Len Auck and Brian Land trade as partners in Auckland Manufacturing Company making components for minicomputers. To cope with increasing demand the partners intend to extend their manufacturing capacity but are concerned about the effect of the expansion on their cash resources during the build-up period from January to April 19X6.

The following information is available.

Required:

Transcribed Image Text:

(a) The balance sheet of Auckland Manufacturing Company at 31 December 19X5 is expected to be: Fixed assets Plant and machinery at cost Less depreciation Current assets Stocks raw materials - finished goods Debtors Cash at bank Current liabilities Creditors Partners' capital accounts Len Auck Brian Land (b) Creditors at 31 December 19X5 are made up of: Creditors for materials supplied in November and December at 13,000 per month Creditors for overheads 65,000 28,000 37,000 10,500 18,500 36,000 4,550 69,550 27,550 42,000 79,000 40,000 39,000 79,000 26,000 1,550 27,550