Reference no: EM132356499

Learning Outcome

Unit Learning Outcome (ULO) ULO 1: Assess the financial standing of an entity by examining relevant financial information and identify how disclosure techniques can support business decisions.

ULO 2: Evaluate scenarios involving ethical decisions in financial accounting.

Graduate Learning Outcome (GLO)

DGLO1 Discipline specific knowledge and capabilities

QUESTION 1

Jen Wie has recently graduated with a Masters in Arts and Cultural Management and has decided to set up her own business as a consultant to galleries and museums in Melbourne and regional Victoria. Although this can be a difficult sector in which to succeed, Jen has a number of contacts both in private galleries as well as local government bodies so she is confident she can make the business, Muse Consulting, viable. Jen has provided the first month's transactions for Muse Consulting for July 2019.

a) You are required to record the following transactions into the transaction analysis chart (template provided).

July
1 Invested $70,000 of her own funds into a business bank account.

2 Jen rented a small office shop front in Prahran. She paid three months' rent in advance totaling $6,000.

3 Jen purchased computer equipment $10,000 cash.
A three-month subscription for access to international professional journals was purchased for $2,400 cash.

4 Office furniture was purchased for $4,000 cash. Paid $2,400 for insurance for 12 months.

5 Jen purchased office fittings and fixtures for $3,000 cash and contributed a motor vehicle to the business valued at $20,000.

6 Jen invoiced her first client $3,300 for two days' work at local gallery.

7 Office stationery was purchased for $800 on 30-day credit terms.

11 Invoiced clients $4,400 for services performed.
17 Received full payment from her first client.
18 Hired an assistant on a casual contract basis.

21 Invoiced clients $7,700 for work performed for various local and regional galleries.
Jen withdrew $1,500 for personal use.

23 Paid wages to her assistant totaling $1,200, $300 of which was deducted for PAYG tax which will be remitted to the Australian Taxation Office at a later date.

24 Received $2,200 from credit clients.

26 Paid telephone and internet bill for July of $270.

27 The City of Stonington, impressed by Jen's reputation, has agreed to retain her services in the future at a rate of $1,900 per day.

28 Invoiced corporate clients for work performed $8,800 Made a part payment of $200 for the office stationery.

30 Paid wages to assistant totaling $1,800, $500 of which was deducted for PAYG tax and will be remitted to the Australian Tax Office in the future.

31 Paid motor vehicle expenses for the month totaling $240. Received $2,200 from credit clients.
Jen withdrew $2,200 from the business, of which, $200 was for a one-off payment for professional membership joining fees to Australian Museums and Galleries Association, the relevant professional body, and
$2,000 was for a future trip to Europe.

Additional information:
• As at 31 July $500 of office stationery had been consumed.
• Utilities owing at balance date are $275
• Motor vehicle is depreciated at 20% per annum straight line.
• Computer equipment is depreciated at 30% per annum reducing balance.
• Office Furniture and Office Fixtures and Fittings are depreciated at 10% per annum straight line.
• Assume a full month for depreciation and no residual value.
• Round up to nearest dollar.
• Ignore GST and income tax.

b) Prepare the fully classified Income Statement and Balance Sheet for July 2019 for Muse Consulting.

Question 2

a) Rob is a senior accountant at Big Pharma Ltd, a very large pharmaceutical company listed on the Australian Stock Exchange. Rob has become aware that management has been manipulating test data from their trials of a new drug called CR45. As a result of the manipulation, the company is falsely reporting a significantly higher success rate for patients who use the drug. Rob is not sure what to do with the information he has. He is convinced patients are at risk, but also does not want to lose his job.

Required:

Discuss Rob' ethical position / obligations. Your research should be drawn from the prescribed text book, articles and any relevant ethical frameworks or theories.
(400 - 750 words)

b) Rob and his wife Diane recently had a family dinner with Rob's parents. Over dinner, Rob expressed his concerns over the many recent complaints about one of Big Pharma's leading products CR45. The drug, CR45, has been promoted as a cure for many deadly diseases. The drug has reportedly been responsible for many premature deaths of patients. There is to be a major investigation by authorities into the company and its practices regarding the drug CR45 and several other of their products. Diane and Rob's parents have always supported Rob's career decisions and consequently have invested many thousands of dollars buying shares in Big Pharma Ltd. The family is now considering selling all their shares before this news hits the financial press, which is imminent in the next few days. The impact on the share price, Rob estimates, will be considerable.

Required:

Discuss any potential legal implications that may result if Rob, Diane and family sell their shares prior to this announcement. From your research, ensure you cite all references in your answer. (500 - 750 words)