Pauls Fitness Store

1 Jan, Paul starts Fitness Store selling protein shakes as Sole Trader

31 Dec, following list of transactions is provided

Prepare Cash Flow Statement, Income Statement and Balance Sheet for the

year ended 31 December

Use the Accrual Basis

Use the Cash Basis

Transactions for the period

1 Jan, Paul invests $80,000 of his own money to start business

1 Jan, the business received a loan from Bank of $40,000 to be

paid off over 10 years

1 Jan, the business paid a Rental Bond of $2,000 to be returned when

the lease ends

1 Jan, the business paid $50,000 for Equipment & Fittings, which should last

for 10 years with a salvage value of $10,000

1 Jan, Paul invested his Vehicle worth $10,000 into the business, which should

last 5 years with no salvage value

On 1 July, the business bought Furniture for $9,000 on credit which will be paid

for in 2 years. It should last for 4 years with a salvage value of $1,000.

Cash collected from customers during the year was $200,000. This included

$1,000 of Sales that will only be earned in the following period.

At 31 Dec, Sales owing from customers was $15,000

Cash paid for protein shakes purchased to resell during the year was $100,000

At 31 Dec, the business still owed $8,000 for protein shakes purchased to resell

At 31 Dec, the business had protein shakes on hand that had cost $20,000

Cash paid for Operating Expenses (excluding Rent) during the year was $45,000

During the year, 13 months of Rent were paid, totalling $13,000

During the year, the business paid $4,000 of Principal repayments and $2,000 of

Interest on the Bank Loan

During the year, Paul paid $1,000 for a TV for his home using the business bank

account

During the year, Paul took his wife on holiday for $1,500 paying with his personal

bank account

At 31 Dec, the business bank balance was $103,000

s Paul's Fitness Store: Cash Flow Statement for the year ended 31 December $ Cash Flows from Operating Activities: Cash received from customers 200.000 Products paid for (Purchases) (100,000) Operating expenses paid (45.000) Rent paid (13,000) Interest paid 12.000 60.000 Ner cash inflow from Operating 40.000 Cash Flows from Investing Activities: Rental Bond paid (2.000) Equipment & Fittings purchased (50.000) Net cash outflow from Imesting (52.000) Cash Flows from Financing Activities: Owner's investment 80.000 Loan from Bank 40.000 120,000 Loan repayments (4,000) Drawings (1.000 15.000 Net cash inflow from Financing 115.000 Net increase in cash held 103,000 Plus: Opening cash balance 0 Closing cash balance 103.000 Paul's Fitness Store: Accrual Basis Income Statement for the year ended 31 December Income: s s Cash Sales (200,000 - 1,000) 199,000 Credit Sales 15.000 214,000 Less Cost of Products (Cost of Goods Sold): Opening inventory Plus: Cash Purchases 100.000 Plus: Credit Purchases 8.000 Less: Closing inventory (20.000 Cost of Products 88.000 Gross Profit 126.000 Less Operating Expenses: Cash Operating expenses 45.000 Rent (13,000*12/13) 12.000 Interest expense 2.000 Depreciation: Equip & Fittings (50,000 - 10,000)/10 4,000 Depreciation: Vehicle (10,000 - 05 2.000 Depreciation: Furniture (9,000 - 1.00094*6/12 1.000 66.000 Net Profit 60,000 0 Paul's Fitness Store: Accrual Basis Balance Sheet as at 31 December OWNER'S EQUITY: s Capital at start 80,000 + Additional Capital 10,000 + Net Profit 60.000 - Drawings (1.000) Capital at end 149,000 THIS IS REPRESENTED BY: ASSETS: Current Assets: Bank Accounts Receivable Inventory Prepaid Rent (13,000/13) 103.000 15.000 20.000 1.000 139.000 Investments: Rental Bond 2.000 2.000 46,000 Non-Current Assets: Equipment & Fittings Less: Accumulated Depreciation Vehicle Less: Accumulated Depreciation Furniture Less: Accumulated Depreciation 50,000 (4.000 10.000 (2.000) 9,000 (1.000) 8,000 8.000 62.000 203.000 TOTAL ASSETS LESS LIABILITIES: Current Liabilities: Revenue in Advance Accounts Payable 1.000 8.000 9,000 Long-Term Liabilities: Bank Loan (40,000 - 4,000) Accounts Payable - Furniture 36,000 9.000 45,000 TOTAL LIABILITIES NET ASSETS 54.000 149.000 Paul's Fitness Store: Cash Basis Income Statement for the year ended 31 December Income: s Cash Sales 200.000 Less Cost of Products: Cash Purchases 100.000 Cost of Products 100.000 Gross Profit 100,000 Less Operating Expenses: Operating expenses paid 45.000 Rent paid 13,000 Interest paid 2.000 60.000 Net Profit 40,000 Paul's Fitness Store: Cash Basis Balance Sheet as at 31 December OWNER'S EQUITY: s s Capital at start 80,000 + Additional Capital + Net Profit 40.000 - Drawings (1.000 Capital at end 119,000 0 THIS IS REPRESENTED BY: ASSETS: Current Assets: Bank 103,000 Investments: Rental Bond 2,000 50.000 Non-Current Assets: Equipment & Fittings TOTAL ASSETS LESS LIABILITIES Current Liabilities: 155.000 36.000 Long-Term Liabilities: Bank Loan (40,000 - 4,000) TOTAL LIABILITIES NET ASSETS 36.000 119,000