AAA Pty Ltd prepared the draft of the statement of financial position and the statement of profit or loss for the financial year ended 31st Dec. 20X8 as shown below. The business operation was started from 1st Jan. 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 Ltd Statement of profit or loss As at 31 December 20X8 Income Hire revenue 140,000 Service revenue received 20,000 in advance PPE revaluation surplus 2,000 Total income 162,000 Expenses Electricity expense 13,000 Prepaid rent expense 24,800 Wages expense 20,200 dividends 6,000 Income tax expense 30,000 Total expenses 94,000 Profit 68,000 AAA Pty Ltd Statement of financial position For the year ended 31 December 20X8 Assets Cash 65,400 Accounts receivable 110,000 Supplies 9,500 PPE 18,000 Acc. Dep. (4,000) GST collected 10,000 Total assets 210,900 Liabilities Accounts payable 20,000 Note payable 12,500 GST paid 5,600 Total liability 38,100 Equity Note payable 12,500 GST paid 5,600 Total liability 38,100 Equity Share capital 30,000 Retained earnings 70,800 General reserve 63,000 Total equity 163,800 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.)