Question

On March 1 2020 Joe started a new sole trader business. During March he carried out the following businesses-related transactions:

1. Deposited $20,000 cash in a business bank account

2. Purchased fixtures and fitting for $6000 cash, and inventory valued at $8000 on credit

3. Borrowed $5000 from a relative, repayable in 2 years time, and deposited it in the bank

4. Purchased a van for $7000 cash and withdrew $200 for his own use

5. Won $2000 in a lottery and paid it all into the business bank account

6. Repaid $1000 of the $5000 loan

Prepare the statement of financial position as at 7th of March 2020

EXPLANATION PLEASE

Answer 1

Answer:

Financial Position
At March 7,2020
Assets		Liabilities and Owner' Equity
Cash	$12,800	Accounts payable	$12,000
Fixtures and fittings	$6,000
Inventory	$8,000	Joe, Capital	$21,800
Van	$7,000
Total assets	$33,800	Total Liabilities and Owner' Equity	$33,800

Calculations

Cash
Capital contribution	$20,000
Purcahse of fixtures and fitters	($6,000)
Borrowed from relatives	$5,000
Purchase of van	($7,000)
Withdrawals	($200)
Additional Contribution [Lottory amount]	$2,000
Repayment of loan	($1,000)
Cash balance at end	$12,800
Accounts payable
Borrowed from relatives	$5,000
Purchase of inventory	$8,000
Repayment	($1,000)
Balance	$12,000
Joe, Capital
Capital contribution	$20,000
Additional contribution [Lottery amount]	$2,000
Withdrawals	($200)
Balance	$21,800