Trading continues apace for your new business Climb On! The products have proved to be popular and, seeing this as your opportunity to seize the day, you decided to expand and grow the business.
Here follows a summary of your cash book, ie all cash transactions during the year to 31 December 2013:
|
Cash In |
Cash Out |
||
|
Description |
$ |
Description |
$ |
|
Cash sales |
32,000 |
Payments to suppliers |
49,000 |
|
Receipts in respect of credit sales |
106,000 |
Purchase of machinery |
55,000 |
|
Capital invested (transfer from private bank account) |
30,000 |
Rent and rates |
7,800 |
|
Bank loan |
45,000 |
Utilities |
3,500 |
|
Interest received |
200 |
Insurance |
1,200 |
|
Sale of machinery |
2,500 |
Telephone |
300 |
|
Postage and packaging |
200 |
||
|
Website development costs |
1,500 |
||
|
Travel/climbing trips |
10,500 |
||
|
General expenses |
6,300 |
||
|
Wages (staff) |
12,000 |
||
|
Drawings (your remuneration) |
8,000 |
||
|
Interest paid |
2,300 |
||
|
Balance carried forward |
58,100 |
||
|
215,700 |
215,700 |
The following information is also available:
(a)The machinery was purchased on 1 April 2013. The estimated useful economic life of these assets is four years. The residual value is estimated to be $nil. You may assume a full year’s depreciation in the year of purchase but none in the year of sale.
(b)Some of the machinery quickly proved to be unnecessary and was sold during the year for $2,500. The original cost was $5,000.
(c)Utilities bills of £400 were still owed as at 31 December 2013.
(d)Closing inventories as at 31 December 2013 were $14,000.
(e)Trade receivables as at 31 December 2013 were $10,500.
(f)Trade payables as at 31 December 2013 were $18,000.
(g)You need to provide for $1,500 of accounting fees as at 31 December 2013.