ACCT1501AccountingandFinancial

Management1A
Session22016

Weeks46

COMPREHENSIVECLASSEXAMPLE
PIANOSERVICESLTD

AdaptedfromHoggett,MedlinandEdwards(2012)

AlexSchubertemigratedfromAustriatoAustraliain2000tofulfilhisbigdreamtobecomea
starpianistintheSydneyOperaHouse.Hehasbeensavingallhismoneyfromhisconcert
plays in Vienna for the last five years to buy his flight ticket to the great southern land.
TimesweretoughthoughsinceDanielBeethovenhasbeenaroundAustraliaforthreeyears
alreadytravellingfromoneconcerthalltotheotherwithhisfamousprogrammeEuropean
ClassicMeetsRedEarth.Danielhasevenbecomepopularthroughouttheremotestareas
inNorthernTerritory.JustrecentlyhehasbeengivingacharityconcertinKatherineforboth
locals and the hundreds of European and other Australian tourists that had just travelled
theretoseethenewbornpianostar.

Alex tried hard to attract the same crowds of people but they only wanted to see Daniel.
Being very disappointed about the unforeseen obstacles, Alex thought about new
possibilitieshowtostayinAustraliaanywaybecausebynowhehasbeenfalleninlovewith
thisbeautifulvastcountry.OnedayhewenttoasmallerconcertinAliceSpringswherea
young group of Australians performed a play combining didgeridoo sounds with classical
piano music. He arrived a bit earlier and found the pianist being all shocked because the
pianowastotallyoutoftune.

Atthatmomenthisideawasborn:hewouldopenabusinessandofferpianotuningservices
throughoutthecountry.Thatwayhecouldcombinebothhisloveforpianosandtravelling
throughAustralia.Nowin2015,AlexhasbeentheownerofPianoServiceLtd.forseveral
yearsandisdoingprettywell.

Thepostclosingtrialbalanceofhiscompanyat30June2014isshownbelow:

Account

Account
code
Debit
Cashatbank
A1
3280
Accountsreceivable
A2
3880
Prepaidinsurance
A3
190
Supplies
A4
210
Motorvehicle
A5
21400
Accumulateddepreciationmotorvehicle
A5.1

Accountspayable
L1

Interestpayable
L2

Bankloan
L3

Sharecapital
SE1

Retainedprofits
SE2

$28960

TheChartofAccountsisshownbelow:

Account
Account
code
Account
Cashatbank
A1
Retainedprofits
Accountsreceivable
A2
Profitandlosssummary
Prepaidinsurance
A3
Pianotuningfees
Supplies
A4
Pianorepairfees
Motorvehicle
A5
Petrolandoilexpense
Accumulateddepreciation

Depreciationexpense
motorvehicle
A5.1
motorvehicle
Accountspayable
L1
Suppliesexpense
InterestPayable
L2
Insuranceexpense
Bankloan
L3
Telephoneexpense
Telephoneexpensepayable
L4
Interestexpense
Sharecapital
SE1

Credit

8026
1940
440
7000
11000
554
$28960

Account
code
SE2
SE3
R1
R2
E1

E2
E3
E4
E5
E6

Transactionscompletedduringtheyearended30June2015aresummarisedbelow:

1. Tuningfeesof$28600werereceivableduringtheyear;$23940ofthistotalwas
receivedincashpredominantlyfromcustomersintheoutback.Theremainderconsisted
oftransactionsoncredit.
2. Revenuefrompianorepairswas$24380.Cashreceivedtotalled$16800,andaccounts
receivableincreasedby$7580.AmajorcustomerthisyearwasDanielBeethovenwhose
pianobrokeduringanoutdoorplayunderthestars.
3. Suppliescosting$340werepurchasedduringtheyearoncredit.
4. On1January2015,PianoServiceLtdpaid$3000offthebankloan,plusinterestof
$860.Theinterestpaymentconsistedof$440accruedupto30June2014andafurther
$420whichaccruedfortheperiodto31December2014.
5. Petrolandoilforthevehicleinordertogetaroundthevastcountrysidecost$2680in
cash.
6. Insuranceonthevehicle,paidinadvancewas$840.
7. Telephoneexpenseof$2240waspaid.
8. Accountsreceivableof$13900werecollected,and$2000waspaidonaccounts
payable.

