Reference no: EM132643378

The annual audit of the accounting records and draft financial statements of Peter Ltd as at 30 June 2019 revealed the following events:

1. On 9 July 2019, the sales manager raised credit notes worth $30 000 relating to sales of faulty goods in the last 2 weeks of June 2019.

2. On 21 August 2019, the purchasing manager discovered that a batch of invoices relating to June inventory purchases had not been processed. The invoices totalled $37 650.

3. On 25 September 2019, the company received notification that a customer owing $130 000 had gone into liquidation. The liquidator advised that unsecured creditors are likely to receive a distribution of only 20c in the dollar. The liquidation was caused by a flood in July 2019 which destroyed the customer's operating plant and warehouse. The damage was not covered by insurance.

4. The company has been involved in a dispute with a government environment agency relating to the release of noxious gases from its manufacturing plant in early June 2019. An expert investigation was conducted to determine if the company was at fault. The investigator's report released on 1 October 2019 found Peter Ltd to be responsible for the release and damages amounting to $1 500 000 were payable by the company.

5. On 15 October 2019 the directors resolved to issue to the public 10 000 5% debentures of $10 each, payable $5 on application and $5 on allotment.

Required:

Question 1: Assume all errors and omissions are material. Prepare the necessary adjustments (if any) for all items.