STATEMENT OF FINANCIAL POSITION AS AT END OF YEAR 1 000 000 Non current assets Equipment NBV 6.25 Current assets Inventory Receivables Cash 20.1 48.35 Total Assets 56.35 Non current liabilities Bank Loan Current Liabilities Payables: inventory Payables: admin 1.5 9.5 Equity Capital Reserves 4.85 22.85 Net Assets (Assets - Liabilities) 22.85 Note: The equipment purchased in year 1 had originally cost 10,000 with a useful life of 5 years, no residual value. The Straight line depreciation approach is used for equipment. Thus there was a depreciation charge of 2,000 in year 1. TechKnow has just completed their second year of business. It was a fairly eventful second year for the new business with various things happening to enable some growth and the infrastructure to support this exciting growth You will need Year 1's year-end closing balance sheet (on the following page) for the opening balance sheet figures to start off Year 2 Complete the following six transactions using the blank debit/credit worksheet on Moodle (or use your own) and bring your worksheet with you to the seminar. 1. At the start of Year 2, the outstanding payables for inventory and admin expenses relating to Year 1 were paid up in full. 2. Also during January of Year 2, the outstanding amount from Year 1's receivables were paid to Techknow. 3. A piece of equipment from Year I was sold at the beginning of Year 2 for 900. It had originally cost the business 1,000 and 200 depreciation was charged in Year 1. No new equipment was bought during year 2. Remember, straight-line depreciation method is used for existing equipment. 4. A strategic decision was taken by the owners to move to larger premises. The rental contract started from 1st January Year 2 and was such that there was an upfront payment of 45,000 for the next 18 months. 5. Two vans were also purchased for 8,000 each (reducing balance depreciation method is used for assets of this nature), with useful lives of 5 years. 6. TechKnow has decided to streamline its offerings to its customers and is trying to specialise in a certain type of quirky gadget. A batch of inventory (750 gadgets @8 each) was bought on account/credit terms from suppliers in February costing 6,000 During June another batch of inventory was purchased on account/credit terms (850 gadgets @7) costing E5,950. And during September a final big batch was purchased on account/credit terms costing E7,500 (1,500 gadgets 5 each). By end of the year they still owed 10,000 to suppliers