Week 3 - Creating a Statement of Financial Position

Question 1

Task: Show the effect of each of the following transactions and adjustments on SBL’s statement of financial position

1. Issue shares for £10,000
2. Borrow £10,000 from Sarah’s parents
3. Buy a car for £9,000
4. Buy £8,000 worth of inventory (stock) (cash on delivery)
5. Buy £20,000 worth of inventory on credit
6. Sell £6,000 worth of inventory for £12,000 cash
7. Sell £12,000 worth of inventory for £30,000 on credit
8. Buy stationery for £2,000 on credit
9. Pay car running costs of £4,000
10. Pay interest on loan of £1,000
11. Collect £15,000 cash from trade receivables (debtors)
12. Pay trade payables (creditors) £10,000
13. Make a prepayment of £8,000 on account of inventory
14. Pay a dividend of £3,000
15. Adjust for £2,000 of telephone expenses not yet billed
16. Adjust for depreciation of non-current assets of £3,000
17. Adjust for £4,000 expected tax liability

Answer 1

Statement of financial position available on page 30 of week 3 notes.

Question 2

Challenge – Create a Statement of
Financial Position from the Following Entries

                                                            £000 Taxation                                                    25 Bank                                                         20 Long-term investments                          500 Retained earnings                                   310 Trade receivables                                     70 Ordinary share capital                            1,300 Patents                                                     350 Inventory                                                   60 Long-term liabilities                                 900 Property plant and equipment               1,600 Trade payables                                         60 Prepayments                                             30 Accruals                                                     35

Answer 2

Statement of financial position available on page 32 of week 3 notes.