Dave Drive, owner of Street Design Landscaping, engaged you to prepare financial statements for the year ended 30 June 2024, on both the cash basis and the accrual basis. This was the end of the first year of operations, The following data are a summary of selected transactions that occurred during the year. Ignore GST.

1. Fees of $320 000 were collected for services provided during the year to a number of City Councils.

2. There was $36 000 in receivables at 30 June 2024 for services performed and invoiced but not yet received.

3. Interbank transfers of $242 000 were made for salaries, rent, insurance and other expenses incurred during the year.

4. Salaries owing but not yet paid at year end amounted to $3000.

5. On 15 June 2024, a City Council paid $14 000 in advance for landscaping to be done during the next financial year.

6. Expenses of $4000 were prepaid (not included in the $242 000) at 30 June.

Required

(a) Calculate profit under both the cash basis and the accrual basis.

(b) Explain how the following items would be reported in the business’s statement of financial position under the accrual basis:

(i) the $36 000 receivables

(ii) the unpaid salaries of $3000

(iii) the $14 000 advance received on 15 June

(iv) the cash payment of $4000 for prepaid expenses.