Question Two The following balances pertaining to fixed assets have been extracted from the trial balance of Macro Traders for the year ended 31 December 2021: Amount (K) Non current assets at cost 12,500,000 Accumulated depreciation 3,125,000 Depreciation expense 625,000 Gain on disposal of non-current assets 29,000 Depreciation on non- current assets is charged from the month of addition to the month prior to disposal using reducing balance method at 20% per annum. Depreciation expense for the current year has been correctly calculated and recorded except for the following: (i) Physical verification of fixed assets carried out on 31 December 2021, revealed the following matters: Two laptops purchased on 1 July 2020 at a cost of K122,500 were withdrawn by the proprietor on 1 May 2021 for his personal use. Equipment costing K400,000 purchased on 1 January 2019 was damaged in rain in December 2021 and was scrapped. A machine costing K37,500 is not in the list of non-current assets, but has been in the use of sales department since 1 March 2021. On investigation it was found that the machine was transferred from stock-in-trade but no adjustment was made in the books. (ii) Installation of an assembly plant was completed on 1 December 2021. Installation charges amounting to K120,000 have not yet been recorded in the books due to non-receipt of the invoice. (iii) An invoice of K341,500 for a machine purchased on 1 October 2021 was mistakenly accounted for as K436,500. Required: Prepare necessary adjusting and closing entries for the year ended 31 December 2021. (15 marks)