Question 34 12 pts Provided below is some financial data and balance sheets of Paris Dreams Ltd, a clothing retailer for the previous two financial years (Year 2019 & Year 2020). ***Sales for the year 2019: $125,000 & Sales for the year 2020: $130,000 ***The cost of goods sold (COGS) in both years was 50% of revenues. ***Profits for year 2019: $25,000 and Profits for year 2020: $35,000 ***The tax rate is 40% and the interest expense was $5,000 each year. The company has had ten thousand shares on issues since 2018, with a share price of $13 on 30 June 2019 and $14 on 30 June 2020. Assume all 2018 balance sheet figures are 80% of the equivalent 2019 figure. Paris Dreams Ltd Statement of Financial Position as at 30 June 2020 Current Assets Cash Short term Investments Accounts Receivable Inventory Prepaid Rent 25.000 20,000 15,000 25,000 10,000 95,000 Non Current Assets (Net of Depreciation) Motor Vehicle Plant & Equipment Land 15.000 45,000 85.000 -> XCO 95,000 Non-Current Assets (Net of Depreciation) Motor Vehicle Plant & Equipment Land 15,000 45,000 85,000 145,000 240,000 55.000 Total Assets Current abilities Accounts Payable Non Current Liabilities Bank loan Total abilities Equity Owner's Equity Retained Earnings Total Equity Total Uabilities & Equity 65,000 120,000 85,000 35,000 120,000 240,000 Paris Dreams Ltd Statement of Financial Position as at 30 June 2019 Current Assets Cash Short term Investments Accounts Receivable Inventory Prepaid Rent 13,000 22.000 15,000 10,000 15,000 75,000 Non Current Assets (Net of Depreciation) Motor Vehicle Plant & Equipment Land Total Non Current Assets Total Asset raatillallalar 20.000 50,000 85,000 155,000 230,000 -> XC Short term Investments Accounts Receivable Inventory Prepaid Rent 22,000 15,000 10,000 15,000 75,000 20,000 50,000 85.000 155,000 230,000 Non-Current Assets (Net of Depreciation) Motor Vehicle Plant & Equipment Land Total Non Current Assets Total Assets Current Uabilities Accounts Payable Non Current Liabilities Bank Loan Total Uabilities Equity Owner's Equity Retained Earnings Total Equity Total Uabilities & Equity 60,000 55,000 95,000 70,000 45,000 115,000 230,000 Required: Comment on the profitability, liquidity and solvency of Paris Dreams Ltd in the year 2020 as compared to 2019. How has it changed? Please provide at least two ratios for each aspect to justify, BIVA-AI EE 3.1 x x, EE X Question 35 8 pts Accounting for Sustainability This reading material below is discussing about the concept of Prevention Cost. Students are expected to have a good read on the material provided and then answer the required question. Prevention costs - organisations might expend resources to reduce or eliminate the likelihood that environmental problems will arise in the future. For example, an organisation that implements a filtration system to eliminate chemical spillage into river streams is undertaking a preventative measure that eliminates the possibility of future environmental pollution affecting the ecosystem around which it conducts its operations. The focus on prevention costs pre-empts future problems, and is generally seen as being a long-term, increasingly sustainable and more engaging style of environmental investment! (Source: Sivabalan, P., Wakefield, J., Sawyers, R., Jackson, S. and Jenkins, G, ACCT3 Management: 3rd Asia Pacific Edition, Cengage, 2018.) Please answer the following question: The ABC Corporation has been supplying building materials since the early to mid-20th century. Its earlier products used asbestos, a material we now know to be toxic and dangerous to those that come into contact with it. As a consequence of the ill health suffered by its employees, ABC Corporation incurred significant environmental costs, which it continues to be held accountable for even today. It is doing its best to minimise headwardock abbondaninerthelescumbinduced system to eliminate chemical spillage into river streams is undertaking a preventative measure that eliminates the possibility of future environmental pollution affecting the ecosystem around which it conducts its operations. The focus on prevention costs pre-empts future problems, and is generally seen as being a long-term, increasingly sustainable and more engaging style of environmental investment! (Source: Slvabalan, P., Wakefield, J., Sawyers, R., Jackson, S. and Jenkins, G., ACCT3 Management: 3rd Asia Pacific Edition, Cengage, 2018.) Please answer the following question: The ABC Corporation has been supplying building materials since the early to mid-20th century. Its earlier products used asbestos, a material we now know to be toxic and dangerous to those that come into contact with it. As a consequence of the ill health suffered by its employees, ABC Corporation incurred significant environmental costs, which it continues to be held accountable for even today. It is doing its best to minimise these adverse costs, but they often nevertheless must be incurred. Please identify any possible prevention costs that might have to be considered by ABC Corporation. BI VAAI EE 3.3 m. 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