UNSW Business School

School of Accounting
ACCT1501 Accounting and Financial Management 1A
Session 2 2017

Weeks 4 – 6

COMPREHENSIVE CLASS EXAMPLE

– PIANO SERVICES LTD
Adapted from Hoggett, Medlin and Edwards (2012)

Student Handout

Moodle: https://moodle.telt.unsw.edu.au

Session 2, 2017 ACCT1501 1

Alex Schubert emigrated from Austria to Australia in 2000 to fulfil his big dream to
become a star pianist in the Sydney Opera House. He has been saving all his money
from his concert plays in Vienna for the last five years to buy his flight ticket to the
great southern land. Times were tough though since Daniel Beethoven has been
around Australia for three years already travelling from one concert hall to the other
with his famous programme “European Classic Meets Red Earth”. Daniel has even
become popular throughout the remotest areas in Northern Territory. Just recently he
has been giving a charity concert in Katherine for both locals and the hundreds of
European and other Australian tourists that had just travelled there to see the new born
piano star.
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 possibilities how to stay in Australia anyway because by now he has been
fallen in love with this beautiful vast country. One day he went to a smaller concert in
Alice Springs where a 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 piano was totally out of tune.
At that moment his idea was born: he would open a business and offer piano
tuning and repair services throughout the country. That way he could combine both
his love for pianos and travelling through Australia. Now in 2017, Alex has been the
owner of Piano Service Ltd. for several years and is doing pretty well. The post-
closing trial balance of his company at 30 June 2016 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
Account number Account number
Cash at bank A1 Retained profits SE2
Accounts receivable A2 Profit and loss SE3
summary
Prepaid insurance A3 Piano tuning fees R1
Supplies A4 Piano repair fees R2
Motor vehicle A5 Petrol and oil expense E1

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Accumulated depreciation – Depreciation expense
motor vehicle A5.1 – motor vehicle E2
Accounts payable L1 Supplies expense E3
Interest Payable L2 Insurance expense E4
Bank loan L3 Telephone expense E5
Telephone expense payable L4 Interest expense E6
Share capital SE1

Transactions completed during the year ended 30 June 2017 are summarised below:

1. Tuning fees of $28 600 were receivable during the year; $23 940 of this total
was received in cash predominantly from customers in the outback. 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. A major customer this year was
Daniel Beethoven whose piano broke during an outdoor play under the stars.
3. Supplies costing $340 were purchased during the year on credit.
4. On 1 January 2017, Piano Service Ltd paid $3 000 off the bank loan, plus
interest of $860. The interest payment consisted of $440 accrued up to 30 June
2016 and a further $420 which accrued for the period to 31 December 2016.
5. Petrol and oil for the vehicle in order to get around the vast countryside cost
$2 680 in cash.
6. Insurance on the vehicle, paid in advance was $840.
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
2017.
9. A physical count showed supplies costing $180 on hand at 30 June 2017.
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 2017.
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 2017.
F. Prepare and post the closing entries.
G. Prepare a post-closing trial balance as at 30 June 2017.
H. Prepare Income Statement for the year ended 30 June 2017 and Balance Sheet
as at 30 June 2017.

Session 2, 2017 ACCT1501 3

At the end of the fiscal year, Alex received a thank you card from Daniel for his great
work on the piano repair in 2017. The card also included an invitation for Alex to play
with Daniel on New Year’s Eve in the Sydney Opera House. Alex was very happy
about that. He thought 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.

