What would have been the effect on the statement of financial position if the inventories had been sold on 7 March for £2,500 rather than £5,000?

The statement of financial position on 7 March would then have been:

Astra Ltd Statement of financial position as at 7 March

ASSETS	£
Cash at bank (15,000 + 2,500)	17,500
Office Equipment	6,000
Inventories (5,000 – 5,000)	–
Total assets	23,500

EQUITY AND LIABILITIES	£
Equity (18,000 + (2,500 – 5,000))	15,500
Liabilities – borrowing	5,000
Liabilities – trade payable	3,000
Total equity and liabilities	23,500

As we can see, the inventories (£5,000) will disappear from the statement of financial position, but the cash at bank will rise by only £2,500. This will mean a net reduction in assets of £2,500. This reduction represents a loss arising from trading and will be reflected in a reduction in the equity of the owners.