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 accounts only) on 1 July 2018, and adjustment entries to record inventory variance. 

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