ALL ABOUT YOU SPA problem 9 Sales and Purchases Ms. Vali of All About You Spa has decided to expand her business by adding two lines of merchandise a selection of products used in the salon for the body, the feet, and the face, as well as logo mugs, T-shirts, and baseball caps that can provide advertising benefits. She believes she will be able to increase her profits significantly. July Journal Entries so that you can complete the journal entries for the month of July, Ms. Valli has also left the information you will need and directions on how to proceed. Note that with the expansion of the business into merchandising, new accounts have been added to the chart of accounts. For example, an additional revenue account, Merchandise Sales, is needed. Because All About You Spa now needs a Purchases account, the chart of accounts needs to be modified for follows: The 500-599 range is used for the purchase-related accounts (for example, Purchases 511 and Freight in 515.) Your new chart of accounts is as follows: CHART OF ACCOUNTS FOR ALL ABOUT YOU SPA Assets 111 Cash 113 Accounts Receivable 114 Office Supplies 115 Spa Supplies 116 Merchandise Inventory 117 Prepaid Insurance 124 Office Equipment 125 Accum. Depr., Office Equip. 128 Spa Equipment 129 Accum. Depr., Spa Equip. Liabilities 211 Accounts Payable 212 Wages Payable 215 Sales Tax Payable Owner's Equity 311 A. Valli, Capital 312 A. Valli, Drawing 313 Income Summary Revenue 411 Income from Services 412 Merchandise Sales 413 Sales Discounts 414 Sales Returns & Allow. Purchases 511 Purchases 512 Purchases Discounts 513 Purch. Returns & Allow. 515 Freight in Expenses 611 Wages Expense 612 Rent Expense 613 Office Supplies Expense 614 Spa Supplies Expense 615 Laundry Expense 616 Advertising Expense 617 Utilities Expense 618 Insurance Expense 619 Depr. Expense, Office Equip 620 Depr. Expense, Spa Equip. 630 Miscellaneous Expense Also note that because you will be making purchases on account and sales on account, subsidiary ledgers will be needed to track what is due from individual customers and owed to individual vendors. A listing of customers and vendors with current balances are as follows: ACOUNTS RECEIVABLE LEDGER AFS About Face Spa $0.00 JA Jill Anson 350.00 C Chaco's 0.00 HC Holmes Condos 0.00 TL Tory Ligman 345.00 LOL Los Obrigado Lodge 0.00 MS Mini Spa 0.00 JM Jack Morgan 468.00 PS Pleasant Spa 0.00 JW Judy Wilcox 110.00 ACCOUNTS PAYABLE LEDGER AI Adco, Inc G Giftco GSS Golden Spa Supplies LP Logo Products OS Office Staples SEI Spa Equipment, Inc. SG Spa Goods SM Spa Magic SOE Superior Office Equipment $415.00 0.00 685.00 0.00 125.00 0.00 0.00 0.00 1,345.00 Checkbook Register Check No Check Amount Date 7/1 7/3 De posts $ 20,000.00 2027 2028 2029 73 7/5 1500.00 685.00 2030 7/5 125.00 2031 7/5 125.00 2032 775 415.00 2033 7/5 2,075.00 4.867.13 717 150.00 2034 7/12 7/14 Explanation Owner invested cash in business Bought additional spa equipment from Spa Equipment, Inc., for $8,150.00 paying $2,000 00 cash down, invoice no. 2731, dated 7/3 terms 2/10,660 Pald Jun's rent Pald on account to Golden Spa Supplies, Invoice no 904, dated June 3 (no discount). Paid in full Paid on account to office Staples invoke no. 222, dated June 5 (no discount). Paid in full Paid Celebrate, Inc., for promotional flowers and balloons for lobby. (miscellaneous expense) Paid on account to Adco, Inc. invoice no. 215, dated June 5 (no discount) Paid in full Paid week's wages. (A portion of this payment was recorded as an adjusting entry on June 30.) Note Payroll taxes related to wages will be ignored here for purposes of simplification Deposited first week's cash