Question 1

An inexperienced bookkeeper prepared the following trial balance from the books of Wilson Agencies, at 31 March 2006:

TRIAL BALANCE

Furniture and equipment 40 000

Accumulated depreciation: furniture and equipment 10 000

Bank: favourable balance 8 000

Debtors 15 000

Capital: A. Wilson 60 000

Drawings: A. Wilson 28 000

Creditors 5 000

Long-term loan 20 000

Commission earned 45 000

Insurance expense 6 000

Salaries 15 500

Rental 24 000

Telephone 3 500

R143 000 R143 000

Additional information:

i. Commission earned but not invoiced, R9 300.

ii. Prepaid insurance on 31 March 2006, R1 500.

iii. Depreciation on furniture and equipment not yet provided for, R3 000.

iv. Accrued interest on long-term loan, R4 000.

v. Salaries in arrears, R2 000.

vi. Telephone due, R500.

Required

(a) Journalise the necessary adjustments. Narrations are not required.

(b) Prepare a corrected, post-adjustment trial balance as at 31 March 2006.

(c) Prepare the closing journal entries.

Question 2

On 1 January 2005, a manufacturer buys a manufacturing plant for R20 000 cash.

On 1 July 2006, he buys an additional plant for R4 000 cash.

On 31 December 2006, he sells a plant that he bought on 1 January 2005 for R3 000 for R1 600 cash.

On 1 April 2007, he buys a plant for R2 800 cash.

On 1 October 2008, he sells a plant that he bought on 1 July 2006 for R1 200 for R700 cash.

He depreciates his plant on the straight-line basis on 31 December each year at the rate of 20% of the original cost.

Required

Machinery, depreciation provision, and asset disposal accounts for the years 2005 to 2009.