Accounting Practice Set: Salzbruck Musical Instruments - June 2018

This accounting practice set simulates the financial activities of Salzbruck Musical Instruments Pty Ltd for the month of June 2018. The assignment requires students to record transactions in various journals (Sales, Purchases, Cash Receipts, Cash Payments, and General Journals), post to subsidiary and general ledgers, prepare an unadjusted trial balance, and complete adjusting entries. Students are then tasked with preparing a worksheet, financial statements (Income Statement, Statement of Changes in Equity, and Balance Sheet), subsidiary ledger schedules, closing entries, and a post-closing trial balance. The exercise covers a range of accounting concepts, including inventory systems, depreciation, and the preparation of key financial reports, offering a comprehensive understanding of the accounting cycle.

Team Assignment Cover Sheet
FAMILY NAME FIRST NAME
(PRINT CLEARLY)
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STUDENT ID. NUMBER
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UNIT NAME UNIT CODE DUE DATE
TUTORIAL OR L ECT URE DAY & TIME
(if applicable)
TEAM
NUMBER
(if applicable)
NAME OF TUTOR (if applicable)
TITLE/TOPIC OF ASSIGNMENT WORD COUNT NAME OF LECTURER
Late assignments submitted outside office hours will be receipted at 8.30 a.m. the following
working day.

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SALZBRUCK MUSICAL INSTRUMENTS
PTY LTD
–
ACCOUNTING PRACTICE SET

Leo Langa, 2018
Accounting & Finance
UWA Business School
The University of Western Australia
Crawley WA 6009

Table of Contents
INTRODUCTION................................................................................................................................................................6
Company Background................................................................................................................................................6
Accounting System Information.................................................................................................................................6
UNADJUSTED TRIAL BALANCE AND CHART OF ACCOUNTS...............................................................................7
As at 31 May 2018...........................................................................................................................................7
SUBSIDIARY LEDGERS...................................................................................................................................................8
Schedule of Accounts Receivable..............................................................................................................................8
As at 31 May 2018...........................................................................................................................................8
Schedule of Accounts Payable...................................................................................................................................8
As at 31 May 2018...........................................................................................................................................8
TRANSACTIONS................................................................................................................................................................9
For June 2018.............................................................................................................................................................9
Instructions...............................................................................................................................................................10
ADJUSTING ENTRIES.....................................................................................................................................................11
General Journal…………………………………………………………………………………………………..12
Cash Receipts Journal...............................................................................................................................................15
Cash Payments Journal.............................................................................................................................................16
Sales Journal.............................................................................................................................................................18
Purchases Journal.....................................................................................................................................................19
LEDGERS..........................................................................................................................................................................20
Accounts Receivable Subsidiary Ledger..................................................................................................................20
Accounts Payable Subsidiary Ledger.......................................................................................................................21
General Ledger.........................................................................................................................................................22
WORKSHEET....................................................................................................................................................................31
FINANCIAL STATEMENTS............................................................................................................................................33
Schedules of Subsidiary Ledgers..............................................................................................................................33
Income Statement.....................................................................................................................................................34
Statement of Changes in Equity...............................................................................................................................36
Balance Sheet...........................................................................................................................................................37
Post-closing Trial Balance........................................................................................................................................38
WRITTEN COMPONENT................................................................................................................................................39
STUDENT DECLARATION FOR COMPLETION OF WORK......................................................................................43

INTRODUCTION
The objective of this Accounting practice set is to provide students with an insight into the process of
recording transactions, completing adjusting and closing entries, and preparing financial statements for a
retail business.
Company Background
Salzbruck Musical Instruments Pty Ltd has been in business in Sydney since July, 2012. The company was
started by William Jacques and operates a shop which sells musical instruments on a wholesale basis to other
businesses on credit and cash terms. The company's share capital consists of 1,134,000 ordinary shares, issued at
$1 each, that are owned by various members of the Jacques family. The company employs a combination of
both sales and administration staff to operate the business.
Accounting System Information & Procedures
The company has a financial year end of 30 June and prepares adjusting entries at the end of the financial year.
To ensure efficiency of its accounting procedures, the company uses the following Special Journals to maintain
its accounting records:
1. Sales Journal (SJ): to record all sales of inventory on credit
2. Purchases Journal (PJ): to record all purchases of inventory on credit
3. Cash Receipts Journal (CRJ): to record all cash receipts
4. Cash Payments Journal (CPJ): to record all cash payments
5. General Journal (GJ): to record all transactions other than the above.
Business transactions are recorded for Salzbruck Musical Instruments on a daily basis in one of these five
journals in the accounts.
Additionally, the company maintains a general ledger to record postings from the journals. Subsidiary Ledgers
are used to record the separate details of Accounts Receivable and Accounts Payable. Transactions are posted
immediately to the relevant ledger account if they are entered into the general journal, the “other” column of the
Cash Receipts Journal or Cash Payments Journal, or if they affect any of the Accounts Receivable or Accounts
Payable subsidiary ledger accounts. Apart from these transactions, totals of the special journals are taken at the
end of the month and then posted to the appropriate accounts. The company uses a periodic inventory system.
In practice, the company would be required to collect and pay Goods and Services Tax (GST) on its sales and
purchases. However, for the purposes of this exercise, GST has been excluded.
Please Note: All amounts in this practice set should be rounded to the nearest dollar.

