Two sisters, Tessa and Vanessa, commenced separate businesses on 1.1.2012 each with capital of £50,000 in cash. On that day each invested their whole capital in 50,000 ordinary shares of £1 each at par. By 31 December 2012 these shares were quoted on the London Stock Exchange at 120p per share. Tessa sold her shares on that date but Vanessa held on to hers expecting the shares to go up even further.

Required:

(a) Set out the Statement of financial position of each sister as at 31 December 2012.

(b) State whether you regard Vanessa’s performance in the year as poorer than Tessa’s.