Neco 2019 Financial Accounting Question 4

XYZ Trading Co. prepared the following unadjusted trial balance as at 31 December: | Account | Debit (₦) | Credit (₦) | |-----------------------------|-----------|------------| | Cash | 45,000 | | | Accounts Receivable | 60,000 | | | Inventory – Opening | 30,000 | | | Machinery (cost) | 120,000 | | | Accumulated Depreciation | | 20,000 | | Trade Payables | | 50,000 | | Capital | | 150,000 | | Sales Revenue | | 200,000 | | Purchases | 90,000 | | | Salaries Expense | 25,000 | | | Rent Expense | 15,000 | | | Interest Receivable | 5,000 | | | Interest Payable | | 3,000 | | Bad Debts Expense | 2,000 | | | Provision for Bad Debts | | 4,000 | | | | | | Total | 387,000 | 387,000 | During the year the following adjusting entries were required: 1. Inventory on hand at year‑end was counted and found to be ₦28,000. 2. Depreciation on machinery for the year is ₦10,000. 3. One customer’s account was written off as irrecoverable amounting to ₦3,000. 4. Rent prepaid of ₦6,000 was recorded as an expense; the portion relating to the next year is ₦2,000. 5. Interest earned on a bank deposit of ₦5,000 was accrued. 6. Provision for doubtful debts was increased to ₦6,000. Using the above information, answer the following: a) Record the adjusting journal entries. b) Post all entries (including the original trial balance items and the adjusting entries) to the appropriate ledger accounts and show the adjusted balances of Inventory, Accumulated Depreciation, Bad Debts Expense, Provision for Bad Debts, Rent Expense and Interest Receivable. c) Prepare a Trading Account and a Profit & Loss Account for the year ended 31 December.