122 Accounting: Business Reporting for Decision Making
Required
a. Prepare the balance sheet of the partnership on its formation (1 January 2017).
b. Calculate each partner’s share of profit for the year ended 31 December 2017.3.43 Preparing a statement of profit or loss and balance sheet LO2, 11
J. Robottom commenced business on 1 October 2017 as a beautician operating as iBeauty Salon
and Services. Transactions for the month of October were as follows.October 1 Started business by contributing capital of $120 000.
2 Paid rent for month of October $12 800.
3 Purchased beauty supplies for the year $20 000 for cash.
4 Bought fixtures and fittings for the beauty salon (chairs, coffee tables, cabinets,
massage table, fountain) on credit from Wellness Supplies $48 000.
8 Paid wages $2000 for first week’s work.
15 Banked takings from first full week of operations $3300.
Paid wages $2000.
18 Bought new light fitting for $2800 from local artist and paid cash.
22 Banked takings from second week of operations $5000.
Paid wages $3000.
24 Withdrew $6000 cash from business for personal use.
27 Banked takings $4700.
31 Paid monthly electricity and gas $1680.Required
a. Prepare a statement of profit or loss for iBeauty Salon and Services for the month ended
31 October 2017.
b. Prepare a balance sheet for iBeauty Salon and Services as at 31 October 2017.3.44 AASB Differential Reporting project and the reduced disclosure regime LO12
Refer to the reality check ‘Differential Reporting project’. Access the latest update on the project
from the AASB website (www.aasb.gov.au/admin/file/content102/c3/Differential_Reporting_
Project_Update_28_07_2014.pdf) and summarise the current status of the project.3.45 Comparing the differences between ownership LO11
Refer to the Balance Sheets for Advantage Tennis Coaching and Coconut Plantations Pty Ltd.
Required
a. Summarise the differences in the ownership structure of the two business entities.
b. What are the relative advantages and disadvantages of each form of ownership structure?
c. What are the advantages of the JB Hi-Fi Ltd form of ownership compared to that of Coconut
Plantations Pty Ltd? Discuss.Decision-making activities
3.46 The introduction of differential reporting has resulted in significant changes for Australian
companies. Access a summary of the Differential Reporting Project update at the Australian
Accounting Standards Board website, http://www.aasb.gov.au.
Required
a. Summarise the requirements for for-profit entities and not-for-profit entities.
b. What do you believe are the cost versus benefits for both entities and stakeholders of differential
reporting?3.47 Lou Lou has just been offered a retirement package from her work as a sales representative
with Pinnacle Makeup. Her long-term goal has been to start up a day-spa resort on the Sunshine
Coast in Queensland, with her sister Delia, who is a marketing consultant. Lou Lou has also been
dreaming of joining the ‘sea change’ set. A suitable building (an ex-holiday home) has become