Here is the trial balance for Palace Industries as at 31 December 20x6:

Additional information:

1. Interest earned on the municipal stock but not yet received is R620.

2. Advertising includes a payment of R1 400 made to the Athlone Tribune for advertisements to be published from 1 January 20x7.

3. R1 250 of the insurance expense is prepaid.

4. Wages earned by employees, but unpaid by 31 December 20x6, totalled R700.

5. On 1 August 20x6, Palooka Industries let a portion of its premises for 12 months and received a cheque for R1 200 for the entire year’s rent.

6. Interest on the mortgage bond is payable quarterly in arrears on the first day of January, April, July and October. The bond was raised on 1 January 20x6 and there have been no payments of the capital sum.

7. Fixtures and fittings must be depreciated by R900.

8. Inventory on hand (at cost) on 31 December was R39 200.

You are required to:

1. Prepare the adjusting journal entries for the additional information.

2. Enter your adjusting entries on a worksheet and complete the worksheet.

3. Prepare the statement of profit or loss & other comprehensive income for the year ended 31 December 20x6.

4. Prepare the statement of financial position as at 31 December 20x6.

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Capital Drawings 8% mortgage bond Accounts payable Land and buildings Fixtures and fittings Inventory (1 January 20x6) Investment: Municipal stock Accounts receivable Bank Sales Rent income Interest income Purchases. Carriage inwards Advertising Insurance Palace Industries TRIAL BALANCE AS AT 31 DECEMBER 20x6 Details Debit Admin expenses Water and electricity Rates and taxes Wages Interest expense Fol. B1 B2 B3 B4 B5 B6 B7 B8 B9 B10 222222222 N1 N2 N3 N4 N5 N6 N7 N8 N9 N10 N11 N12 5 000 00 00 25 000 50 000 00 7 000 00 50 000 00 18 600 00 41 000 00 7 000 00 161 500 00 3 000 00 4 900 00 2 500 00 17 300 00 4 000 00 4 800 00 38 500 00 1 500 00 416 600 00 Credit 75 000 00 45 000 00 270 000 00 1 200 00 400 00 416 600 00