QUESTION 06 10 MARKS Smart Home Ltd is a company that designs and manufactures home furniture. While its head office is in Auckland, the warehouse is in Wellington. Three showrooms are located in Auckland, Wellington and Hamilton. The directors have reached you with a number of issues that they have encountered when finalising the financial statements for the year ended 31 March 2020. The financial statements will be authorised for issue on 1 July 2020. (a) On 15 April 2020, it was revealed that $55,000 of furniture sales on credit to Mr.Yang on 1 January 2020 were debited to Accounts Payable Account mistakenly. Mr Yang has not paid money until 15 April 2020. The company usually grants 3 months credit to individual customers and the company policy is to make a 2% doubtful debts provision for outstanding customer balances as at balance date. Required Determine how the company should treat the above in its financial statements for the year ended 31 March 2020. Prepare the necessary journal entries. (5 marks) (b) On 31 March 2020, fire destroyed some inventory items in the warehouse in Wellington, This information was received by the directors in Head office after 2 days. However, due to an oversight by the management, the insurance cover for inventory items is not current and insurer refuses to accept the liability. As a result of this, the inventory damage has been estimated as $35,000 Required Classify the above event as either adjusting or non-adjusting events after the end of the reporting period. Justify your classification. Prepare the necessary journal entries or note disclosures to comply with the requirements of NZ IAS 10. (5 marks) Round all amounts to the nearest dollar