Question $1-$ Business Transactions

Oceanic Ventures Ltd$.$ is an emerging firm specialising in the retail of surf gear, beachwear, and accessories. The company's

balance sheet as at $31$ March $2024$ is provided below, along with transactions for April $2024($ignore taxes$).$

Oceanic Ventures Ltd$.-$ Balance Sheet as at $31$ March $2024$

Transactions for the Month of April $2024$:

$($i$)2$ April: Received advanced payment from a customer for a surfboard rental service to be provided in May. The

customer paid $$800$ for a month$-$long rental period, starting on $1$ May.

$($ii$)5$ April: Acquired new surfboard equipment worrth $$6,000,$ making an upfront payment of $$2,000$ and arranging the

rest as a deferred payment due over the next six months.

$($iii$)18$ April: The cost of the regular maintenance service is $$1,500,$ which Qceanic Ventures Ltd$.$ paid in two instalments:

$$700$ in cash on $18$ th April and the remaining $$800$ to be paid within $30$ days upon completion of the maintenance

work.

$($iv$)22$ April: The business pays $$2,000$ towards employee salaries and other operational costs.

$($v$)25$ April: Paid $$5,000$ towards the bank loan.

$($vi$)28$ April: Made total sales of $$67,000$ for various water sports gear, with a direct cost of $$45,000.$ Out of the total

sales, $$23,000$ was received in cash, and the rest is to be paid on credit.

$($vii$)30$ April: Made a prepayment of $$4,000$ for insurance covering the next quarter.

$($viii$)30$ April: Made a payment for interest on the bank loan for the amount of $$325.$

$($ix$)30$ April: Depreciation on the equipment amounted to $$833.$

Required:

$($a$)$ Prepare the worksheet for these business transactions. In the "Impact on Cash Flow" column, show the impact on the

Cash Flow Statement $($i$.$e$.$ "operating", "investing", "financing", or $"$no impact"$),$ and if there is a cash flow impact, state

whether it is an inflow or outflow.

$(10$ marks$)$

$($b$)$ In terms of transactions $($ii$)$ and $($ix$),$ explain how the Company's balance sheet is affected.