THE UNIVERSITY OF NEW SOUTH WALES

School of Accounting ACCT 1501: Accounting and Financial Management 1A

Weeks 4 6

APPENDIX: COMPREHENSIVE CLASS EXAMPLE PIANO TUNING SERVICES LTD

Adapted from Hoggett, Edwards and Medlin, Problem 5.7, pp. 217-8.

Student Handout

Blackboard: http://elearning.unsw.edu.au

Session 1, 2011

AFM1A

Alex Schubert owns Piano Tuning Service Ltd. The post-closing trial balance at 30 June 2009 is shown below. Account Account number Debit Credit Cash at bank A1 3 280 Accounts receivable A2 3 880 Prepaid insurance A3 190 Supplies A4 210 Motor vehicle A5 21 400 Accumulated depreciation motor A5.1 8 026 vehicle Accounts payable L1 1 940 Interest payable L2 440 Bank loan L3 7 000 Share capital SE1 11 000 Retained profits SE2 554 $28 960 $28 960

The Chart of Accounts is shown below: Account Account number Cash at bank A1 Accounts receivable A2 Prepaid insurance Supplies Motor vehicle Accumulated depreciation motor vehicle Accounts payable Interest Payable Bank loan Telephone expense payable Share capital A3 A4 A5 A5.1 L1 L2 L3 L4 SE1

Account Retained earnings Profit and loss summary Piano tuning fees Piano repair fees Petrol and oil expense Depreciation expense motor vehicle Supplies expense Insurance expense Telephone expense Interest expense

Account number SE2 SE3 R1 R2 E1 E2 E3 E4 E5 E6

Transactions completed during the year ended 30 June 2010 are summarised below: 1. Tuning fees of $28 600 were receivable during the year; $23 940 of this total was received in cash. The remainder consisted of transactions on credit. 2. Revenue from piano repairs was $24 380. Cash received totalled $16 800, and accounts receivable increased by $7 580. 3. Supplies costing $340 were purchased during the year on credit. 4. On 1 January 2010, Piano Tuning Service Ltd paid $3 000 off the bank loan, plus interest of $860. The interest payment consisted of $440 accrued up to 1 July 2009 and a further $420 which accrued for the period to 31 December 2009. 5. Petrol and oil for the vehicle cost $ 2680 in cash. 6. Insurance on the vehicle, paid in advance was $840. Session 1, 2011 AFM1A 2

7. Telephone expense of $2 240 was paid. 8. Accounts receivable of $13 900 were collected, and $2 000 was paid on accounts payable. The following information relating to adjusting entries is available at the end of June 2010. 9. A physical count showed supplies costing $180 on hand at 30 June 2010. 10. Accrued interest on the bank loan is $240. 11. Insurance costing $820 expired during the year. 12. Depreciation on the vehicle is $5 350. 13. The June telephone account for $180 has not been paid or recorded. Required: A. Prepare transaction analysis using excel sheet. B. Prepare journal entries to record the transactions completed in the year to 30 June 2010. C. Open ledger accounts for each of the accounts, and post the journal entries to the ledger. D. Prepare a 10-column worksheet. E. Prepare an adjusted trial balance as at 30 June 2010. F. Prepare and post the closing entries. G. Prepare a post-closing trial balance as at 30 June 2010. H. Prepare the Financial Statements.

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TRANSACTION ANALYSIS

Cash O/B 1 2 3 4 -3860 5 6 7 -2240 8a 8b 9 13900 -2000 -2680 -840 3280 23940 16800

Accounts receivable 3880 4660 7580

Prepaid insurance 190

Supplies 210

Motor vehicle 21400

Accumulated depreciation 8026

Accounts payable 1940

Interest payable 440

Telephone expense payable

Bank loan 7000

Share capital 11000

Retained profit 554 28600 24380 Revenue Revenue Interest expense Petro expense Telephone expense

340

340 -440 -3000 -420 -2680

840 -2240 -13900 -2000 -370 -370 240 -240 -820 5350 -5350 180 -180 4000 11000 41234 Supplies expense Interest expense Insurance expense Depreciation expense Telephone expense

