Referencing Styles : APA Recently you met with Robert to discuss his financial statements. Following your meeting you find you have to make balance day adjustments based on the following information:• Robert purchased a top of the line mountain bike through the business for his own private use, as he could get a better deal. The cost of the mountain bike was $8,500 and is included in the amount for Bicycles in the trial balance.• The interest rate on the loan is … View More Recently you met with Robert to discuss his financial statements. Following your meeting you find you have to make balance day adjustments based on the following information: • Robert purchased a top of the line mountain bike through the business for his own private use, as he could get a better deal. The cost of the mountain bike was $8,500 and is included in the amount for Bicycles in the trial balance. • The interest rate on the loan is 8%pa and has been paid to 31 December 2014. No principle repayments were made during this financial year. • Included in the tour guide fees are deposits received from Wellington High School of $150 per student for six students for a trip to be taken in May 2015. • PAYE due on the employees’ wages on 20 April 2015 is $420. • Robert has advised he had a local tourist who had been paying off their trip. He still owed $150 for the trip. The tourist had been made bankrupt and Robert has been advised he will receive 15 cents in the dollar. The rest is to be written off. • The insurance account includes the following: o Container, bikes and equipment – covers year to 30.9.15 $2,700 o Public indemnity – covers year to 30.9.15 $1,900 o Life insurance $600 • Depreciation is to be calculated for the year: o Bicycles 40% DV per annum o Bicycle equipment and tools 15% SL per annum o Container 8% SL per annum o Trailer 13% DV per annum o Truck 30% DV per annum 2.1 Prepare the necessary balance day adjustments for Robert’s business showing the effect on the accounting equation (ignore any GST implications) (10 marks) 2.2 Prepare an updated trial balance after the adjustments have been made. You will need to construct the original trial balance and add the adjustments to it to obtain the updated figures. (6 marks) 2.3 Prepare the Income Statement and Balance Sheet, including working capital, appropriate classifications and the notes to the financial statements for Robert’s business for the six months ending 31 March 2015. Include all three parts of the accounting policies including general and specific policies. (20 marks) 2.4 Many of the tools and equipment Robert purchases for his business are individually worth less than $500, but collectively are worth more than $500. Explain, using the definitions of assets and expenses and one GAAP, when the cycle tools and equipment would be treated as an asset and when they would be treated as an expense. (3 marks) 2.5 Explain, using an example, one further balance day adjustment, not outlined previously, that would apply to accounting for Accounts Receivable. Use your example to show the effect on the accounting equation. (3 marks) 2.6 Explain the difference between depreciation and amortisation using relevant examples. (2 marks) 2.7 Find and reference an annual report with contingent liabilities in it and present it in your assignment to show Robert how to include any contingent liabilities he may have in his financial statements in future. (1 mark) Read Less