Arppel Company uses a periodic inventory system and closes its accounts annually on 31 December. Below are extracted from the books of the Company: $42,000 Account balance as at 31 Dec 2020 Inventory Account balance as at 31 Dec 2021 Purchases Sales Sales Returns $440,000 $890,000 $22,000 A complete physical inventory taken as at 31 December 2021 indicates goods costing $48,000 remains in stock. Required: (a) Compute (i) the cost of goods sold; (ii) gross profit; and (iii) the gross profit rate (in %) for the year 2021. Show workings. (6 marks) (b) Prepare two closing entries to create the Cost of Goods Sold account and update the Inventory account. (5 marks) Question 2 (33 marks) Part I (20 marks) Balance of the Cash account of Isofac Company on 31 August 2022 was $42,650, while balance of its bank statement on the same day was $40,400. Isofac adjusts its book monthly. Below is some additional information for August: There were no outstanding checks and deposit in transit at the end of 31 July 2022 (1) The Company has correctly issued and recorded a check no.113 in the amount of $8,600 to purchase inventories from a supplier. But the bank statement showed the bank has cleared this check incorrectly as $6,800. (2) The total deposit shown in the bank statement was $158,000 while the accounting records of Isofac showed the total deposit made in August was $183,000. (3) Papal, a customer of Isofac, directly deposited $500 to Isofac's bank account account. settle its outstanding (4) Three checks no. 54, $100; no.56, $200, no.60, $800, issued by Isofac were not found on the bank statement. (5) A $1,500 check issued by a customer Shine Ltd. in favour of Isofac was returned by the bank because of insufficient fund. (6) On 1 March, 2022 Isofact signed a 9% 6-month note receivable of $20,000. The note and full amount of the interest was credited directly to Isofac's bank account on 31 August. (7) The bank debited Isofac's account $50 for bank charges. Required: (a) Prepare the bank reconciliation statement as at 31 August 2022. (12 marks) (b) Prepare the necessary adjusting journal entries to update the accounting record. (8 marks)