The following question is similar to Activities 5.1 and 5.3 and completing the question will ensure that you have understood the concepts so far.

Miss Coffee intends to set up in business as a retailer of ladies high-class fashion. She places £40,000 of her own money into a business bank account and then purchases a car for £8,000 and stock for £25,000. She rents property at £12,000 per annum paying the first month’s rental. At the end of the first month of trading she is able to identify that she has sold stock worth £2,000 for £5,000 and paid sundry expenses of £500.

Draw up the balance sheet for Miss Coffee as at the end of the first month’s trading and a profit and loss account for the period together with the double entry accounts for the period.