ACCT1008 Economics|Heart Healthy Food

You are a Graduate Accountant at Warwick & Clarke Chartered Accountants and you have been asked to prepare the Balance Day Adjustment journals for Avocado Smash Café. Pietra has provided you with transaction details (below) and she has specifically asked you to include a narration (explanation) for each Balance Day Adjustment journal entry.  The General Journal is provided on the following page.1. The Office Supplies on hand at 30 June 2021 was $3 890. 2. On 30 June, Pietra estimated 2.5% of Accounts Receivable will not be collected as this amount has been outstanding for 90 days. 3. The bank has approved an overdraft facility for $15 500 for Avocado Smash Cafe. 4.The deep fryer was purchased on 1 February 2021 and will be depreciated at 15% per annum and will have no residual value (calculate and record the depreciation expense for the year). 5. The 4 month Insurance policy (policy #675) of $7 680 was paid on April 1 2021. 6. The Refrigeration Equipment is expected to have a useful life of five years and have a $9 658 scrap value (calculate and record the depreciation expense for the year).  7. The Chef’s wages payable but not recorded as at 30 June are $2 876. 8. Rent was paid on 1 August 2020 for a two year period ending 31 July 2022. 9.  $4 289 of Unearned Sales represent receipts for catering at the Heart Healthy Food Fair which was catered for on the 2nd June 2021. REQUIRED (i)  The partner has requested that you draft a letter (in your own words) to Jerry which explains how Jerry should have recorded the refrigerated van.  The partner has asked that you refer to the going concern assumption, definitions for asset and how he should have recorded the refrigerated van based on both the assumption and asset definition. (Hint – marks are given for explanation of the assumption and definition and to the application of the facts given to both of these – ensure you conclude how Mr Guernsey should treat the refrigerated van and why) (ii)  In addition, he would like you to explain to Jerry the term ‘depreciation’ as it is used in accounting and how it should be applied to the refrigerated van.  Please include the terms ‘historic cost’ and ‘accounting period’ in your answer
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