SECTION B-PRACTICAL QUESTIONS This section contains TWO (2) practical questions with sub-questions. You must attempt ALL questions. Question 4 Huonville Pty Ltd is a newly established company specialised in rug trading. Currently, Huonville has two retail shops and one warehouse for storage. The company commences its trading on 1 January 2021 and its first financial year ends at 30 June 2021. As at 31st May 2021, Huonville's accounts are as follows: Note: $ Cash at bank 20.000 Inventory 24 000 Account receivables 20 000 Account payables Mortgage loan Accrued expenses $ 25 000 120 000 16 900 Prepaid rent 10 500 Accrued interest 1600 Land 135 000 Retained profit 15 000 Motor vehicle 20 000 Owner's capital 89 000 Accumulated (12 000) Depreciation MV Furniture and Fittings 50 000 Total 267 500 Total 267 500 Huonville has paid 3 months' rent in advance from June to August 2021. Furniture and Fittings (F&F) have been purchased on 1 April 2021 and no depreciation expense has been recorded. Huonville has a policy to depreciate F&F by reducing balance method at the rate of 70%. F&F has an estimated useful life of 3 years and residual value of $3,000 There are 8 items in inventory purchased at $3,000 each at the end of May. Huonville uses Perpetual inventory system and FIFO assumption. Huonville purchased a lot of land on 1 February 2021 on cash and on mortgage loan. Mortgage loan has the term of 10 years and interest rate of 4% p.a paid annually. Interest expense has been recorded up to May. Huonville recorded retained profit at the end of month. During June, Huonville has the following transaction: June 2 June 2 June 4 June 10 Purchased 6 rugs at $3 500 each on credit Trade-in the existing delivery truck (Motor vehicle) for another truck costing $35 000. Huonville received a trade-in of $5 000 and paid the remaining on cash. The truck is to be depreciated using straight line method with 3.5 years of useful life with nil residual value. Received $15 000 cash from customers. On the same date, Huonville pay to suppliers a total of $10 000 for outstanding payables. Sold 10 rugs at $6 000 each and received $15 000 on cash and the remaining on credit with n/30 4/6