Alex Ltd has drawn up the following profit and loss account for the first year of trading:

The following information is also available:
► The company started the year with £20,000 cash in the bank.

► Sales for cash throughout the year were £58,000 and cost of sales for cash £38,000. No debtors or creditors existed at the beginning of the year.
► Of the expenses figure of £10,000, £1,500 has not yet been paid.
► The company acquired £15,000 of fixed assets during the year paying in cash.
Identify:
► The cash figure at the end of the year and explain why this is different from the profit figure.
► Cash inflows and outflows during the year.
► Any figures in the profit and loss account that could be manipulated.

Transcribed Image Text:

Sales 60,000 Cost of sales 35,000 Gross profit 25,000 Depreciation 5,000 Expenses 10,000 Net profit 10,000