Question
Tesses Tresses 55 Salon Rd. Charlottetown, PE C1A 6D3 Tel: (902) 729-6211 Fax: (902) 728-4821 Business No.: 136 422 375 The salon building they own
Tesses Tresses 55 Salon Rd. Charlottetown, PE C1A 6D3 Tel: (902) 729-6211 Fax: (902) 728-4821 Business No.: 136 422 375
The salon building they own includes two apartments that are rented to students. These tenants provided postdated cheques for three months at the beginning of January.
Instead of hiring a maintenance, cleaning and laundry company to take care of the premises, the Dubois family shares this responsibility to reduce expenses. Cleaning is required almost continually to meet hygiene standards for health and safety.
The salons regular suppliers provide inventory products, including those used in the salon for client services; office supplies; cleaning supplies for the salon; linens such as towels, capes and gowns; and hairdressing equipment. Supplier records are set up for all of these suppliers as well as for utility service companies and government agencies to which Tesses Tresses remits taxes. The salon pays HST on all purchases.
Although most clients are one-time clients who pay by cash and credit card, some repeat clients have accounts and are entitled to a 2 percent discount if they pay within five days. Net payment is due in 15 days. The cash clients do not receive a discount. A record called Cash Customers is set up for the weekly summaries of cash and credit card sales. Clients pay HST at 15 percent on merchandise they buy from the salon and on all services. The tax rates and codes are entered into client and inventory records, so the program automatically calculates taxes.
Tesses Tresses also provides hair styling services to local theatre companies, cutting and styling hair for cast members before performances, re-styling throughout the show for cast character changes and styling wigs. These evening commitments do not conflict with the usual daytime salon business hours. The theatre companies pay preferred prices at about 20 percent off regular prices in addition to the discount for early payment.
At the beginning of February, some unfilled purchase orders will provide the inventory for the additional sales anticipated for Valentines Day.
The accounting records for Tesses Tresses were converted to Sage 50 at the beginning of January, and the transactions for January have been completed. The files are ready for January bank account transactions (deposits and account reconciliation) and February transactions. The current accounting records include the following:
Chart of Accounts
Trial Balance as at January 31, 2024
Supplier Information
Client Information
Inventory Information
Accounting Procedures
CHART OF ACCOUNTS
TESSES TRESSES
ASSETS
1030
Undeposited Cash and Cheques
1060
Bank: Chequing Account
1080
Bank: Credit Cards
1200
Accounts Receivable
1240
Prepaid Insurance
1260
Prepaid Subscriptions
1300
Towels and Capes
1320
Office Supplies
1340
Washroom & Cleaning Supplies
1360
Salon Supplies
1420
Hair Care Products 1520
Computer and Cash Register
1540
Furniture and Fixtures
1560
Salon Equipment
1580
Salon and Building
LIABILITIES
2100
Bank Loan
2150
Credit Card Payable
2200
Accounts Payable
2750
HST Charged on Sales
2760
HST Paid on Purchases
2850
Mortgage Payable EQUITY
3100
TT Capital
3150
TT Drawings
3600
Net Income
REVENUE
4100
Revenue from Sales
4120
Revenue from Services
4140
Rental Income
4160
Sales Discounts
4220
Interest Revenue
4240
Other Revenue EXPENSE
5020
Advertising and Promotion
5040
Bank Charges
5060
Credit Card Fees
5080
Cost of Services
5180
Inventory Losses
5200
Cost of Goods Sold
5220
Purchase Discounts
5240
Insurance Expense
5260
Subscriptions Expense
5300
Supplies Used
5320
Utilities
5340
Interest Expense
NOTES: The Chart of Accounts includes only postable accounts and Net Income.
TRIAL BALANCE
TESSES TRESSES
January 31, 2024
Debits
Credits
1030
Undeposited Cash and Cheques
$ 17 187.85
1060
Bank: Chequing Account
34 117.66
1080
Bank: Credit Cards
9 660.97
1200
Accounts Receivable
29.90
1240
Prepaid Insurance
750.00
1260
Prepaid Subscriptions
270.00
1300
Towels and Capes
530.00
1320
Office Supplies
330.00
1340
Washroom & Cleaning Supplies
365.00
1360
Salon Supplies
807.00
1420
Hair Care Products
2 435.00
1520
Computer and Cash Register
4 200.00
1540
Furniture and Fixtures
7 600.00
1560
Salon Equipment
4 600.00
1580
Salon and Building
220 000.00
2100
Bank Loan
$ 23 510.00
2150
Credit Card Payable
80.50
2200
Accounts Payable
1 874.50 2750
HST Charged on Sales
$ 3 823.35
2760
HST Paid on Purchases
$ 856.05
2850
Mortgage Payable
149 650.00
3100
TT Capital
104 799.00
4100
Revenue from Sales
5 618.00
4120
Revenue from Services
19 871.00
4140
Rental Income
1 070.00
4160
Sales Discounts
66.75
5060
Credit Card Fees
373.53
5200
Cost of Goods Sold
3 305.00
5220
Purchase Discounts
103.36
5240
Insurance Expense
150.00
5260
Subscriptions Expense
30.00
5300
Supplies Used
1 140.00
5320
Utilities
335.00
5340
Interest Expense
1 260.00
$310 399.71
$310 399.71
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started