Caspian Pty Ltd is a business that manufactures and sells water filters. The business was established in 2014 and has grown to a large proprietary company with four owners: Olivia, Elliot, Alexandra and John. The business operates from a large factory in Melbourne and is registered for Goods and Services Tax (GST) with financial year end on 30 June. When it commenced its operations on 5 March 2014, Caspian was not able to purchase a building to manufacture water filters in and instead rented a factory. As the business has grown, the owners are considering purchasing the following assets as a package for $2,200,000 (GST Inclusive) on 1 July 2022: Asset Land Building Equipment Total Fair value of asset $1,386,000 $808,500 $115,500 $2,310,000 Purchasing these assets would involve additional costs: legal fees of $5,500 (GST Inclusive) to register the land in business's name; $6,600 (GST Inclusive) to rewire the building; $4,840 (GST Inclusive) for a one year building insurance; $2,200 (GST Inclusive) to conduct a safety inspection of the equipment. To use the building, the business will need to incur $16,500 (GST Inclusive) to install a cooling/heating system. The building is expected to have a useful life of 20 years and an estimated residual value of $200,000. The equipment is expected to have a useful life of 5 years and be used for 10,000 hours and an estimated residual value of $20,000. The equipment is expected to be used for 1,500 hours in year 1; 2,200 hours in year 2; 2,500 hours in year 3; 2,000 hours in year 4; and 1,800 hours in year 5. Caspian adopts the cost model to measure all existing non-current assets. Because the business has seen a significant increase in demand for its products in recent months, the owners believe existing non-current assets should be valued higher and it would be more appropriate to change to the revaluation model of measuring non-current assets. With more people staying at home because of the pandemic, the business has seen a significant increase in demand for its products. This led the management to employ 1 additional staff for the 2021-2022 financial year. It was determined that new staff would earn gross salaries of $3,000 per fortnight with related deductions and on-costs: PAYG withholding', employer superannuation guarantee, payroll tax, WorkCover of 2%, employee contribution to superannuation of $150 and employee contributions to insurance fees of $20. Question 5: Record the necessary general journal entries in relation to payroll and payroll deductions for one fortnight for the new employee. List the take-home pay that the new employee will receive and explain why it is less than $3,000. One of the downfalls of the pandemic is that some debtors are now having difficulty paying their debt. In the past, the business used the direct write off method. The CFO has already discussed with the owners the possibility of moving to the allowance method of accounting for bad debts. Two of the owners were debating the merits of percentage of net credit sales method and the ageing method. Question 6: In terms of the methods of calculating bad debts, do you agree that the percentage of net credit sales method should be preferred because of its ease of calculation? Or do you think that the ageing method might be better in times when credit sales and receivables are increasing