this is task one

Task Three: (LOS 1,5) Recently, two trainees joined Auto Deal's accounting functions. The accounting manager requested you to explain to the new trainees the relevant elements of the conceptual framework for financial reporting, including the qualitative characteristics of financial information, underlying assumptions and the recognition concepts. Your manager requested you to prepare an email that illustrates your theoretical explanation of the conceptual framework for financial reporting with three accounting related examples you encountered during the preparation of the financial statements in Task One above. Word count: (1,000 words +/-10%). The following Auto Deal transactions occurred during December 2019: 1 December 12 December 15 December 17 December 22 December 25 December 27 December 30 December 30 December The owner Invested additional BHD44,000 cash into the business. Sold 2 cars on account to Ali Hasan for BHD12,500. (VAT 5%) Collected BHD7,500 cash from Jameel for the sale of one car that will be delivered in January 2020. (VAT 5%). Sold one car to Khaled for BHD10,000 and received 30% of the amount in cash; the rest was on account. (VAT 5%). Auto Deal signed an employment contract with Layla Hasan as part time assistant for a monthly salary of BHD700. Layla is expected to start working on 1 January Auto Deal received BHD1,400 from Ali Hasan. Fatema, the owner of the company, withdrew BHD 683 cash from the company's assets for her personal use. Received the remaining balance on the 12 December transaction from the Ali Hasan. Purchased BHD340 of furniture on credit (on account) from IKEA Store Paid salaries to the employees totaling BHD2,300 30 December The following matters have just been discovered on 31 December: 1. The long-term note that was issued on 1 January 2019 for BHD5,340 requires the company to pay interest at an annual rate of 10%. The interest for the year 2019 must be accrued. 2. Supplies on hand on December 31, 2020 were worth BHD1,200 3. Prepaid insurance amounting to BHD2,200 was used up (expired) during December 4. Depreciation of December needs to be charged on the equipment BHD 400, BHD1,041 on buildings and BHD170 on furniture Notes: Inventory as at 31 December 2019 cost BHD21,096 Cost of goods sold during December BHD 4,200 Required: Assuming the role of the Auto Deal accountant, refer to the preceding information to complete the accounting cycle by preparing the following end of year financial statements: Statement of Profit or Loss Statement of Changes in Owner's Equity Statement of Financial Position Auto Deal is a showroom for different kinds of cars. It was established as a sole trader, for Fatema Ahmed on 1 January 2019. Auto Deal adopts the calendar year as its fiscal year. Below is the statement of financial position as at 30 November 2019: Auto Deal Statement of Financial Position As at 30 November 2019 BHD BHD 313,543 325,000 (11,457) 24,400 (4,400) 10,200 (1,650) 20,000 8,550 342,093 Non-current assets: Building Accumulated depreciation - Building Equipment Accumulated depreciation -Equipment Furniture Accumulated depreciation - Furniture Total non-current assets Current assets: Inventory Prepaid Insurance Supplies Trade receivables Cash Total current assets Total Assets Equity: Capital Non-current liability: Notes Payable (10%) Current liabilities: Unearned Sales Revenue Account payables VAT Due Total current liabilities Total liability Total Equity & Liabilities 25,296 57,000 2,000 4,036 24,000 112,332 454,425 403,704 5,340 17,968 27,293 120 45,381 50,721 454,425 The following is the most recent chart of accounts for Auto Deal Company: 101 102 103 104 105 106 107 108 109 110 111 112 113 114 115 201 202 203 204 205 300 301 400 401 402 500 501 502 600 602 603 604 605 606 607 Cash Trades receivables Accounts receivables Prepaid rent Prepaid insurance Supplies Short-term investments Long-term investments Furniture Equipment Buildings Land Accumulated depreciation -Buildings Accumulated depreciation - Equipment Accumulated depreciation - furniture Loans Payable Bonds payable Salaries payable Trades payable Accounts payable Capital Drawing Sales Sales return & allowance Sales discount Purchases Purchases returns & allowance Purchases discount Freight in Rent expense Salary expense Depreciation expense Advertising expense Interest expense Insurance