Please refer to Chapter 15 Balance Day Adjustments learning materials to complete the following questions:

Please follow the extract of the accounting Policies and Procedures of Milo Ltd. based on accrual accounting as below:

All the prepaid expenses need to be adjusted on the last day of the period to match the revenue for the same period.

The unused portion of the prepaid expenses need to be carried forward as current assets for the following period

Any expenses due but not paid should be recognised as an expense to match the revenue of the respective period.

Any revenue which is accrued in the period should be recognised as income for that period.

Any revenue which is received as advance should be considered as current liability.

The number of bad debts calculated every year, after following up the collection procedures, need to be written off on balance day of the respective financial year.

Allowance for Doubtful Debts to be 5.5 % of Accounts Receivable

The rules of double entry accounting principles must be followed.

At balance day all Accrued income and expenses must be brought to account

At balance day all prepaid income and expenses must be adjusted so that accounts are not overstated

You are working with Complete Business Services on the year-end adjustments for one of your clients, Milo Ltd. You are required to comply with the following information given by the client to finalise the year-end adjustment entries:

Ledger Account balances (prior to any Balance Day Adjustments) as of 30 June 2018:

Insurance	$ 2,400.00
Rent	$ 1,800.00
Interest Income	$ 1,400.00
Plant	$ 10,000.00
Accumulated Depreciation	$ 6,000.00
Accounts Receivable	$ 5,550.00
Allowance for Doubtful Debts	$ 200.00

Additional Information

On 1 December 2017 a one-year insurance premium was paid for $2,400 plus GST. Insurance cover starts on 1 December

Rent paid in advance $150 on 30 June 2018

Interest earned but not received $350 on 30 June 2018

Depreciation to be provided $1,000 on 30 June 2018

Bad Debts to be written off $500 plus $50 GST on 30 June 2018

Allowance for Doubtful Debts to be adjusted to 5.5% of Accounts Receivable

Physical count on 30 June 2018 reveals inventory value of $68,000 and the perpetual records show inventory value $70,000. Milo Ltd uses a perpetual inventory system.

Task 8

Prepare general journal entries for the balance day adjustments, reversing general journal entries (for some of the accounts only) on 1 July 2018, and adjustment entry to record inventory variance.

Note: you need to provide the narration/description on each journal entry.