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Prepare journal entries to record the transactions

Assignment Help Financial Accounting
Reference no: EM13834954

Johnson owns Piano Tuning Service. The Trial Balance at 30th June 2013 is shown below:

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               1000

Bank Loan                                                                                             2200              14 000

Johnson, Capital                                                                                    3000                23 110

------------------------                                                                        $63,920        $63,920

 





Transactions completed during the year ended 30 June 2014 are summarised below:

  1. 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.
  2. Revenue from Piano repairs was $48 700. Cash received totalled $33,500, and accounts receivable increased by $15,200.
  3. Supplies costing $750 were purchased during the year on credit.
  4. 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.
  5. Petrol and oil for the vehicle cost $5,300 in cash.
  6. Insurance on the vehicle, paid in advance, was $1,680.
  7. Telephone expense of $4,480 was paid.
  8. Accounts receivable of $27 800 were collected, and $4,000 was paid on accounts payable.
  9. Johnson withdrew $5,000 cash from the business.
  10. On 1st January 2014 Johnson invested $20,000 for expanding his business.
  11. Salary for the manager $ 5,000 has been paid.
  12. On 1st January Johnson borrowed additional fund of $ 10,000
  13. 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:

  1. A physical count showed supplies costing $400 on hand at 30 June, 2014.
  2. Accrued interest on the bank loan is $420.
  3. Insurance costing $1,500 expired during the year.
  4. Depreciation on the vehicle is $10 700.
  5. The June telephone account for $380 has not been paid or recorded.
  6. Salary for the manager accrued but not paid $2,000
  7. Repair expenses accrued but not paid $ 2,000.
  8. Depreciate machinery using straight line method.

Open T accounts for the accounts listed in the trial balance and the accounts below:

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

  1. Post the entries to Accounts
  2. Prepare and post the adjusting entries
  3. Prepare a 10-column worksheet for the year ended 30th June, 2014
  4. Prepare an Income Statement, a statement of changes in Owners' Equity and a balance-

sheet for the year ended 30th June, 2014

  1. Prepare the closing entries           

Comment on the performance of the business based on their financial statements (600 words).

Reference no: EM13834954

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