Exercise 18.7 Sable Led has provided the following information concerning events occurring after the end of the reporting period and the dates the accounts were authorised. This information is to be considered in the preparation of the financial statements for the year ended 30 June 2020. On 17 July 2020, a firebomb destroyed four of the company's transport vehicles resulting in damages of $400,000. Insurance will cover $300,000 of the damages but payment of the insurance claim has been delayed by a police investigation. As a result of the loss of these vehicles, the company's delivery schedules have been severely disrupted. On 18 July 2020, the release of a far superior and cheaper product by a competitor caused a major decline in demand for Product X made by Sable Ltd. In an effort to sell remaining stock of the product Sable Led has reduced its selling price to 50% of cost. Inventories on hand at 30 June 2020 were recorded at their cost of $190,000. On 15 August 2020, the Department of Occupational Health and Safety charged the company over unsafe storage practices that resulted in the leakage of toxic materials into a local creek. The leakage occurred on 3 July 2020. If found to be negligent by the court, the company will have to pay a fine of $350,000 plus legal and clean-up costs in excess of $70,000. On 21 August 2020, the purchasing manager discovered that a batch of invoices relating to June inventories purchases had not been processed. The invoices totalled $37,000. On 30 August 2020, the company issued a prospectus offering 1,000 10% debentures of $197 each for public subscription. The debentures are redeemable on 1 October 2020. Interest is payable annually in arrears. The debentures are secured by a floating charge over the company's assets. Assume all events and transactions are material.1. Classify the events as either adjusting or non-adjusting events after the end of the reporting period. 17 July 2020 Firebombing of vehicles 18 July 2020 Selling price reduction for product X 15 August 2020 Charge of environmental damage lodged 21 August 2020 Unrecorded purchase invoices 30 August 2020 Debenture offer2. Based on your answer to requirement A, prepare the necessary journal entries or note disclosures to comply with the requirements of AASB 110. (Enter debit entries first, followed by credit entries. Credit account titles are automatically indented when the amount is entered. Do not indent manually.) Adjusting journal entries Date Account and explanation Debit Credit 30 June 2020 (Adjustment to inventories for Product X) 30 June 2020 (Recognition of unprocessed invoices)Note disclosures Note X: Events occurring after the end of the reporting period On 2020, a firebomb destroyed a number of transport vehicles resulting in disruption of delivery schedules and an uninsured loss of $ On 2020, the company was charged with environmental damages arising from a leakage of toxic materials from the storage tanks on 3 July 2020. Possible losses from fines, legal and clean-up costs could be in excess of $ The directors will vigorously defend the claim of negligence. On 2020, the company offered 1,000 10% $197 debentures for public subscription. The debentures are secured by floating charge over the company's assets and are redeemable on 2020.Note disclosures Note X: Events occurring after the end of the reporting period On 2020, a firebomb destroyed a number of transport vehicles resulting in disruption of delivery schedules and an uninsured loss of $ 18 July 1 October On 2020, the company was 31 December ronmental damages arising from a leakage of toxic materials from the storage tanks on 3 July 2020. Possible losses from fines, legal and 17 July 15 August ould be in excess of $ The directors will vigorously defend the claim of negligence. 30 August 30 September On 2020, the company offer 21 August 97 debentures for public subscription. The debentures are secured by floating charge over the company's assets and are redeemable on v 2020. Click if you would like to Show Work for this question: Open Show Work