Pauls Fitness Store has the Following: On 1 Jan, Paul started a Fitness Store selling protein
Question:
Paul’s Fitness Store has the Following:
• On 1 Jan, Paul started a Fitness Store selling protein shakes as a Sole Trader
• On 31 Dec, he provides you with the following list of transactions
• Prepare a Cash Flow Statement, Income Statement, and Balance Sheet for the year ended 31 December
– Using the Accrual Basis
– Using the Cash Basis
Transactions for the period
• On 1 Jan, Paul invested $80,000 of his own money to start the business
• On 1 Jan, the business received a loan from the Bank of $40,000 which will be paid off over 10 years
• On 1 Jan, the business paid a Rental Bond of $2,000 that will be returned when the lease ends
• On 1 Jan, the business paid $50,000 for Equipment & Fittings, which should last for 10 years with a salvage value of $10,000
• On 1 Jan, Paul invested his Vehicle worth $10,000 into the business, which should last 5 years with no salvage value
• On 1 July, the business bought Furniture for $9,000 on credit which will be paid for in 2 years. It should last for 4 years with a salvage value of $1,000.
• Cash collected from customers during the year was $200,000. This included $1,000 of Sales that will only be earned in the following period.
• At 31 Dec, Sales owing from customers was $15,000
• Cash paid for protein shakes purchased to resell during the year was $100,000
• At 31 Dec, the business still owed $8,000 for protein shakes purchased to resell
• At 31 Dec, the business had protein shakes on hand that had cost $20,000
• Cash paid for Operating Expenses (excluding Rent) during the year was $45,000
• During the year, 13 months of Rent were paid, totaling $13,000
• During the year, the business paid $4,000 of Principal repayments and $2,000 of Interest on the Bank Loan
• During the year, Paul paid $1,000 for a TV for his home using the business bank account
• During the year, Paul took his wife on holiday for $1,500 paying with his personal bank account
• At 31 Dec, the business bank balance was $103,000
Management Accounting
ISBN: 978-0132570848
6th Canadian edition
Authors: Charles T. Horngren, Gary L. Sundem, William O. Stratton, Phillip Beaulieu