10 11 -820 12 13 C/B 46300 2220 210 180 21400 13376 280 240 180

Session 1, 2011

AFM1A

JOURNALS 1 Cash Accounts Receivable Piano Tuning Fees Cash Accounts Receivable Piano Repair Fees Supplies Accounts Payable AC A1 A2 R1 A1 A2 R2 A4 L1 Debit 23 940 4 660 Credit

28 600 16 800 7 580 24 380 340 340

Bank Loan Interest Payable Interest Expense Cash Petrol and Oil Expense Cash

L3 L2 E6 A1 E1 A1

3 000 440 420 3 860 2 680 2 680

Prepaid Insurance Cash

A3 A1

840 840

Telephone Expense Cash

E5 A1

2 240 2 240

8a

Cash Accounts Receivable

A1 A2

13 900 13 900

8b

Accounts Payable Cash

L1 A1

2 000 2 000

Supplies Expense Supplies

E3 A4

370 370

10

Interest Expense Interest Payable

E6 L2

240 240

11

Insurance Expense Prepaid Insurance

E4 A3

820 820

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Depreciation Expense MV Accumulated Depreciation MV

E2 A5.1

5 350 5 350

13

Telephone Expense Telephone Expense Payable

E5 L4

180 180

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LEDGERS
Opening Balance Piano Tuning Fees Piano Repair Fees Accounts Receivable Cash at bank 3 280 23 940 16 800 13 900 Bank Loan Interest Payable Interest Expense Petrol and Oil Expense Prepaid Insurance Telephone Expense Accounts Payable Closing Balance A1 3 000 440 420 2 680 840 2 240 2 000 46 300 $57 920

Opening Balance

$57 920 46 300 Accounts receivable 3 880 4 660 7 580 $16 120 2 220 Prepaid insurance

Opening Balance Piano Tuning Fees Piano Repair Fees Opening Balance

Cash Closing Balance

A2 13 900 2 220 $16 120

Opening Balance Cash

190 840 $1 030

Insurance Expense Closing Balance

A3 820 210 $1 030

Opening Balance

210

Opening Balance Accounts Payable Opening Balance

Supplies 210
340 $550 180

Supplies Expense Closing Balance

A4 370 180 $550

Opening Balance Opening Balance

Motor vehicle 21 400 21 400

Closing Balance

A5 21 400

Accumulated depreciation motor vehicle Opening Balance Closing Balance 13 376 Depreciation Exp Opening Balance Accounts Payable 2 000 280
$2 280

