D. Harvey started business on 1 April with $150,000. He also borrowed $50,000 from A. Veck on a long-term loan. Both amounts were paid into a business bank account. During the next three months, the following business was transacted: 

1. (a) Rented buildings for $24,000 per annum, and paid four months rent on 1 April. 
2. (b) Purchased by cash furniture and equipment for $100,000 and a motor vehicle for $8,000. 
3. (c) Purchased inventory amounting to $80,000 on credit. 
4. (d) Sales for cash amounted to $50,000. The cost of these goods was $30,000. 
5. (e) Credit sales amounted to $40,000. The cost of these goods was $25,000. 
6. (f) Paid the creditors (payables) $60,000. 
7. (g) Received cash from debtors (receivables) of $30,000. 
8. (h) Business expenses paid, excluding rent, amounted to $5,000. 
9. (i) On 30 June expenses outstanding amounted to $500.

You are required to: 

(i) calculate, using ledger accounts, the value of inventory at cost, receivables, and payables as at 30 June.

(ii) prepare accounts to show the balance in the bank, the gross proft, and the proft for the period.

(iii) prepare a balance sheet as at 30 June to show the total of fxed assets, current assets, and current liabilities.

Answer rating: 100% (QA)

Using inventory cost Inventory at cost Beginning inventory 0 Purchases 80000 Total 80000 Receivables ... View the full answer