After completing this chapter, you should be able to NOTES Air Care Services 100 Belair Avenue, Unit 25 Regina, SK S4T 4U2 Tel 1: (306) 456-1299 Tel 2: (888) 455-7194 Fax: (306) 456-3188 Business No.: 533 766 457 CHAPTER SEVEN AirCare Services OBJECTIVES plan and design an accounting system for a small business prepare procedures for converting from a manual system understand the objectives of a computerized system create company files create and understand linked accounts set up accounts in the General, Payables and Receivables ledgers enter historical information for suppliers and customers correct historical transactions after recording them set up credit cards for receipts and payments set up sales taxes and tax codes leave history in an unbalanced state finish entering history after entering journal transactions enter postdated transactions COMPANY INFORMATION Company Profile ir Care Services, located in sunny Regina, Saskatchewan, has been operating years Simon Arturro. After his mechanical engineering education and several years' experience with heating installations, he became a certified installer of solar electrical panels. As more consumers are eager to rely less on fossil fuels as their source of power, the demand for solar energy is steadily increasing. Arturro has two assistants: a certified electrician and an assistant installer. < Revenue comes from four sources: installation of new units, repairs, service contracts and subcontracting. Most jobs are new installations, either for individual customers or subcontracts for building projects. Small and medium-sized home roof installation jobs are usually finished in two to four days. Repair work, outside of the service contracts, may include removing and replacing the panels when customers Result 3 of 12 > 213 x After completing this chapter, you should be able to NOTES Air Care Services 100 Belair Avenue, Unit 25 Regina, SK S4T 4U2 Tel 1: (306) 456-1299 Tel 2: (888) 455-7194 Fax: (306) 456-3188 Business No.: 533 766 457 CHAPTER SEVEN AirCare Services OBJECTIVES plan and design an accounting system for a small business prepare procedures for converting from a manual system understand the objectives of a computerized system create company files create and understand linked accounts set up accounts in the General, Payables and Receivables ledgers enter historical information for suppliers and customers correct historical transactions after recording them set up credit cards for receipts and payments set up sales taxes and tax codes leave history in an unbalanced state finish entering history after entering journal transactions enter postdated transactions COMPANY INFORMATION Company Profile ir Care Services, located in sunny Regina, Saskatchewan, has been operating years Simon Arturro. After his mechanical engineering education and several years' experience with heating installations, he became a certified installer of solar electrical panels. As more consumers are eager to rely less on fossil fuels as their source of power, the demand for solar energy is steadily increasing. Arturro has two assistants: a certified electrician and an assistant installer. < Revenue comes from four sources: installation of new units, repairs, service contracts and subcontracting. Most jobs are new installations, either for individual customers or subcontracts for building projects. Small and medium-sized home roof installation jobs are usually finished in two to four days. Repair