ThefollowinginformationrelatingtoadjustingentriesisavailableattheendofJune2015.
9. Aphysicalcountshowedsuppliescosting$180onhandat30June2015.
10. Accruedinterestonthebankloanis$240.
11. Insurancecosting$820expiredduringtheyear.
12. Depreciationonthevehicleis$5350.
13. TheJunetelephoneaccountfor$180hasnotbeenpaidorrecorded.

Required:
A. Preparetransactionanalysisusingexcelsheet.
B. Preparejournalentriestorecordthetransactionscompletedintheyearto30June
2015.
C. Openledgeraccountsforeachoftheaccounts,andpostthejournalentriestothe
ledger.
D. Preparea10columnworksheet.
E. Prepareanadjustedtrialbalanceasat30June2015.
F. Prepareandposttheclosingentries.
G. Prepareapostclosingtrialbalanceasat30June2015.
H. PrepareIncomeStatementfortheyearended30June2015andBalanceSheetasat30
June2015.

Attheendofthefiscalyear,AlexreceivedathankyoucardfromDanielforhisgreatwork
onthepianorepairin2015.ThecardalsoincludedaninvitationforAlextoplaywithDaniel
onNewYearsEveintheSydneyOperaHouse.Alexwasveryhappyaboutthat.Hethought
that his dream has finally come true and that being the owner of Piano Service Ltd. AND
being able to play in the Opera House was even better than just being an ordinary star
pianist.

A.TRANSACTIONANALYSIS

Cash

Opening
balance

Accounts
receivable

3280

16800

Supplies

Motor
vehicle

190

210

21400

3880

23940

Prepaid
insurance

4660

7580

3860

2680

840

Accumulated
depreciation

Accounts
payable

8026

Interest
payable

1940

340

Telephone
expensepayable

Bank
loan

440

7000

Share Retained
capital profits
11000

340

554
28600 Revenue
24380 Revenue

4
440

Interest
420 expense
2680 Petroexpense

3000

840

7
2240
8a

13900

13900

8b

2000

370

820

2000

240

5350

180

9
10
11
12
13

Closing
balance

46300

2220

210

180

21400

Telephone
2240 expense

13376

280

240

180

4000

11000

Supplies
370 expense
Interest
240 expense
Insurance
820 expense
Depreciation
5350 expense
Telephone
180 expense
41234

B.GeneralJournal

1
Cash
AccountsReceivable
PianoTuningFees
2

Cash
AccountsReceivable
PianoRepairFees
Supplies
AccountsPayable

BankLoan
InterestPayable
InterestExpense
Cash

AC
A1
A2
R1

A1
A2
R2

A4
L1

L3
L2
E6
A1

Debit
23940
4660

E1
A1

A3
A1

E5
A1

A1
A2

2680

Credit

28600
16800
7580

24380

340
340

3000
440
420
3860

8a

8b

10

PetrolandOilExpense
Cash

PrepaidInsurance
Cash

TelephoneExpense
Cash

Cash
AccountsReceivable

AccountsPayable
Cash

SuppliesExpense
Supplies

InterestExpense
InterestPayable

L1
A1

E3
A4

E6
L2

2680

840
840

2240
2240

13900
13900

2000
2000

370
370

240
240

11

12

13

InsuranceExpense
PrepaidInsurance

DepreciationExpenseMV
AccumulatedDepreciationMV

TelephoneExpense
TelephoneExpensePayable

E4
A3

E2
A5.1

E5
L4

820
820

5350
5350

180
180

C.GeneralLedger

OpeningBalance
PianoTuningFees
PianoRepairFees
AccountsReceivable

OpeningBalance(Balb/d)