sales merchandise, $1,510,00; services $3,225.00, sales tax collected $132 13 Deposited check from Ja Anson, invoice no. 20, dated June 7 balance due in August $200.00 Paid week's winges Deposited check from Jack Morgan, invoice no 21, dated June 14 balance due on August, $268.00) Deposited second week's cash sales merchandise, $1,525.00, services $2,510.00, sales tax collected, $122.00 Paid on account to Superior Equipment, Invoice no 4315, dated June 5 (no discount). Paid in full Paid week's wages De posted check from Tory Ligman, invoice no. 22, dated June 21 (balance due in August $160.00) Deposited third week's cash sales merchandise $3,490.00, services $4,476.55, $ sales tax collected, $279.20 Bought new nail cart for cash (debt Spa Equipment) Paid week's wages Paid month's laundry bill Deposited check from Judy Wilcox, Invoke no. 23, dated June 28 (paid in full) Deposited end of month cash sales merchandise, 54 930.00, servkes. $3,151 23; sales tax collected, $394.40 Owner withdrew cash for personal use Pald July telephone bill Paid July power and water bill 2,075.00 200.00 7/14 4,157.00 2035 7/18 520.00 2036 7/19 7/21 2.075.00 185.00 7/21 8,245.75 2037 2038 2099 7/25 7/26 7/28 7/28 155.00 2.075.00 55.00 110.00 7/31 8.475.63 2040 2041 2042 7/31 7/31 7/31 2.500.00 125.00 155 00 Purchases Invoices for Merchandise Bought on Account During July All about You Spa will pay freight costs associated with purchases of merchandise to supplier. Use the new accounts Purchases 511 and Freight In 515. Date of Transaction information Amount Purchase July 1 Bought Aromatherapy products from Spa Goods; invoice $5,300.00 plus no.512, dated 7/1; terms 2/10, n/60. $125.00 freight July 1 Bought logo merchandise from Logo Products; invoice no. $3,692.00 plus 2579, dated 7/1; terms 2/10, n/60. $101.00 freight July 2 Bought bath and beauty products from Spa Magic; $2,623.00 plus Invoice no. 3503, dated 7/2; terms 2/10, n/30. $95.00 freight July 5 Bought logo merchandise from Giftco; invoice no. 613, $1,253,00 plus dated 7/5: terms 2/10, n/60. $65.00 freight Sales Invoices for Gift Certificates Sold on Account During July All About You Spa is responsible for collecting and paying the sales tax on merchandise that it sells. The sales tax rate where All About You Spa does business is 8 percent of each sale (for example, $340.00 X 0.08 = $27.20). Date of Sale Transaction information Sales Amount (Before Tax) July 2 Los Obrigados Lodge, invoice no. 24. $ 340.00 July 4 Chaco's, invoice no. 25 475.50 July 5 Pleasant Spa, Invoice no. 26 1,518.59 July 10 Holmes Condos, invoke no. 27 325.50 July 10 Mini Spa, invoice no. 28 226.00 July 12 About Face Spa, Invoice no. 29 465.95 Note: All gift certificates were redeemed for merchandise by the end of the month. Amount $ 410.00 395.00 Other July Transactions There were five other transactions in July. None involved cash. Date Transaction information July 1 Bought spa supplies on account from Golden spa Supplies, Invoice no. 1368, dated 7/1; term n/45. July 5 Bought office equipment on account from Superior Office Equipment, Invoice no. 4608, dated 7/5; terms 2/10, n/60. July 5 Bought self-help books for the waiting room on account (Miscellaneous Expense) from Office Staples, invoice no. 2417, dated 7/5; terms n/30. July 5 Bought office supplies on account from Office Staples, Invoice no. 2418, dated 7/5; termsn/30. July 31 Owner invested additional personalspa equipment (treadmill and bicycle) valued at $2,000.00. 