Management of Sarah Limited are interested in the directional effect (i.e. increase, decrease or no effect) on

Question:

Management of Sarah Limited are interested in the directional effect (i.e. increase, decrease or no effect) on net profit before tax and total assets for the year ended 30 June 2019, if the following occurred from January to June 2019. 

1. Paying back a loan of $200 000. 

2. Purchasing inventory of $150 000 on credit. 

3. Receiving $10 000 for a job to be done in July. 

4. Making sales of $200 000 on credit for goods that cost $80 000. 

5. Changing the depreciation policy by reducing the estimated life of certain equipment. 

6. Prepaying insurance on 30 June 2019 for $50 000. The policy covers the year commencing July 2019. 

7. Increasing the allowance for doubtful debts by $100 000. 

8. Interest revenue is accrued at 30 June, and is $5000. 

9. Accounts receivable totalling $12 000 are found to be uncollectable. The current balance of allowance for doubtful debts is $100 000.

Impact of transactions on financial statements?

Fantastic news! We've located the answer you've been seeking!

Step by Step Answer:

Related Book For  answer-question
Question Posted: