Question 1 10 Marks Accounting provides information to help owners and managers make both economic and noneconomic decisions in their various workplaces. Required A. What is the difference between...

Question 1 10 Marks Accounting provides information to help owners and managers make both economic and noneconomic decisions in their various workplaces. Required A. What is the difference between economic and non-economic decisions? B. List, with examples, the economic and non-economic decisions that the following people would need to make with the use of accounting information. (a) A production manager in a firm that manufactures vehicles (b) The Chief Executive Officer of a national sporting not for profit organisation. (c) The manager of a second hand recycling charitable organisation (d) Tom and Tim who are setting up and opening a business to sell computing equipment and provide back-up service to users. Question 2 (23 Marks) James Jackson has decided to establish a Pet Warehouse business as a sole trader. For the six months to 30th June 2017 he has the following transactions: 1. James invested $20000 in savings into an account for the business venture. 2. James located a small building that he could rent for $250 per month and pays 6 months’ rent which he records as an expense. 3. He also purchases stock of pet supplies worth $5500. He pays $1500 in cash and agrees to settle the balance in 60 days. 4. Sales for the six months were $6000 cash and $12000 on credit. 5. He received $11000 in cash from customers and paid $3600 to suppliers. 6. In April the business bought grooming equipment worth $7500 and paid $1000 in cash taking out a loan of $6500 for the balance. 7. Electricity expense for the period paid in cash totalled $850; and James has received a bill for 1 month owing $310 that he has not yet paid and he wants recorded. 8. Advertising cost $650 for the six months was paid in cash 9. James has withdrawn $1400 to pay for personal expenses. 10. At the end of the month there is $2900 worth of pet supplies in stock. James has no accounting knowledge and has asked you to: A. Draw up an excel spreadsheet similar to the template below and enter the transactions into the template adjusting the account balances after each transaction. Assets Liabilities Equity Transaction No Cash at Bank Accounts Receivable Pet Supplies Grooming Equipment Accounts Payable Loan Payable J Jackson Capital 1 2 B. Prepare financial statements on 30th June, 2017 a. Income Statement b. Statement of changes in Owner’s Equity and c. Balance Sheet. C. What 2 pieces of advice would you give to James about the financial outcomes for the first six months? D. Comment on whether James is a separate legal entity from his business. Why? How is this different from being a separate accounting entity? Question 3 (32 Marks) Tony’s Personal Training Service (TPTS) has been in business for several years. He presents you with the following accounts and their balances at 1st March, 2018: Cash at Bank 68000 Training Equipment $44400 Accounts Receivable 18800 Land 240000 Prepaid Insurance 6000 Buildings 125000 Capital ? Drawings 4000 Service Fee Revenue 110000 Supplies Expense 28000 Wages Expense 41000 Loan Payable 50000 Accounts Payable 9200 Promotion Expenses 6600 Unearned Revenue 0 During March the business had the following transactions. Note where relevant all figures are GST inclusive: Mar 1 Owner invested additional $10000 into the business 5 Purchases more training equipment $8800. Paid $4800 in cash, and increased Loan Payable for the balance. 8 Paid promotion expenses $330 10 Received fees in advance of $5500 for contract work to be delivered in June, 2018 15 Receive Service Fee Revenue in cash for the first half of the month $22000. 20 Paid Accounts Payable 9200 22 Bought supplies on credit $2200 24 Received $12800 from accounts receivable 26 Owner withdrew $6000 from the business for personal use 28 Paid Wages for the month $9000 30 Recorded service fee revenue for the second half of the month $15400. $1400 was received in cash the balance on credit. Required: A. Draw up the ledger of TPTS and enter the balances at the beginning of March after calculating the Capital Balance. B. Enter the entries March 1 to 30 in the General Journal C. Post the entries from the journal to the ledger accounts D. Complete the Trial Balance as at 31st March, 2018 E. Can Tony assume that because the Trial Balance balances that the books for the business are correct? Give three reasons for your answer. Question 4 10 Marks Read the article below and answer the following questions in relation to ethics and governance: Required A. What is meant by being socially responsible? Give 2 examples. B. Who are the major stakeholders in the debate on the health warnings on cigarette packs in the article? C. What are the main ethical issues (if any) involved. D. Comment on the ethics of not including correct health warnings on products to be sold in a country where you are conducting business given that such actions are unacceptable in your own country. E. If you were Randall Hedges, what would you do? Article Big Business Tobacco (BBT) is a large Australian producer of tobacco products including a market-leader brand of cigarettes. With the continuing development of Asian countries such as China and its move to a market-based economy, the company has made the decision to sell its cigarettes in this large market from the beginning of next month. The cigarettes will be sold in packs of 40. Mary Bender, marketing manager, is discussing the design of the cigarette packet for the Asian market with Randall Hedges, the company’s public relations manager. Having agreed on the basic design of the pack, Hedges raised the issue of whether to include the normal health warning on the pack, which has to be displayed under Australian law. He emphasised recent medical findings which predicted many hundreds of thousands of deaths from cigarette smoking in the next few years, particularly in the developing countries. Mary Bender was strongly opposed to including a ‘health hazard’ warning on the packs destined for parts of the Asian market. She explained: ‘In this business it is the bottom line (i.e. profits) which matters- we have to think of our shareholders. BBT stands to lose a considerable market share to competitors if it includes such a warning. Besides, it is not a legal requirement in many Asian countries to display a health warning on cigarette packs. If Asian law is subsequently amended then we will be one of the first to comply. Besides, the managing director supports me on this one. Hedges expressed a final opinion: ‘The Company could be better off in the long term by being seen to be acting with corporate responsibility, and demonstrating some concern for its consumers. Besides, such warnings have not been detrimental to the company’s performance in Australia, where health warnings have been common for years.