179.00 109.00 2,000.00 Print Trial Balance, Schedule of Accounts Receivable and Schedule of Accounts Payable. Trial balance -Check Figure. $107, 122.17 ALL ABOUT YOU SPA problem 9 Sales and Purchases Ms. Vali of All About You Spa has decided to expand her business by adding two lines of merchandise a selection of products used in the salon for the body, the feet, and the face, as well as logo mugs, T-shirts, and baseball caps that can provide advertising benefits. She believes she will be able to increase her profits significantly. July Journal Entries so that you can complete the journal entries for the month of July, Ms. Valli has also left the information you will need and directions on how to proceed. Note that with the expansion of the business into merchandising, new accounts have been added to the chart of accounts. For example, an additional revenue account, Merchandise Sales, is needed. Because All About You Spa now needs a Purchases account, the chart of accounts needs to be modified for follows: The 500-599 range is used for the purchase-related accounts (for example, Purchases 511 and Freight in 515.) Your new chart of accounts is as follows: CHART OF ACCOUNTS FOR ALL ABOUT YOU SPA Assets 111 Cash 113 Accounts Receivable 114 Office Supplies 115 Spa Supplies 116 Merchandise Inventory 117 Prepaid Insurance 124 Office Equipment 125 Accum. Depr., Office Equip. 128 Spa Equipment 129 Accum. Depr., Spa Equip. Liabilities 211 Accounts Payable 212 Wages Payable 215 Sales Tax Payable Owner's Equity 311 A. Valli, Capital 312 A. Valli, Drawing 313 Income Summary Revenue 411 Income from Services 412 Merchandise Sales 413 Sales Discounts 414 Sales Returns & Allow. Purchases 511 Purchases 512 Purchases Discounts 513 Purch. Returns & Allow. 515 Freight in Expenses 611 Wages Expense 612 Rent Expense 613 Office Supplies Expense 614 Spa Supplies Expense 615 Laundry Expense 616 Advertising Expense 617 Utilities Expense 618 Insurance Expense 619 Depr. Expense, Office Equip 620 Depr. Expense, Spa Equip. 630 Miscellaneous Expense Also note that because you will be making purchases on account and sales on account, subsidiary ledgers will be needed to track what is due from individual customers and owed to individual vendors. A listing of customers and vendors with current balances are as follows: ACOUNTS RECEIVABLE LEDGER AFS About Face Spa $0.00 JA Jill Anson 350.00 C Chaco's 0.00 HC Holmes Condos 0.00 TL Tory Ligman 345.00 LOL Los Obrigado Lodge 0.00 MS Mini Spa 0.00 JM Jack Morgan 468.00 PS Pleasant Spa 0.00 JW Judy Wilcox 110.00 ACCOUNTS PAYABLE LEDGER AI Adco, Inc G Giftco GSS Golden Spa Supplies LP Logo Products OS Office Staples SEI Spa Equipment, Inc. SG Spa Goods SM Spa Magic SOE Superior Office Equipment $415.00 0.00 685.00 0.00 125.00 0.00 0.00 0.00 1,345.00 Checkbook Register Check No Check Amount Date 7/1 7/3 De posts $ 20,000.00 2027 2028 2029 73 7/5 1500.00 685.00 2030 7/5 125.00 2031 7/5 125.00 2032 775 415.00 2033 7/5 2,075.00 4.867.13 717 150.00 2034 7/12 7/14 Explanation Owner invested cash in business Bought additional spa equipment from Spa Equipment, Inc., for $8,150.00 paying $2,000 00 cash down, invoice no. 2731, dated 7/3 terms 2/10,660 Pald Jun's rent Pald on account to Golden Spa Supplies, Invoice no 904, dated June 3 (no discount). Paid in full Paid on account to office Staples invoke no. 222, dated June 5 (no discount). Paid in full Paid Celebrate, Inc., for promotional flowers and balloons for lobby. (miscellaneous expense) Paid on account to Adco, Inc. invoice no. 215, dated June 5 (no discount) Paid in full Paid week's wages. (A portion of this payment was recorded as an adjusting entry on June 30.) Note Payroll taxes related to wages will be ignored here for purposes of simplification Deposited first week's cash