Week 3 2019 Weds slides for students.pdf - Week 3 Wednesday...

Week 3 Wednesday lecture
ACF 100 Financial Accounting
Dr Catherine Salzedo
Michaelmas Term, 2019-20

T accounts and trial balance
Cash Asset P or L/retained profits Equity
Inventory Asset Trade payables Liability
Insurance Expense Ordinary share capital Equity
Land Asset Trade receivables Asset
Machinery Asset Loan payable Liability
Advertising Expense

(a) The company issues 15 million ordinary shares for £8 cash each on 1 January
2019 (ignore any difference between share capital and share premium if you
have done accounting before)
(b) Grieves Ltd buys land costing £150m on 1 January 2019. It pays £60m in cash
and takes a long term loan for the balance.
(c) The company buys machinery on credit costing £14m on 1 January 2019.
Machinery is not depreciated in the year of purchase.
(d) The company pays £2m cash for insurance for the year from 1 January 2019.
(e) Grieves Ltd acquires inventory on credit costing £12m on 1 January 2019 from
the same supplier as the machinery.
(f) The company pays for half of the amount owed to the supplier of machinery
and inventory on 30 June 2019.
(g) Grieves Ltd sells goods which cost £10m for £18m on credit on 30 June 2019.