AAA Pty Ltd prepared the draft of the statement of financial position and the statement of profit or loss for the financial year ended 31stDec. 20X8 as shown below. The business operation was started from 1stJan. 20X8. All transactions incurred in the year 20X8 were recorded correctly. The PPE was purchased for $20,000 but carried at fair value $18,000.

AAA Pty LtdStatement of profit or lossAs at 31 December 20X8IncomeHire revenue140,000Service revenue received in advance20,000PPE revaluation surplus2,000Total income162,000ExpensesElectricity expense13,000Prepaid rent expense24,800Wages expense20,200dividends6,000Income tax expense30,000Total expenses94,000Profit68,000AAA Pty LtdStatement of financial positionFor the year ended 31 December 20X8AssetsCash65,400Accounts receivable110,000Supplies9,500PPE18,000Acc. Dep.(4,000)GST collected10,000Total assets210,900LiabilitiesAccounts payable20,000Note payable12,500GST paid5,600Total liability38,100EquityShare capital30,000Retained earnings70,800General reserve63,000Total equity163,800

Required:(please label your responses as 1.,2.)

1. Identify individual errors in the statement of profit and loss and briefly explain how to correct the identified errors. (5/11)
2. Identify individual errors in the statement of financial position and briefly explain how to correct the identified errors. (6/11)

(Note: ignore the errors in the calculation of summations.)