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During the month of June 20x1, employees of Armidale Cleaners (AC) have spent 60 hours cleaning the Large Mart Store in Armidale. The contract between Large Mart and AC requires Large Mart to pre-pay 180 hours of cleaning on the 1st day of each quarter (July, October, January and April). The Large Mart store manager can then decide when the store is cleaned, and how much time is spent cleaning the store.

During the month of June 20x1, employees of Armidale Cleaners (AC) have spent 60 hours cleaning the Large Mart Store in Armidale. The contract between Large Mart and AC requires Large st Mart to pre-pay 180 hours of cleaning on the 1 day of each quarter (July, October, January and April). The Large Mart store manager can then decide when the store is cleaned, and how much time is spent cleaning the store. Required: . a) State whether the USE OF the prepaid cleaning hours during each month creates an asset, a liability, income, an expense or equity in the accounting system of Large Mart. (1 mark) . b) Explain your decision based on the criteria that the conceptual framework uses to define the item that is created by the USE OF the prepaid cleaning hours each month and describe how each criterion is fulfilled by the outlined situation. (3 marks) Large Mart owns a computer which is used to track the inventory in its warehouse in Armidale (the computer is a non-current asset). On 1 June 20x1, the carrying value of the computer in the accounts of Large Mart is $100,000. On the same day, Sydney Electronics (SE) offers to purchase the computer from Large Mart for $200,000. Large Mart agrees to sell the computer and SE pays the $200,000 on 1 June 20x1. Required: . a) State whether the GAIN that Large Mart has made when selling the computer creates an asset, a liability, income, an expense or equity in the accounting system of Large Mart. (1 mark) . b) Explain your decision based on the criteria that the conceptual framework uses to define the item that is created by the GAIN that Large Mart has made and describe how each criterion is fulfilled by the outlined situation. (3 marks) The statement of cash flows is an important part of every financial report. Required: . a) Explain why the statement of cash flows is useful for the users of financial statements.(2 marks) . b) Determine if the statement of cash flows or the income statement can be manipulated more easily AND explain your decision. (2 marks) On 1 July 20x2 (the first day of the financial year), Large Mart decided to start selling electric bicycles (e-bikes). Initially, Large Mart places an order for 50 e-bikes (for $250 per e-bike), and the first e-bikes arrive at the Large Mart store on 8 July 20x2. Following an advertising campaign, the e-bikes become a big seller and Large Mart makes the following sales and purchase transactions during the year: Sale (10 August 20x2) of 10 e-bikes for a price of $900 per e-bike Purchase (1 September 20x2) of 20 e-bikes for $300 per e-bike Sale (10 September 20x2) of 30 e-bikes for $800 per e-bikeSale (12 November 20x2) of 20 e-bikes for $750 per e-bike Large Mart accounts for its inventory using the \"firstinfirstout\" cost flow assumption and the perpetual inventory system. Required: . a) Calculate the cost of all e-bikes sold during the year ended 30 June 20x3 AND explain your calculations. (2 marks) . b) Calculate the closing balance of the inventory account on 30 June 20x3 AND explain your calculations. (2 marks) . c) Calculate the amount of revenue that the e-bikes have generated for Large Mart during the year ended 30 June 20x3 AND explain your calculations. (2 marks)