During the month of June 20×1, employees of Armidale Cleaners

During the month of June 20×1, employees of Armidale Cleaners(AC) have spent 60 hours cleaning the Large Mart Store inArmidale. The contract between Large Mart and AC requires LargestMart to pre-pay 180 hours of cleaning on the 1 day of eachquarter (July, October, January and April). The Large Mart storemanager can then decide when the store is cleaned, and how muchtime is spent cleaning the store.Required:.a) State whether the USE OF the prepaid cleaning hours duringeach month creates an asset, a liability, income, an expense orequity in the accounting system of Large Mart. (1 mark).b) Explain your decision based on the criteria that the conceptualframework uses to define the item that is created by the USE OFthe prepaid cleaning hours each month and describe how eachcriterion is fulfilled by the outlined situation. (3 marks)Large Mart owns a computer which is used to track the inventoryin its warehouse in Armidale (the computer is a non-current asset).On 1 June 20×1, the carrying value of the computer in the accountsof 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 20×1.Required:.a) State whether the GAIN that Large Mart has made when sellingthe computer creates an asset, a liability, income, an expense orequity in the accounting system of Large Mart. (1 mark).b) Explain your decision based on the criteria that the conceptualframework uses to define the item that is created by the GAIN thatLarge Mart has made and describe how each criterion isfulfilled by the outlined situation. (3 marks)The statement of cash flows is an important part of every financialreport.Required:.a) Explain why the statement of cash flows is useful for the usersof financial statements.(2 marks).b) Determine if the statement of cash flows or the incomestatement can be manipulated more easily AND explain yourdecision. (2 marks)On 1 July 20×2 (the first day of the financial year), Large Martdecided to start selling electric bicycles (e-bikes). Initially, LargeMart places an order for 50 e-bikes (for $250 per e-bike), and thefirst e-bikes arrive at the Large Mart store on 8 July 20×2.Following an advertising campaign, the e-bikes become a big sellerand Large Mart makes the following sales and purchasetransactions during the year:Sale (10 August 20×2) of 10 e-bikes for a price of $900 per e-bikePurchase (1 September 20×2) of 20 e-bikes for $300 per e-bikeSale (10 September 20×2) of 30 e-bikes for $800 per e-bikeSale(12 November 20×2) of 20 e-bikes for $750 per e-bikeLarge 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 30June 20×3 AND explain your calculations. (2 marks).b) Calculate the closing balance of the inventory account on 30June 20×3 AND explain your calculations. (2 marks).c) Calculate the amount of revenue that the e-bikes have generatedfor Large Mart during the year ended 30 June 20×3 AND explainyour calculations. (2 marks)