The trial balance of Leeway Investors as at 31 December 20x6 (financial year end), is given below together with additional information:

Additional information:

1. Wages earned by employees in December 20x6 but only paid in 20x7 are R400.

2. Unused office supplies on hand at 31 December 20x6 total R250.

3. Interest owing on mortgage bond for 20x6 but not yet paid is R225.

4. Equipment, purchased 1 January 20x6, must be depreciated at the rate of 10% on cost.

5. Rent income in advance and not earned, R300.

6. Interest earned on government bonds but not yet received, R200.

7. Advertising costs paid that relate to the 20x7 financial year are R150.

You are required to:

1. Record adjustments 1 to 7 on a worksheet (add new accounts where necessary) and complete the worksheet.

2. Use the completed worksheet to prepare the annual financial statements.

3. Use the information from the worksheet to open all the ledger accounts you have listed.

Then enter the trial balance figures and record adjustments 1 to 7.

4. Compare your adjusted account balances with those on the worksheet and pass the closing entries to the profit and loss account. Then balance the ledger accounts.

Transcribed Image Text:

Capital 9% mortgage bond Land and buildings Leeway Investors TRIAL BALANCE AS AT 31 DECEMBER 20x6 Details Fol. Debit B1 Equipment (at cost) Investments: Government bonds Bank Rent income Interest income Adve Salaries and wages Office supplies Interest expense 28888=22222 B2 B5 N2 N3 N4 N5 N6 40 000 00 5 000 00 8 000 00 1 000 00 600 00 6 000 00 1 600 00 600 00 00 62 800 Credit 39 700 00 10 000 00 12 775 00 325 00 62 800 00