Accounting Business Reporting for Decision Making

120 Accounting: Business Reporting for Decision Making

3.33   LO4, 6

Refer to the JB Hi-Fi Ltd consolidated balance sheet in figure 3.3 to answer the following questions.

a. What is the major difference between the format of this statement and that of a partnership?

b. List two current assets and two current liabilities of JB Hi-Fi Ltd and explain what is meant by

each one.

c. Why do you think some items such as ‘borrowings’ and ‘provisions’ appear as both current and

non-current liabilities?

d. What information can external users such as creditors and shareholders obtain from this

statement?

3.34   LO2, 5, 11

Jac and Kev are sole traders who run their own separate businesses providing accounting and

bookkeeping services. On 31 December 2016, their individual balance sheets show the following

accounts.

Jac Kev

Cash

Accounts receivable

Inventory

Equipment

Capital

39 650

20 800

36 400

52 000

148 850

28 600

26 000

39 000

50 700

144 300

Starting in 2017, Jac and Kev have agreed to form a partnership trading as Jac and Kev

Financial Services. The partnership agreement stipulates that all cash and other assets will be

transferred to the partnership. In addition, Jac and Kev will invest an additional $8000 and

$140 000 in cash, respectively. Prepare a balance sheet for Jac and Kev Financial Services as at

1 January 2017.

Problems

 BASIC |   MODERATE |    CHALLENGING

3.35 Researching the benefits of listing  LO6, 7

Go to the ASX website, http://www.asx.com.au. In the search window, type ‘listing on the ASX’. How

does the ASX define ‘Listing’? What are the key benefits of ‘Listing’ according to the ASX?

3.36 Researching business start-up strategies and advantages and disadvantages

of business structures  LO2, 4, 6, 9

Go to the Business Victoria website, http://www.business.vic.gov.au, and click on ‘Operating

a business’. Click on ‘Business structures’. Next click on ‘Choose the right business

structure’. List the various considerations one should contemplate when deciding on a business

structure. Compare and contrast the advantages and disadvantages of each of the four business

structures.

3.37 Preparing a balance sheet  LO2, 11

From the following information for sole trader J. Pfahlert, software designer, draw up a balance

sheet at the end of the financial year (30 June 2017). You are also required to determine the amount

of owner’s capital: accounts payable $9600; land $120 000; cash on hand $12 000; office building

$276 000; bank mortgage $16 800; profit $800; accounts receivable $9180; computer equipment

$1200.

3.38 Preparing a statement of profit or loss  LO2, 11

Vince Tamano, a real estate agent, requires you to prepare a statement of profit or loss for the

period ended 31 December 2017: donations $120; office wages $8400; sales salaries $30 000; sales