This trial balance is for High Flats (owned by Mr Cook) as at 31 December 20x5.

Additional information:

1. Office furniture and equipment must be depreciated at 15% per annum on the diminishing-balance method. (No furniture or equipment was bought or  sold during the year.)

2. The mortgage is for a fixed term of 20 years. No capital repayment is required until 20x5.

3. Insurance includes an amount of R250 for Mr Cook’s private house.

4. The payment in advance (rates and taxes) shown in the trial balance is for the previous financial year. The prepayment of R4 500 for the current year is included in the rates and taxes figure of R9 190.

5. It is considered that an allowance for bad debts of R2 000 would be adequate.

6. An annual salary of R650 paid to the bookkeeper was debited to drawings in error.

7. A receivable, whose outstanding balance of R480 is considered to be irrecoverable, is to have the debt written off.

You are required to:

1. Prepare the necessary adjusting journal entries for the adjustments.

2. Calculate the net profit or loss.

Transcribed Image Text:

TRIAL BALANCE AS AT 31 DECEMBER 20x5 Fol. Debit Details Capital account - 1 January 20x5 Maintenance and repairs Rates and taxes Drawings Wages Bad debts. Rent income Interest paid on bond Land and buildings at cost Office furniture and equipment at cost Accounts receivable Prepaid expenses (rates) Allowance for bad debts Accounts payable Electricity and water Insurance Telephone and postage 18% mortgage bond over land and buildings Accumulated depreciation: Office furniture and equipment Bank 62222222 B1 N1 N2 B2 N3 N4 N5 N6 B3 B4 B5 B6 B7 B8 N7 N8 N9 B9 B10 B11 6 295 00 9 190 00 31 920 00 9 960 00 485 00 18 225 00 298 000 00 14 900 00 19 870 00 3 750 00 5 828 00 5 250 00 1 326 00 36 110 00 00 461 109 Credit 194 245 00 123 474 00 3 000 00 www. 1 890 00 135 000 00 3 500 00 461 109 00