Question 1 This question has two parts, Part A and B. You are required to answer both parts. Part A On 1 March 2021, Tom set up J Hair Salon by investing $50,000 cash and $30,000 of equipment in J Hair Salon. On that day, he paid rent of $15,000 for three months. During March 2021, he completed the following additional transactions: . Purchased $3,000 of supplies on account. . Provided haircuts and treatments and received $20,000 cash. Determined that the cost of supplies on hand in end-March was $500. Analyse the above and record the necessary entries for March 2021. For this question, dates and narrations are not required. (13 marks) Part B Andrea, your best friend, started a company last month. After one year of operations, she asked you to invest in her business. She showed you the following financial statements which she has drafted. 2 ANF Company Statement of Comprehensive Income For the Year Ended December 31, 2020 Revenue $230,000 Less: Salaries paid $80,000 Rent paid 60,000 Supplies paid 30,000 Other cash payments 10,000 (180,000) Net profit $50,000 Other comprehensive income Total comprehensive income $50,000 ANF Company Statement of Financial Position As of December 31, 2020 Assets Cash Accounts receivables Motor vehicles Total assets $ $70,000 90,000 240,000 $400,000 Liability Notes payable (3-year 10% p.a) $150,000 Equity Share capital Retained earnings Total liability and equity $200,000 50,000 $400,000 After reviewing the financial statements, you have some questions. You suspected that the financial statements were not prepared using the accrual basis of accounting. You also suspected that she did not make the necessary adjusting entries before preparing the financial statements. Explain why you suspect the financial statements were not prepared using accrual basis incorporating adjusting entries. In your response, you should explain the correct accounting treatments. (12 marks)