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:

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.

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Cash In Description Cash sales Receipts in respect of credit sales Capital invested (transfer from private bank account) Bank loan Interest received Sale of machinery $ Cash Out Description $ 32,000 Payments to suppliers 49,000 106,000 Purchase of machinery 55,000 30,000 Rent and rates 7,800 45,000 Utilities 3,500 200 Insurance 1,200 2,500 Telephone 300