Unit 3.4 Chp 1-4

36 UNIT 3 FINANCIAL ACCOUNTING FOR A TRADING BUSINESS
Exercise 2.6
Transactions and the Balance Sheet
As at 31 March 2025, the assets and liabilities of Pete’s Paint Emporium were as follows:
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B
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$ $
Assets
Liabilities
Accounts Receivable 8 000 Accounts Payable 9 000
Bank 2 300 Wages owing 2 000
Delivery van 25 000 Capital – Pete ?
Fixtures and fittings 18 000
Inventory 24 000
Total Assets 77300 Total Equities 77300
In the first week of April 2025, the following transactions occurred:
Apr. 1 Paid $3 000 to Accounts Payable
2 Borrowed $28 000 cash from the NAB, which was used to purchase another van. The loan is to be
repaid in monthly instalments of $1 000, commencing in May 2025
3 Received $2 400 from Accounts Receivable
4 Pete withdrew $1 500 worth of paint for his own purposes
5 Paid the wages owing
6 Pete contributed to the business his personal computer. Pete had paid $4 600 but on this date its
value was $4 000
Required
a Calculate Capital as at 31 March 2025.
b Explain why the computer contributed on 6 April 2025 must not be valued at $4 600. In your answer
refer to one Accounting assumption and one Qualitative characteristic.
c Prepare a table to show the effect of each transaction on the Balance Sheet of Pete’s Paint Emporium.
* d Prepare a classified Balance Sheet for Pete’s Paint Emporium as at 6 April 2025.
Exercise 2.7
Transactions and the Balance Sheet
As at 30 September 2025, the assets and liabilities of Sam Booker Liquor were as follows:
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B
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$ $
Assets
Liabilities
Accounts Receivable 3 000 Bank overdraft 2 500
Fixtures and fittings 15 000 Accounts Payable 7 000
Fridges 40 000 Loan – ANZ (repay. $6000 p.a.) 36 000
Inventory 25 000 Capital – Sam ?
Total Assets 83000 Total Equities 83000
In the first week of October 2025, the following transactions occurred:
Oct. 1 Paid $2 000 to an Account Payable
2 Sam contributed $5 000 of his own money to the business
3 Paid $3 000 off the loan principal
4 Purchased Inventory on credit for $10 000
5 Sam took home for personal use a fridge worth $2 500
6 Paid $1 200 rent in advance for the next 6 months
Required
a Prepare a table to show the effect of each transaction on the Balance Sheet of Sam Booker Liquor.
* b Prepare a classified Balance Sheet for Sam Booker Liquor as at 6 October 2025.
c Referring to your answer to part ‘b’, explain your treatment of rent paid in advance.
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