(a) The following figures have been extracted from the books of account of Frankie Limited at 31 December 2019.

Required

Using the statement of financial position format presented in this chapter, draw up the statement of financial position for Frankie Limited at 31 December 2019.

(b) During January 2020, the following transactions took place:

• Bought £12,200,000 of inventory on credit from suppliers.

• Made sales on credit to customers of £15,500,000. The inventory cost of the sales made was £11,450,000.

• Took out a loan of £2,500,000 with which to purchase new plant and machinery for £2,500,000. The new loan is due for repayment on 31 December 2024.

• Held a share issue, which raised cash of £1,500,000. £500,000 of the total amount raised represents share capital while the remaining £1,000,000 represents share premium.

• Made a tax payment from the bank account of £690,000.

• Received £6,450,000 from trade receivables.

• Paid trade payables £8,210,000.

• Sold a surplus piece of land that had cost £2,000,000 for £2,500,000.

• Made a short-term loan repayment of £200,000.

Required 

Using the statement of financial position for Frankie Limited drawn up at 31 December 2019, show how the above transactions would increase or decrease the various balances on the statement of financial position and draw up and balance the new statement of financial position at the end of January 2020.

Transcribed Image Text:

Cash at bank Land and buildings Loans due for repayment by 31 December 2020 Share premium Loans due for repayment on 31 December 2028 Cash in hand Share capital Goodwill Taxation payable Fixtures and fittings Trade receivables Plant and machinery Trade payables Retained earnings Inventory £000 600 15,500 850 4,000 8,500 5 2,000 1,000 1,380 1,670 4,910 10,630 6,720 13,365 2,500