Cashatbank
3280
23940
16800
13900

BankLoan
InterestPayable
InterestExpense
PetrolandOilExpense
PrepaidInsurance
TelephoneExpense
AccountsPayable
ClosingBalance(Balc/d)

$57920
46300

A1
3000
440
420
2680
840
2240
2000
46300
$57920

Accountsreceivable
OpeningBalance
3880
PianoTuningFees
4660
PianoRepairFees
7580

$16120
OpeningBalance(Balb/d)
2220

Cash
ClosingBalance(Balc/d)

A2
13900
2220

$16120

Prepaidinsurance
OpeningBalance
190
Cash
840


$1030
OpeningBalance(Balb/d)
210

Supplies
OpeningBalance
210
AccountsPayable
340

$550
OpeningBalance(Balb/d)
180

InsuranceExpense
ClosingBalance(Balc/d)

SuppliesExpense
ClosingBalance(Balc/d)

A3
820
210

$1030

A4
370
180
$550

Motorvehicle
OpeningBalance
21400
OpeningBalance(Balb/d) 21400

Closing Balance (Balc/d)

A5
21400

Accumulateddepreciation motorvehicle
OpeningBalance
ClosingBalance(Balc/d) 13376
DepreciationExp

OpeningBalance(Balb/d)

A5.1
8026
5350
$13376
13376

AccountsPayable
Cash
2000
ClosingBalance(Balc/d)
280

$2280

OpeningBalance
Supplies
OpeningBalance(Balb/d)

L1
1940
340
$2280
280

InterestPayable
Cash
440
ClosingBalance(Balc/d)
240

$680

L2
OpeningBalance
InterestExpense
Balb/d

440
240
$680
240

Bankloan
3000
4000

Cash
ClosingBalance(Balc/d)

OpeningBalance

$7000
Balb/d

L3
7000

$7000
4000

Telephoneexpensepayable
ClosingBalance(Balc/d)
180

L4
TelephoneExpense
Balb/d

180
180

ClosingBalance(Balc/d)

Sharecapital
11000

OpeningBalance
Balb/d

SE1
$11000
11000

Retainedprofits
ClosingBalance(Balc/d) 41234

Expenses
Retainedprofits

OpeningBalance
P/LSummary
Balb/d

SE2
554
40680
$41234
41234

ProfitandLossSummary
12300
40680
$52980

Revenues

SE3
52980

$52980

P/LSummary

P/LSummary

Pianotuningfees
28660

Pianorepairfees
24380

Cash
AccountsReceivable

Cash
AccountsReceivable

R1
23940
4660

R2
16800
7580
24380

Petrolandoilexpense
2680

Cash

P/LSummary

Depreciationexpense motorvehicle
5350
P/LSummary

AccDepn

Supplies

PrepaidInsurance

Cash
TelephoneExPay

Cash
InterestPayable

Suppliesexpense
370

P/LSummary

Insuranceexpense
820

P/LSummary

Telephoneexpense
2240
180
$2420

Interestexpense
420
240
660

P/LSummary

P/LSummary

E1
2680

E2
5350

E3
370

E4
820

E5
2420

$2420

E6
660

D.WORKSHEET

Acc.
Co.
A1
A2
A3
A4
A5
A5.1
L1
L2
L3
L4
SE1
SE2
SE3
R1
R2
E1
E2
E3
E4
E5
E6

AccountName

Cashatbank
Accountsreceivable
Prepaidinsurance
Supplies
Motorvehicle
AccumulateddepreciationMV
Accountspayable
Interestpayable
Bankloan
Telephoneexpensepayable
Sharecapital
Retainedprofits
Profitandlosssummary
Pianotuningfees
Pianorepairfees
Petrolandoilexpense
DepreciationexpenseMV
Suppliesexpense
Insuranceexpense
Telephoneexpense
Interestexpense

NETPROFIT(LOSS)

