Materiality and events after the reporting period   LO5, 6 The following information has been made available to you to assist in the preparation of the financial statements of Ant Ltd for the year ended 30 June 2021.

(a) The company has been involved in a dispute with a government environment agency relating to the release of noxious gases from its manufacturing plant in early June 2021. An expert investigation was conducted to determine if the company was at fault. The draft financial report already discloses a contingent liability in the notes detailing the investigation and estimating the potential damages at $1.25 million. The investigator’s report, released on 1 August 2021, found Ant Ltd to be responsible for the release and damages amounting to $1 500 000 were payable by the company.

(b) On 9 July 2021, the sales manager raised credit notes worth $30 000 relating to sales of faulty goods in the last 2 weeks of June 2021.

(c) On 25 September 2021, the company received notification that a customer owing $130 000 had gone into liquidation. The liquidator advised that unsecured creditors are likely to receive a distribution of only 20c in the dollar. The liquidation was caused by a flood in July 2021 which destroyed the customer’s operating plant and warehouse. The damage was not covered by insurance. Ant Ltd’s draft profit for the year ended 30 June 2021 is $720 000. Required In relation to the above events or transactions, prepare the necessary notes or general journal entries to comply with applicable accounting standards.