Question 3 (3 marks) Jimmy acquired Acropolis Now, a traditional Mediterranean themed caf in the city of Melbourne, from his retiring father in 2020 Shortly after taking over, Jimmy realised the need to modernise the caf and so is seeking to obtain finance for renovations and new caf equipment. Jimmy was asked by his bank to provide financial statements for his business for the first six months of operations, as part of a loan application. Jimmy's accountant is ill and cannot assist for another month. As Jimmy has no experience in accounting, he watched some "how to prepare financial statements videos he discovered online and then prepared the financial statements on the next page: $ Acropolis Now Cafe Statement of Profit or Loss As at 30 June 2021 Income Income received in advance Service revenue Accounts receivable Cash at bank Total income Expenses Utilities expense Supplies expense Prepaid rent Depreciation expense Rent expense Wages expense Total expenses 6,750 97,200 7,830 20,925 132,705 6,885 13,365 6,750 6,750 27,000 28,350 89,100 Net profit 43,605 $ Acropolis Now Cafe Balance Sheet For the period ending 30 June 2021 Current Assets Supplies Delivery vehicles Total Current Assets Non-Current Assets Kitchen equipment Total Non-Current Assets Total assets 16,740 67,500 84,240 19,035 19,035 103,275 Current Liabilities Accounts payable Bank loan (due in 2024) Total Current Liabilities Total liabilities 12,960 27,000 39,960 39,960 Net Assets 63,315 Owner's Equity Capital Total equity 92,070 92,070 Pona 4 After learning that you are currently studying Dollars and Sense at La Trobe College, Jimmy 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 (100 words). (0.5 mark) b) List any errors Jimmy has made in these financial statements and then briefly explain to Jimmy the correct treatment (200 words). (2.5 marks)