Accounting: Depreciation and Marks
Assignment Questions
Question 1
Frank Crosby (who has never owned or run a business before) started a lawn mowing business (Crosby’s Cutters) as a temporary job/business which he intended to run until he started his business degree at the University of Woop Woop in Semester 2, 2014. To start the business on 1 April 2014, he deposited $1,000 into a new bank account opened in the name of the business. The $1,000 consisted of a $600 loan from his father and $400 of his own money. Frank rented some equipment, purchased supplies, and hired friends to mow and trim his customer’s lawns.
At the end of each month Frank sent invoices to his customers. On 31 July, he was ready to dissolve the business and start his university studies. As he was so busy, he kept few records other than his cheque book and a list of amounts owed to him by customers.
At 31 July, Frank’s business account cheque book shows a balance of $690, and his customers still owe him $500. During the period, he collected $4,250 from customers. His cheque book lists payments for supplies totalling $400, and he still has fuel and supplies that cost a total of $50 on hand. He paid his employees $1,900, and he still owes them $200 for their final week of work.
Frank rented some equipment from Scholes Machine Shop. On 1 April, he signed a sixmonth rental agreement on lawnmowers and paid $600 for the full period. Scholes will refund the unused portion of the prepayment if the equipment is in good order when he returns it. In order to get the refund, Frank has kept the equipment in excellent condition. In fact during May, he paid $300 to repair one of the mowers.
To transport employees and equipment to jobs, Frank used a trailer that he bought for $300.
He believes that the period’s work used up one-third of the trailer’s service potential. The business cheque book lists a payment of $460 for private cash withdrawals by Frank during the period. In July Frank paid back the money his father had
Question 1
Frank Crosby (who has never owned or run a business before) started a lawn mowing business (Crosby’s Cutters) as a temporary job/business which he intended to run until he started his business degree at the University of Woop Woop in Semester 2, 2014. To start the business on 1 April 2014, he deposited $1,000 into a new bank account opened in the name of the business. The $1,000 consisted of a $600 loan from his father and $400 of his own money. Frank rented some equipment, purchased supplies, and hired friends to mow and trim his customer’s lawns.
At the end of each month Frank sent invoices to his customers. On 31 July, he was ready to dissolve the business and start his university studies. As he was so busy, he kept few records other than his cheque book and a list of amounts owed to him by customers.
At 31 July, Frank’s business account cheque book shows a balance of $690, and his customers still owe him $500. During the period, he collected $4,250 from customers. His cheque book lists payments for supplies totalling $400, and he still has fuel and supplies that cost a total of $50 on hand. He paid his employees $1,900, and he still owes them $200 for their final week of work.
Frank rented some equipment from Scholes Machine Shop. On 1 April, he signed a sixmonth rental agreement on lawnmowers and paid $600 for the full period. Scholes will refund the unused portion of the prepayment if the equipment is in good order when he returns it. In order to get the refund, Frank has kept the equipment in excellent condition. In fact during May, he paid $300 to repair one of the mowers.
To transport employees and equipment to jobs, Frank used a trailer that he bought for $300.
He believes that the period’s work used up one-third of the trailer’s service potential. The business cheque book lists a payment of $460 for private cash withdrawals by Frank during the period. In July Frank paid back the money his father had