Johnson’s Piano Tuning Service
Johnson owns Piano Tuning Service. The Trial Balance at 30th June 2013 is shown below:
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Account |
Account no. |
Debit |
Credit |
|
|
Cash at Bank 1100 $ 6 560 Accounts Receivable 1200 7 760 Prepaid Insurance 1300 380 Supplies 1400 420 Motor Vehicle 1500 48 800 Accumulated Depreciation-Motor Vehicle 1510 $16 050 Accounts Payable 20008 880 Interest Payable 2100 880 Salary payable 2150 1 000 Bank Loan 2200 14 000 Johnson, Capital 3000 23 110
———————— $63,920 $63,920 =============== |
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Transactions completed during the year ended 30 June 2014 are summarised below:
- Tuning Fees of $57,000 were receivable during the year; $47,900 of this total was received in cash. The reminder consisted of transactions of credit.
- Revenue from Piano repairs was $48 700. Cash received totalled $33,500, and accounts receivable increased by $15,200.
- Supplies costing $750 were purchased during the year on credit.
- On 1 January 2014, John paid $6000 off the bank loan plus interest of $1800. The interest payment consisted of $880 accrued up to 1 July 2013 and a further $920 which accrued for the period to 31 December 2013.
- Petrol and oil for the vehicle cost $5,300 in cash.
- Insurance on the vehicle, paid in advance, was $1,680.
- Telephone expense of $4,480 was paid.
- Accounts receivable of $27 800 were collected, and $4,000 was paid on accounts payable.
- Johnson withdrew $5,000 cash from the business.
- On 1st January 2014 Johnson invested $20,000 for expanding his business.
- Salary for the manager $ 5,000 has been paid.
- On 1st January Johnson borrowed additional fund of $ 10,000
- Machinery was purchased on 1st January 2014 of $ 15,000. The useful life of the machinery was 5 years.
The following information relating to adjusting entries is available at the end of June, 2014:
- A physical count showed supplies costing $400 on hand at 30 June, 2014.
- Accrued interest on the bank loan is $420.
- Insurance costing $1,500 expired during the year.
- Depreciation on the vehicle is $10 700.
- The June telephone account for $380 has not been paid or recorded.
- Salary for the manager accrued but not paid $2,000
- Repair expenses accrued but not paid $ 2,000.
- Depreciate machinery using straight line method.
Open T accounts for the accounts listed in the trial balance and the accounts below:
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Account Account Number |
|
Telephone Expense Payable 2300 Johnson, Drawings 3100 Piano Tuning Fees Revenue 3200 Piano Repair Fees Revenue 4100 Petrol & Oil Expense 5000 Telephone Expense 5100 Supplies Expense 5200 Insurance Expense 5300 Depreciation Expense-Vehicle 5400 Interest expense 5500 Salary expense 6000 Repair expenses 7000 Machinery 8000 Accumulated depreciation- Machinery 8500 |
Required:
A. Prepare journal entries to record the transactions (1-13) completed in the year to 30 June, 2014
- Post the entries to Accounts
- Prepare and post the adjusting entries
- Prepare a 10-column worksheet for the year ended 30th June, 2014
- Prepare an Income Statement, a statement of changes in Owners’ Equity and a balance-
sheet for the year ended 30th June, 2014
- Prepare the closing entries
- Comment on the performance of the business based on their financial statements (600 words).
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