Using a worksheet, draw up the balance sheet and statement of profit or loss and other comprehensive income for the business whose transactions are set out below:

– Month 1: Bert put in $9000 of his own money and transferred his own car into the name of the business. At the time of the transfer, it would have cost $6000 to buy a new model of the same car, but as the car was one year old its second-hand value was only $4000. The business then bought a machine for $4000 paying cash and, at the same time, bought a second machine on credit terms. The credit terms were a deposit of $1000 which was paid in cash and two equal instalments of $900 payable at the start of months 4 and 7 respectively. The cash price of the machine was $2500.

– Month 2: Bought raw materials for $3000 cash, and made cash sales of $3000.

– Month 3: Paid rent in arrears for the three months, amounting to $600 in cash. Paid wages of $1500 for the three months to date. Made cash sales of $4000 and purchased more raw materials, again for cash, amounting to $8000.

– Month 4: Paid instalment on machine of $900 in cash and made cash sales of $4000.

– Months 5–7: Bought raw materials for $2000 cash and made cash sales of $5000, paid wages for three months of

$1500, the rent for three months ($600) and the second and final instalment on the machine of $900.

– Months 8–12: Made cash sales of $14 000, bought raw materials for $6000 cash, paid wages for six months of $3000 and paid rent for three months of $600.

– At the end of the year Bert has raw materials in inventory which cost $2000. He calculates that the car will last two more years, after which he will be able to sell it for $400. The machines have useful lives estimated at three years and will then be sold for $100 each. Since Bert is not very good with figures, he opts for straight-line depreciation on all the non-current assets.