2.1 Explain the following terms:2.1.1 Accrued income(3) 2.1.2 Accrued expense(3) 2.1.3 Income received in advance(3) 2.1.4 Prepaid expense(3) 2.1.5 Depreciation(3)2.2 On 1 August 2016 Sipho started a garden services business. The following is an extract of certain accounts from his trial balance on 31 August 2016: Prepaid expenses (insurance)R1500 EquipmentR8000 Loan (credit)R10000 Fees earnedR2000 Income received in advance (fees)R1500

The following relates to the above accounts:

a. The insurance premium was paid for the month of September 2016. b. Depreciation on equipment for August 2016 amounts to R300. c. The loan was negotiated on 1 August 2016 at an interest rate of 15% per annum. d. A client paid R1500 on 1 August 2016, for the next four months (September, October, November and December). e. A client, who received services valued at R250 during August, has not yet paid for them.

Sipho would like to prepare statements on a monthly basis.

REQUIRED:

Prepare the adjusting general journal entries as at 31 August 2016. Show all calculations.(15)