Question

On March 1 2020 Joe started a new sole trader business. During March he carried out...

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

Homework Answers

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
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