Question

The statement of financial position of a business at the start of the week is as follows:

	£
ASSETS
Property	145,000
Furniture and fittings	63,000
Inventories	28,000
Trade receivables	33,000
Total assets	269,000
EQUITY AND LIABILITIES
Equity	203,000
Short-term borrowing (bank overdraft)	43,000
Trade payables	23,000
Total equity and liabilities	269,000

During the week the following transactions take place:

1. Sold inventories for £11,000 cash; these inventories had cost £8,000.

2. Sold inventories for £23,000 on credit; these inventories had cost £17,000.

3. Received cash from trade receivables totalling £18,000.

4. The owners of the business introduced £100,000 of their own money, which was placed in the business bank account.

5. The owners brought a motor van, valued at £10,000, into the business.

6. Bought inventories on credit for £14,000.

7. Paid trade payables £13,000.

Required:

Show the statement of financial position after all of these transactions have been reflected.

Answer 1

Financial Statements
Workings
	Opening Balance sheet
	Asset	Amount	Liability	Amount
	Property	145000	Equity	203000
	Furniture	63000	Bank OD	43000
	Inventories	28000	Trade payable	23000
	Trade receivable	33000
	Total	269000	Total	269000
	Journal Entries
	Account	Dr	Cr
	Cash A/c	11000
	Sales		11000
	Trade receivables	23000
	Sales		23000
	Cash A/c	18000
	Trade receivable		18000
	Bank A/c	100000
	Equity		100000
	Motor Van	10000
	Equity		10000
	Purchase	14000
	Trade payable		14000
	Trade payable	13000
	Cash		13000
Answer
	Inventories Valuation (At Cost)
	OB	28000
	Sales	-8000
	Sales	-17000
	purcahse	14000
	Total	17000
	Balance Sheet
	Asset	Amount		Liability	Amount
	Property		145000	Equity	313000
	Furniture		63000	Retained earnings	9000	322000
	Motor Van		10000	Bank OD		43000
	Inventories		17000	Trade payable		24000
	Trade receivable		38000
	Cash		16000
	Bank		100000
	Total		389000	Total		389000
	Income Statement
	Particulars	Amount		Particulars	Amount
	Opening Stock		28000	Sales		34000
	Purchase		14000	Closing stock		17000
	Profit		9000
	Total		51000	Total		51000