work, outside of the service contracts, may include removing and replacing the panels when customers Result 3 of 12 > 213 x 214 CHAPTER 7 are replacing a roof. Arturro also offers annual service contracts that provide free labour for existing installations. Some customers - homeowners, owners of office buildings and builders - have accounts with Air Care and receive a 1 percent discount if they pay within 10 days. They are asked to settle their accounts in 30 days, paying by cash or by cheque. PST and GST apply to all work completed by Air Care. Accounts have been set up with a local hardware store, with suppliers of solar panels and inverters (units that convert the solar DC power to AC) and other regular suppliers. After remitting all taxes before the end of March 2023, Arturro converted the accounts for Air Care using the following information: COMPANY INFORMATION Address: 100 Belair Avenue, Unit 25 Regina, Saskatchewan S4T 4U2 Telephone 1: (306) 456-1299 Telephone 2: (888) 455-7194 Fax: (306) 456-3188 Website Address: aircare.com Business No.: 533 766 457 RT0001 Business Information Chart of Accounts Income Statement Balance Sheet Trial Balance Supplier Information Customer Information Accounting Procedures. USER PREFERENCES Options Use Accounting Terms Fiscal Start: January 1, 2023 Fiscal End: June 30, 2023 Earliest Transaction: March 31, 2023 Company Type: Construction/Contractor REPORTS & FORMS Choose settings for your printer and forms Automatically Save Changes to Records Show List Buttons Calculate Record Balances in Home Window by Session Date View Settings Hide: Inventory & Services, Employees & Payroll, Job Sites, Time & Billing Daily Business Manager: turn off Checklists: turn off Show Session Date at Startup Transaction Confirmation: confirmation turned on Pop-Ups: your preferences COMPANY SETTINGS System Do not allow dates before March 31, 2023 < BUSINESS INFORMATION AIR CARE SERVICES Allow Future Transactions, Warn If Transactions Are 7 Days In Future Warn If Accounts Are Not Balanced Backup Backup Weekly; Display reminders Turn off scheduled backup Features Do not use: goods received notes, quotes, orders, delivery orders, contracts, estimates, packing slips, projects (job sites) Use both French and English Credit Card Information Card Used: Visa Payable Account: 2160 Expense Account: 5020 Card Accepted: Visa Discount Fee: 2.9% Expense Account: 5020 Asset Account: 1070 Card Accepted: MasterCard Discount Fee: 2.7% Expense Account: 5020 Asset Account: 1080 Sales Taxes Taxes: GST; PST Codes: G-GST @ 5%; GP-GST @ 5%, PST @ 6%, non-refundable Forms Settings (Next Number) Sales Invoices No. 710 Receipts No. 200 Check for duplicates Result 3 of 12 Date Format Short Date Format: MM dd yyyy On The Screen Use Long Dates Logo: SageData20 LOGOS AIRCARE.BMP GENERAL SETTINGS: No changes PAYABLES SETTINGS Address: Regina, Saskatchewan, Canada Options Aging Periods: 10, 30, 60 days Discounts Before Tax: Yes RECEIVABLES SETTINGS Address: Regina, Saskatchewan, Canada Options Aging Periods: 10, 30, 60 days Interest Charges: compound, 1.5% monthly rate, after 1 day Statements: Include Invoices for 31 days New Customer Tax Code: GP Discounts Payment Terms: 1/10, n/30 after tax Discounts Before Tax: No Line Discounts: No Comments Sales Invoice: Interest @ 1.5% per month charged on accounts over 30 days BANK ACCOUNTS: NEXT CHEQUE NO. Bank: Chequing 101 > x ASSETS 1000 CURRENT ASSETS [H] 1010 Test Balance Account 1060 Bank: Chequing [A] 1070 Bank: Visa [A] 1080 Bank: MasterCard [A] 1100 Net Bank [S] 1200 Accounts Receivable 1210 Prepaid Insurance 1300 Solar Panels 1310 Inverters 1320 Electrical Supplies 1340 Office Supplies 1390 TOTAL CURRENT ASSETS [T] 1400 SHOP & EQUIPMENT [H] 1440 Computer System 1460 Service Equipment 1480 Tools 1500 Van January 1 to March 31, 2023 Revenue 4000 GENERAL REVENUE 4100 Installation Revenue 4140 Service Contract Revenue 4160 Subcontracting Revenue. 