Question

Required: Complete the following worksheet for Appliance Repair for the year ended 30 June 2020.

Additional information to complete the worksheet:

1. The equipment of $67,500 was purchased on 1 March 2020. The straight-line depreciation method is used with a useful life of 3 years and a scrap value of $2,700. No depreciation is ever recorded.
2. The $75,000 bank loan was borrowed on 1 May 2020. It is an interest only loan. The interest rate is 0.8% per month. No interest is ever paid or recorded.
3. The supplies on hand at 30 June 2020 were $650.
4. The prepaid insurance balance represents the annual premium paid on 1 April 2020.
5. $2,500 of unearned revenue has been earned by 30 June 2020.

Appliance Repair Worksheet For the year ended 30 June 2020
	Trial Balance (Unadjusted)		Adjustments		Trial Balance (Adjusted)		Income Statement		Balance Sheet
Account title	Debit	Credit	Debit	Credit	Debit	Credit	Debit	Credit	Debit	Credit
Cash at bank	37,500
Accounts receivable	127,500
Prepaid insurance	1,800
Supplies	900
Equipment	67,500
Accumulated depreciation-Equipment
Accounts payable		2,700
Unearned revenue		3,150

Interest payable
Bank loan (due in 2028)		75,000
Capital		49,950
Service revenue		157,500
Wages expense	52,500
Supplies expense	600
Depreciation expense – Equipment
Insurance expense
Interest expense
	288,300	288,300

Answer 1

	Trial balance (Unadjusted)	Adjustment	Trial balance (adjusted)	Income statement	Balance Sheet
Account Title	Debit	Credit	Debit	Credit	Debit	Credit	Debit	Credit	Debit	Credit
Cash at bank	37500				37500	0			37500	0
Accounts receivable	127500				127500	0			127500	0
Prepaid insurance	1800			450	1800	450			1800	450
Supplies	900			250	900	250			900	250
Equipment	67500				67500	0			67500	0
Accumulated depreciation				21600	0	21600			0	21600
Accounts payable		2700			0	2700			0	2700
Unearned revenue		3150	2750		2750	3150			2750	3150
Interest payable				1200	0	1200			0	1200
Bank loan (due in 2028)		75000			0	75000			0	75000
Capital		49950			0	49950			0	49950
Service revenue		157500		2500	0	160000	0	160000
Wages expense	52500				52500	0	52500	0
Supplies Expense	600				600	0	600	0
Depreciation expense - Equipment			21600		21600	0	21600	0
Insurance expense			450		450	0	450	0
Interest expense			1200		1200	0	1200	0
Profit							83650
Profit added to capital										83650
	288300	288300	26000	26000	314300	314300	160000	160000	237950	237950

Notes
Depreciation
Cost	67500
Scrap value	2700
Depreciable value	64800
No of years	3
Depreciation per year	21600
Interest on bank loan
Loan amount	75000
Interest %	0.80%
Interest per month	600
Interest for 2020 (2 months)	1200
Supplies unadjusted	900
Supplies in hand	650
Used for services but no information on billing, hence debited unearned revenue	250
Insurance paid	1800
Apr to Jun 2020 (3 months)	450
Adjusted prepaid insurance	1350