The accountant for George St Hairdressing has compiled the following information
about the company and its accounts for the year ended 31 December 2016:

Cash

$30,000

Prepaid Rent

$2,000

Revenues

99,000

Expenses

54,000

Accounts Payable

9,000

Equipment

40,000

Wages Payable

1,000

Loan Payable

4,000

Accounts receivable

1,000

(a)

What is the total amount of assets belonging to the business? (3 marks)

(b)

What is the total amount that business owes for liabilities? (3 marks)

(c)

Using the accounting equation, what is the amount of Owners’ Equity
reported on the business balance sheet? (2 marks)

(d)

How much net profit or loss did the business earn in the year? (2 marks)

Question 2 (15 marks)

An accountant provided data for a small manufacturing business, trading under the
name Regional Farm Equipment Pty Ltd. The following list of financial data relates
to the business as at 31 December 2016.

Inventories

Motor Vehicles (net)

Cash

Prepaid insurance

Fuel supplies

Accounts receivable

$125,000

75,000

35,000

1,500

9,000

10,000

Plant & equipment (net)

Accounts payable

Salaries payable

Loan Payable

Contributed capital

Retained profits

$200, 000

25,000

2,500

160,000

155, 000
Additional information

20% of the figure for loan payable is payable within 12 months of 30
June.

Required

. Prepare a fully classified balance sheet for the business as at 31
December 2016. (15 marks)

Question 3 ( 15 marks )

Review the CPA and ICANZ websites (links below) and write a short essay
quoting three recent examples (2016 and 2017 only) to demonstrate how
breaches of ethical standards were seriously treated by the professional
organisation.

Required:

1. Explain why the penalties were imposed
2. Referring to APES 110 standards (available on Moodle), which sections
should have applied to your three mentioned examples?
3. Were the penalties imposed by the accounting bodies sufficient?

Note: Your essay should not exceed 500 words. Recent examples should be
limited to between 2016 and 2017.

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