Peter’s Personal Training Service had been in business for several years. In June 2019, as a result of a dispute with the owner, the accountant of the business disappeared and took all the records with her.

You have been hired to reconstruct the accounting records, and with this in mind, you conduct a stocktake of all of the assets of the business. By checking with banks, counting the office equipment and supplies, and investigating the ownership of the buildings and equipment, you develop the following information as at 30 June 2019.

Statements from creditors and unpaid invoices found in the office indicate that $230 000 is owing to trade creditors. There is also $60 000 owing under a 30‐year mortgage with the bank. The owner, Peter Piper, has told you that he had contributed $150 000 in cash to the business when it was established and that no further contributions had been made. There is no record of how much total profit (losses) had been earned in past years.

Required

(a) Prepare a trial balance and balance sheet as at 30 June 2019 for the business.

(b) Write a report to the owner suggesting a simple accounting system that could be used in future and why you recommend such a system.

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Account title Land Office Equipment Buildings Accounts Receivable Investments Office Supplies Cash at Bank Balance $ 90000 145 000 172 000 57 500 30 000 80 000 320 000