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A. TRANSACTION ANALYSIS

Cash Accounts Prepaid Supplies Motor Accumulated Accounts Interest Telephone Bank Share Retained
receivable insurance vehicle depreciation payable payable expense loan capital profits
payable
Opening
balance
1
2
3
4
5
6
7
8a
8b
9
10
11
12
13
Closing
balance

Session 1, 2017 ACCT1501 5

B. General Journal
Account Debit Credit
Code
1

8a

8b

10

11

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 12

13

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C. General Ledger
Cash at bank A1

Accounts receivable A2

Prepaid insurance A3

Supplies A4

Motor vehicle A5

Accumulated depreciation – motor vehicle A5.1

Accounts Payable L1

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 Interest Payable L2

Bank loan L3

Telephone expense payable L4

Share capital SE1

Retained profits SE2

Profit and Loss Summary SE3

Piano tuning fees R1

Piano repair fees R2

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 Petrol and oil expense E1

Depreciation expense – motor vehicle E2

Supplies expense E3

Insurance expense E4

Telephone expense E5

Interest expense E6

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 D. WORKSHEET
Piano Service Ltd Worksheet
Adjusted
Trial Balance Adjustments Trial Balance Income statement Balance Sheet
Acc.
Co. Account Name Debit Credit Debit Credit Debit Credit Debit Credit Debit Credit
A1 Cash at bank 150
A2 Accounts receivable 2,268
A3 Prepaid insurance 9,930
A4 Supplies 170
A5 Motor vehicle 6,580
A5.1 Accumulated depreciation – MV
L1 Accounts payable
L2 Interest payable 80,000
L3 Bank loan 288,000
L4 Telephone expense payable 24,000
SE1 Share capital 25,800
SE2 Retained profits
SE3 Profit and loss summary 6,260
R1 Piano tuning fees
R2 Piano repair fees
E1 Petrol and oil expense 50,000
E2 Depreciation expense – MV 24,300
E3 Supplies expense 308,920
E4 Insurance expense 700
E5 Telephone expense
E6 Interest expense

NET PROFIT (LOSS)

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E. ADJUSTED TRIAL BALANCE

Account
Account code Debit Credit
Cash at bank A1
Accounts receivable A2
Prepaid insurance A3
Supplies A4
Motor vehicle A5
Accumulated depreciation – motor A5.1
vehicle
Accounts payable L1
Interest payable L2
Bank loan L3
Telephone expense payable L4
Share capital SE1
Retained profits SE2
Piano tuning fees R1
Piano repair fees R2
Petrol and oil expense E1
Depreciation expense – motor vehicle E2
Supplies expense E3
Insurance expense E4
Telephone expense E5
Interest expense E6

F. CLOSING ENTRIES
Account Debit Credit
code
1

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G. POST-CLOSING TRIAL BALANCE

Account
Account code Debit Credit
Cash at bank A1
Accounts receivable A2
Prepaid insurance A3
Supplies A4
Motor vehicle A5
Accumulated depreciation – motor A5.1
vehicle
Accounts payable L1
Interest payable L2
Bank loan L3
Telephone expense payable L4
Share capital SE1
Retained profits SE2

H. FINANCIAL STATEMENTS

PIANO SERVICE LTD

INCOME STATEMENT
for the year ended 30 June 2017

Revenue
Piano tuning fees 12,135
Piano repair fees 900 11,235

GROSS PROFIT

Expenses
Petrol and oil expenses 12,015
Depreciation expense – motor vehicle 5,455 6,570
Supplies expense
Insurance expense
Telephone Expense 4,665
Interest Expense
19
NET PROFIT/LOSS
4,684

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 PIANO SERVICE LTD
BALANCE SHEET
as at 30 June 2017

Current Assets
Cash at bank 150
Accounts receivable 2,268
Prepaid insurance 9,930
Supplies 199 9,731
5,445
Non-current Assets 880
Motor vehicle 19
Accumulated depreciation – motor vehicle
18,493
TOTAL ASSETS
80,000
Current Liabilities 288,000
Accounts payable 25,200 262,800
Interest payable 25,800
Telephone expense payable 269 25,531

Non-current Liabilities
Bank loan 368,331
386,824
TOTAL LIABILITIES
6,260
Shareholder’s Equity 1,176
Share capital 784
Retained profits
8,220
TOTAL SHAREHOLDER’S EQUITY
50,000
TOTAL LIABILITIES AND SHAREHOLDER’S
EQUTIY

Session 2, 2017 ACCT1501 14