We will now move on to 7 January, which is the end of the first week of trading. The business has made cash sales of 10 boxes of candles at £20 each and credit sales of 20 boxes of candles at £20 each. Using the following pro forma, prepare a draft statement of financial position at 7 January. Any profit the business has made should be shown beneath the figure for share capital as retained earnings. Like the share capital, profit is a liability because it is owed by the business to the owner. At this stage in trading you can ignore the fact that a proportion of operating expenses should be deducted from the profit and simply calculate the gross profit:

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Candlewick Ltd Draft statement of financial position at 7 January 2012 E ASSETS Non-current assets Equipment lat cost) Current assets Inventory Trade and other receivables Cash and cash equivalents Total assets EQUITY AND LIABILITIES Equity Share capital Retained earnings Non-current liabilities. Loan Current liabilities Trade and other payables Total equity and liabilities