A5.1 8 026 5 350 $13 376 13 376 L1 1 940 340 $2 280

280

Cash Closing Balance

Opening Balance Supplies Opening Balance

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Cash Closing Balance

Interest Payable 440

240 $680

L2 Opening Balance Interest Expense Opening Balance 440 240 $680 240

Cash Closing Balance

Bank loan 3 000

4 000 $7 000

Opening Balance

L3 7 000

Opening Balance

$7 000 4 000

Telephone expense payable Closing Balance

180

L4 Telephone Expense Opening Balance 180

180

Closing Balance

Share capital 11 000

Opening Balance Opening Balance

SE1 $11 000 11000

Closing Balance

Retained earnings 41 234

Opening Balance Profit and Loss Summary Opening Balance

SE2 554 40 680 $41 234 41 234

Expenses Retained Earnings

Profit and Loss Summary 12 300

40 680 $52 980

Revenues

SE3 52 980 $52 980

P/L Summary

Piano tuning fees 28 600

Cash / Accounts Rec

R1 28 600

P/L Summary

Piano repair fees 24 380

Cash / Accounts Rec

R2 24 380

Session 1, 2011

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Cash

Petrol and oil expense 2 680

P/L Summary

E1 2 680

Acc Depn

Depreciation expense motor vehicle 5 350 P/L Summary

E2 5 350

Supplies

Supplies expense 370

P/L Summary

E3 370

Prepaid Insurance

Insurance expense 820

P/L Summary

E4 820

Cash Telephone Ex Pay

Telephone expense 2 240 180 $2 420

P/L Summary

E5 2 420 $2 420

Cash Interest Payable

Interest expense 420 240 $660

P/L Summary

E6 660 $660

Session 1, 2011

AFM1A

WORKSHEET Piano Tuning Service Ltd Worksheet Adjusted Trial Balance Adjustments Trial Balance Acc. Co. A1 A2 A3 A4 A5 A5.1 L1 L2 L3 L4 SE1 SE2 SE3 R1 R2 E1 E2 E3 E4 E5 E6 Account Name Cash at bank Accounts receivable Prepaid insurance Supplies Motor vehicle Accumulated depreciation MV Accounts payable Interest payable Bank loan Telephone expense payable Share capital Retained earnings Profit and loss summary Piano tuning fees Piano repair fees Petrol and oil expense Depreciation expense MV Supplies expense Insurance expense Telephone expense Interest expense NET PROFIT (LOSS) Debit 46 300 2 220 1 030 550 21 400 Credit Debit Credit Debit Credit 46 300 2 220 820 210 370 180 21 400 5 350 13 376 280 240 240 4 000 180 180 11 000 554 28 600 24 380 5 350 370 820 180 240 $6 960 2 680 5 350 370 820 2 420 660 $6 960 $82610 $82610 2 680 5 350 370 820 2420 660 $70130 $70130 40 680

Profit & Loss Debit Credit

Balance Sheet Debit 46 300 2 220 210 180 21400 Credit

8 026 280 4 000 11 000 554 28 600 24 380 2 680

13 376 280 240 4 000 180 11 000 41 234 28 600 24 380

2 240 420 $76 840 $76 840

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PRE-CLOSING TRIAL BALANCE Account code A1 A2 A3 A4 A5 A5.1 L1 L2 L3 L4 SE1 SE2 R1 R2 E1 E2 E3 E4 E5 E6

Account Cash at bank Accounts receivable Prepaid insurance Supplies Motor vehicle Accumulated depreciation motor vehicle Accounts payable Interest payable Bank loan Telephone expense payable Share capital Retained earnings Piano tuning fees Piano repair fees Petrol and oil expense Depreciation expense motor vehicle Supplies expense Insurance expense Telephone expense Interest expense

Debit 46 300 2 220 210 180 21 400

Credit

13 376 280 240 4 000 180 11 000 554 28 600 24 380 2 680 5 350 370 820 2 420 660 $82 610

$82 610

CLOSING ENTRIES 1 Piano Tuning Fees Piano Repair Fees Profit and Loss Summary Profit and Loss Summary Petrol and Oil Expense Depreciation Expense MV Supplies Expense Insurance Expense Telephone Expense Interest Expense Profit and Loss Summary Retained Earnings PR R1 R2 SE3 SE3 E1 E2 E3 E4 E5 E6 SE3 SE2 Debit 28 600 24 380 Credit

52 980 12 300 2 680 5 350 370 820 2 420 660 40 680 40 680

Session 1, 2011

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POST-CLOSING TRIAL BALANCE Account code A1 A2 A3 A4 A5 A5.1 L1 L2 L3 L4 SE1 SE2 $70 310

Account Cash at bank Accounts receivable Prepaid insurance Supplies Motor vehicle Accumulated depreciation motor vehicle Accounts payable Interest payable Bank loan Telephone expense payable Share capital Retained earnings

Debit 46 300 2 220 210 180 21 400

Credit

13 376 280 240 4 000 180 11 000 41 234 $70 310

FINANCIAL STATEMENTS PIANO SERVICE TUNING LTD PROFIT AND LOSS STATEMENT for Year Ending 30 June 2010 Revenue Piano tuning fees Piano repair fees GROSS PROFIT Expenses Petrol and oil expenses Depreciation expense motor vehicle Supplies expense Insurance expense Telephone Expense Interest Expense NET PROFIT/LOSS

28 600 24 380 52 980

2 680 5 350 370 820 2 420 660

12 300 $40 680

Session 1, 2011

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PIANO SERVICE TUNING LTD BALANCE SHEET as at 30 June 2010 Current Assets Cash at bank Accounts receivable Prepaid insurance Supplies Non-current Assets Motor vehicle Accumulated depreciation motor vehicle TOTAL ASSETS Current Liabilities Accounts payable Interest payable Telephone expense payable Non-current Liabilities Bank loan TOTAL LIABILITIES Shareholders Equity Share capital Retained profits TOTAL SHAREHOLDERS EQUITY TOTAL LIABILITIES AND SHAREHOLDERS EQUTIY

46 300 2 220 210 180

48 910

21 400 13 376

8 024

8 024 56 934

280 240 180

700

4 000

4 000 4 700

11 000 41 234 52 234 56 934

Session 1, 2011

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