FINM7409 Tutorial 2
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FINM7409
Tutorial 2
Application exercises
AE 2.2.
For each of the following transactions, identify the effect on the balance sheet equation.
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Asset |
Liability |
OE |
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A |
The owner “Bill” contributes cash to the business, “Bill Electrical Services” |
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B |
The business purchases supplies on credit |
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C |
The business purchases equipment with a bank loan |
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D |
Services provided on credit to a client |
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E |
Cash payment for rent of storage shed for the next 6 months |
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F |
Cash payment at the end of the month for electricity used during the month |
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G |
Paid for supplies purchased on credit during the month |
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H |
Used up supplied during the month |
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J |
Customer pays for services provided on credit earlier in the month |
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AE 2.3.
The following is a list of assets and claims of a manufacturing business at a particular point in time.
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$ |
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Bank overdraft |
22,000 |
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Freehold land and buildings |
245,000 |
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Inventory of raw materials |
18,000 |
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Accounts payable |
23,000 |
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Plant and machinery |
127,000 |
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Loan from National Australia Bank |
100,000 |
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Inventory of finished goods |
28,000 |
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Delivery vehicles |
54,000 |
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Accounts receivable |
34,000 |
a) Prepare a statement of financial position in the standard vertical format incorporating these figures.
(Hint: There is a missing figure which needs to be deduced and inserted.)
b) Discuss the significant features revealed by this financial report.
AE 2.4
Complete the table of assets below by classifying each account in terms of being:
1 current
1 non-current: investments
1 non-current: property, plant, and equipment
1 non-current: intangibles
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Account |
Classification |
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Cash at Bank |
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Patent |
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Equipment |
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Pre-payment |
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Land |
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Goodwill |
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Accounts Receivable |
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Shares in Telstra |
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Accumulated Depreciation - Equipment |
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Inventories |
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Leasehold Improvements |
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Interest Prepaid |
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Government Bonds |
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AE2.5
You are provided with the following statement of financial position at the start of the week and the seven transactions for the week.
Complete the table to show how each transaction affected the accounts together with the balances at the end of the period.
2022-08-31