UNADJUSTED TRIAL BALANCE AND CHART OF ACCOUNTS
As at 31 May 2018
Acc. No. Account Debit ($) Credit ($)
100 Cash at Bank 614,628
101 Accounts Receivable Control 238,140
102 Store Supplies 151,011
103 Inventory 781,200
104 Prepaid Store Rent (paid 1 March 2018) 739,620
105 Prepaid Insurance (paid 1 Nov. 2017) 11,340
150 Showroom Fittings 510,300
151 Accumulated Depreciation-Showroom Fittings
160 Equipment 173,250
161 Accumulated Depreciation - Equipment 85,050
200 Accounts Payable Control 153,594
201 Interest Payable
202 Utilities Payable
203 Wages Payable
204 Salaries Payable
205 Tax Payable
206 Dividend Payable
250 Mortgage Loan (due 31 July 2042) 606,942
300 Share Capital 1,134,000
301 Retained Profits (1 July 2017) 963,522
302 Dividends Declared
303 Profit and Loss Summary
400 Sales Revenue 4,045,734
401 Sales Discounts (Discount Allowed) 31,059
402 Sales Returns and Allowances 8,757
500 Purchases 1,926,855
501 Purchase Discounts (Discount Received) 24,192
502 Purchase Returns and Allowances 10,143
600 Freight-Out 2,898
601 Wages Expense - Sales Staff 968,121
602 Depreciation Expense - Showroom Fittings
603 Depreciation Expense - Equipment
604 Supplies Expense
605 Rent Expense
606 Insurance Expense
607 Advertising Expense 43,848
608 Interest Expense
609 Utilities expense 58,464
610 Tax Expense
611 Sundry Expenses 3,024
612 Salaries Expense – Office Staff 760,662
613 Bad Debts Expense
7,023,177 7,023,177

SUBSIDIARY LEDGERS
Schedule of Accounts Receivable
As at 31 May 2018
Note: Salzbruck Musical Instruments offers all customers Credit Terms 2/10, n/30, unless otherwise stated
Acc. No. Account Invoice
date
Amount ($)
101-1 Amadeus Cellos 27 May 95,256
101-2 Bach Guitars 16 May 48,132
101-3 Chopin Pianos 23 April 65,142
101-4 Ludwig Trumpets 11 May 29,610
$238,140
Schedule of Accounts Payable
As at 31 May 2018
Acc. No. Account Invoice
date
Credit terms Amount ($)
200-1 Schubert Synthesisers 29 May 2/10, n/60 43,470
200-2 Wagner Violins 22 May 1/10, n/45 110,124
$153,594

TRANSACTIONS
For June 2018
Date Transaction Week 1
June 1 Amadeus Cellos paid the entire balance of its account that was still outstanding.
Delivered goods to Bach Guitars for $68,292 and issued invoice #910. Issued cheque #153 to pay
$7,560 for delivery costs of inventory to their premises.
June 3 Paid the amount owing to Schubert Synthesisers. Cheque #154 was sent.
June 4 Total Cash Sales for the week were $19,278.
Week 2
June 8 Chopin Pianos Store paid $27,342 toward the amount it owes us.
June 9 Made a purchase from Wagner Violins for $58,590 for boutique lighting: Terms are 1/10, n/45 and
date of invoice was 8 June.
The firm issued cheque #155 for the purchase of store supplies amounting to $5,544.
June 10 Amadeus Cellos purchased inventory of $68,796. Invoice #911 was issued.
June 11 Some of the boutique light fittings purchased on 7 June from Wagner Violins were the wrong
design. Returned inventory in exchange for a Credit Note of $18,900.
June 12 Total Cash Sales for the week were $26,334.
Week 3
June 15 Purchased inventory from Schubert Synthesisers for $96,390. The invoice was dated 14 June.
Credit terms are 2/10, n/30.
June 16 Sold inventory to Chopin Pianos for $124,362 on invoice #912. Issued cheque #156 to pay for
delivery costs of $9,450.
June 16 Paid office staff salaries of $73,458. Cheque #157 was issued for payment.
Cheque #158 was issued to pay sales staff wages, $62,370.
June 18 The company issued cheque #159 to pay the amount still owing to Wagner Violins.
June 19 Total Cash Sales for the week were $25,011.