4180 Sales Discounts 4200 Interest Revenue 4290 TOTAL REVENUE TOTAL REVENUE AIR CARE SERVICES RECEIVABLES & PAYABLES SETUP 1550 Shop CHART OF ACCOUNTS 1590 TOTAL SHOP & EQUIPMENT [T] AIR CARE SERVICES LIABILITIES 2000 CURRENT LIABILITIES [H] 2100 Bank Loan 2160 Credit Card Payable 2200 Accounts Payable 2640 PST Payable 2650 GST Charged on Sales [A] 2670 GST Paid on Purchases [A] 2750 GST Owing (Refund) [S] 2790 TOTAL CURRENT LIABILITIES [T] < 2800 LONG TERM LIABILITIES [H] 2850 Mortgage Payable 2890 TOTAL LONG TERM LIABILITIES [T] $ 82 500 9 900 21 000 -800 525 $113 125 $113 125 EQUITY 3000 OWNER'S EQUITY [H] 3560 S. Arturro, Capital 3650 Net Income [X] 3690 UPDATED CAPITAL [T] REVENUE 4000 GENERAL REVENUE [H] 4100 Installation Revenue 4140 Service Contract Revenue 4160 Subcontracting Revenue 4180 Sales Discounts 4200 Interest Revenue 4290 TOTAL REVENUE [T] EXPENSE 5000 OPERATING EXPENSES [H] 5010 Bank Charges 5020 Credit Card Fees 5040 Purchase Discounts NOTES: The Chart of Accounts includes all accounts. Account types are marked for all subgroup Accounts [A], Subgroup totals [S], Heading accounts [H], Total accounts [T] and the type X account. All other unmarked accounts are postable Group accounts. INCOME STATEMENT AIR CARE SERVICES Expenses 5000 OPERATING EXPENSES 5010 Bank Charges 5020 Credit Card Fees 5040 Purchase Discounts 5060 Hydro Expense 5070 Maintenance Services 5110 Computer Supplies Used 5120 Office Supplies Used 5150 Solar Panels Used 5160 Inverters Used 5180 Insurance Expense 5190 Telephone Expense 5200 Loan Interest Expense 5210 Mortgage Interest Expense 5290 TOTAL OPERATING EXPENSES 5300 PAYROLL EXPENSES [H] 5320 Wages 5340 Payroll Service Charges 5390 TOTAL PAYROLL EXPENSES TOTAL EXPENSE NET INCOME (LOSS) 5060 Hydro Expense 5070 Maintenance Services 5110 Computer Supplies Used 5120 Office Supplies Used 5150 Solar Panels Used 5160 Inverters Used 5180 Insurance Expense 5190 Telephone Expense 5200 Loan Interest Expense 5210 Mortgage Interest Expense 5290 TOTAL OPERATING EXPENSES [T] Result 3 of 12 > 215 5300 PAYROLL EXPENSES [H] 5320 Wages 5340 Payroll Service Charges 5390 TOTAL PAYROLL EXPENSES [T] $ 225 590 -300 750 1365 1 200 1 150 36 000 16 000 3 600 400 625 2 400 $64 005 12.000 330 $12 330 $76 335 $36 790 x March 31, 2023 216 Assets 1000 CURRENT ASSETS 1060 Bank: Chequing 1070 Bank: Visa 1080 Bank: MasterCard 1100 Net Bank 1200 Accounts Receivable 1210 Prepaid Insurance 1300 Solar Panels 1310 Inverters 1320 Electrical Supplies 1340 Office Supplies 1390 TOTAL CURRENT ASSETS CHAPTER 7 1400 OFFICE & EQUIPMENT 1440 Computer System 1460 Service Equipment 1480 Tools 1500 Van 1550 Shop 1590 TOTAL SHOP & EQUIPMENT TOTAL ASSETS March 31, 2023 1060 Bank: Chequing 1070 Bank: Visa 1080 Bank: MasterCard 1200 Accounts Receivable 1210 Prepaid Insurance 1300 Solar Panels 1310 Inverters 1320 Electrical Supplies 1340 Office Supplies 1440 Computer System 1460 Service Equipment 1480 Tools 1500 Van 1550 Shop 2100 Bank Loan 2160 Credit Card Payable 2200 Accounts Payable 