sales merchandise, $1,510,00; services $3,225.00, sales tax collected $132 13 Deposited check from Ja Anson, invoice no. 20, dated June 7 balance due in August $200.00 Paid week's winges Deposited check from Jack Morgan, invoice no 21, dated June 14 balance due on August, $268.00) Deposited second week's cash sales merchandise, $1,525.00, services $2,510.00, sales tax collected, $122.00 Paid on account to Superior Equipment, Invoice no 4315, dated June 5 (no discount). Paid in full Paid week's wages De posted check from Tory Ligman, invoice no. 22, dated June 21 (balance due in August $160.00) Deposited third week's cash sales merchandise $3,490.00, services $4,476.55, $ sales tax collected, $279.20 Bought new nail cart for cash (debt Spa Equipment) Paid week's wages Paid month's laundry bill Deposited check from Judy Wilcox, Invoke no. 23, dated June 28 (paid in full) Deposited end of month cash sales merchandise, 54 930.00, servkes. $3,151 23; sales tax collected, $394.40 Owner withdrew cash for personal use Pald July telephone bill Paid July power and water bill 2,075.00 200.00 7/14 4,157.00 2035 7/18 520.00 2036 7/19 7/21 2.075.00 185.00 7/21 8,245.75 2037 2038 2099 7/25 7/26 7/28 7/28 155.00 2.075.00 55.00 110.00 7/31 8.475.63 2040 2041 2042 7/31 7/31 7/31 2.500.00 125.00 155 00 Purchases Invoices for Merchandise Bought on Account During July All about You Spa will pay freight costs associated with purchases of merchandise to supplier. Use the new accounts Purchases 511 and Freight In 515. Date of Transaction information Amount Purchase July 1 Bought Aromatherapy products from Spa Goods; invoice $5,300.00 plus no.512, dated 7/1; terms 2/10, n/60. $125.00 freight July 1 Bought logo merchandise from Logo Products; invoice no. $3,692.00 plus 2579, dated 7/1; terms 2/10, n/60. $101.00 freight July 2 Bought bath and beauty products from Spa Magic; $2,623.00 plus Invoice no. 3503, dated 7/2; terms 2/10, n/30. $95.00 freight July 5 Bought logo merchandise from Giftco; invoice no. 613, $1,253,00 plus dated 7/5: terms 2/10, n/60. $65.00 freight Sales Invoices for Gift Certificates Sold on Account During July All About You Spa is responsible for collecting and paying the sales tax on merchandise that it sells. The sales tax rate where All About You Spa does business is 8 percent of each sale (for example, $340.00 X 0.08 = $27.20). Date of Sale Transaction information Sales Amount (Before Tax) July 2 Los Obrigados Lodge, invoice no. 24. $ 340.00 July 4 Chaco's, invoice no. 25 475.50 July 5 Pleasant Spa, Invoice no. 26 1,518.59 July 10 Holmes Condos, invoke no. 27 325.50 July 10 Mini Spa, invoice no. 28 226.00 July 12 About Face Spa, Invoice no. 29 465.95 Note: All gift certificates were redeemed for merchandise by the end of the month. Amount $ 410.00 395.00 Other July Transactions There were five other transactions in July. None involved cash. Date Transaction information July 1 Bought spa supplies on account from Golden spa Supplies, Invoice no. 1368, dated 7/1; term n/45. July 5 Bought office equipment on account from Superior Office Equipment, Invoice no. 4608, dated 7/5; terms 2/10, n/60. July 5 Bought self-help books for the waiting room on account (Miscellaneous Expense) from Office Staples, invoice no. 2417, dated 7/5; terms n/30. July 5 Bought office supplies on account from Office Staples, Invoice no. 2418, dated 7/5; termsn/30. July 31 Owner invested additional personalspa equipment (treadmill and bicycle) valued at $2,000.00. 179.00 109.00 2,000.00 Print Trial Balance, Schedule of Accounts Receivable and Schedule of Accounts Payable. Trial balance -Check Figure. $107, 122.17