Mark Davies has started a lawn mowing business (MD Lawnmowing) as a temporary job/business which he intends to run until he starts his business degree at the University of South Australia in six months. Mark has never owned or run a business before. To start the business on 1 January 2015, he deposited $3,000 into a new bank account opened in the name of the business. The $3,000 consisted of a $2500 loan from his father and $500 of his own money. Mark rented some equipment, purchased supplies, and hired friends to mow and trim his customer's lawns. At the end of each month Mark sent invoices to his customers. On 30th June, 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 30 June, Mark's business account cheque book shows a balance of $3,885, and his customers still owe him $650. During the period, he collected $7,200 from customers. His cheque book lists payments for supplies totalling $690, and he still has fuel and supplies that cost a total of $95 on hand. He paid his employees $2,600, and he still owes them $310 for their final few weeks of work. Mark rented some equipment from Kennard's Hire. On 1 March, he signed a six-month rental agreement on lawnmowers and paid $780 for the full period. Kennard's Hire 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, Mark has kept the equipment in excellent condition. In fact during May paid $280 to repair one of the mowers. To transport employees and equipment to jobs, Mark used a trailer that he bought for $820. He believes that the period's work used up one-quarter of the trailer's service potential. The business cheque book lists a payment of $520 for private cash withdrawals by Mark during the period. In June Mark paid back a quarter of the amount his father had lent to him and agreed to repay the balance at $125 per month. Mark estimates that he spent approximately 130 hours working on the business during the period. He plans to recommence operations on a similar basis during major breaks in his university study and believes he will do better in later periods as he now has an existing customer base to work from. Required 1. Prepare the business Income Statement for the period. (9 marks) 2. Prepare the classified Balance Sheet at the end of the period. (11 marks) 3. Was Mark's venture successful? Give the reasons for your answer. 150 – 250 words only. (5 marks) Total for Question 1: 25 marks Question 2 Joanne's business, Superior Shod Shoes Pty Ltd, had just received a significant amount of money from some important customers so she decided to make the following payments on behalf of the business from the business' bank account: 1 . paid $3,200 for a new cash register 2. paid $400 wages to a shop assistant 3. paid $1,200 off mortgage loan that the company had taken out to purchase the building the shoe shop was located in 4. paid $500 into her own personal bank account 5. paid an outstanding accounts payable account for $200 that had terms of 2/7, n/30 within 7 days of receiving the account, so only paid $196. Required: For each of the five payments: • Explain which element/s of accounting each of the payments affects, i.e. asset, liability, equity, income or expense, and whether the element/s affected increase or decrease (ignore the impact on Cash at Bank) [ 1/2 mark ea payment] • Use the definition of the affected element/s to explain why the payment affected that that/those particular element/s [1 1/2 marks ea payment] [2 marks each payment = 10 marks]