B. Prepare Bank Reconciliation Statement.  

Section C – Long answer question (ONE compulsory question)                       

Ashra Construction LLC is a leading building material firm in Muscat. The trial balance of the firm is given as under for the year to 31 December 2020 :

Details	Amt. OMR	Amt. OMR
Sales		3,120,000
Purchases	1,700,000
Furnitures and Fittings	752,000
Furniture and Fittings
accumulated Depreciation as at 1 Jan 2020		290,000
Inventory at 1 Jan 2020	374,000
Cash Balance	515,000
Accounts Receivables	1,081,500
Accounts Payables		796,500
Buildings	2,850,000
Buildings Accumulated Depreciation as at 1 Jan 2020		1,740,000
Sales and Marketing Overheads	246,000
Legal fees	32,000
Insurance	104,000
Interest	6,000
Advertising expense	2,000
Retained earnings as at 1 Jan 2020		316,000
Capital as at 1 Jan 2020		1,400,000
	7,662,500	7,662,500

The following additional information is also available:-                    

a)   Closing Inventory at the 31 December 2020 was valued at OMR 332,000

b)   Insurance includes an invoice for OMR 60,000 the year ending 30 June 2021.

c)   Sales and Marketing overheads of OMR 55,000 were still outstanding at the year end

d)   Depreciation is provided on a straight line basis of 5% on cost for Buildings and 12% on the cost of Furniture's and Fittings.

Required:

1. Prepare Income statement using multi-step method with appropriate period end adjustments.                                                                            

2. Prepare Balance -Sheet in an appropriate format with period end adjustments.

3. Identify an example of Pre-paid expense from the above given data and explain the concept of Prepayment.                                                    

Identify an example of accrued expense from the above given data and explain the concept of accrued income and expense.