Answer Happy

QUESTION 2 Ms. Wong, studying full time Master Accounting Degree, formed a lawn service business as a vacation summer job. Wong started the business on May 1, 2020 she deposited RM4,000 in a new bank account in the name of the business. The RM4,000 consisted of a RM2,400 loan from the Public Bank and RM1,600 of her own money. Wong invested her RM1,600 of capital in the business. Wong rented lawn equipment, purchased supplies, and hired other students to mow and trim customers' lawns. At the end of each month, Wong mailed bills to the customers. On August 31, 2020, she was ready to dissolve the business and return to college. Because she was so busy, she kept few records other than the cheque book and a list of receivables from customers. At August 31, the business's cheque book shows a balance of RM8,000, and the customers still owe RM3,000. During the summer, the business collected RM22,000 from customers. The business cheque book lists payment for supplies totaling RM1,600, and still has gasoline, weed eater cord, and other supplies that cost a total of RM200. The business paid employees RM7,200 and still owes them RM1,200 for the final week of the summer. Wong rented some equipment from Peter's shop. On May 1, the business signed a six-month lease on mowers and paid RM2,400 for the full lease period. Peter's will refund the unused portion of the prepayment if the equipment is in good shape. In order to get the refund, Wong has kept the mowers in an excellent condition. In fact, the business had to pay RM1,200 to repair a mower. To transport employees and equipment to job, Wong used a trailer that the business bought for RM1,200. The business estimates that the summer's work used up one-third of the trailer's service potential. The business cheque book lists a payment of RM2,000 for cash withdrawals during the summer. The business paid the loan back during August. Required: 1. Prepare the income statement and the statement of the owner's equity of Wong Lawn Service for the four months May through August 2020. (8 marks) (8 marks) 2. Prepare the classified balance sheet of Wong Lawn Service at August 31, 2020. 3. Was Wong's summer work successful? Give the reason for your answer. (4 marks)