No.1 (f) Explanations: 
Note 1:
The purchase of the welding plant will give rise to a liability of $50,000 that is; ($150,000-$100,000), owing to Welders International as only a part payment was made.
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Note 2: The unused office supplies on hand is an asset of D&G Ltd, however the portion that has been used during the period must be expensed. As a result the office supplies balance must be reduced to $2,500 by expensing $22,500, that is; (25,000-$2,500). At the end of the period this expense must be transferred to the Income Statement.

Workings:
Important note; the year end for James Sargeant Compnay is the 31st March, 2009
Note 1
One month's prepayment for rent was made for April 2009. The value of the prepayment is $5,550/6mths = $925.
Note 2
Electricity has been accrued up to March 2009, but has only been paid up to 31st December, 2008. Therefore the entire amount of $1,785 must be recorded as an accrual.
Note 3
Calculation of the depreciation expense for the year ended 31st December, 2009 - 
18% ($138,900-$45,500) = $16,812.
Note 4
Inventory should be valued at the lower of cost and net realizable value. The cost of the inventory is $2,645 and its net realizable value is $4,000-$2,250 = $1,750. Therefore the value of the stock needs to be reduced by $895, that is $2,645-$1,750.
Note 5 
The updated provision for doubtful debt balance is 8% of $20,000 = $1,600. Therefore the current provision of $1,000 needs to be increased by $600.