LFS00AC1 Questions On Foundation Studies: Accounting 1 - Assessment Test 1

Question 1 (18 marks)

James Strong is the owner of Jim Jams Repairs. He has provided the following list of the firm’s assets and liabilities as at 30 June 2020.

Required:
Prepare a classified Balance Sheet as at 30 June 2020. You must ensure that you include all appropriate headings and totals.

Question 2 (24 marks)

Charlie Loong started Crafty Charlie Services on 1 June 2020. He has provided you with his business transactions for the first week of his business.

Required
Prepare a classified Balance Sheet after each transaction.

• Charlie Loong deposited $50,000 into the business bank account
• Purchased computer for $2,000 from Best Computers on credit
• Borrowed $15,000 from CBA, payable in 3 years
• Made payment of $1,500 to Best Computers
• Bought stock of supplies $3,500 for cash
• Withdrew $5,000 cash from the business

Question 3 (8 marks)

The following totals have been extracted from the Balance Sheet for Winkler Trading at 30 June 2020

Required

1. Calculate the working capital of the business. (You must show the formula and all workings to gain full marks)
2. Calculate the working capital ratio. (You must show the formula and all workings to gain full marks)
3. Do you think that this business has a liquidity problem? Explain with reference to your answer in part b.