Peter Smart used to wash cars in the back yard of his home. He set up...

 

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Peter Smart used to wash cars in the back yard of his home. He set up a car cleaning business and rented premises, hired 2 staff and moved personal equipment to his business premises where a small office was available. He kept very basic records and after 3 months provided you with the following balances at 1 April 2022: Account balances at 1 April 2022 R Bank balance 23 000 Equipment 41 000 Consumables on hand 5 200 Creditors 3 700 Capital ?? The following transactions took place for the month of April 2022: No. 1. Peter transferred R20 000 from his personal savings into the business bank account. Transferred personal vehicle valued at R66 000 for business use. 2.. Paid rent for April 2022 by stop order arranged with the bank, R3 200. 3. Equipment to clean the inside and undercarriage of vehicles was bought on credit from Fast Wash for R42 000. The account is payable in three (3) equal annual instalments. The first instalment is payable on 30 April 2022. Made an electronic funds transfer (EFT) of R2 000 in favour of A Flash to set up a web page and on-line advertisements. 5. Paid Creditors a total of R3 400 on account and bought consumables for R5 600 on credit. 6. Total cleaning fees of R49 000 for the month was deposited into the bank. 7. Peter Smart paid Fast Wash the first instalment due on 30 April 2022 from his personal bank account. Required: 2.3 State whether the balance owing to Creditor Fast Wash should be shown in the statement of financial position as a current or a non-current item. Briefly explain why it should be shown as such. (2) 2.4. Define an asset and provide relevant examples for each classification. (4) Peter Smart used to wash cars in the back yard of his home. He set up a car cleaning business and rented premises, hired 2 staff and moved personal equipment to his business premises where a small office was available. He kept very basic records and after 3 months provided you with the following balances at 1 April 2022: Account balances at 1 April 2022 R Bank balance 23 000 Equipment 41 000 Consumables on hand 5 200 Creditors 3 700 Capital ?? The following transactions took place for the month of April 2022: No. 1. Peter transferred R20 000 from his personal savings into the business bank account. Transferred personal vehicle valued at R66 000 for business use. 2.. Paid rent for April 2022 by stop order arranged with the bank, R3 200. 3. Equipment to clean the inside and undercarriage of vehicles was bought on credit from Fast Wash for R42 000. The account is payable in three (3) equal annual instalments. The first instalment is payable on 30 April 2022. Made an electronic funds transfer (EFT) of R2 000 in favour of A Flash to set up a web page and on-line advertisements. 5. Paid Creditors a total of R3 400 on account and bought consumables for R5 600 on credit. 6. Total cleaning fees of R49 000 for the month was deposited into the bank. 7. Peter Smart paid Fast Wash the first instalment due on 30 April 2022 from his personal bank account. Required: 2.3 State whether the balance owing to Creditor Fast Wash should be shown in the statement of financial position as a current or a non-current item. Briefly explain why it should be shown as such. (2) 2.4. Define an asset and provide relevant examples for each classification. (4)

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23 Briefly Explanation The balance owing to creditors is classified as a noncurrent item because it is due beyond one year 2 annual equal installments ... View the full answer