In each of the following situations discuss the potential effect on the business and suggest possible ways in which those effects could be reflected on the worksheet.

(a) The owner starts up a new business and pays £1000 into the business bank account. In addition it is decided that the owner's car will be used exclusively for the business. The car was purchased last year at a cost of £5000 but a similar one year old car could be bought for

£4500.

(b) Goods previously bought by the business for £500 were sold to a customer for £800. However, prior to taking delivery of the goods the customer changed his mind and decided that he did not want the goods after all.

(c) Another batch of goods which had been bought for £400 and sold for £600 was subsequently found to be faulty. The options available are as follows:

(i) Give the customer a rebate on the purchase price of £100.

(ii) Refund the full selling price to the customer and reclaim the goods.

If this course of action is followed a further £140 will need to be spent to rectify the faults.