Due to Covid the business has expanded rapidly and needs to obtain finance for an additional delivery van to expand the business. Denises accountant is ill and cannot assist for another month. As Denise has no experience in accounting she watched how to prepare financial statements videos and then prepared the financial statements below:

Denise has asked you for advice in the form of a brief written report. Your report should:

a) Describe the purpose of each of the financial statements above. Ensure you discuss how the statements link to each other (100 words). (1 mark)

b) List any errors Denise has made in these financial statements and then briefly explain to Denise the correct treatment (ignore addition errors) (200 words). (2 marks)

Fresh Foods Delivery Services Pty Ltd Income Statement As at the 30 June 2021 Fresh Foods Delivery Services Pty Ltd Statement of Financial Position For the year ended 30 June 2021 353,000 28,000 Assets Current Assets Cash Accounts payable Total current assets 250,000 60,000 351,000 Revenues Service revenue Revenue received in advance Expenses Accumulated depreciation-motor vehicle Delivery supplies Insurance expense Interest payable Salaries expense Total expenses Loss 33,500 24,000 31,500 10,000 167,000 349,000 4,000 Non-current assets Delivery Vehicles Depreciation expense-motor vehicle Total non-current assets Total assets 240,000 26,500 206,500 206,500 557,500 Fresh Foods Delivery Services Pty Ltd Statement of Changes in Equity For the year ended 30 June 2021 Liabilities Current liabilities Accounts receivable Interest expense Fuel expense Total current liabilities 77,000 20,000 104,000 116,000 Owners' Investment 67,000 Retained earnings opening balance 176,500 Non-current liabilities Long-term bank loan Salaries payable Total non-current labilities Total liabilities Retained earnings closing balance 180,500 194,000 18,000 194,000 310,000 247,500 Closing Equity 247,500 Net assets Equity Owners' Investment Retained earnings Add profit Total Equity 67,000 180,500 4,000 247,500