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SevenSeas Technologies

SevenSeas Technologies. Basic formulation of balance sheets and analysing the effects of business transactions……. Brief Summary of transactions. Day 1: Emilie invests £50,000 of her own cash. Day 2: Obtains £25,000 loan from Barclays Bank.

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SevenSeas Technologies

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  1. SevenSeas Technologies Basic formulation of balance sheets and analysing the effects of business transactions……

  2. Brief Summary of transactions • Day 1: Emilie invests £50,000 of her own cash. • Day 2: Obtains £25,000 loan from Barclays Bank. • Day 3: Purchased one laptop computer for £3,000 on credit from Dell. • Day 4: Purchased computer accessories for £1,000 cash payment. • Day 5: Received £5,000 in cash from sales. • Day 6: Pay £1,500 back to creditor Dell. • Day 7: Paid salaries to employees £1,500 and office rent £2000 • Day 8: Sold software services for £8,000 but “not” received. • Day 9: Withdrew £2,000 for personal use.

  3. Assets = Liabilities + Shareholder’s / Owner’s Equity SevenSeas: Balance Sheet as at Day 1. Assets: £ Cash 50,000 Owner’s Equity Emilie 50,000

  4. SevenSeas: Balance Sheet as at Day 2. Assets: £ Cash 75,000 Liabilities: Creditors (Barclays Bank) 25,000 Owner’s Equity 50,000

  5. SevenSeas: Balance Sheet as at Day 3. Assets: £ Cash 75,000 Office Equipment (laptops) 3,000 78,000 Liabilities: Barclays Bank 25,000 Dell 3,000 Owner’s Equity Emilie 50,000

  6. SevenSeas: Balance Sheet as at Day 4. Assets: £ Cash 74,000 Office Equipment 4,000 78,000 Liabilities: Barclays Bank 25,000 Dell 3,000 Owner’s Equity Emilie 50,000

  7. SevenSeas: Balance Sheet as at Day 5. Assets: £ Cash 79,000 Office Equipment 4,000 83,000 Liabilities: Barclays Bank 25,000 Dell 3,000 Owner’s Equity Emilie 50,000 Retained Profits 5,000

  8. SevenSeas: Balance Sheet as at Day 6. Assets: £ Cash 77,500 Office Equipment 4,000 81,500 Liabilities: Barclays Bank 25,000 Dell 1,500 Owner’s Equity Emilie 50,000 Retained Profits 5,000

  9. SevenSeas: Balance Sheet as at Day 7. Assets: £ Cash 74,000 Office Equipment 4,000 78,000 Liabilities: Barclays Bank 25,000 Dell 1,500 Owner’s Equity Emilie 50,000 Retained Profits 1,500

  10. SevenSeas: Balance Sheet as at Day 8. Assets: £ Cash 74,000 Office Equipment 4,000 Debtor 8,000 86,000 Liabilities: Barclays Bank 25,000 Dell 1,500 Owner’s Equity Emilie 58,000 Retained Profits 1,500

  11. SevenSeas: Balance Sheet as at Day 9. Assets: £ Cash 72,000 Office Equipment 4,000 Debtor 8,000 84,000 Liabilities: Barclays Bank 25,000 Dell 1,500 Owner’s Equity Emilie 56,000 Retained Profits 1,500

  12. The Rule: Asset = Liabilities and Owner’s Equity Assets = Liabilities + Owner’s Equity £ £ £ 7,2000 (Cash) 25,000 (Barclays Bank) 56,000 (Emilie) 4,000 (Office Eqp) 1,500 (Dell) 1,500 (Profits) 8,000 (Debtors) £ 84,000 = £26,500 + £57,500

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