choose the annual report of a large company with shares traded on a stock exchange). its website address and answers found in the annual report to the following questions: a) What industry is the company of your choice in? b) What amount was reported for revenue? c) What was the change in revenue during the year? d) What was a main reason given in management's discussion and analysis for the change in revenue? e) What amount was reported for total assets and net income [note: companies may use different titles such as 'earnings' to describe income.) The annual report chosen much contain audited financial statements and management's discussion and analysis of same (i. the name of the Company.PART 2: Locate and use an annual report Find the most recent annual report online. Read and enjoy! Required: write on a single piece of paper (or in a word processing document if you are in a virtual tutorial).

2012. Most products have 'wizards' to lead you through the process. in an amount equal to twice your student number 14    . the tutors report that QuickBooks online. A cash sale. (If you are using QuickBooks online: choose 'make journal entry' from the banking menu. However. b) Post the following transactions using the 'general journal entry' option of QuickBooks. so students may wish to try both products before making up their mind. paid in cash. in an amount equal to your student number b. There are many other trialware versions of great accounting software. depending upon your connection speed. dated December 1st. The receipt of cash. It is available as a trialware version at no cost for 30 days (see detailed directions for connecting to and using QuickBooks and others below). to demonstrate the need for controls over the financial reporting process given the ease with which wrong numbers may be produced with accounting software.e. the proceeds of a bank loan. and are doing more than is required in this assignment): a. you are not using the 'general journal entry' option. REQUIRED: Choose QuickBooks online or any other accounting software to explore their functionality. Note: If you being prompted to enter customer or supplier name and address information.PART 3: Use accounting software The objective of part 3 of the term project is to afford students the opportunity to use accounting software so they better understand the workflow of an accounting department and the tools used in accounting processes. We hope it will illustrate how easy it would be to produce financial statements with the click of a button without doing the requisite adjusting entries i. A payment to a landlord to prepay rent in an amount equal to one fifth of your student number d. equal to one tenth of your student number c. Online updating of accounting records is a complex procedure and may be slow.. a) Use the accounting software (QuickBooks online or any other) to create a set of books (a company) for a fictional company with the fiscal year end of December 31. but is also one of the simplest for students to use for this project. A journal entry to accrue wages in an amount equal to one tenth of your student number e. Students may either use a trialware version online to complete this task or download a trialware version. A telephone expense. not only showcase the functionality of accounting software.

intuit.com/freetrial/ Please note that as of May 2011 MYOB has been acquired by Mamut. Accounting software is three-dimensional – time being the third dimension. regardless of the software you use. QuickBooks online includes links to getting started and help information.com Simply Accounting trail downloadable at http://www. In all cases. Virtual tutorial students should save the reports as . If you have entered transactions and yet see no amounts on the income statement – check your starting and end date of the income period to ensure it spans the dates of the transactions entered. Task 3 requirements are very limited. (Click 'reports' on the main menu bar at the top of QuickBooks for a list of all standard reports).simplyaccounting.xls or . Walk-in tutorial students may print the reports. Other alternatives of accounting software for small businesses as of May 2011 are the following ones: http://waveaccounting. Adjusting entries are NOT required. Since taxes are ignored in this part of the term project (accounting softwares are country specific because of tax laws and other regulations) the use of software designed for another country besides Canada is not a concern. You will need to make up a US address … anything with a five digit ZIP code will suffice. d) Submit the income statement and balance sheet output by the accounting software. Spreadsheet software may not be used for this assignment. The submission requirements are very specific. and free trials have been discontinued.pdf files following the on-screen prompts of QuickBooks online or the software being used.f. Directions for connecting and using QuickBooks online: • Go to www. download and explore the software. c) Prepare the Income Statement (called the 'Profit and Loss Statement’ in some softwares) for December and the Balance Sheet at December 31st. The payment of an amount equal to half your student number for equipment. if you do not complete the assignment in one session. therefore we hope that students spend a little extra time exploring (clicking around in) the software to see its enormous functionality.it is based on different paradigms than other software with which you are familiar. Accounting software is quite different from spreadsheet software. choose 'Intuit QuickBooks online' • Click ‘try it free’ on the page that appears • Follow the on screen directions (the basic edition is more than enough for this exercise) and complete the online form.com • Click 'Free Products and Tools' on the menu bar at the top of the page.. You'll need to remember your account ID and password.  15    . an Australian company. It takes a while to feel comfortable with accounting software .

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