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.
