Joseph Hill has the following assets and liabilities as at 30Dec2019. Equipment 6200 Creditors 2800 Car7300 Stock of goods 8100 Debtors 4050 Cash at bank 9100 Cash in hand 195 During the first week of January 2020. The following transactions took place. a) Hill bought extra equipment on credit for 110 b) Bought stock by cheque 380 c) Paid creditors by cheque 1150 d) Debtors paid us 640 by cheque and 90 by cash e) Hill paid in an extra 1500 into the business 1300 by cheque and 200 in cash required. Draw up the balance sheet as at 7 January 2020 after the above transactions have been completed
To draw up the balance sheet as of January 7, 2020, we need to update Joseph Hill's assets and liabilities based on the transactions that took place during the first week of January 2020.
First, let's list the transactions:
a) Equipment purchased on credit: +$110
b) Stock bought by cheque: -$380
c) Creditors paid by cheque: -$1150
d) Debtors paid: +$640 (by cheque) and +$90 (by cash)
e) Additional capital introduced: +$1500 ($1300 by cheque and $200 in cash)
Now, let's update the balance sheet:
Assets:
- Equipment: $6200 + $110 = $6310
- Car: $7300
- Stock of goods: $8100 + $380 = $8480
- Debtors: $4050 - $640 (paid by cheque) - $90 (paid by cash) = $3320
- Cash at bank: $9100 + $1300 (introduced by cheque) = $10400
- Cash in hand: $195 + $200 (introduced in cash) = $395
Total Assets: $6310 (equipment) + $7300 (car) + $8480 (stock) + $3320 (debtors) + $10400 (cash at bank) + $395 (cash in hand) = $32805
Liabilities:
- Creditors: $2800 - $1150 (paid by cheque) = $1650
Total Liabilities: $1650
Now, let's calculate the owner's equity:
Owner's Equity:
- Initial capital: Not provided
- Additional capital introduced: +$1500
Total Owner's Equity: $1500
Now, let's put it all together:
Balance Sheet as of January 7, 2020:
Assets:
- Equipment: $6310
- Car: $7300
- Stock of goods: $8480
- Debtors: $3320
- Cash at bank: $10400
- Cash in hand: $395
Total Assets: $32805
Liabilities:
- Creditors: $1650
Owner's Equity:
- Owner's Capital: Not provided
- Additional Capital: $1500
Total Liabilities and Owner's Equity: $1650 (liabilities) + $1500 (owner's equity) = $3150
This balance sheet reflects the financial position of Joseph Hill's business as of January 7, 2020, after the specified transactions.