PianoServiceLtdWorksheet

Adjusted
TrialBalance
Adjustments
TrialBalance
Debit
Credit
Debit
Credit
Debit
Credit
46300
2220
1030
550
21400

2680

2240
420
$76840

8026
280

4000

11000
554

28600
24380

$76840

5350
370
820
180
240
$6960

820
370

5350

240

180

$6960

46300
2220
210
180
21400

2680
5350
370
820
2420
660
$82610

13376
280
240
4000
180
11000
554

28600
24380

IncomeStatement
Debit
Credit

2680
5350
370
820
2420
660

28600
24380

$82610

BalanceSheet
Debit
Credit
46300
2220
210
180
21400

$70130
40680

13376
280
240
4000
180
11000
41234

$70130

10

E.ADJUSTEDTRIALBALANCE

Account
Cashatbank
Accountsreceivable
Prepaidinsurance
Supplies
Motorvehicle
Accumulateddepreciationmotorvehicle
Accountspayable
Interestpayable
Bankloan
Telephoneexpensepayable
Sharecapital
Retainedprofits
Pianotuningfees
Pianorepairfees
Petrolandoilexpense
Depreciationexpensemotorvehicle
Suppliesexpense
Insuranceexpense
Telephoneexpense
Interestexpense

F.CLOSINGENTRIES

PianoTuningFees
PianoRepairFees
ProfitandLossSummary

ProfitandLossSummary
PetrolandOilExpense
DepreciationExpenseMV
SuppliesExpense
InsuranceExpense
TelephoneExpense
InterestExpense

ProfitandLossSummary
Retainedprofits

Accountcode
A1
A2
A3
A4
A5
A5.1
L1
L2
L3
L4
SE1
SE2
R1
R2
E1
E2
E3
E4
E5
E6

Account
code
R1
R2
SE3

SE3
E1
E2
E3
E4
E5
E6
SE3
SE2

Debit
46300
2220
210
180
21400

2680
5350
370
820
2420
660
$82610

Debit

Credit

13376
280
240
4000
180
11000
554
28600
24380

$82610

Credit

28600
24380
52980
12300
2680
5350
370
820
2420
660
40680
40680

11

G.POSTCLOSINGTRIALBALANCE

Account
Account
code
Debit
Cashatbank
A1
46300
Accountsreceivable
A2
2220
Prepaidinsurance
A3
210
Supplies
A4
180
Motorvehicle
A5
21400
Accumulateddepreciationmotorvehicle
A5.1
Accountspayable
L1
Interestpayable
L2
Bankloan
L3
Telephoneexpensepayable
L4
Sharecapital
SE1
Retainedprofits
SE2

$70310

H.FINANCIALSTATEMENTS

PIANOSERVICELTD
INCOMESTATEMENT
fortheyearended30June2015

Revenue
Pianotuningfees
28600
Pianorepairfees
24380

GROSSPROFIT

Expenses
Petrolandoilexpenses
(2680)
Depreciationexpensemotorvehicle
(5350)
Suppliesexpense
(370)
Insuranceexpense
(820)
TelephoneExpense
(2420)
InterestExpense
(660)

NETPROFIT/LOSS

Credit

13376
280
240
4000
180
11000
41234
$70310

52980

(12300)

$40680

12

PIANOSERVICELTD
BALANCESHEET
asat30June2015

CurrentAssets
Cashatbank
Accountsreceivable
Prepaidinsurance
Supplies

NoncurrentAssets
Motorvehicle
Accumulateddepreciationmotorvehicle

TOTALASSETS

CurrentLiabilities
Accountspayable
Interestpayable
Telephoneexpensepayable

NoncurrentLiabilities
Bankloan

TOTALLIABILITIES

ShareholdersEquity
Sharecapital
Retainedprofits

TOTALSHAREHOLDERSEQUITY

TOTALLIABILITIESANDSHAREHOLDERSEQUITY

21400
(13376)

46300
2220
210
180

8024

280
240
180

4000

11000
41234

48910

8024
56934

700

4000
4700

52234
56934

13