1.

A shareholder of Gonunda Ltd currently holds 1,000 shares representing 1% of the total number of shares issued. The shares were issued for $17 each but the shareholder has only paid $7 for each share. Gonunda Ltd has been forced into liquidation with outstanding debts of $5 million.

State the amount, to the nearest whole dollar, of the shareholder's liability.

2.

ROE (return on equity) is measured by Profit / Average total equity. Assume ROE is less than 100%

State the effect the following event occurring on the reporting date would have on this ratio.

EVENT: A cash sale of goods at cost price