Overview The information on this page w continue to be made available to you through a nk on each subsequent page of the practice set. However, it may be useful to print this page because you will be referring to it regularly Once you have read this page, click the Start question 1 button below to start recording transactions for Mercedes Blends Background Assume it is currently June 30, 2017. You are working for the temporary accounting employment agency known as Your progress Today you have been asked to work at Mercedes Blends, a new barista Uptempo. and coffee school that operates in inner city San Francisco and is owned by Katharine Lippmann. Your task here is to complete the accounting cycle for Mercedes Blends for the month of June 2017 o assist you in this task, Katharine tells you to read the accounting policies and procedures of the business. Note that RECORDING INTRODUCTION be required to follow these polic es and procedures when completing the you WI accounts for Mercedes Blends Mercedes-Blenda Accounting policies ADJUSTING TRIAL a. Business operations: Mercedes Blends is set up as a sole proprietorship based in San Fran with ENTRIES Katharine Lippmann as the sole owner. The business derives its main source of revenue from providing coffee making lessons to students All coffee making lessons are provided by instructors who are employed on a part-time basis. Since it took a few days to set up the business, coffee making lessons did not start until the end of the first week Lessons can be conducted on any day of the week, including weekends Instructors receive their wages NANCIAL CLOSING POST-CLOSING ATEMENTS TRIAL BALANCE every two weeks, after they have conducted the lessons Katharine handles a of the administrative tasks but she does not receive a salary for her work. Instead from time to time she makes withdrawals of capital from the business b. Accounting cycle The business adopts a monthly accounting cycle Completed 0% (approximately) This page will take: up to 0.5 hou C. Revenue recognition: The business recognizes revenue when coffee making lessons are provided to OR customers. Any revenue received in advance is recorded as a ability. Remaining pages will take: up to 9.5 hours d. Sales tax Katharine has advised you to ignore the effect of sales tax his is an assumption to The time frames we provi de are a guide only. It may ASID E: T take you more or less time to complete each page make the practice set easier for you to complete n the real world, sales tax cannot be ignored e. Prepayments The business has a policy of recording prepayments cluding office supplies, as assets. At the end of the month, adjustments are made to the relevant accounts to recognize the expense incurred during the accounting period Information from previous pages f. Property, plant and equipment Property, plant and equipment items are depreciated over their estimated useful life using the straight line method to calculate the depreciation charge. Depreciation is allocated on a monthly basis g. Long-term liabilities: The business obtained an interest only loan of $162,000 from ZNZ Bank on June 1 17 at a simple interest rate of 6% per year. The first interest payment is due at the end of August 2017 and the principal on the loan is due on June 1, 2020