The financial year of Patience Pty Ltd ended on 30 June 2019. Your auditor's report was signed on 25

August and the financial statements were issued on 10 September. Listed below are events that occurred

or were discovered after the end of the financial year. Assume that each has a "material" effect on the

financial statements:

1.

1 August A lawsuit was filed against Patience for damages that allegedly occurred

before 30 June. In the opinion of Patience's lawyers, there is a danger of a significant loss.

2.

15 August You discovered that Hardwork, a debtor of Patience went bankrupt on 10

August. The most recent sale had taken place on 25 May and no transactions had occurred

since that date.

3.

1 September You discovered that a legal action commenced against Patience in relation

to a faulty product sold in May 2019.

4.

15 September A fire burnt down one of Patience's warehouses, resulting in a loss of

30% of the inventory that was on hand at that date.

5.

30 September You discovered that Honesty, a debtor of Patience, went bankrupt on 15

July. Sales to Honesty were all made before the end of the year.

6.

30 September You discovered that Focus, a debtor of Patience, went bankrupt on 25

September. The sale had taken place before the end of the year, but the amount had

appeared collectable at the date on which the auditor's report was signed.

REQUIRED:

(a) Indicate your responsibilities for EACH of the above events.

(6 marks)

(b) Indicate the accounting treatment you would recommend in relation to EACH of the above events.

Justify your answer.

(6 marks)