2640 PST Payable 2650 GST Charged on Sales 2670 GST Paid on Purchases 2850 Mortgage Payable < $ 34 660 1950 1 060 Debit $ 34 660 1 950 1 060 24 200 3 800 28 280 33 420 6 100 400 10 500 10 000 3 000 31 000 110 000 840 BALANCE SHEET AIR CARE SERVICES $ 37 670 24 200 3 800 28 280 33 420 6 100 400 $ 133 870 10 500 10 000 3 000 31 000 110 000 $164 500 $298 370 Credit $ 25 000 1 010 Liabilities 2000 CURRENT LIABILITIES 2100 Bank Loan TRIAL BALANCE 20 100 1 530 1 530 2160 Credit Card Payable 2200 Accounts Payable 2640 PST Payable 2650 GST Charged on Sales GST Paid on Purchases 2670 2750 2790 TOTAL CURRENT LIABILITIES GST Owing (Refund) AIR CARE SERVICES 80 000 2800 LONG TERM LIABILITIES 2850 Mortgage Payable 2890 TOTAL LONG TERM LIABILITIES TOTAL LIABILITIES Equity 3000 OWNER'S EQUITY 3560 S. Arturro, Capital 3650 Net Income 3690 UPDATED CAPITAL TOTAL EQUITY LIABILITIES AND EQUITY 3560 S. Arturro, Capital 4100 Installation Revenue 4140 Service Contract Revenue 4160 Subcontracting Revenue 4180 Sales Discounts Interest Revenue 4200 5010 Bank Charges 5020 Credit Card Fees 5040 Purchase Discounts 5060 Hydro Expense 5070 Maintenance Services 5110 Computer Supplies Used 5120 Office Supplies Used 5150 Solar Panels Used 5160 Inverters Used. 5180 Insurance Expense 5190 Telephone Expense 5200 Loan Interest Expense 5210 Mortgage Interest Expense 5320 Wages 5340 Payroll Service Charges Result 3 of 12 > $1 530 -840 Debit $ 800 225 590 750 1365 1 200 1 150 36 000 16 000 3 600 400 625 2 400 12 000 330 $376 645 $ 25.000 1 010 20 100 1 530 690 $ 48 330 80 000 $ 80 000 $ 128 330 $ 133 250 36 790 $ 170 040 $ 170 040 $298 370 Credit $133 250 82 500 9 900 21 000 525 300 $376 645 x Supplier Name (Contact) Green Earth Products Inc. (Ezra Green) Beausejour Electrical Products 50 Shockley Rd., Unit 18 (Janine Beausejour) Killarney Solar Equipment (Kieper Warme) *Receiver General for Canada *Saskatel (Sotto Voce) Wheatfields Hardware (Nutley Bolter) Address Willow Garage (Axel Rodd) *Saskatchewan Energy Corp. 50 Watts Rd. (Kira Strong) Supplier Name Beausejour Electrical Products Killarney Solar Equipment AIR CARE SERVICES RECEIVABLES & PAYABLES SETUP Regina, Saskatchewan S4F 2T2 2 Greening St. Regina, Saskatchewan S4F 9J9 Sudbury Tax Services Office PO Box 20004 Sudbury, Ontario P3A 6B4 SUPPLIER INFORMATION Starbuck Advertising Agency 300 Flyer St. (Pam Fletts) Suite 800 Regina, Saskatchewan S4B 1C6 91 Radiation St. Tel: (306) 363-0210 Regina, Saskatchewan S4B 4F4 Fax: (306) 363-2000 4 Speakers Corners Regina, Saskatchewan S4L 4G2 AIR CARE SERVICES Tel 1: (306) 755-6000 Regina, Saskatchewan S4G 5K8 Tel 2: (306) 755-3997 Fax: (306) 754-7201 Tel: (306) 361-3255 Terms Phone No. Fax No. Tel 1: (306) 476-5282 Tel 2: (306) 476-3997 Fax: (306) 476-5110 Tel: (306) 475-6432 Fax: (306) 475-8600 1/10, n/30 (before tax) 1/10, n/30 (before tax) < 72 Hammer St. Tel 1: (306) 369-0808 Regina, Saskatchewan S4P 1B8 Tel 2: (306) 369-6222 1/5, n/30 (before tax) Tel 1: (800) 561-7761 Tel 2: (800) 959-2221 699 Willow St. Tel 1: (306) 368-6444 Regina, Saskatchewan S4P 1B3 Tel 2: (306) 368-6000 Tel: (306) 361-1727 Fax: (306) 361-8229 AIR CARE SERVICES Date Email Website Tax ID Mar. 26/23 Mar. 26/23 Mar. 28/23 jb@beausejour.com beausejour.com 444 276 539 RT0001 OUTSTANDING SUPPLIER INVOICES Mar. 25/23 Mar. 28/23 Mar. 31/23 egreen@greenearth.com greenearth.com 177 235 447 RT0001 kw@heatexchange.com heatexchange.com 571 277 631 RT0001 accounts@seg.ca seg.ca 459 021 648 RT0001 accounts@saskatel.ca saskatel.ca 492 304 597 RT0001 pfletts@saa.com saa.com 610 728 362 RT0001 nbolter@yahoo.com 385 416 821 RT0001 axel@wefixcars.com wefixcars.com 129 732 012 RT0001 canada.ca/en/revenue-agency Inv/Chq No. B-894 Chq 94 B-921 Balance owing KS-1031 Chq 96 Chq 98 Balance owing Result 3 of 12 Amount $10 000 NOTES: *For Receiver General, Saskatchewan Energy Corp. and Saskatel, Cheque is the default payment method for invoices. For all other suppliers, Pay Later is the default. 