Week 4
June 22 Chopin Pianos returned $23,562 of inventory purchased on 14 June. Issued a Credit Note for the
transaction.
June 23 Issued cheque #160 for $12,600 to pay for the annual gift the company donates to the Smith
Family Charity Fund. The gift is to be recorded as a sundry expense in the accounts.
June 24 Purchased inventory from Wagner Violins, worth $93,870. The terms were 1/10, n/45. Date of the
invoice was 22 June.
June 25 Received the total amount owing from Chopin Pianos.
June 26 Total Cash Sales for the week were $39,312.
Week 5
June 28 Bach Guitars paid the entire balance of its still outstanding account.
June 29 Reduced $75,600 of the amount owing to Wagner Violins and Cheque #161 was issued.
June 29 A dividend of $177,100 was declared to the company shareholders. However, the dividend will
not be paid until September 30, 2018.
Paid sales staff wages, $62,370 and Cheque #162 was issued to meet the payment.
June 30 Issued additional shares to the owners of the Company for cash, and $126,000 was received and
banked.
Total Cash Sales for the week were $23,436.
INSTRUCTIONS
1) Enter the transactions on pages 8-9 into the appropriate Journal for the month of June 2018, Remember to post
Journal transactions to the ledger accounts as specified in the “Account System Information” section of the
introduction.
2) Total all Special Journal columns and post to the appropriate ledger account at the end of the month.
3) Prepare the unadjusted Trial Balance as at 30 June on the worksheet provided.
4) Prepare the adjusting entries shown on page10 in the General Journal and post to the relevant ledger accounts.
The enter the adjustments in the relevant worksheet columns and prepare an adjusted Trial Balance.
5) A stocktake on 30 June 2018 indicates that the balance of closing inventory is $1,416,492. Use this information to
complete the remaining columns of the worksheet.
6) Use the worksheet to prepare the Income Statement and Balance Sheet.
7) Complete the Schedule of Accounts Receivable and Schedule of Accounts Payable. Ensure the balances agree
with the totals in the control accounts.
8) Prepare closing entries and post to the relevant general ledger accounts.

9) Complete the post-closing Trial Balance as at June 2018.
ADJUSTING ENTRIES
a) The Showroom Fittings were installed on 1 July, 2017. They have a useful life of 9 years and no salvage value.
b) The Equipment was installed on 1 July, 2012. They have a useful life of 10 years and estimated salvage value of $3150.
c) Twelve months of store rent was prepaid on 1 March, 2018. Of the original prepaid amount, $246,537 worth of store
rent has now expired.
d) A count of store supplies indicates that $85,365 remain on hand at year end.
e) A one-year insurance policy was purchased on 1 November 2017 for $11,340.
f) Interest on the ANZ Bank Loan is charged at 7% per annum and is paid annually on 1 August (the interest expense
should be rounded off to the nearest dollar). The ANZ Bank Loan was originally taken out on the 1 August, 2017.
g) The company has been informed that Ludwig Trumpets has been declared bankrupt and Salzbruck Musical
Instruments Pty Ltd has agreed to write off the amount owing as a bad debt. The company uses the direct write-of
method to account for any bad debts in the books.
h) A telephone bill for $6,426 for June was received on 4 July, 2018. The amount has not yet been recorded. The company
records them as a utilities expense.
i) Office Staff are paid once per month, $73,458. The Office Staff were last paid on the 15 June, 2018. Exactly half of
one month Office Staff wages are still owing.
j) Sales Staff are paid fortnightly and work 7 days per week. The sales staff were last paid on the 29 June, 2018. One day
of the wages bill is still owed to the Sales Staff.
k) The estimated Tax Payable for the year ended 30 June, 2018 is $86,400. This amount is to be paid on 31 October, 2018.

General Journal
Date Account Post
Ref. Debit Credit
09-06-
2018 Showroom Fittings…..Dr. 150 58,590
To,Wagner Violins 200-2 58,590
(Being Showroom Fittings purchased on Credit)
11-06-
2018 Wagner Violins…..Dr. 200-2 18,900
To, Showroom Fittings 150 18,900
(Being Showroom Fittings returned to Wagner Violins)
22-06-
2018 Sales Returns & Allowances….Dr. 402 23,562
To, Chopin Pianos 101-3 23,562
(Being goods sold on creit, returned by customer)
29-06-
2018 Dividend Declared….Dr. 302 1,77,100
To, Dividend Payable 206 1,77,100
(Being dividend declared)
30-06-
2018 Depreciation Expense- Showroom Fittings A/c……Dr. 602 56,700
To, Accum Depr. - Showroom Fittings A/c. 151 56,700
(Being depreciation charged on showroom fittings)
Depreciation Expense- Equipment A/c……Dr. 603 17,010
To, Accum Depr. - Equipment A/c. 161 17,010
(Being depreciation charged on equipment)
Rent Expense A/c…..Dr. 605 2,46,537
To, Prepaid Store Rent A/c. 104 2,46,537
(Being rent expired for the month)
Supplies Expense A/c……Dr. 604 71,190
To, Store Supplies A/c. 102 71,190
(Being office supplies consumed for the month)
Insurance Expense A/c……Dr. 606 7,560
To, Prepaid Insurance A/c. 105 7,560
(Being insurance expired for the month)
Interest Expense A/c……Dr. 608 38,945
To, Interest Payable A/c. 201 38,945
(Being interest due on loan)
Bad Debts Expense A/c……Dr. 613 29,610
To, Ludwig Trumpets A/c. 101-4 29,610
(Being due from Ludwig Trumpets written off)
Utilities Expense A/c……..Dr. 609 6,426
To, Utilities Payable A/c. 202 6,426
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