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Question 4(b) You are working as an accountant at Southern Accounting Services. During...

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Accounting

Question 4(b)

You are working as an accountant at Southern Accounting Services. During the annual audit of the accounting records and draft financial statements of your client as at 30 June 2021 you found the following errors and omissions.

  1. Credit notes totalling $85,000 relating to June sales were posted against sales made in July.
  2. No disclosure has been made about a fire in the warehouse during May that caused damage worth $350,000. The warehouse and its contents are fully insured.
  3. No adjustment to the allowance for doubtful debts has been made to reflect the fact that a major debtor owing $51,000 went into liquidation after the end of the reporting period. Correspondence with the liquidator indicates that your client will never receive this amount.
  4. The manufacturing assembly line has been taken out of operation pending its sale. The asset has a carrying amount of $50,000 as at 30 June 2021 and is likely to be sold for a profit.

Required

Assume all errors and omissions are material. Prepare the necessary adjustments for each item.

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