et eyes [Exercise 10.7] © Prepare a classified balance sheet as at 30 June 2015. 4 ‘Closing entries are done in order to satisfy @ qualitative characteristic of accounting.” State the qualitative characteristic and explain how closing entries help meet the demands of this characteristic. ‘Ann Nelson owns and manages Clocks & Watches and she has provided the following information at the end of her yearly reporting period Clocks & Watches: Bad debs ‘cash at bank Computer maintenance Computer system Cost af sales Courier charges Debtors control Discount excense Display equipment Drawings Heating & fighting Insurance expense Intorost Land & buildings Office expanses Postage expense Promotion casts Rates Salaries ‘Stock control Stock oss Telephone expense 25000 18600 1240 1800 6400 47000 1800 60 3120 2400 2000 55350 800 370 82560 ditional information: Capital—Nelson Creditors contol Discount revenue Finance Co. loan GST clearing Mortgage loan Sales—cash Sales—eredit the Finance Company loan is repayable atthe rato of $200 per wock —the Mortgage loan requires monthly repayments of $650 353600 75500 2000 4320 314000 120600 42400 ‘382560 2 Prepare all relevant closing entries in the general journal, including the transfer of profit and drawings. b Prepare the profit and loss summary account, the drawings account and the capital account in the general ledger. Prepare a fully classified balance sheet as at 31 March 2015. Explain how your balance sheet helps satisfy the demands of the qualitative characteristic of understandability.