1 Employees of Donovan Ltd are paid every Friday for the five-day working week from Monday to Friday. The weekly wages expense is $115 000. The accounting year-end is 31 December. Assume this falls on a Thursday.

a Prepare the adjusting entry for the year-end.

b If no adjusting entry is made on 31 December, what will be the impact on net profit? What will the errors in the balance sheet be?
c What is the journal entry made on 1 January when the staff are paid?
2 On 1 July 2022, Donovan obtained a bank loan of $100 000 at 12 per cent interest, payable yearly in arrears. The accounting year-end is 31 December.
a What is the adjusting entry required on 31 December 2022?
b The company’s accountant forgets to prepare the entry for point

a. What will the effect of this omission be on Donovan’s financial statements?
c Prepare the journal entry for 1 July 2023, when the first interest payment is made.