4 The following is the trial balance of Owen Corporation as at 31 December 2019. Debit ($) Credit ($) Delivery Vehicle 100,000 Accumulated Depreciation - Vehicle 42,000 Land 2,000,000 Building 800,000 Accumulated Depreciation - Building 350,000 Cash 148,500 Bank 312,400 Account receivable 110,000 Inventory at 1 January 2019 60.000 Account payable 210,000 12% Long Term Loan (Note v) 200,000 Common Stock @ RM2 each, fully paid 1,000,000 Retained earnings 608,000 Freight-in 8,000 Sales 4,320,000 Purchases 2,150,000 Sales and purchase discounts 124,000 94,000 Returns inwards & allowances 48,000 Unearned rental (Note vii) 160.000 Salaries expense 800,700 Prepaid insurance (Note iv) 57,600 Supplies 35,000 Dividends 50,000 Repairs to building (Note iii) 125,000 General expenses 664,600 Interest on loan 15,000 7,296,400 7,296,400 Note to accounts: Inventory at 31 December 2019 was $90, 100. At the financial year end, $3,500 worth of supplies remained unused. Repairs building were incurred in 1 January 2016 for repainting of store room of $5,000 and renovation of building of $120,000. (iv) The prepaid insurance was for coverage against losses due to fire and theft. One third of this prepaid insurance remained unexpired at the end of this financial year, (v) (vi) The long-term loan was obtained from First Bank on 1 April 1016. Annual depreciation for the non-current assets needs to be provided as follows: 5/9 5 SIQ1001 Delivery Vehicle 10% on reducing balance method . Building 15% on cost (vii) (vili) During the financial year, half of the unearned rental was earned On 31 March, an invoice was received from KL Motors for $15,600. This included $600 for repairs to delivery vehicles and RM15,000 for the purchase of a second delivery vehicle. This invoice had not been paid at year end. (Ignore depreciation for this second-hand delivery vehicle). (ix ) It was discovered that the purchase of stationery of RM2,000 had been debited to the purchases account. This error had not been corrected in the books. (x ) During the year, Owen Corporation had issued 100,000 units of new common stocks to the public at $3.00 each unit for cash. These shares were fully subscribed. The accountant has not reflected this transaction in the books. (xi) Ignore taxation. You are required to show: a) The adjusting journal entries that must be made prior to the preparation of the financial statements for the financial year ended 31 December 2019. (11 marks) b) The following financial statements for Owen Corporation: . Income statement for the year ended 31 December 2019. Statement of changes in shareholders equity for the year ended 31 December 2019. Balance sheet as at 31 December 2019