Beautician Liability Insurance

Bernard M. Palmer, 50 years old (date of birth 06/17/1956), is single and lives at XXXX XXXX XXXXXXXXXX, Overland Park, KS 66204.

1. Bernard is a hairdresser and beautician license and operates his own business. Situated
AL 1500 Cottonwood Lane, Kansas City, KS 66102, the business is conducted under the
name "Bernard's Creations. In addition to a showroom and reception area, the company
consists of eight workstations (ie, presidents). During one year, Bernard
leases at seven stations of other hairdressers and beauticians. As is the common
practice with similar businesses in the region, the other stylists are treated as self-
employees. They organize their own work schedules, manage customer appointments,
and collect and retain all fees charged. In return for the use of the workstation, each stylist
Bernard pays a minimum rent plus a percentage of income earned. Although not
expressly provided, it is expected that designers will purchase their beauty supplies
Bernard.

2. Creations Bernard is the local distributor of beauty products from several (eg,
conditioners, shampoos) that can be purchased in stores. Bernard bought these items
manufacturers and resells them to other beauticians (including those who rent
chairs it), regular customers, clients and appointments. Bernard is also Craft
well known for the selection and quality of wigs (ie wigs, hairpieces). At the
Business Centre, Bernard operates storage facilities and a display area for items
he has to sell.

3. Although Bernard operates on a cash basis, he maintains stocks
accounts for the items it sells. Relevant information on inventories (based on
lower of cost or market) is as follows:





12/31/05

12/31/06


Beautician and wigs supplies

10200 $ 13,100

9900 $ 12,700


4. Creations Bernard had the following recipes for the calendar year 2006:

Sales of cosmetics $ 54,000

Sales of hairpieces and wigs 88,000

Receipts from customers Bernard (including tips) 50500

Rents received from designers for the hire of 62,000 stations

The amounts indicated for the appropriate state sales and exclude sales tax.

E-2 Appendix E Comprehensive Tax Problems http://www.thomsonedu.com/taxation/wft


Creations Bernard had the following costs for 2006:

Purchases cosmetics

Purchases of hairpieces and wigs

Operating supplies (eg, rinses, dyes, gels, styling spray, hair)

Utilities (ie gas, electricity, telephone)

Water, sewage, garbage collection

City fine

Legal advice

occupancy permit for the City and State

Accounting services

Janitorial

Liability Insurance

Fire and theft

property ad valorem taxes on business assets (equipment,

inventory, construction)

provisions Reception room (magazines, coffee, tea) Advertising (newspaper suburban) Reception room renovation


$ 34.300

47,500

5100

8200

3800

300

100

2200

4600

3400

3700

4400

6,000 2,100 4,300 9,200


6. As Bernard has an aversion to the time and trouble involved, he does everything
possible to avoid the employer-employee arrangements. Thus, it preserves the local accounting
and corporate housekeeping to perform accounting and cleaning work for Busi.