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Another solution: The annual audit of the accounting records and draft financial statements of Moala Ltd...

Another solution:

The annual audit of the accounting records and draft financial statements of Moala Ltd as at 30 June 2017 revealed the following errors and omissions:

  1. The purchase price of $55 000 for a new vehicle on 1 January 2016 was posted to the vehicle maintenance expense account. Motor vehicles are depreciated at 25% p.a. straight-line.
  2. No adjustment to the allowance for doubtful debts has been made to reflect the fact that a major debtor owing $20 000 went into liquidation after the end of the reporting period. Correspondence with the liquidator indicates that the expected payout will be no more than 10c in the dollar.
  3. A manufacturing assembly line has been taken out of operation pending its sale. The asset had a carrying amount of $50 000 as at 30 June 2017 and is likely to be sold for a profit.
  4. Credit notes totaling $63 000 relating to June sales were posted against sales made in July.
  5. No disclosure has been made about a fire in the warehouse during May that caused damage worth $10 000. The warehouse and its contents are fully insured.

Required: Prepare the necessary adjustments or note (if any) for all items.

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ekkarill92 answered 2 years ago
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