You are part of the audit team for THE DATA INCUBATOR, an emerging data storage company based in Melbourne. You have been involved in the audit for the year ended 30 June 2021 and have been told that the company has not correctly followed accounting rules in the preparation of the financial statements. Terry, your reporting partner, wants you to prepare the journal entries that should be recorded to correct the problems the audit has uncovered.

The audit has uncovered the below information relating to revenue.

i. On 30 June 2021, the company sold obsolete inventory it purchased for $25,000 for $15,000 cash. This transaction was not recorded by THE DATA INCUBATOR. (4 marks)

The audit has uncovered the following information relating to supplies.

ii. At the beginning of June 2021, the Balance Sheet showed supplies worth $15,000 as a current asset. A purchase of $10,000 supplies was correctly debited to the supplies account during June. A physical count of supplies at the end of the month shows the balance of supplies at 30 June needs to be adjusted to $21,000. (2 marks)

The audit has uncovered the following information relating to dividends.

iii. On 30 June 2021, THE DATA INCUBATOR received a dividend payment of $20,000. This relates to dividend income recorded earlier in the financial year. On the same date, THE DATA INCUBATOR announced a dividend of $30,000 to its shareholders. (4 marks)

The audit has uncovered the following issues relating to expense transactions.

iv. On April 1st, 2021, THE DATA INCUBATOR took out a loan of $100,000 at an interest rate of 6%. While the loan is correctly recorded on the balance sheet, no interest expense is recorded on the balance sheet. Interest is paid annually in arrears meaning the first interest payment will occur in 2022. (2 marks)

v. On May 1st, 2021, THE DATA INCUBATOR purchased a machine worth $100,000. While the Machine was correctly recorded on the balance sheet, no depreciation expense is recorded on the balance sheet. Depreciation of $24,000 should be charged annually. (2 marks)

vi. Before the above adjustments for THE DATA INCUBATOR were recorded, the balance sheet showed a cash balance of $55,000 and retained profits of $150,000. You are required to calculate the updated balances for cash and retained profits that would be shown in the financial statements for THE DATA INCUBATOR. You should show all workings. (11 marks)