Top Cake shop was established on 1 April 2019 with an initial investment of $100,000 by the owner (Jack Claff). During the first few weeks of business, the owner employed a part-time book-keeper who recorded the following list of accounts:

Accounts payable $37,100

Buildings 100,000

Cash at bank 31,000

Furniture 12,000

Jack Claff Capital 150,000

Baking Supplies 5,600

Loan payable 20,700

Accounts receivable 20,000

Land 43,200

Mortgage payable 40,000

Cash drawings by Jack Claff 36,000

Required:

1. Assuming that the amounts above are correct, prepare a statement of financial position in vertical format illustrated on page 56, Example 2.3. (show your calculations) (4 marks)
2. Prepare a statement of changes in equity for the period and determine the amount of profit (loss) made by the business during the period of its first few weeks of existence, assuming that the owner had invested an additional $20,000 into the business just before the above amounts were calculated by the book-keeper. (must show your calculations) (3 marks)
3. Why is it that, in an entitys financial statements, assets leased by an entity are sometimes shown on that entitys balance sheet even though those assets are not legally owned? Explain. You should disclose the source of your information by referencing and support your statements by research and readings. (3 marks)