Question 2 (52 marks) A- The two main sets of accounting standards followed by businesses are GAAP and IFRS. Briefly explain how the balance sheet is formatted under each set. (You should search the internet to answer this question) (6 marks) B- Farah Consulting completed the following transactions during December 2016: Dec. 2 Farah invested $20,000 cash into the business 2 Paid monthly office rent, $2,000. Paid cash for a computer, $3,600. Purchased office furniture on account, $3.000. Purchased office supplies on account, $800. 9 Performed consulting service for a client on account, $2,500. 12 Paid utilities expenses, $ 150. 18 Performed service for a client and received cash of $2,100 21 Borrowed $2,400 cash, signing a note payable to be paid May 31, 2018. 21 Hired an administrative assistant to be paid $2,055 on the 20th day of each month. The secretary begins work immediately. 26 Paid $200 on account. 28 Collected $400 on account. 30 Farah withdrew $1,000 cash from the business for personal use. Requirements 1. Journalize the transactions, Explanations are not required. 2. Post the journal entries to the T-accounts, and calculate account balances. 3. Prepare a trial balance as of December 31, 2016. 4. Prepare the income statement of Farah Consulting for the month ended December 31, 2016. 5. Prepare a classified balance sheet as of December 31, 2016. 6. Is Farah's ability to pay its short term debts strong or weak? Support your answer by calculating the suitable ratio(s). (You should search the internet to answer this question) (46 marks) B- One item is omitted in each of the following summaries of balance sheet and income statement data for three different companies, A, B, and C. Determine the amounts of the missing items, identifying each company by letter (You must show your calculations). COMPANY B 300,000 160,000 160,000 95,000 120,000 70,000 Beginning of the year: Assets Liabilities End of the year: Assets Liabilities During the year: Additional investment by the owner Withdrawals by the owner Revenue Expenses 500,000 300.000 200,000 100.000 180,000 60.000 40,000 65,000 75,000 80,000 190,000 160,000 110,000 85.000 35,000 (6 Marks)