expense Task Three: (LOS 1,5) Recently, two trainees joined Auto Deal's accounting functions. The accounting manager requested you to explain to the new trainees the relevant elements of the conceptual framework for financial reporting, including the qualitative characteristics of financial information, underlying assumptions and the recognition concepts. Your manager requested you to prepare an email that illustrates your theoretical explanation of the conceptual framework for financial reporting with three accounting related examples you encountered during the preparation of the financial statements in Task One above. Word count: (1,000 words +/-10%). The following Auto Deal transactions occurred during December 2019: 1 December 12 December 15 December 17 December 22 December 25 December 27 December 30 December 30 December The owner Invested additional BHD44,000 cash into the business. Sold 2 cars on account to Ali Hasan for BHD12,500. (VAT 5%) Collected BHD7,500 cash from Jameel for the sale of one car that will be delivered in January 2020. (VAT 5%). Sold one car to Khaled for BHD10,000 and received 30% of the amount in cash; the rest was on account. (VAT 5%). Auto Deal signed an employment contract with Layla Hasan as part time assistant for a monthly salary of BHD700. Layla is expected to start working on 1 January Auto Deal received BHD1,400 from Ali Hasan. Fatema, the owner of the company, withdrew BHD 683 cash from the company's assets for her personal use. Received the remaining balance on the 12 December transaction from the Ali Hasan. Purchased BHD340 of furniture on credit (on account) from IKEA Store Paid salaries to the employees totaling BHD2,300 30 December The following matters have just been discovered on 31 December: 1. The long-term note that was issued on 1 January 2019 for BHD5,340 requires the company to pay interest at an annual rate of 10%. The interest for the year 2019 must be accrued. 2. Supplies on hand on December 31, 2020 were worth BHD1,200 3. Prepaid insurance amounting to BHD2,200 was used up (expired) during December 4. Depreciation of December needs to be charged on the equipment BHD 400, BHD1,041 on buildings and BHD170 on furniture Notes: Inventory as at 31 December 2019 cost BHD21,096 Cost of goods sold during December BHD 4,200 Required: Assuming the role of the Auto Deal accountant, refer to the preceding information to complete the accounting cycle by preparing the following end of year financial statements: Statement of Profit or Loss Statement of Changes in Owner's Equity Statement of Financial Position Auto Deal is a showroom for different kinds of cars. It was established as a sole trader, for Fatema Ahmed on 1 January 2019. Auto Deal adopts the calendar year as its fiscal year. Below is the statement of financial position as at 30 November 2019: Auto Deal Statement of Financial Position As at 30 November 2019 BHD BHD 313,543 325,000 (11,457) 24,400 (4,400) 10,200 (1,650) 20,000 8,550 342,093 Non-current assets: Building Accumulated depreciation - Building Equipment Accumulated depreciation -Equipment Furniture Accumulated depreciation - Furniture Total non-current assets Current assets: Inventory Prepaid Insurance Supplies Trade receivables Cash Total current assets Total Assets Equity: Capital Non-current liability: Notes Payable (10%) Current liabilities: Unearned Sales Revenue Account payables VAT Due Total current liabilities Total liability Total Equity & Liabilities 25,296 57,000 2,000 4,036 24,000 112,332 454,425 403,704 5,340 17,968 27,293 120 45,381 50,721 454,425 The following is the most recent chart of accounts for Auto Deal Company: 101 102 103 104 105 106 107 108 109 110 111 112 113 114 115 201 202 203 204 205 300 301 400 401 402 500 501 502 600 602 603 604 605 606 607 Cash Trades receivables Accounts receivables Prepaid rent Prepaid insurance Supplies Short-term investments Long-term investments Furniture Equipment Buildings Land Accumulated depreciation -Buildings Accumulated depreciation - Equipment Accumulated depreciation - furniture Loans Payable Bonds payable Salaries payable Trades payable Accounts payable Capital Drawing Sales Sales return & allowance Sales discount Purchases Purchases returns & allowance Purchases discount Freight in Rent expense Salary expense Depreciation expense Advertising expense Interest expense Insurance expense