(a) The following balances have been extracted from the books of Frankie Limited at 31 December 2016.

Required 

Using the statement of financial position format presented in this chapter, draw up the statement of financial position for Frankie Limited at 31 December 2016.

(b) During January 2017, the following transactions took place:
• Bought £12,200,000 of inventory on credit from suppliers.
• Made sales on credit to customers of £15,500,000. The inventory cost of the sales made was £11,450,000.
• Took out a loan of £2,500,000 with which to purchase new plant and machinery for £2,500,000. The new loan is due for repayment on 31 December 2021.
• Held a share issue, which raised cash of £1,500,000. £500,000 of the total amount raised represents share capital while the remaining £1,000,000 represents share premium.
• Made a tax payment from the bank account of £690,000.
• Received £6,450,000 from trade receivables.
• Paid trade payables £8,210,000.
• Sold a surplus piece of land that had cost £2,000,000 for £2,500,000.
• Made a short-term loan repayment of £200,000.

Required 

Using the statement of financial position for Frankie Limited drawn up at 31 December 2016, show how the above transactions would increase or decrease the various balances on the statement of financial position and draw up and balance the new statement of financial position at the end of January 2017.

Transcribed Image Text:

000 Cash at bank 600 Land and buildings Loans due for repayment by 31 December 2017 Share premium 15,500 850 4,000 Loans due for repayment on 31 December 2025 8,500 Cash in hand 5 Share capital 2,000 Goodwill 1,000 Taxation payable 1,380 Fixtures and fittings 1,670 Trade receivables 4,910 Plant and machinery 10,630 Trade payables 6,720 Retained earnings 13,365 Inventory 2,500