In finalising the financial statements of a company for the year ended 30 June 2004, which of the following
material matters should be adjusted for?

1    A customer who owed $180,000 at the balance sheet date went bankrupt in July 2004.
2    The sale in August 2004 for $400,000 of some inventory items valued in the balance sheet at $500,000.
3    A factory with a value of $3,000,000 was seriously damaged by a fire in July 2004. The factory was back in
      production by August 2004 but its value was reduced to $2,000,000.
4    The company issued 1,000,000 ordinary shares in August 2004.

A    All four items
B    1 and 2 only
C    1 and 4 only
D    2 and 3 only

B