The following income statement and balance sheet have been prepared for Joburg Co.

After the accounts were prepared, the following information became available.
1. Interest payable on the long-term loan is paid half-yearly and interest for the second half-year has not been included in the accounts.
2. A sum of €5,000 of the long-term loan is to be repaid by 30 June 20X8.
3. Depreciation has not been charged on the motor vehicles. This class of assets is depreciated at 40 per cent per annum using the reducing balance method.
4. A new machine has been purchased on credit, just before the year end, for €75,000 but this has not been included in the accounts. No depreciation is to be charged on this asset this year.

5. After reviewing the Accounts receivable balance, it was decided that bad debts of €4,000 should be written off.
6. An invoice for electricity for €12,000 for the quarter ended 31 December did not arrive until 23 January and has not been included.
7. Taxation is payable at 30 per cent of the net profit before tax.
You are required to:

(a) list the adjustments required to record these events;

(b) prepare a balance sheet and income statement for Joburg Co. for the year ended 31 December 20X7 incorporating the new information given.

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Income statement for the year ended 31 December 20X7 000 Sales 2,180 Cost of sales -600 Gross profit 1,580 Selling and distribution expenses -620 Administrative expenses -506 Profit before interest 454 Interest expense -4 Profit for the year 450 Profit brought forward 510 Profit carried forward 960 Balance sheet as at 31 December 20X8 000 Non-current assets Plant and machinery 1,600 Vehicles 500 2,100 Current assets Inventory 300 Accounts receivable 100 Bank 80 480 Current liabilities Accounts payable -200 Net current assets 280 2,380 Long-term loan (8%) -100 2,280 Capital and reserves Share capital 1,320 Retained earnings 960 2,280