It is the end of the month and even though David has not been in business very long he is anxious to see how the business is doing. He hopes he has made profit because he needs to be able to make a reasonable living out of the business.

Required

(a) Analysing and decision making First, prepare a worksheet to record the July pre-adjustment trial balance figures from the case study in the previous chapter. Second using the information provided below, record the adjusting entries to account for prepayments, accruals and depreciation expenses.

round all calculations to the nearest dollar.
• Rent is \($990\) per calendar month and rent has been paid for the period up to the end of August.
• The advertising was for a series of five weekly advertisements and only two of these were used in July.
• The commencement date for the annual business insurance premium is 21 July.
• A telephone was installed in the shop on 21 July, but the bill has not yet been received. David estimates the monthly bill will be \($150.\) Accrue an amount equal to 10 days out of the 31 days only.
• The company is to pay for the electricity usage for half of the month of July but will not receive a bill until mid-September. David estimates the bill, which will cover a 2-month period, will be approximately \($360.
•\) Depreciation on shop equipment and fittings is \($132\) for July.
• Interest charged to the bank loan account for July is \($96.
Complete\) the worksheet as demonstrated in the chapter on recording transactions, by determining the adjusted trial balance and the figures that should appear in the statement of profit or loss and statement of financial position.

(b) Recording Record the adjusting entries in the general journal and post them to the general ledger accounts developed in the previous chapter.

(c) Reporting Prepare a statement of profit or loss, statement of changes in equity, and a statement of financial position for July.