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ADDITIONAL

Adjustments Depreciation is calculated on a STRAIGHT LINE method Vacumn Sealer machine; Estimated useful life 6 years with zero residual value. Bowl Sealing machine; Estimated useful life 5 years with zero residual value. Website Set Up Costs; Depreciate over three years A physical count of the Packaging Supplies on hand at the end of the month revealed;
Units Containers 1,920 Bowls 160 Vacuum seal bags 660 The rent amount paid covers three months; one month of this amount has been USED. Electricity and Gas used for the month (Electricity and Gas is paid on a quarterly basis at the end of each quarter) $ 323.20 Water used for the month (Water is billed and paid at the end of each quarter) $ 58.80

After the discussion, Jason and James agree to purchase the car off James for business use for $15,000. They approached the CBA bank for a loan. Initially, the bank preapproved to lend them $10,000 as secured loan, 12% interest per year and repayment term is monthly. The balance for the cost of the car is coming out of the business account.

However, the business is new, so CBA only agreed for the loan term to be 1 year, other terms stay the same.

Jason and James negotiated to pay monthly interest only for the loan and the balance of the principle will be paid at the end of the term. The interest will be paid in advance starting from 31 July.

The car is depreciated over 5 years under straight-line method. At the end of five year the residual value is $5,000

Summary:

	Transactions as per Week 4 and 5, apply
	I/S and B/S from week 5 is departure point.
	Additional Events (End of July)
31-Jul	Bank "Preapproved" loan agreed. 1	$ 10,000
	Purchase price of proposed vehicle 2	$ 15,000
	Balance to be paid by business	$ 5,000
1	Loan terms.
	Loan length (years)	1
	Payment frequency	Monthly
	Interest rate (annual)	12%
	Payment structure	Interest only
	Advance / Arrears	Advance
2	Depreciation
	Vehicle Cost	$ 15,000
	Residual	$ 5,000
	Useful life (yrs)	5
	Dept'n	$ 2,000

Required:

1. Include the above transactions in the Income Statements and Balance Sheet
2. Construct the Cash Flows Statement for the month ended 31 July (include the above transaction)
3. Compare the cash balance at the end of the month and the profit made at the end of the month and fully comment on what you observe