Question

The following is a list of assets and claims of a manufacturing business at a particular point in time:

	£
Short-term borrowings	22,000
Property	245,000
Inventories of raw materials	18,000
Trade payables	23,000
Plant and equipment	127,000
Loan from manufacturing Finance Co. (long-term borrowing)	100,000
Inventories of finished goods	28,000
Delivery vans	54,000
Trade receivables	34,000

Required:

Write out a statement of financial position in the standard format incorporating these figures. (Hint: There is a missing item that needs to be deduced and inserted.)

Answer 1

The Statement is also called balance sheet, which includes assets, liabilities, and owners’ equity.

Balance sheet

As at the end of period

Assets	Amount	Liabilities and equity	Amount
Current assets:		Liabilities:
		Short-term borrowings	22,000
Trade receivables	34,000	Trade payable	23,000
Inventories of raw materials	18,000
Inventories of finished goods	28,000	Long-term borrowings	100,000
Total current assets	80,000	Total liabilities	145,000
Non-current assets:
Property	245,000	Stockholders’ equity	361,000
Plant and equipment	127,000
Delivery vans	54,000
Total non-current assets	426,000
Total assets	506,000		506,000

Workings: Stockholders’ equity was missing. This is to be calculated as below:

Stockholders’ equity = Total assets – Total liabilities

                                    = 506,000 – 145,000

                                    = 361,000