Week-2 a) 'Expensing or Capitalising costs is only a way of recording/classifiying the financial transactions and as such has no impact overall on the Financial Statements or the information they communicate.' Discuss the statement b) Transaction Analysis Scenario Ms Barnes's accountant has advised her to maintain a monthly reporting system using the accrual basis of accounting. The following information provides details of some of the activities of Ms Barnes for the month of June 2021. You must identify and record the relevant business transactions in the Accounitng workbook/equation format. You may create meaningful accounts names as you need. Provide your assumptions if you make any. 1. The Bank balance on 1st Jun 2021 is $15,000. 2. Ms. Barnes has to make a payment of $40,000 by 18th June 2021 to her supplier. However, the delay in receiving payments from her clients in May, have disrupted her cash flow cycle, and she needs to make arrangements to honor her pending invoice. In her anxiety, she happened to discuss her situation with her parents on 3rd June who offered $10,000 as a gift to her (their daughter) and extended another $20,000 as a short-term loan towards her business. Ms Barnes graciously accepted the offers. Week-2 (b) continued 3. In the morning of 5th June 2021, she visited her bank branch and deposited this $30,000 to her business account. While there, she also discussed her situation with her bank manager, and the manager suggested a few other options to meet the shortfall. The bank manager offered her an overdraft facility with a limit of $10,000, for no additional cost which allows her to overdraw her business account at any point in time. The bank manager also suggested her to subscribe for further options such as a 'Ready line of credit' or a 'Credit card'. The manager explained that she qualifies for a limit up to $20,000 and $40,000 respectively for the two options. They both have an annual fee being $100 and $200 respectively, to be paid at the time of signing the contract. She may only choose one of the options. The credit card is an expensive option, both in terms of the annual fee and the interest rates but provides a 50-day interest free period. Ms. Barnes needed time to reflect on the options, and the manager prepared and handed over the contract papers for both the products to be signed and returned later after enough deliberation and decision. 4. On 6th June 2021, she renewed her yearly business insurance for the period July 2021 to June 2022 and paid $2,400. Likewise, she also made a rental payment of $2,000 for her office premise for the month of July in advance. 5. She was in arrears to pay towards her Trader's Association membership which must be renewed each year on 1st of April. With some cash in account now, On 7th June 2021, she paid $1,200 for the year period 1st April 2021 to 31st March 2022. 6. On 8th June 2021, she finalized an appointment of a staff member whom she had interviewed last month and offered a salary package of $60,000 per annum. The new employee will start working from the 1st of July after serving notice at the current workplace. 7. On 8th June 2021, she received a payment of $5,000 from her client for sale in May 2021. 8. On 9th June 2021, she decided to apply for the credit card option offered to her by the bank manager on the 5th June and signed the contract on that date. The Bank Manager confirmed that the processing will take some time and that she will be able to use her credit card from 14th June onwards. 9. On 18th June 2021 she paid her supplier using 70% of her then bank account balance and met the shortfall if any by Credit Card. You must use the following Accounting Workbook/Equation layout to record your transactions. Assets Non Current Current Liabilities Non Current Current + Owners Equity Capital Income Expenses /Reserve Week-2 a) 'Expensing or Capitalising costs is only a way of recording/classifiying the financial transactions and as such has no impact overall on the Financial Statements or the information they communicate.' Discuss the statement b) Transaction Analysis Scenario Ms Barnes's accountant has advised her to maintain a monthly reporting system using the accrual basis of accounting. The following information provides details of some of the activities of Ms Barnes for the month of June 2021. You must identify and record the relevant business transactions in the Accounitng workbook/equation format. You may create meaningful accounts names as you need. Provide your assumptions if you make any. 1. The Bank balance on 1st Jun 2021 is $15,000. 2. Ms. Barnes has to make a payment of $40,000 by 18th June 2021 to her supplier. However, the delay in receiving payments from her clients in May, have disrupted her cash flow cycle, and she needs to make arrangements to honor her pending invoice. In her anxiety, she happened to discuss her situation with her parents on 3rd June who offered $10,000 as a gift to her (their daughter) and extended another $20,000 as a short-term loan towards her business. Ms Barnes graciously accepted the offers. Week-2 (b) continued 3. In the morning of 5th June 2021, she visited her bank branch and deposited this $30,000 to her business account. While there, she also discussed her situation with her bank manager, and the manager suggested a few other options to meet the shortfall. The bank manager offered her an overdraft facility with a limit of $10,000, for no additional cost which allows her to overdraw her business account at any point in time. The bank manager also suggested her to subscribe for further options such as a 'Ready line of credit' or a 'Credit card'. The manager explained that she qualifies for a limit up to $20,000 and $40,000 respectively for the two options. They both have an annual fee being $100 and $200 respectively, to be paid at the time of signing the contract. She may only choose one of the options. The credit card is an expensive option, both in terms of the annual fee and the interest rates but provides a 50-day interest free period. Ms. Barnes needed time to reflect on the options, and the manager prepared and handed over the contract papers for both the products to be signed and returned later after enough deliberation and decision. 4. On 6th June 2021, she renewed her yearly business insurance for the period July 2021 to June 2022 and paid $2,400. Likewise, she also made a rental payment of $2,000 for her office premise for the month of July in advance. 5. She was in arrears to pay towards her Trader's Association membership which must be renewed each year on 1st of April. With some cash in account now, On 7th June 2021, she paid $1,200 for the year period 1st April 2021 to 31st March 2022. 6. On 8th June 2021, she finalized an appointment of a staff member whom she had interviewed last month and offered a salary package of $60,000 per annum. The new employee will start working from the 1st of July after serving notice at the current workplace. 7. On 8th June 2021, she received a payment of $5,000 from her client for sale in May 2021. 8. On 9th June 2021, she decided to apply for the credit card option offered to her by the bank manager on the 5th June and signed the contract on that date. The Bank Manager confirmed that the processing will take some time and that she will be able to use her credit card from 14th June onwards. 9. On 18th June 2021 she paid her supplier using 70% of her then bank account balance and met the shortfall if any by Credit Card. You must use the following Accounting Workbook/Equation layout to record your transactions. Assets Non Current Current Liabilities Non Current Current + Owners Equity Capital Income Expenses /Reserve