317 ACC 102 CA 3 END OF YEAR ADJUSTMENTS Question One The following balances were extracted for Bakers Inc, as at 31 December 2019. Office equipment at cost 9.200 Motor vehicles at cost 21,400 Provision for depreciation: Motor vehicles 12.800 Office equipment 3.600 Inventory 38,410 Accounts receivables 41.940 Accounts Payables 32.216 Cash at bank 2.118 Cash in hand Sales 180,400 Purchases 136,680 Salaries 27,400 Office expenses 2.130 Discounts allowed Provision for Doubtful debt 3,382 Capital accounts 81,009 Drawings 33,500 Required: Draw up a set of final accounts for the year ended 31 December 2019 for the business. The following notes are applicable at 31 December 2019. (a) Inventory 31 December 2019 N41,312. (b) Office expenses owing N240. (e) Provide for depreciation: motor 25 per cent of cost office equipment 20 per cent of cost. (d) Salaries paid in advance N2,600. (e) Provision for doubtful debt is to be created as 5% of receivables. Question Two At the end of an accounting period, before financial statements can be prepared, the accounts must be reviewed for potential adjustments. Required: i. Explain the objectives of end of year adjusting entries ii. Discuss the relevant underlying concepts that guide each type of end of year adjustments 312