Complete Tire Inc., Located in Red Deer Case Study - Accounting and Finance Assignment Help

Assignment Task:

Task:

Complete Tire Inc., located in Red Deer, Alberta, sells tires for all types of passenger cars, light trucks and SUV’s. Fred Moose completed an auto mechanics program at a local community college. To help prepare himself for starting his own business, Fred studied business administration part time while working for the prior owner of the tire business, who was looking to retire. Fred purchased the net assets of the business, renamed it Complete Tire Inc. and started his new operation on January 1, 2020. In December 2020, the month of this application, Complete Tire sells mainly winter tires. The service center, provides a limited range of tire services, including installation, balancing, repairs, tire rotation and wheel alignments. Two salaried employees work on vehicles, while Fred Moose (also salaried) handles all customer contacts, billings and scheduling of appointments, as well as advising/assisting his technicians on vehicle work.

Complete Tire’s inventory consists of Tires, while supplies include Supplies: Garage.
Complete Tire has accounts with most of its suppliers, receiving varied discount terms. Purchase discounts are based on the after-tax invoice amount.
Regular customers have accounts with Complete Tire Inc. and are all offered a 2% discount if they settle their accounts within 20 days (2% 20, Net 40). Sales discounts are based on an after-tax invoice amount. Cash sales (ie. no customer account set up with Complete Tire) receive no sales discounts.
 

Required:
Task 1: 

The database for Complete Tire Inc. has been set up for you as HDWR on the scratch drive: K:/Rmustard/ACCT72010 – Winter2021/Complete Tire Inc. – Begin Here – Nov. 30, 2020.
The G/L, A/P and A/R modules have all been activated for you, along with the Banking Services and Tax Services modules (both found in Common Services). The “current” fiscal year (January 1 –
December 31, 2020) has been correctly set as 2020. Your account structure (ACC) has been set up for you. Note: do “NOT” set up Divisions. G/L account 4100 (Retained Earnings) is already set up for you. Do not set up an account for G/L account 4100.

Change the company name from “YourName Complete Tire Inc.” so that the first two words are your first and last name, followed by the company name and then your section number (eg. Robert Mustard - Complete Tire Inc. - S1). Using the trial balance information provided at November 30, 2020 (see page 4 – do not change any of the account names provided), set up the chart of accounts and the opening balances as of November 30, 2020, following the procedures outlined in lessons 3 and 4 of your textbook. Use GL-SU (Setup) as the source code for this entry, using your own “unique” numeric G/L account numbers (do not use the same G/L account numbers used in OMNI). Post this batch! The reference number for each line item in G/L journal entries “MUST” begin with your initials. For example, the opening balances batch reference number for student Mary Smith would begin with MS. Posting G/L journal entries without your initials will result in a grade of 0 for each entry.

Task 2: 
Bank Services
The Banking Services module has been activated for you. Using information starting from Exercise 9-3, add a bank record for the TD Canada Trust chequing account (transit 4321 acct. #581581). You will need to use your G/L account number from Task 1 when setting up the bank record. Credit cards are not used. Use 0.00 as the Errors/Write-Off Spread amount. Set up a new G/L account called “Write-Off”, as you cannot leave this field blank. You also cannot leave the Credit Card Charges Account blank (enter your new “Write-Off” account for this field as well). Use cheque #300 as your starting number for new cheques written. In Exercise 9-4, for both the Length: and Next Number: fields for both Bank Entry and Bank Transfer, use 10 and 100 respectively. You will need to use a distribution code for the bank services (Exercise 9-5). Do “NOT” set your TD Canada Trust G/L chequing account up as a “control” account, as shown in your textbook in Exercise 9-8. You will need to make a batch entry to set up the opening balance in the Bank Services sub-ledger at November 30, 2020 (Exercise 9-9). The bank statement balance at November 30, 2020 is $80,380. Cheque number 298, dated November 15, 2020, written for $9,880 to Michelin Tire, is the only outstanding cheque at November 30, 2020. There are no outstanding deposits at November 30, 2020. Post the reconciliation in Bank Services and then delete the G/L transaction batch that has been generated.

Task 3: (2 Marks)

The Accounts Payable module has been activated for you. Set up vendor’s accounts in the Accounts Payable module of Sage 300 following the procedures outlined in Lessons 10 & 11 of the textbook. On the A/P Options (Numbering tab), change the Next Number (for Payments) to 300. Create one Account Set for Alberta vendors using your Cost of Goods Sold G/L account number for Purchase Discounts and the your Accounts Payable G/L account number for Prepayment. Distribution Codes, Distribution Sets, and E-mail Messages will not be used in the Accounts Payable module for this project. Purchases on account have various credit terms. Set up the 3 credit terms for invoices owing at Nov. 30, 2020 and as needed when new vendors are added. Vendor discounts taken should be done on an after-tax basis (ie. Taxes “Included”). Vendors are paid by cheque only. Create a Vendor Group and distribute by G/L Account.

Task 4: 

The Accounts Receivable module has already been activated for you. Set up customer accounts in the Accounts Receivable module of Sage 300 following the procedures outlined in Lessons 16 of the textbook. Under the A/R Options (Transactions tab - p. 484), the Default Invoice Type has been correctly changed to “Summary” (from “Item”) for you. On the A/R Options (Numbering tab), change the Next Number (for Invoices) to 201. Create one Account Set for Alberta Customers using your Accounts Receivable general ledger account for the prepayment liability (p. 489). Use the same G/L account for Write-Offs that you set up in Task 3 for Write-Offs. One Billing Cycle (“AB”) has been set up for you. While interest is not charged to customers on overdue accounts, you will need to set up an Interest Profile and an Interest Income Account. Distribution Codes, Dunning Messages, Salespersons, Items, Comment Types, and E-mail Messages will not be used in this project. Customers pay only by cheque. All sales on account terms are 2% 20, Net 40. Sales discounts should be done on a “after-tax” basis (ie. Taxes “Included”). Using the procedures outlined in Lesson 17 of the textbook, you will need to set up a Customer Group and distribute by G/L Account when you set up each customer. Set up the customers (Lesson 17) and their respective balances at November 30, 2020, using the procedures outlined in Lesson 18.

Task 5:

Enter transactions for the month of December 2020. For each period (December 1-9, December 10-11, December 12-15 and December 16-31), enter all of the sales transactions as one batch, all customer receipts transactions as one batch and so forth. Follow the batch posting instructions, which are provided at the end of the transactions for each of the 4 periods below.
The document number field of each entry within a batch must begin with your 2 initials. For example, vendor invoice #844 for student John Doe will be entered as JD844 in the document number field (the transaction number would show as ??844). Posting Journals entries without your initials on each entry will not be graded.

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