Reference no: EM132974566

Question: Sean joined Evonic Pte Ltd as an Accountant one month ago and the following came to his attention while closing the accounts for the year ended 31 December 2020 :

(1) Credit sales of $55,800 were omitted from the records.

(2) Depreciation for furniture for December was recorded as $15,110 instead of $11,550.

(3) An additional provision of $18,260 for allowance for impairment of receivables was debited to rent expense.

(4) Monthly maintenance fees for factory machinery amounting to $12,000 for the whole year was debited to factory machinery account.

(5) Information pertaining to the building is as follows :

                                                                                                  $
           Valuation @ 1 January 2020                                     820,000
           Revaluation reserve @ 1 January 2020                      20,000
           Revaluation value @ 31 December 2020                  300,000
           Accumulated depreciation @ 31 December 2020     492,000

The company has not accounted for the above revaluation in the books.

Required:

(a) Prepare the necessary journal entries to correct the above items, showing workings where necessary. No narrations are needed.

(b) Use one or more of the journal entries in (a) to explain how they support the enhancing qualitative characteristics of useful financial information as stated in the Conceptual Framework.