2 000 $20 000 Grand Total Terms Account > 1/10, n/30 $2 100 (before tax) ($2 000 & $2 100) 1320 G 1/10, n/30 (before tax) 1310 1/5, n/30 (before tax) 1300 net 1 net 10 5060 net 10 5190 net 10 net 15 1480 net 30 217 Tax $500 100 YTD Purchases (Pre- & Post-Tax Payments) Tax Code 1 000 G G ($790 & $790) No tax $840 ($800 & $840) G $666 ($600 & $666) GP $1 110 ($1 000 & $1 110) GP $999 ($900 & $999) GP $444 ($400 & $444) GP Total $10 500 4 500 2 100 $ 8 100 $21 000 5 200 9 900 $ 5.900 $14 000 x Customer Name (Contact) Grande Pointe Towers (Sophie Grande) 218 Oak Bluff Banquet Hall (Ann Oakley) Passions Department Store (Mann E. Kinn) Midwest Funeral Home 8 Quiet St. (N. Mourning) Regina School Board (Ed Ducate) Selkirk Community Centre (Elsa Peeples) Customer Name CHAPTER 7 Grande Pointe Towers Address Regina School Board 77 LaPointe Cr. White City Saskatchewan SOG 5B0 Regina, Saskatchewan S4B 1E1 4 Celebration Ave. Regina, Saskatchewan S4V 3H7 44 Highlife Ave. Regina, Saskatchewan S4L 2K0 49 Trainer St. Regina, Saskatchewan S4C 4B6 588 Populous St. Regina, Saskatchewan S4T 8N1 Terms 1/10, n/30 (after tax) 1/10, n/30 (after tax) CUSTOMER INFORMATION 1/10, n/30 (after tax) AIR CARE SERVICES NOTES: For all customers, Pay Later is the default payment method for invoices. < Phone No. Fax No. Tel: (306) 322-7500 Fax: (306) 322-7436 Tel: (306) 763-WAKE or (306) 763-9253 Fax: (306) 762-9301 Tel: (306) 622-7391 Fax: (306) 622-7900 Tel: (306) 762-8662 Fax: (306) 763-9115 Tel 1: (306) 466-5000 Tel 2: (306) 466-1123 Fax: (306) 466-2000 Tel: (306) 368-4575 Fax: (306) 368-2198 Date Email Website Mar. 24/23 Mar. 28/23 Mar. 28/23 sgrande@GPTowers.com GPTowers.com Mar. 28/23 Mar. 28/23 nm@midwestfh.com midwestfh.com OUTSTANDING CUSTOMER INVOICES annie@OBBH.com OBBH.com passions.com edd@rdsb.ca rdsb.ca AIR CARE SERVICES elsa@selkirk.com selkirk.com Inv/Chq No. 699 Chq 4896 703 Balance owing 701 Chq 10367 Balance owing Terms Revenue Acct Tax Code Result 3 of 12 1/10, n/30 (after tax) 4100 GP 1/10, n/30 (after tax) 4140 GP 1/10, n/30 (after tax) 4160 GP 1/10, n/30 (after tax) 4100 GP 1/10, n/30 (after tax) 4100 GP 1/10, n/30 (after tax) 4100 GP Amount $4 440 2460 2 220 $22 200 2 200 Grand Total YTD Sales (Credit Limit) Customer Since > $11 000 ($20 000) Jan. 1/23 ($10 000) Aug. 1/21 ($20 000) Mar. 1/23 $6 300 ($15 000) Jan. 1/18 $8 400 ($15 000) Mar. 1/23 ($20 000) Jul. 1/20 Total Accounting Procedures Open-Invoice Accounting for Payables and Receivables The open-invoice method of accounting for invoices allows the business to keep track of each individual invoice and any partial payments made against it. This method is in contrast to methods that keep track of only the outstanding balance by combining all invoice balances owed to a supplier or by a customer. Sage 50 uses the open-invoice method. When invoices are fully paid, they should be removed periodically after statements are received from the supplier or sent to the customers. $4 200 $20 000 $24 200 x