Explain how the statement of financial position (balance sheet) prepared in B3.3 will change for each of the following transactions?

(a) The full amounts of £5,000 due from customers are received.

(b) Additional items of raw materials to be held for resale are bought on credit at a cost of £3,500.

(c) Some of the raw materials held for resale are lost through theft and there is no insurance to cover the loss. The original cost of these raw materials is estimated at £3,000.

Data from B3.3

Prepare a statement of financial position (balance sheet) from the following list of assets and liabilities using the accounting equation to deduce the ownership interest as the missing item.

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Amounts due from customers (trade debtors ) Cash in hand Inventory (stock of raw materials held for resale) Plant and machinery Amounts due to suppliers but not paid Vehicles Three-year loan from a local authority 5,000 800 20,000 65,400 3,500 4,000 40,000